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EXHIBIT 2
CONFORMED COPY
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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
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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 . . . . . . . . . . . . . . . . . . . . . . . . . 5
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
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Contents, p. 2
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ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Shareholders Meeting and Parent's Stockholders
Meeting . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.02. Letter of the Company's Accountants . . . . . . . . . . . 52
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 . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.09. Indemnification . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.10. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.11. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 58
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
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Contents, p. 3
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . 66
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 . 71
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties . . . . . . . 72
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.05. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries . . . . . . 74
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
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Index of Defined Terms
In
Amended and Restated Agreement and Plan of Merger
Term Section
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"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)
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Term Section
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"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)
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Term Section
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"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"
"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)
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Term Section
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"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)
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Term Section
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"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
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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 representations, 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 certificates 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
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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
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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
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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
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Parent Common Stock One Share of Holdco Common
Stock
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Parent Series B Preferred Stock One Share of Series B 6.40%
Preferred Stock, par value
$0.10 per share, of Holdco
("Holdco Series B Preferred
Stock")
Parent Series C Preferred Stock 2.08264 shares of Holdco
Common Stock
Parent Series D Preferred Stock One share of Series D
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series D
Preferred Stock")
Parent Series E Preferred Stock One share of Series E
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series E
Preferred Stock")
Parent Series F Preferred Stock One share of Series F
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series F
Preferred Stock")
Parent Series G Preferred Stock One share of Series G
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series G
Preferred Stock")
Parent Series H Preferred Stock One share of Series H
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series H
Preferred Stock")
Parent Series I Preferred Stock One share of Series I
Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series I
Preferred Stock")
Parent Series J Preferred Stock 1,000 shares of Series
LMCN-V Common Stock, par
value $0.01 per share, of
Holdco ("Holdco LMCN-V
Stock")
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Parent Series K Preferred Stock 1,000 shares of Series LMC
Common Stock, par value $0.01
per share, of Holdco ("Holdco
LMC Class Stock")
Parent Series L Preferred Stock One share of Series L
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
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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).
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(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.
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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
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(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
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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
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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
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(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
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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
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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
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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.
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(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
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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
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22
August 29, 1995, (A)(I) 68,330,388 shares of Class A Common Stock were
outstanding, all of which were validly issued, fully paid and nonassessable,
(II) 137,819,078 shares of Class B Common Stock were outstanding, all of which
were validly issued, fully paid and nonassessable, (III) 12,396,976 shares of
Class C Preferred Stock were outstanding, all of which were validly issued,
fully paid and nonassessable, and (iv) no shares of Class A Preferred Stock,
Class B Preferred Stock or Class D Preferred Stock were issued or outstanding;
and (B)(I) 81,822,278 shares of Class B Common Stock were reserved for
issuance upon conversion of the Class C Preferred Stock and the Company's Zero
Coupon Subordinated Convertible Notes due 2007, (II) 13,904,724 shares of
Class B Common Stock were reserved for issuance upon the exercise of
outstanding stock options (the "Company Stock Options") granted pursuant to
the Company's 1988 Stock Option Plan, the Company's 1993 Stock Option and
Equity Award Plan and the agreement, dated June 1, 1993, among CNN America,
Inc., the Company, ▇▇▇▇▇ ▇▇▇▇ 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
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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
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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,
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25
bond, mortgage, indenture, lease or other agreement (but excluding any
Programming Agreement), instrument, permit, concession, franchise or license
applicable to the Company or any Company Subsidiary or their respective
properties or assets or (iv) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any
Company Subsidiary or their respective properties or assets, other than, in
the case of clauses (iii) and (iv), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) have a
Company Material Adverse Effect, (y) prevent the Company from performing its
obligations under this Agreement in any material respect or (z) prevent or
delay in any material respect the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including the European
Union (a "Governmental Entity"), is required by or with respect to the Company
or any of the Company Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated by this Agreement, except for (i) the filing
of a premerger notification and report form by the Principal Shareholder as
the ultimate parent entity of the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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
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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,
36
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 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 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
37
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
38
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
39
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
40
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.
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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:
42
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
43
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
44
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
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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
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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
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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
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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
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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 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 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-
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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
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Agreement, the authorization of any issuance of any other securities
in exchange or in substitution for shares of the Parent Common Stock;
(iv) any damage, destruction or loss, whether or not covered by
insurance, that has had or is likely to have a Parent Material
Adverse Effect; or
(v) any change in accounting methods, principles or practices by
Parent or any Material Parent Subsidiary materially affecting its
assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed Parent SEC
Documents or in Section 3.02(h) of the Parent Disclosure Letter, there is no
suit, action or proceeding (including any proceeding by or before the FCC)
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of the Parent Subsidiaries (and Parent is not aware of any basis for
any such suit, action or proceeding) that, individually or in the aggregate,
could reasonably be expected to (i) have a Parent Material Adverse Effect or
(ii) prevent Parent, Holdco, Delaware Sub or Georgia Sub from performing their
respective obligations under this Agreement in any material respect, and there
is not any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of the Parent
Subsidiaries having, or which, insofar as reasonably can be foreseen, in the
future would have, any Parent Material Adverse Effect. As of September 22,
1995, except as disclosed in the Filed Parent SEC Documents or in Section
3.02(h) of the Parent Disclosure Letter, there was no suit, action or
proceeding pending, or, to the knowledge of Parent, threatened, against Parent
or any of the Parent Subsidiaries (and Parent is not aware of any basis for
any such suit, action or proceeding) that, individually or in the aggregate,
could reasonably be expected to prevent or delay in any material respect the
consummation of the Mergers or any of the transactions contemplated by this
Agreement.
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(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
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44
aggregate, reasonably be expected to result in a Parent Material Adverse
Effect.
(m) ERISA Compliance. Except as described in the Parent Filed SEC
Documents or as would not have a Parent Material Adverse Effect, (i) all
employee benefit plans or programs maintained for the benefit of the current
or former employees or directors of Parent or any Parent Subsidiary that are
sponsored, maintained or contributed to by Parent or any Parent Subsidiary, or
with respect to which Parent or any Parent Subsidiary has any liability,
including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (ii) neither Parent nor any Parent
Subsidiary has any liabilities or obligations with respect to any such
employee benefit plans or programs, whether accrued, contingent or otherwise,
nor to the knowledge of the executive officers of Parent are any such
liabilities or obligations expected to be incurred.
(n) Operations of Holdco, Delaware Sub and Georgia Sub. Holdco does
not, and will not prior to the Closing, engage in any significant business
activities or conduct any significant operations other than in connection with
the transactions contemplated by this Agreement. Each of Delaware Sub and
Georgia Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and has not engaged in any business activities
or conducted any operations other than in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from September 22, 1995, to the Effective Time of
the Mergers, the Company shall, and shall cause the Company Subsidiaries to,
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and in compliance in
all material respects with all applicable laws and regulations (including the
Communications Act and the FCC's rules and regulations)
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and, to the extent consistent therewith, use commercially reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting the generality of
the foregoing, during the period from September 22, 1995, to the Effective Time
of the Mergers, except for Approved Matters (as defined below) the Company
shall not, and shall not permit any of the Company Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned Company Subsidiary to
its parent and regular quarterly cash dividends on the Company Capital Stock
in an amount per share per quarter for each class of Company Capital Stock not
in excess of the amount paid for the quarter immediately preceding September
22, 1995, (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of the
Company Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities (other than, in the
case of this clause (z), for the redemption of New Line Debentures following a
call by the Company for redemption of all the New Line Debentures);
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (x) the issuance of shares of
Class B Common Stock upon the exercise of Company Stock Options outstanding on
September 22, 1995, and in accordance with their then terms, (y) the issuance
of shares of Class B Common Stock reserved for issuance as described in
clauses (B)(I) and (B)(III) of Section 3.01(c) and (z) the grant of Company
Stock Options permitted under Section 3.01(c)(i) and the issuance of shares of
Class B Common Stock upon the exercise thereof);
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(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
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employees, (B) grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, executive officer or
employee of the Company or any Company Subsidiary or (C) establish, adopt,
enter into or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement (other than any
collective bargaining agreement for the film production operations of the
Company and the Company Subsidiaries) or any stock option, employee benefit
plan, agreement or policy except as contemplated by this Agreement; provided,
however, that this clause (ix) shall not prohibit the Company or any Company
Subsidiary from (1) entering into any employment agreement with any employee
(other than any executive officer of the Company) (x) whose current employment
agreement is expiring, (y) contemporaneously with the hiring of such employee
or (z) contemporaneously with the promotion of such employee, if, in each
case, such employment agreement does not provide for salary in excess of
$200,000 in any year, does not have a term in excess of five years and is
entered into in the ordinary course of business consistent with prior
practice, in the case of clause (x) above, such new employment agreement is
substantially similar to the expiring agreement and, in the case of clause (y)
or (z) above, such employment agreement is substantially similar to current
employment agreements for employees of the Company and the Company
Subsidiaries at the applicable level, (2) entering into talent agreements in
the ordinary course of its film production operations consistent with prior
practice, or (3) making any severance payment, including any payment in
settlement of litigation arising out of or resulting from the cessation of
employment, to any employee or former employee (other than any executive
officer or former executive officer of the Company) in excess of the amounts
otherwise permitted under this clause (ix) if the excess amount of such
payment does not, in any case, exceed $50,000;
(x) except as contemplated by Section 2.02(e), and without limiting
the generality of clause (ix) above, make any amendment to any Company Stock
Plan or New Line Plan as a result of this Agreement or in contemplation of the
Mergers;
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(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
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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
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advisor or representative of the Company or any of the Company Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of the Company Subsidiaries or otherwise, shall be deemed to be a breach of
this Section 4.02(a) by the Company. For purposes of this Agreement, "takeover
proposal" means any proposal for a merger, consolidation or other business
combination involving the Company or any of the Material Company Subsidiaries
or any proposal or offer to acquire in any manner, directly or indirectly, more
than 15% of any class of voting securities of the Company or any of the
Material Company Subsidiaries, or assets representing a substantial portion of
the assets of the Company and the Company Subsidiaries, taken as a whole, other
than the transactions contemplated by this Agreement. The Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations by the Company or any of its officers, investment
bankers, attorneys or other advisors or representatives with any parties
conducted heretofore with respect to any of the foregoing.
(b) Subject to Section 7.01(e), neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent, the adoption, approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the TBS Merger or (ii) approve or recommend, or propose to approve
or recommend, any takeover proposal.
(c) The Company promptly shall advise Parent orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company shall keep Parent promptly and fully informed
in all material respects of the status and details of any such takeover
proposal or inquiry.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Shareholders Meeting and Parent's Stockholders Meeting. (a) As soon as
practicable following September 22, 1995, the Company and Parent shall prepare
and file with the SEC the Proxy Statement and Parent and Holdco
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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
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cause to be delivered to Parent and Holdco a letter of Price Waterhouse LLP,
the Company's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and addressed
to Parent and Holdco, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
SECTION 5.03. Letter of Parent's Accountants. Parent shall use its
best efforts to cause to be delivered to the Company a letter of Ernst & Young
LLP, Parent's independent public accountants, and, with respect to persons or
assets acquired by Parent, one or more other independent public accountants,
dated a date within two business days before the date on which the Form S-4
shall become effective and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Each of the
Company and Parent shall, and shall cause each of its respective subsidiaries
to, afford to the other party and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such other party,
reasonable access during normal business hours during the period prior to the
Effective Time of the Mergers to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties and personnel as such
other party may reasonably request. Except as required by law, each of the
Company and Parent shall hold, and shall cause its respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information in confidence to the extent
required by, and in accordance with, the provisions of the letter dated August
26, 1995, between the Company and Parent (the "Confidentiality Agreement").
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SECTION 5.05. Best Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement and, in the case of
Parent, in the LMC Agreement, each of the parties agrees to use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Mergers and the other transactions
contemplated by this Agreement and the Voting Agreements, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Voting Agreements or the consummation of the transactions contemplated by
this Agreement or the Voting Agreements, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement; provided, however, that a
party shall not be obligated to take any action pursuant to the foregoing if
the taking of such action or the obtaining of any waiver, consent, approval or
exemption is reasonably likely (x) to be materially burdensome to such party
and its subsidiaries taken as a whole or to impact in a materially adverse
manner the economic or business benefits of the transactions contemplated by
this Agreement, the Voting Agreements and the Investors' Agreements referred to
in Section 6.02(f) so as to render inadvisable the consummation of the Mergers
or (y) to result in the imposition of a condition or restriction of the type
referred to in clause (ii), (iii) or (iv) of Section 6.02(e). In connection
with and without limiting the foregoing, the Company and its Board of Directors
shall (i) take all reasonable action necessary so that no state takeover
statute or similar statute or regulation is or becomes applicable to the TBS
Merger, this Agreement or any of the other transactions contemplated by this
Agreement or the Voting Agreements and (ii) if any
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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
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(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
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cause the TBS Surviving Corporation (or in the case of a transfer of all or
substantially all the assets and business of the TBS Surviving Corporation, its
successors or assigns) to maintain the Benefit Plans (other than medical plans)
at the benefit levels in effect on September 22, 1995 or (B) provide or cause
the TBS Surviving Corporation (or, in such case, its successors or assigns) to
provide benefits to employees of the Company and the Company Subsidiaries that
are not materially less favorable in the aggregate to such employees than those
in effect on September 22, 1995 and (ii) provide or cause to be provided
medical benefits to employees of the Company and the Company Subsidiaries that
are substantially equivalent to those provided to similarly situated employees
of the TW Surviving Corporation.
(b) Service. With respect to any "employee benefit plan", as
defined in Section 3(3) of ERISA, maintained by Parent, Holdco or any other
Parent Subsidiary (including any severance plan), for purposes of determining
eligibility to participate, vesting, entitlement to benefits, benefit accrual
(but in the case of any "employee pension benefit plan", as defined in Section
3(2) of ERISA, solely to the extent necessary to comply with Section 5.08(a))
and in all other respects where length of service is relevant, service with the
Company or any Company Subsidiary shall be treated as service with Parent,
Holdco or the other Parent Subsidiaries; provided, however, that such service
need not be recognized to the extent that such recognition would result in any
duplication of benefits.
(c) Third Party Beneficiaries. This Section 5.08 is intended to be
for the benefit of and shall be enforceable by each person who is an employee
of the Company or any Company Subsidiary as of the Effective Time of the
Mergers (but only with respect to those provisions applicable to such
employee), and his heirs and personal representatives and, to the extent set
forth above, shall be binding on all successors and assigns of Parent, Holdco,
the other Parent Subsidiaries, the Company and the Company Subsidiaries. To
the extent that any provision of this Section 5.08 shall be reflected in a plan
or arrangement subject to ERISA, the exclusive remedy of any employee referred
to in the preceding sentence with respect to such provisions or request for a
related benefit provided by such plan or arrangement shall be the claims
procedure under such plan or arrangement.
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SECTION 5.09. Indemnification. Parent, Holdco and Georgia Sub agree
that all rights to indemnification for acts or omissions occurring prior to the
Effective Time of the Mergers existing as of September 22, 1995, in favor of
the current or former directors or officers of the Company as provided in its
Restated Articles of Incorporation or By-laws shall survive the TBS Merger and
shall continue in full force and effect in accordance with their terms from the
Effective Time of the Mergers until the expiration of the applicable statute of
limitations with respect to any claims against the current or former directors
or officers of the Company arising out of such acts or omissions. Holdco shall
cause to be maintained for a period of not less than six years from the
Effective Time of the Mergers the Company's directors' and officers' insurance
and indemnification policy in effect as of September 22, 1995, to the extent
that it provides coverage for events occurring prior to the Effective Time of
the Mergers (the "D&O Insurance") for all persons who are directors and
officers of the Company who are covered persons under the Company's D&O
insurance policies in effect on September 22, 1995, so long as the annual
premium therefor would not be in excess of 150% of the last annual premium paid
prior to September 22, 1995 (the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such six-year period,
Holdco shall use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous to the covered persons than the existing D&O Insurance. The
Company represents to Parent that the Maximum Premium is $947,602.
SECTION 5.10. Fees and Expenses. Except as provided in Sections
5.15, 7.02(a), 7.02(b) and 7.02(c), all fees and expenses incurred in
connection with the Mergers, this Agreement and the transactions contemplated
by this Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Mergers are consummated, except that expenses incurred in
connection with printing and mailing the Proxy Statement and the Form S-4 shall
be shared equally by Parent and the Company.
SECTION 5.11. Affiliates. Prior to the Closing Date, the Company
shall deliver to each of Parent and Holdco a letter identifying all persons who
are, at the time this Agreement is submitted for approval to the shareholders
of the Company, "affiliates" of the Company for purposes of
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Rule 145 under the Securities Act. The Company shall use its best efforts to
cause each such person, and Parent shall use its best efforts to cause each of
its "affiliates", to deliver to Holdco on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit A.
SECTION 5.12. Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Holdco Common Stock to be issued in the Mergers
and pursuant to the Company Stock Options, the New Line Options, the notes
referred to in Section 3.01(c)(i)(B)(I) and the other securities referred to in
Section 3.01(c)(i)(B)(III) to be approved for listing on the New York Stock
Exchange (the "NYSE"), subject to official notice of issuance, prior to the
Closing Date.
SECTION 5.13. Execution of the Registration Rights Agreement.
Holdco shall execute and deliver to the other parties thereto the Registration
Rights Agreement in the form of Exhibit B (the "Registration Rights Agreement")
at or prior to the Closing.
SECTION 5.14. Tax Treatment. Each of Parent, Holdco and the Company
shall use its reasonable best efforts to cause the Mergers to qualify as
exchanges governed by Section 351 of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(d) and 6.03(d).
SECTION 5.15. Transfer and Real Property Transfer Gains Taxes.
Holdco shall be responsible for any liabilities, without deduction or
withholding from any amount payable to the holders of Parent Capital Stock or
Company Capital Stock, arising under any New York State Real Estate Transfer
Tax, New York State Tax on Gains Derived from certain Real Property Transfers,
New York City Real Property Transfer Tax, New York State Stock Transfer Tax and
any similar taxes imposed by any other city or State of the United States (and
any penalties and interest with respect to such Taxes), to the extent any such
Taxes become payable in connection with the transactions contemplated by this
Agreement, on behalf of the holders of Parent Capital Stock or Company Capital
Stock. The Company and Holdco shall cooperate in complying with the
requirements of such Taxes. Holders of Parent Capital Stock or Company Capital
Stock shall be bound by the values and allocations established by Holdco and
the Company on any Tax Returns relating to any such Taxes.
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SECTION 5.16. Material Transactions by Parent. Parent shall
promptly notify the Company if, after September 22, 1995, and prior to the
Effective Time of the Mergers, Parent or any Parent Subsidiary enters into a
definitive agreement providing for the implementation of a Material Transaction
(as defined below). In such event, the Board of Directors of the Company may
request the Company's financial advisor, CS First Boston Corporation, to
deliver a written opinion, substantially in the same form as the opinion
referred to in Section 3.01(m), that, after giving effect to the Material
Transaction, the consideration to be received by the Company's shareholders in
the TBS Merger is fair to the Company's shareholders (other than Parent) from a
financial point of view. The Company and Parent shall cooperate in furnishing
such information to CS First Boston Corporation as shall be reasonably required
in order for such opinion to be delivered as promptly as practicable, and the
Company shall use all commercially reasonable efforts to cause such opinion or
the written advice referred to in the following sentence to be delivered within
15 days following request therefor from the Company. In the event that CS
First Boston Corporation advises the Company and Parent in writing that it is
unable to deliver such opinion, the Company shall be entitled to terminate this
Agreement pursuant to Section 7.01(f), if such termination is approved by the
Board of Directors of the Company. For purposes of this Agreement, "Material
Transaction" means (i) the issuance by Parent of more than 90,000,000 "common
stock equivalents" (one common stock equivalent being equal to one share of
Parent Common Stock, including any share of Parent Common Stock issuable by
Parent upon conversion, exercise or exchange of any other capital stock,
warrant or other security or right of Parent, any Parent Subsidiary or any
other controlled affiliate of Parent) in any single transaction or in any
series of individual transactions (excluding (A) any transaction involving an
exchange by Parent on a one-for-one basis of newly issued shares of Parent
Series L Preferred Stock for outstanding shares of Parent Series C Preferred
Stock and (B) any transaction contemplated by the elective merger letter
agreement dated as of September 22, 1995, between Parent and LMC, if, in the
case of this clause (B), such transaction is not reasonably likely to (1) cause
the satisfaction of any condition set forth in Article VI to be delayed in any
material respect or (2) make the satisfaction of any such condition materially
more difficult or costly or otherwise more disadvantageous to the Company,
Parent or Holdco in any material respect), each of which involves the issuance
of more than 20,000,000
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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 extensions 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 jurisdiction 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
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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 representations 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
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letters, which letters and certificates are substantially in the form set
forth in Exhibit D and dated the Closing Date, to the effect that the TW
Merger will qualify as an exchange governed by the provisions of Section 351
of the Code.
(e) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity (i) challenging the acquisition by
Parent or Holdco of any shares of capital stock of the Company or the TBS
Surviving Corporation, seeking to restrain or prohibit the consummation of the
Mergers or any of the other transactions contemplated by this Agreement or the
LMC Agreement or seeking to obtain from the Company, Parent, Holdco or any of
their respective subsidiaries any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent, Holdco, any Material
Company Subsidiary or any Material Parent Subsidiary of any material portion
of the business or assets of the Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary or to compel the Company, Parent,
Holdco, or any of their respective subsidiaries to dispose of or hold separate
any material portion of the business or assets of the Company, Parent, Holdco,
any Material Company Subsidiary or any Material Parent Subsidiary as a result
of the Mergers or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of Holdco to
acquire or hold, or exercise full rights of ownership of, any shares of
capital stock of the TW Surviving Corporation or the TBS Surviving
Corporation, including, without limitation, the right to vote such capital
stock on all matters properly presented to the stockholders of the TW
Surviving Corporation or the TBS Surviving Corporation, (iv) seeking to
prohibit Parent or Holdco from effectively controlling in any material respect
the business or operations of the Company or any Material Company Subsidiary
or (v) which otherwise is reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect.
(f) Investors' Agreements. Each of the other parties thereto shall
have executed and delivered to Holdco an Investors' Agreement in the form of
Exhibit C-1 or C-2, as applicable.
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(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 representations and
warranties of Parent set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties
of Parent set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except to the extent any such representation or warranty expressly
relates to another date (in which case as of such date), and the Company shall
have received a certificate signed on behalf of Parent by the chief executive
officer (or any executive vice president) and the chief financial officer of
Parent to such effect.
(b) Performance of Obligations. Parent, Holdco, Delaware Sub and
Georgia Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by the chief
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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;
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(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting of the Company or
any adjournment thereof at which the Shareholder Approvals are voted
upon, the Shareholder Approvals shall not have been obtained;
(ii) if, at a duly held stockholders meeting of Parent or any
adjournment thereof at which the Parent Stockholder Approvals are
voted upon, the Parent Stockholder Approvals shall not have been
obtained;
(iii) if the Mergers shall not have been consummated on or
before September 30, 1996, unless the failure to consummate the
Mergers is the result of a wilful and material breach of this
Agreement by the party seeking to terminate this Agreement; provided,
however, that if all the conditions set forth in Sections 6.01 (other
than 6.01(g)), 6.02 and 6.03 have been satisfied at such date, either
Parent or the Company may, by notice to the other prior to such date,
extend such date to the latest date so extended by either party but
in no event later than December 31, 1996;
(iv) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or
otherwise prohibiting the Mergers and such order, decree, ruling or
other action shall have become final and non-appealable;
(v) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A) would give rise to the failure of a
condition set forth in Section 6.02(a) or 6.02(b) or Section 6.03(a)
or 6.03(b), as applicable, and (B) cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
party of such breach (a "Material Breach") (provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement that would
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give rise to a failure of a condition as described in clause (A)
above); or
(vi) if the FCC shall have issued an order or ruling or taken
other action denying approval of the transactions contemplated by
this Agreement, and such order, ruling or other action shall have
become final and non-appealable;
(c) by either Parent or the Company in the event that (i) all the
conditions to the obligation of such party to effect the Mergers set forth in
Section 6.01 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Mergers set forth in Section 6.02 (in
the case of Parent) or Section 6.03 (in the case of the Company) is not
capable of being satisfied prior to the end of the period referred to in
Section 7.01(b)(iii);
(d) by Parent, if any order or approval of the FCC contemplated by
Section 6.01(f) when obtained shall have included any conditions or
restrictions of the type referred to in Section 6.02(e)(ii), (iii) or (iv)
that are not acceptable to Parent in its sole discretion and such order or
approval shall have become final and non-appealable;
(e) by the Company, subject to Section 7.05(b), if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the
implementation of the transactions contemplated by a takeover proposal;
provided, however, that (i) the Company is not then in breach of Section 4.02
or in breach of any other representation, warranty, covenant or agreement that
would give rise to a failure of a condition set forth in Section 6.02(a) or
6.02(b), (ii) the Board of Directors of the Company shall have complied with
Section 7.05(b) in connection with such takeover proposal and (iii) no
termination pursuant to this Section 7.01(e) shall be effective unless the
Company shall simultaneously make the payment required by Section 7.02(a);
(f) by the Company, as contemplated by Section 5.16;
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(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 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
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would give rise to a failure of a condition set forth in Section 6.02(a) or
6.02(b) and (y) such breach cannot be or has not been cured within 30 days
after the Company becomes aware of such breach), (F) by the Company pursuant to
Section 7.01(c) or (G) pursuant to Section 7.01(e), and (ii) a definitive
agreement with respect to a takeover proposal is executed, or a takeover
proposal is consummated, at or within eighteen months after such termination,
then the Company shall pay to Parent a fee of $175,000,000 (reduced by any
amount actually paid by the Company pursuant to Section 7.02(b) in connection
with such termination), which amount shall be payable by wire transfer of same
day funds on the date such agreement is executed, or such takeover proposal is
consummated, as applicable. The Company acknowledges that the agreements
contained in this Section 7.02(a) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails to
promptly pay the amount due pursuant to this Section 7.02(a), and, in order to
obtain such payment, Parent commences a suit which results in a judgment
against the Company for the fee set forth in this Section 7.02(a), the Company
shall also pay to Parent its costs and expenses (including reasonable
attorneys' fees) in connection with such suit.
(b) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.01(b)(i) or by Parent pursuant to Section
7.01(b)(v), then the Company shall reimburse Parent for all its reasonable
out-of-pocket expenses actually incurred in connection with this Agreement and
the transactions contemplated hereby, up to a maximum amount of $15,000,000,
which amount shall be payable by wire transfer of same day funds within three
business days of written demand, accompanied by a reasonably detailed statement
of such expenses and appropriate supporting documentation, therefor.
(c) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.01(b)(ii) or by the Company pursuant to
Section 7.01(b)(v), then Parent shall reimburse the Company for all its
reasonable out-of-pocket expenses actually incurred in connection with this
Agreement and the transactions contemplated hereby, up to a maximum amount of
$15,000,000, which amount shall be payable by wire transfer of same day funds
within three business days of written demand, accompanied by a reasonably
detailed statement of
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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
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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
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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 Agreement 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.
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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.
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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 operation 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., ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇,
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Delaware 19901, as its agent for service of process in Delaware.
SECTION 8.10. Waivers. Except as provided in this Agreement or any
waiver pursuant to Section 7.04, no action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
IN WITNESS WHEREOF, Parent, Holdco, Delaware Sub, Georgia Sub and the
Company have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
TIME WARNER INC.,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
TW INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
TIME WARNER ACQUISITION CORP.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
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TW ACQUISITION CORP.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ BROADCASTING SYSTEM, INC.,
by /s/ R.E. ▇▇▇▇▇▇
-------------------------------
Name: R.E. ▇▇▇▇▇▇
Title: President
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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.
87
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
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88
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
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89
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:
4
90
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").
91
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
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92
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.
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93
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:
4
94
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
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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.
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3
"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
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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
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5
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").
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(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,
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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
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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.
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(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
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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
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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
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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
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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
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14
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
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15
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
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16
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
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17
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
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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
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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
113
20
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.
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21
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
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22
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
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23
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:
117
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:
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2
"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.
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3
"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.
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4
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
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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;
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(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
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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;
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(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
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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
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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
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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
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(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
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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: (▇▇▇) ▇▇▇-▇▇▇▇
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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
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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.
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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:
133
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.
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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
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3
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
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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
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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
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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
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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
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provision or portion of any provision had never been contained herein. The
parties shall endeavor in good faith negotiations to replace any invalid,
illegal or unenforceable provision with a valid provision the effects of which
come as close as possible to those of such invalid, illegal or unenforceable
provision.
SECTION 4.10. Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such party
may be entitled.
IN WITNESS WHEREOF, Holdco and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TW INC.,
by
_______________________________________
Name:
Title:
INITIAL INVESTORS:
▇▇▇▇▇▇ FOUNDATION, INC.,
by
________________________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHARITABLE
FOUNDATION UNITRUST NO. 2,
by
________________________________________
Name:
Title:
141
Exhibit D(i)
[Letterhead of]
TW INC.
TIME WARNER ACQUISITION CORP.
TW ACQUISITION CORP.
TIME WARNER INC.
[Closing Date], 199_
Dear Sirs:
In connection with the opinions to be delivered by you
pursuant to Sections 6.02(d) and 6.03(d) of the Amended and Restated Agreement
and Plan of Merger (the "Agreement") dated as of September 22, 1995 by and
among Time Warner Inc., a Delaware corporation ("Parent"), TW Inc., a Delaware
corporation and a direct wholly owned subsidiary of Parent ("TW Inc."), Time
Warner Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia Corporation and a
direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and ▇▇▇▇▇▇
Broadcasting System, Inc., a Georgia corporation (the "Company"), pursuant to
which Delaware Sub will merge with and into Parent (the "TW Merger") and
Georgia Sub will merge with and into the Company (the "TBS Merger")
(collectively, the "Mergers") in the manner described in the Agreement and the
Proxy
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2
Statement [dated ], I certify, after due inquiry and investigation,
that to the best of my knowledge and belief: 1/ (i) the facts relating to the
contemplated Mergers, as described in the Agreement and the Proxy Statement
[dated ], are, in each case, insofar as such facts pertain to TW Inc.,
Delaware Sub, Georgia Sub or Parent true, correct and complete in all material
respects, (ii) Delaware Sub and Georgia Sub are transitory subsidiaries of TW
Inc. formed solely for the purpose of facilitating the Mergers and will not
survive the Mergers, (iii) there is no plan or intention on the part of TW Inc.
or any of its affiliates to redeem or otherwise reacquire any stock to be
issued in the Mergers, (iv) there is no plan or intention by TW Inc. to dispose
of the stock of TW Surviving Corporation or TBS Surviving Corporation, (v) TW
Inc., Delaware Sub, Georgia Sub and Parent will pay each of their respective
expenses, if any, incurred in connection with the Mergers and (vi) TW Inc. will
not be an investment company within the meaning of Section 351(e)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations
Section 1.351-1(c)(1)(ii).
____________________
1/ Capitalized terms not defined herein shall have the meanings
ascribed to them in the Agreement.
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3
I understand that you will be relying on the representations
contained in this letter in rendering the aforementioned opinion.
TW INC.
by ___________________________________
Title:
Date:
TIME WARNER ACQUISITION CORP.
by ___________________________________
Title:
Date:
TW ACQUISITION CORP.
by ___________________________________
Title:
Date:
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TIME WARNER INC.
by ___________________________________
Title:
Date:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
145
Exhibit D(ii)
[Letterhead of]
▇▇▇▇▇▇ BROADCASTING SYSTEM INC.
[Closing Date], 199_
Dear Sirs:
In connection with the opinions to be delivered by you pursuant to
Sections 6.02(d) and 6.03(d) of the Amended and Restated Agreement and Plan of
Merger (the "Agreement") dated as of September 22, 1995 by and among Time
Warner Inc., a Delaware corporation ("Parent"), TW Inc., a Delaware corporation
and a direct wholly owned subsidiary of Parent ("TW Inc."), Time Warner
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Holdco ("Delaware Sub"), TW Acquisition Corp., a Georgia corporation and a
direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and ▇▇▇▇▇▇
Broadcasting System, Inc., a Georgia corporation (the "Company"), pursuant to
which Delaware Sub will merge with and into Parent (the "TW Merger") and
Georgia Sub will merge with and into the Company (the "TBS Merger")
(collectively, the "Mergers"), in the manner described in the Agreement and the
Proxy Statement [dated ], I certify, after due inquiry and
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2
investigation, that to the best of my knowledge and belief: 1/ (i) the facts
relating to the contemplated Mergers, as described in the Agreement and the
Proxy Statement [dated ], are, in each case, insofar as such facts
pertain to TBS, true, correct and complete in all material respects and (ii)
TBS will pay its expenses, if any, incurred in connection with the Mergers.
I understand that you will be relying on the representations contained
in this letter in rendering the aforementioned opinion.
▇▇▇▇▇▇ BROADCASTING SYSTEM INC.
by __________________________________
Title:
Date:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________
1/ Capitalized terms not defined herein shall have the meanings
ascribed to them in the Agreement.
147
Exhibit D(iii)
Certificate by R. E. ▇▇▇▇▇▇, III
[Closing Date], 199_
In connection with the opinions to be delivered by (i) Cravath, Swaine &
▇▇▇▇▇, counsel to Time Warner Inc., a Delaware corporation ("Parent"), pursuant
to Section 6.02(d) of the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1995 (the "Agreement") by and among Parent, TW Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("TW
Inc."), Time Warner Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and
▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the "Company") and
(ii) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, pursuant to
Section 6.03(d) of the Agreement, I hereby certify, recognizing that such
counsel will rely on this certificate in delivering such opinions, that as of
the date hereof I am not bound by any agreement, understanding or contract to
sell, transfer or otherwise dispose of any of the TW Inc. Common Stock (as
such term is
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2
defined in the Agreement) to be received by me pursuant to the Agreement.
By: ________________________________________
R. E. ▇▇▇▇▇▇, III
Date:
149
Exhibit D(iv)
Certificate by TCI ▇▇▇▇▇▇ Preferred, Inc.
[Closing Date], 199_
In connection with the opinions to be delivered by (i) Cravath, Swaine &
▇▇▇▇▇, counsel to Time Warner Inc., a Delaware corporation ("Parent"), pursuant
to Section 6.02(d) of the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1995 (the "Agreement") by and among Parent, TW Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("TW
Inc."), Time Warner Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and
▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the "Company") and
(ii) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, pursuant to
Section 6.03(d) of the Agreement, I hereby certify, recognizing that such
counsel will rely on this certificate in delivering such opinions, that as of
the date hereof: (i) TCI ▇▇▇▇▇▇ Preferred, Inc. ("TCITP") is not bound, except
to the extent provided in the Voting Trust Agreement [dated ] among
TCITP, United Cable ▇▇▇▇▇▇ Investment, Inc., Communication Capital Corp. and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, by any agreement, understanding or contract to sell, transfer
or otherwise dispose of any of the TW Inc. Capital Stock (as such term is
defined in this
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Agreement) received by TCITP pursuant to the Agreement and (ii) except to the
extent provided in Section 5.15 of the Agreement, no other person will pay any
expenses incurred by TCITP in connection with the transactions undertaken
pursuant to the Agreement.
TCI ▇▇▇▇▇▇ PREFERRED, INC.
by: __________________________________________
Title:
Date:
151
Exhibit D(v)
Certificate by United Cable ▇▇▇▇▇▇ Investment, Inc.
[Closing Date], 199_
In connection with the opinions to be delivered by (i) Cravath, Swaine &
▇▇▇▇▇, counsel to Time Warner Inc., a Delaware corporation ("Parent"), pursuant
to Section 6.02(d) of the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1995 (the "Agreement") by and among Parent, TW Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("TW
Inc."), Time Warner Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and
▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the "Company") and
(ii) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, pursuant to
Section 6.03(d) of the Agreement, I hereby certify, recognizing that such
counsel will rely on this certificate in delivering such opinions, that as of
the date hereof: (i) United Cable ▇▇▇▇▇▇ Investment, Inc. ("UCT") is not bound,
except to the extent provided in the Voting Trust Agreement [dated ]
among UCT, TCI ▇▇▇▇▇▇ Preferred, Inc., Communication Capital Corp. and ▇▇▇▇▇▇
▇. ▇▇▇▇▇, by any agreement, understanding or contract to sell, transfer or
otherwise dispose of any of the TW Inc. Capital Stock (as such term is defined
in this
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Agreement) received by UCT pursuant to the Agreement and (ii) except to the
extent provided in Section 5.15 of the Agreement, no other person will pay any
expenses incurred by UCT in connection with the transactions undertaken
pursuant to the Agreement.
UNITED CABLE ▇▇▇▇▇▇ INVESTMENT, INC.
by: __________________________________________
Title:
Date:
153
Exhibit D(vi)
Certificate by Communication Capital Corp.
[Closing Date], 199_
In connection with the opinions to be delivered by (i) Cravath, Swaine &
▇▇▇▇▇, counsel to Time Warner Inc., a Delaware corporation ("Parent"), pursuant
to Section 6.02(d) of the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1995 (the "Agreement") by and among Parent, TW Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("TW
Inc."), Time Warner Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and
▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the "Company") and
(ii) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, pursuant to
Section 6.03(d) of the Agreement, I hereby certify, recognizing that such
counsel will rely on this certificate in delivering such opinions, that as of
the date hereof: (i) Communication Capital Corp. ("CCC") is not bound, except
to the extent provided in the Voting Trust Agreement [dated
] among CCC, TCI ▇▇▇▇▇▇ Preferred, Inc., United Cable ▇▇▇▇▇▇
Investment, Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, by any agreement, understanding or
contract to sell, transfer or otherwise dispose of any of the TW Inc. Capital
Stock (as such term is defined in the
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2
Agreement) received by CCC pursuant to the Agreement and (ii) except to the
extent provided in Section 5.15 of the Agreement, no other person will pay any
expenses incurred by CCC in connection with the transactions undertaken
pursuant to the Agreement.
COMMUNICATION CAPITAL CORP.
by: __________________________________________
Title:
Date:
155
Exhibit D(vii)
Certificate by ▇▇▇▇▇▇ Outdoor Inc.
[Closing Date], 199_
In connection with the opinions to be delivered by (i) Cravath, Swaine &
▇▇▇▇▇, counsel to Time Warner Inc., a Delaware corporation ("Parent"), pursuant
to Section 6.02(d) of the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1995 (the "Agreement") by and among Parent, TW Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent ("TW
Inc."), Time Warner Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of TW Inc. ("Delaware Sub"), TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of TW Inc. ("Georgia Sub") and
▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the "Company") and
(ii) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, pursuant to
Section 6.03(d) of the Agreement, I hereby certify, recognizing that such
counsel will rely on this certificate in delivering such opinions, that as of
the date hereof ▇▇▇▇▇▇ Outdoor Inc. ("Outdoor") is not bound by any agreement,
understanding or contract to
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2
sell, transfer or otherwise dispose of any of the TW Inc. Common Stock (as
defined in the Agreement) received by it pursuant to the Agreement.
▇▇▇▇▇▇ OUTDOOR INC.
by: __________________________________________
Title:
Date: