Exhibit 2(a)
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AGREEMENT AND PLAN OF MERGER
Dated as of September 22, 1995
Among
TIME WARNER INC.,
TIME WARNER 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 Merger
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SECTION 1.01. The Merger . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . 3
SECTION 1.04. Effects of the Merger . . . . . . . 3
SECTION 1.05. Certificate of Incorporation and
By-Laws . . . . . . . . . . . . 3
SECTION 1.06. Directors . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . 4
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock . . . . . . 4
SECTION 2.02. Exchange of Certificates . . . . . 7
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company . . . . . . . . . . 11
SECTION 3.02. Representations and Warranties of
Parent and Sub . . . . . . . . . 24
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business . . . . . . . . 34
SECTION 4.02. No Solicitation . . . . . . . . . . 38
Contents, p. 3
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders
Meeting and Parent's Stockholders
Meeting . . . . . . . . . . . . 39
SECTION 5.02. Letter of the Company's
Accountants . . . . . . . . . . 40
SECTION 5.03. Letter of Parent's Accountants . . 41
SECTION 5.04. Access to Information;
Confidentiality . . . . . . . . 41
SECTION 5.05. Best Efforts; Notification . . . . 41
SECTION 5.06. Board Authority . . . . . . . . . . 43
SECTION 5.07. Public Announcements . . . . . . . 44
SECTION 5.08. Benefit Plans . . . . . . . . . . . 44
SECTION 5.09. Indemnification . . . . . . . . . . 45
SECTION 5.10. Fees and Expenses . . . . . . . . . 46
SECTION 5.11. Affiliates . . . . . . . . . . . . 46
SECTION 5.12. Stock Exchange Listing . . . . . . 47
SECTION 5.13. Execution of the Registration
Rights Agreement . . . . . . . . 47
SECTION 5.14. Tax Treatment . . . . . . . . . . . 47
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes . . . . . . . . . . . 47
SECTION 5.16. Material Transactions by Parent . . 47
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect The Merger 49
SECTION 6.02. Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . 50
SECTION 6.03. Conditions to Obligation of the
Company . . . . . . . . . . . . 53
Contents, p. 4
Page
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination . . . . . . . . . . . 54
SECTION 7.02. Effect of Termination . . . . . . . 57
SECTION 7.03. Amendment . . . . . . . . . . . . . 58
SECTION 7.04. Extension; Waiver . . . . . . . . . 59
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver . 59
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties . . . . . . . . . . . 60
SECTION 8.02. Notices . . . . . . . . . . . . . . 60
SECTION 8.03. Definitions . . . . . . . . . . . . 61
SECTION 8.04. Interpretation . . . . . . . . . . 61
SECTION 8.05. Counterparts . . . . . . . . . . . 62
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . 62
SECTION 8.07. Governing Law . . . . . . . . . . . 62
SECTION 8.08. Assignment . . . . . . . . . . . . 62
SECTION 8.09. Enforcement . . . . . . . . . . . . 62
SECTION 8.10. Waivers . . . . . . . . . . . . . . 63
EXHIBITS
Exhibit A Form of Affiliate Letter
Exhibit B Form of Registration Rights Agreement
Exhibit C-1 Form of Investors' Agreement with
Principal Shareholder and Related
Parties
Exhibit C-2 Form of Investors' Agreement with
Qualified Stockholders
Exhibit D Form of Certificates and Letters of
Representation regarding Tax Matters
Index of Defined Terms
In
Agreement and Plan of Merger
Term Section
"affiliate" 8.03(a)
"Approved Matters" 4.01(a)
"Benefit Plans" 3.01(i)
"Certificate of Merger" 1.03
"Certificates" 2.02(b)
"Class A Common Stock" 2.01(b)
"Class A Preferred Stock" 3.01(c)
"Class B Common Stock" 2.01(b)
"Class B Preferred Stock" 3.01(c)
"Class C Preferred Stock" 2.01(b)
"Class C Shareholders" 3.01(c)(ii)
"Class D Preferred Stock" 3.01(c)
"Closing" 1.02
"Closing Date" 1.02
"Code" Recitals
"Common Conversion Number" 2.01(c)
"Common Stock Equivalents" 5.16
"Communications Act" 3.01(d)
"Company" Recitals
"Company Capital Stock" 2.01(b)
"Company Disclosure Letter" 3.01(a)
"Company Material Adverse Effect" 3.01(a)
"Company Programming Subsidiary" 3.01(a)
"Company Stock Options" 3.01(c)
Term Section
"Company Stock Plans" 3.01(c)
"Company Subsidiary" 3.01(a)
"Confidentiality Agreement" 5.04
"Corporation" 1.05
"D&O Insurance" 5.09
"DGCL" 1.01
"Dissenting Shares" 2.01(d)
"Effective Time of the Merger" 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" 2.02(a)
"Exchange Fund" 2.02(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
"Governmental Entity" 3.01(d)
"HSR Act" 3.01(d)
"incentive stock option" 2.01(e)
"Liens" 3.01(b)
"LMC" Recitals
"LMC Agreement" Recitals
"Material Breach" 7.01(b)(v)
"Material Company Subsidiary" 3.01(a)
"Material Parent Subsidiary" 3.02(a)
"Material Transaction" 5.16
"Maximum Premium" 5.09
Term Section
"Merger" 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" 3.02(i)
"Parent" Recitals
"Parent Common Stock" Recitals
"Parent Disclosure Letter" 3.02(c)
"Parent Material Adverse Effect" 3.02(a)
"Parent Preferred Stock" 3.02(c)
"Parent SEC Documents" 3.02(e)
"Parent Stockholder Approvals" 3.02(i)
"Parent Stock Plans" 3.02(c)
"Parent Subsidiary" 3.02(a)
"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)
"Securities Act" 3.01(e)
"Shareholder Approvals" 3.01(d)
"Shareholders Meeting" 5.01(b)
"Sub" Recitals
"subsidiary" 8.03(c)
Term Section
"Support Agreement" Recitals
"Surviving Corporation" 1.01
"takeover proposal" 4.02(a)
"Taxes" 3.01(n)(A)
"Tax Returns" 3.01(n)(B)
"TWE Proceeding" 6.01(g)
"Voting Agreements" Recitals
AGREEMENT AND PLAN OF MERGER dated as of
September 22, 1995, among TIME WARNER INC., a
Delaware corporation ("Parent"), TIME WARNER
ACQUISITION CORP., a Delaware corporation ("Sub")
and a wholly owned subsidiary of Parent, and
▇▇▇▇▇▇ BROADCASTING SYSTEM, INC., a Georgia
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub
and the Company have approved the merger of the Company into Sub (the
"Merger"), upon the terms and subject to the conditions set forth in
this Agreement, whereby each issued and outstanding share of Company
Capital Stock (as defined in Section 2.01(b)), not owned by the
Company or by Parent, except Dissenting Shares (as defined in Section
2.01(d)), will be converted into the right to receive common stock,
par value $1.00 per share, of Parent ("Parent Common Stock"), and have
adopted this Agreement;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the
Merger;
WHEREAS for Federal income tax purposes it is intended that
the Merger qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, as a condition to the willingness of Parent to
enter into this Agreement, (a) R. E. ▇▇▇▇▇▇, III (the "Principal
Shareholder") and certain of his associates and affiliates have
entered into a Shareholders' Agreement with Parent, dated as of the
date hereof (the "Support Agreement") and (b) Liberty Media
Corporation ("LMC") and certain of its subsidiaries and affiliates
have entered into a LMC Agreement with Parent, dated as of the date
hereof (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 in favor of the 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 Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL") and the Georgia Business
Corporation Code (the "Georgia BCC"), the Company shall be merged into
Sub at the Effective Time of the Merger (as defined in Section 1.03).
Following the Merger, the separate corporate existence of the Company
shall cease and Sub shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the
rights, properties, liabilities and obligations of the Company in
accordance with the DGCL and the Georgia BCC. At the election of
Parent, any direct wholly owned subsidiary (as defined in Section
8.03(c)) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute
an appropriate amendment to this Agreement in order to reflect such
substitution. Furthermore, if Parent and the Company agree, the
structure of the Merger (as set forth in this Section 1.01) will be
changed in order to qualify the transaction as another form of
tax-free reorganization under Section 368 of the Code or as a tax-free
incorporation transaction under Section 351 of the Code (and in the
latter case the Company Capital Stock will be converted into the right
to receive common stock of a newly-formed corporation that will become
the sole stockholder of Parent and the Company and certain holders of
Parent Preferred Stock (as defined in Section 3.02(c)) may become
entitled to appraisal rights under Section 262 of the DGCL), and
otherwise on substantially the same terms as set forth in this
Agreement. In such case, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such change in
structure.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will 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 a certificate of merger or other
appropriate documents (in any such case, the "Certificate 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 Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of
State and the Georgia Secretary of State, or at such other later time
as may be specified in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL and Section 14-2-1106
of the Georgia BCC.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The Certificate of Incorporation of Sub as in effect immediately prior
to the Effective Time of the Merger shall be amended at the Effective
Time of the Merger so that Article I thereof reads in its entirety as
follows: "The name of the corporation (hereinafter called the
"Corporation") is ▇▇▇▇▇▇ Broadcasting System, Inc." and, as so
amended, such Certificate of Incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect at the Effective Time of
the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable
law.
SECTION 1.06. Directors. The directors of Sub at the
Effective Time of the Merger shall be the directors of
the Surviving Corporation 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 Merger, Parent and Sub 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 Surviving Corporation.
SECTION 1.07. Officers. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving
Corporation 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
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time of the Merger, by virtue of the 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 Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of capital stock of Sub shall remain outstanding as one fully
paid and nonassessable share of Common Stock, par value $1.00 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Class A
Common Stock, par value $.0625 per share, of the Company (the
"Class A Common Stock"), each share of Class B Common Stock, par
value $.0625 per share, of the Company (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Company
Common Stock") and each share of Class C Convertible Preferred
Stock, par value $.125 per share, of the Company (the "Class C
Preferred Stock" and, together with the Company Common Stock, the
"Company Capital Stock") that is owned by the Company and each
share of Company Capital Stock that is owned by Parent shall
automatically be canceled and retired and shall cease
to exist, and no Parent Common Stock or other consideration shall
be delivered in exchange therefor.
(c) Conversion of Company Capital Stock. Subject to Sections
2.01(d) and 2.02(e), (i) each issued and outstanding share of
Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b)), shall be converted into the
right to receive 0.75 (the "Common Conversion Number") of a fully
paid and nonassessable share of Parent Common Stock and (ii) each
issued and outstanding share of Class C Preferred Stock (other
than shares to be canceled in accordance with Section 2.01(b))
shall be converted into the right to receive 4.80 fully paid and
nonassessable shares of Parent Common Stock. Pursuant to the
Rights Agreement (as defined in Section 3.02(c)), one Right (as
defined in the Rights Agreement) will be attached to each share
of Parent Common Stock issued upon conversion of Company Capital
Stock in accordance with this Section 2.01(c). As of the
Effective Time of the Merger, 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 Parent
Common Stock and any cash in lieu of fractional shares of Parent
Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02,
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 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 Merger 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 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 Parent
Common Stock as provided in Section 2.01(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 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 Merger into the right to receive the shares
of Parent Common Stock as provided in Section 2.01(c) and any
cash in lieu of fractional shares of Parent Common Stock as
provided in Section 2.02(e), without any interest thereon.
(ii) The Company shall give Parent (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 Parent, 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 Options. (i) At the Effective Time of
the Merger, each outstanding Company Stock Option (as defined in
Section 3.01(c)) and each outstanding New Line Option (as defined
in Section 3.01(c)) shall be assumed by Parent and converted into
an option to purchase shares of Parent Common Stock, as provided
below. Following the Effective Time of the Merger, 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 Merger, and 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 Merger, except that (i) each such Company
Stock Option and New Line Option shall be exercisable for that
number of shares of Parent Common Stock equal to the product of
(x) the number of shares of Class B Common Stock for which such
Company Stock Option or New Line Option was exercisable
immediately prior to the Effective Time of the Merger and (y) the
Common Conversion Number, rounded, in the case of any Company
Stock Option or New Line Option other than any "incentive stock
option" (within the meaning of Section 422 of the Code), 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 or New Line Option shall be equal to
the aggregate exercise price of such Company Stock Option or New
Line Option immediately prior to the Effective Time of the Merger
divided by the number of shares of Parent Common Stock for which
such Company Stock Option or New Line Option 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 Merger, Parent will
enter into an assumption agreement with respect to each Company
Stock Option and New Line Option, which shall provide for
Parent's assumption of the obligations of the Company under the
applicable Company Stock Plan or New Line Plan. Prior to the
Effective Time of the Merger, the Company shall make such
amendments, if any, to the Company Stock Plans and the New Line
Plans as shall be necessary to permit such assumption in
accordance with this Section 2.01(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 Merger, 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 2.01(e)
shall satisfy the conditions of Section 424(a) of the Code.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
As of the Effective Time of the Merger, Parent shall deposit with
Chemical Bank or such other bank or trust company as may be designated
by Parent (the "Exchange Agent"), for the benefit of the holders of
shares of Company Capital Stock, for exchange in accordance with this
Article II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock (such shares of Parent Common Stock,
together with any dividends or distributions with respect thereto with
a record date after the Effective Time of the Merger, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.01 in exchange for outstanding shares of Company Capital
Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time of the Merger, the Exchange Agent shall mail
to each holder of record of a certificate or certificates which
immediately prior to the Effective Time of the Merger represented
outstanding shares of Company Capital Stock (the "Certificates") whose
shares were converted into the right to receive shares of Parent
Common Stock pursuant to Section 2.01, (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 Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent,
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 Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Company Capital Stock which is not
registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common 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 Parent Common
Stock to a person other than the registered holder of such Certificate
or establish to the satisfaction of Parent that such tax has been paid
or is not applicable. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time after the
Effective Time of the Merger to represent only the right to receive
upon such surrender the certificate representing shares of Parent
Common Stock and cash in lieu of any fractional shares of Parent
Common Stock as contemplated by this Section 2.02. No interest will be
paid or will accrue on any cash payable in lieu of any fractional
shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time of the Merger shall be
paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(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 Parent Common 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 Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and the amount of
dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to such
whole shares of Parent Common 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 Merger but prior to such
surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Capital Stock.
All shares of Parent Common 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 2.02(c) or 2.02(e))
shall be
deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Capital Stock theretofore
represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time of the
Merger which may have been declared or made by the Company on such
shares of Company Capital Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time of the Merger, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Capital Stock which
were outstanding immediately prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are
presented to the 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) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Capital Stock converted pursuant to
the Merger who would otherwise have been entitled to receive a
fraction of a share of Parent 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 Parent Common Stock multiplied by the closing price
of a share of Parent Common 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).
(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 Merger
shall be delivered to Parent, upon demand, and any holders of the
Certificates who have not theretofore complied with this Article II
shall thereafter look only to Parent for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock
and any dividends or distributions with respect to Parent Common
Stock.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares
of Parent Common 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 Merger (or immediately prior to
such earlier date on which any shares of Parent Common Stock, any cash
in lieu of fractional shares of Parent Common Stock or any dividends
or distributions with respect to Parent Common 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 Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent,
on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub 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 is in good
standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material
adverse effect on the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of
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 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 the date of this Agreement,
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 the
date of this Agreement 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 Convertible
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 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 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 the date of this Agreement through the
Effective Time of the Merger, there are not now, and at the
Effective Time of the Merger 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 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, 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 Merger 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 Certificate 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 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 (as such
documents have been amended prior to the date hereof, the "SEC
Documents"). 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, 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 1O-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 Parent in connection with the issuance of
Parent Common Stock in the Merger (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 mislead-
ing, 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 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 or Sub
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 the date of this Agreement (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 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;
(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 the date of this
Agreement, 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 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 Merger 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
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 trans-
actions 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.
(m) Opinions of Financial Advisors. The Company has received
the opinions of CS First Boston Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., each dated the date of this Agreement, to the effect that,
as of such date, the consideration to be received in the Merger
by the Company's shareholders is fair to the Company's
shareholders other than Parent from a financial point of view, 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 Merger. 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 Merger, 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 Merger.
(iii) For purposes of this Agreement, the following terms
shall have the following meanings:
(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 and
Sub. Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent,
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 Sub (each a "Parent
Subsidiary"), is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or
in the aggregate) would not have a material adverse effect on the
business, properties, assets, condition (financial or otherwise),
results of operations or prospects of Parent and the Parent
Subsidiaries, taken as a whole (a "Parent Material Adverse
Effect"). 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 Sub and the Material
Parent Subsidiaries, in each case as amended to the date of this
Agreement. Neither Parent nor 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 the date
of this Agreement 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 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
the date of this Agreement Parent does not own, directly or
indirectly, any capital stock or other ownership interest, with a
fair market value as of the date of this Agreement greater than
$5,000,000, in any corporation, partnership, limited liability
company, joint venture or other entity.
(c) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists 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 Series B 6.40%
Preferred Stock were outstanding, all of which were validly
issued, fully paid and nonassessable, (iii) 3,264,508 shares of
Series C Preferred Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, (iv) 11,000,000
shares of Series D Convertible 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 Directors (the
"Parent Stock Plans"), (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 the date of this Agreement, 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 capital stock
of Parent 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 the date of this Agreement, there are 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 the date of this Agreement, there are 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). As of the date of this Agreement, the
authorized capital stock of Sub consists of 1,000 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.
(d) Authority; Noncontravention. Parent and 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 and Sub and the consummation by Parent
and Sub of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the
part of Parent and Sub, subject to the Parent Stockholder
Approvals. This Agreement
has been duly executed and delivered by Parent and 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
and 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, Sub or any other
Parent Subsidiary under, (i) the certificate of incorporation or
by-laws of Parent or Sub or the comparable organizational
documents of any 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, Sub or any 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, 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 or 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, 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
or 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 Parent Common Stock
pursuant to the Merger, (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 the Parent Common Stock as
contemplated by this Agreement, (iii) the filing of the
Certificate 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 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 and (vi) 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 or 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 (as such documents
have been amended prior to the date hereof, the "Parent SEC Docu-
ments"). 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 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 1O-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 ▇▇▇▇▇▇▇-
dated 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 or 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 Company'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 or Sub 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 the date of this Agreement (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 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 or 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
the date of this Agreement, 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 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 Merger or any of the transactions contemplated by
this Agreement.
(i) Voting Requirements. The (A) approval by Parent's
stockholders of the issuance of shares of Parent Common Stock
pursuant to the Merger as required by Rule 312 of the New York
Stock Exchange (the "NYSE") and (B) approval by the holders of a
majority of the outstanding Parent Common Stock, voting as a
separate class, and by the holders of a majority of the voting
power of the outstanding Parent Common Stock and the outstanding
voting Parent Preferred Stock, voting together as a single class,
of an amendment to the Restated Certificate of Incorporation of
Parent to increase the number of authorized shares of Parent
Common Stock (collectively, the "Parent Stockholder Approvals")
are the only votes 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, 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 Sub.
(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 Merger. 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 Merger, 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 Merger.
(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
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) Interim Operations of Sub. 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 the date of this Agreement to
the Effective Time of the Merger, 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) 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 the date of this Agreement to the Effective Time of the Merger,
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 the date of this Agreement, (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;
(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 the date of this Agreement and in accordance with
their present terms and (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));
(iii) amend its articles of incorporation, by-laws or other
comparable organizational documents;
(iv) except for Approved Matters (as defined below), 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) except for Approved Matters, 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) except for Approved Matters, (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) except for Approved Matters, 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
existing employment agreements or Benefit Plans, or as required
by applicable laws, and except for Approved Matters, (A) increase
the compensation payable or to become payable to its executive
officers or 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 or any stock option, employee
benefit plan, agreement or policy except as contemplated by this
Agreement;
(x) 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 Merger;
(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 the date of this Agreement or as hereafter
approved by Parent prior to its approval by the Board of Directors of
the Company or (y) otherwise approved by Parent pursuant to the
immediately succeeding sentence. 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) No Amendments by Parent. During the period from the date
of this Agreement to the Effective Time of the Merger, except as
contemplated by this Agreement, Parent will 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 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 Merger 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
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 will
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 or Sub, the adoption, approval or
recommendation by such Board of Directors or any such
committee of this Agreement or the 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 will 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
the date of this Agreement, the Company and Parent shall
prepare and file with the SEC the Proxy Statement and Parent
shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement will be included as a prospectus. Each
of the Company and Parent 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 will 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. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under
any applicable state securities or "blue sky" laws in
connection with the issuance of Parent Common Stock pursuant
to the Merger, 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 will, as soon as practicable
following the date of this Agreement, 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 will, 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 will, as soon as practicable following
the date of this Agreement, 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 will, 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
cause to be delivered to Parent 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, 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; Confidenti-
ality. 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
Merger 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, registra-
tion 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 will hold, and will 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").
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 Merger 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 Merger 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 Merger, this
Agreement or any of the other transaction contemplated by
this Agreement or the Voting Agreements and (ii) if any
state takeover statute or similar statute or regulation
becomes applicable to the Merger, this Agreement or any
other transaction contemplated by this Agreement or any
Voting Agreement, take all action necessary so that the
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
Merger and the other transactions contemplated by this
Agreement and the Voting Agreements.
(b) The Company shall give prompt notice to
Parent, and Parent or Sub 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 and Sub that (a) on or
prior to the date of execution of this Agreement, 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, except as contemplated by
Section 1.01, or to the other agreements entered into in
connection with the Merger 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, except as contemplated by
Section 1.01, or to the other agreements entered into in
connection with the Merger 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 (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, except as contemplated by
Section 1.01, or to the other agreements entered into in
connection with the Merger 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 currently required) of the directors of the Company or
any group or committee thereof. The Company represents and
warrants to Parent and Sub that neither the Company nor its
Board of Directors is subject to any such contract,
agreement or other instrument as of the date of this
Agreement.
SECTION 5.07. Public Announcements. Parent and
Sub, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and provide
each other the opportunity to review and comment upon, any
press release or other public statements with respect to the
transactions contemplated by this Agreement, including the
Merger, 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 Merger, Parent shall (i) either (A) maintain or
cause the Surviving Corporation (or in the case of a
transfer of all or substantially all the assets and business
of the Surviving Corporation, its successors or assigns) to
maintain the Benefit Plans (other than medical plans) at the
benefit levels in effect on the date of this Agreement or
(B) provide or cause the 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 the date of this Agreement
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 Parent.
(b) Service. With respect to any "employee
benefit plan", as defined in Section 3(3) of ERISA,
maintained by Parent or any 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 or the 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
Merger (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, the 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.
SECTION 5.09. Indemnification. Parent and Sub
agree that all rights to indemnification for acts or omis-
sions occurring prior to the Effective Time of the Merger
now existing 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 Merger and
shall continue in full force and effect in accordance with
their terms from the Effective Time of the Merger 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. Parent will cause to be maintained for a
period of not less than six years from the Effective Time of
the Merger the Company's current directors' and officers'
insurance and indemnification policy to the extent that it
provides coverage for events occurring prior to the
Effective Time of the Merger (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 the date of this Agreement, so long as
the annual premium therefor would not be in excess of 150%
of the last annual premium paid prior to the date of this
Agreement (the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such
six-year period, Parent will 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 $631,735.
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 Merger,
this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is 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 Parent a letter identify-
ing 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 Rule 145 under
the Securities Act. The Company shall use its best efforts
to cause each such person to deliver to Parent 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 Parent
Common Stock to be issued in the Merger 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 NYSE, subject to official notice
of issuance, prior to the Closing Date.
SECTION 5.13. Execution of the Registration
Rights Agreement. Parent 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 and
the Company shall use its reasonable best efforts to cause
the Merger to qualify as a reorganization under the
provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code or as a tax-free incorporation transaction under
Section 351 of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(d) and 6.03(c).
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes. Parent shall be responsible for any
liabilities, without deduction or withholding from any
amount payable to the holders of 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 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 shareholders of the Company. The Company and Parent
shall cooperate in complying with the requirements of such
taxes.
SECTION 5.16. Material Transactions by Parent.
Parent shall promptly notify the Company if, after the date
of this Agreement and prior to the Effective Time of the
Merger, 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 in the Merger by the Company's shareholders 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
the foregoing, "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,
each of which involves the issuance of more than 20,000,000
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 Merger. The respective obligation
of each party to effect the Merger 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 Parent Company
Stock issuable to the Company's shareholders 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 Merger shall have been obtained or
made.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent juris-
diction or other legal restraint or prohibition
preventing the consummation of the 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 Parent shall have received all state
securities or "blue sky" authorizations necessary to
issue the Parent Common Stock 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. If any 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 (a "TWE Proceeding") shall have
been commenced, then either (i) such TWE Proceeding
shall have been dismissed with prejudice or (ii) a
final judgment that remains unstayed for a period of
60 days shall have been entered in such TWE Proceeding;
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
regulations, in the assets and businesses of Parent by
reason of the Parent Common Stock subject thereto or
(B) the parties to the LMC Agreement (other than
Parent) shall have acknowledged that the procedures set
forth in Section 4.1 of the LMC Agreement relating to
exchange for nonvoting shares of Parent Preferred Stock
are applicable.
SECTION 6.02. Conditions to Obligations of Parent
and Sub. The obligations of Parent and Sub to effect the
Merger are further subject to the satisfaction or waiver by
Parent on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of the Company set forth in
this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the
extent any such representation or warranty expressly
relates to an earlier date (in which case as of such
date), and Parent shall have received a certificate
signed on behalf of the Company by the Chief Executive
Officer (or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer
(or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Parent
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 shall have received an
opinion dated the Closing Date from Cravath, Swaine &
▇▇▇▇▇, 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 Merger will qualify as a
reorganization under the provisions of Section 368(a)
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 Sub
of any shares of capital stock of the Company or the
Surviving Corporation, seeking to restrain or prohibit
the consummation of the Merger or any of the other
transactions contemplated by this Agreement and the LMC
Agreement or seeking to obtain from the Company, Parent
or Sub 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, any Material Company
Subsidiary or any Material Parent Subsidiary of any
material portion of the business or assets of the
Company, Parent, any Material Company Subsidiary or any
Material Parent Subsidiary or to compel the Company,
Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the
business or assets of the Company, Parent, any Material
Company Subsidiary or any Material Parent Subsidiary as
a result of the Merger or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire
or hold, or exercise full rights of ownership of, any
shares of capital stock of the Surviving Corporation,
including, without limitation, the right to vote such
capital stock on all matters properly presented to the
stockholders of the Surviving Corporation, (iv) seeking
to prohibit Parent or any of the Parent Subsidiaries
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
Parent an Investors' Agreement in the form of
Exhibit C-1 or C-2, as applicable.
(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 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
Merger is further subject to the satisfaction or waiver by
the Company on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Parent and Sub set forth
in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of Parent and Sub set forth in this Agree-
ment 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 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 of Parent and Sub.
Parent and 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 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
or Sub any damages that are material in relation to
Parent and its subsidiaries taken as a whole
(determined after giving effect to the Merger),
(ii) seeking to prohibit or limit the ownership or
operation by Parent or any Material Parent Subsidiary
of any material portion of the business or assets of
Parent or any Material Parent Subsidiary (determined
after giving effect to the Merger) or to compel Parent
or any of its subsidiaries to dispose of or hold
separate any material portion of the business or assets
of Parent or any Material Parent Subsidiary (determined
after giving effect to the Merger), as a result of the
Merger or any of the other transactions contemplated by
this Agreement, or (iii) which otherwise is reasonably
likely to have a Parent Material Adverse Effect
(determined after giving effect to the Merger).
(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 Merger
will qualify as a reorganization under the provisions
of Section 368(a) 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
Merger, whether before or after the Shareholder Approvals:
(a) by mutual written consent of Parent, Sub and
the Company;
(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 Merger shall not have been
consummated on or before September 30, 1996,
unless the failure to consummate the Merger 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 Merger 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
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 Merger set forth in Section 6.01
shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Merger 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;
(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 the date of this
Agreement), 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 the date of this Agreement,
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
the date of this Agreement) and (y) regardless of
whether the Rights Agreement is then in effect (and
excluding, in all cases, any amendment of this
Agreement as contemplated by Section 1.01); 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 pursuant to
Section 7.01(b)(i), 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), 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), by Parent pursuant to Section 7.01(b)(v), pursuant
to Section 7.01(b)(vi) (if at the time of termination (x)
the Company is in breach of any representation, warranty,
covenant or other agreement that would give rise to a
failure of a condition set forth in Section 6.02(a) or
6.02(b) and (y) such breach cannot be or has not been cured
within 30 days after the Company becomes aware of such
breach), by the Company pursuant to Section 7.01(c) or
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,
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
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, 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; provided, however, that 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. 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 Merger, 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
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, 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
Merger. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this Agree-
ment shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or 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.
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.
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 Merger or this Agreement).
SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by opera-
tion of law or otherwise by any of the parties without the
prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its
rights, interests and obligations under this Agreement to
Parent or to any direct wholly owned Parent Subsidiary, but
no such assignment shall relieve Sub 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. The Company hereby appoints the
▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as its agent for service
of process in Delaware.
SECTION 8.10. Waivers. Except as provided in
this Agreement or any waiver pursuant to Section 7.04, no
action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed
to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder
shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision
hereunder.
IN WITNESS WHEREOF, Parent, 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: Chairman and CEO
TIME WARNER ACQUISITION CORP.,
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
▇▇▇▇▇▇ BROADCASTING SYSTEM,
INC.,
by
/s/ R. E. ▇▇▇▇▇▇
-------------------------
Name: R. E. ▇▇▇▇▇▇, III
Title: Chairman, President
and CEO
EXHIBIT A
FORM OF AFFILIATE LETTER
Time Warner, 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 Agreement and Plan of Merger, dated as of
September --, 1995 (as amended from time to time, the
"Merger Agreement"), by and among Time Warner, Inc., a
Delaware corporation ("Parent"), the Company and Time Warner
Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), the Company will be merged
with and into Sub (the "Merger").
Pursuant to the 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 $1.00 per share,
of Parent ("Parent 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 Parent Common Stock.
I represent, warrant and covenant to Parent that,
with respect to all Parent Common Stock received as a result
of the Merger:
1. I shall not make any sale, transfer or other
disposition of Parent 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 Parent Common Stock with my counsel or counsel
for the Company.
3. I have been advised that the issuance of
Parent Common Stock to me pursuant to the Merger has been
registered with the Commission under the Act. However, I
have also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of the Company,
I may be deemed to have been an affiliate of the Company and
the distribution by me of Parent Common Stock has not been
registered under the Act, I may not offer to sell, sell,
transfer or otherwise dispose of Parent Common Stock issued
to me in the 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 Parent, 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 Parent
and the undersigned as contemplated by the Merger Agreement,
Parent is under no obligation to register under the Act the
sale, transfer or other disposition of Parent 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 Parent will give stop
transfer instructions to Parent's transfer agents with
respect to Parent Common Stock, that the Parent Common Stock
issued to me will all be in certificated form and that the
certificates therefor, or any substitutions therefor, will
bear a legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT,
DATED SEPTEMBER __, 1995, 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 Parent Common Stock has been registered under the
Act or is a sale made in conformity with the provisions of
Rule 145, Parent 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 purposes 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 Parent
Common Stock received in the 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 Parent Common Stock received in the
Merger and the provisions of Rule 145(d)(3) are then
available to the undersigned, or (iii) Parent has received
either an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to Parent, 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
September, 1995:
Time Warner, Inc.
By----------------------
Name:
Title:
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT, dated as
of , among TIME WARNER INC.,
a Delaware corporation (the "Company"), and
the Holders (as defined below).
WHEREAS, in connection with the Agreement and Plan
of Merger, dated as of September 22, 1995 (the "Merger
Agreement"), among the Company, Time Warner Acquisition
Corp., a Delaware corporation, 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 Merger Agreement, the Company has
agreed to provide each Holder with the registration rights
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this
Agreement, the following terms shall have the following
meanings:
"Advice" shall have the meaning set forth in
Section 5 hereof.
"Affiliate" means, with respect to any specified
person, any other person directly or indirectly controlling
or controlled by or under direct or indirect common control
with such specified person. For the purposes of this
definition, "control" when used with respect to any
specified person means the power to direct the management
and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means any day that is not a
Saturday, a Sunday or a legal holiday on which banking
institutions in the State of New York are not required to be
open.
"Capital Stock" means, with respect to any person,
any and all shares, interests, participations or other
equivalents (however designated) of corporate stock issued
by such person, including each class of common stock and
preferred stock of such person.
"Common Stock" means the Common Stock, par value
$1.00 per share, of the Company issued pursuant to the
Merger Agreement or any other shares of capital stock or
other securities of the Company into which such shares of
Common Stock shall be reclassified or changed, including, by
reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so
reclassified or changed, or if the Company pays a dividend
or makes a distribution on the Common Stock in shares of
capital stock, or subdivides (or combines) its outstanding
shares of Common Stock into a greater (or smaller) number of
shares of Common Stock, a share of Common Stock shall be
deemed to be such number of shares of stock and amount of
other securities to which a holder of a share of Common
Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution,
subdivision or combination would be entitled.
"Company" shall have the meaning set forth in the
introductory clauses hereof.
"Delay Period" shall have the meaning set forth in
Section 2(d) hereof.
"Demand Notice" shall have the meaning set forth
in Section 2(a) hereof.
"Demand Registration" shall have the meaning set
forth in Section 2(b) hereof.
"Effectiveness Period" shall have the meaning set
forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
"Hold Back Period" shall have the meaning set
forth in Section 4 hereof.
"Holder" means a person who owns Registrable
Shares and is either (i) named on the signature pages hereof
as a Holder, or (ii) a person who has agreed to be bound by
the terms of this Agreement as if such person were a Holder
and is (A) a person to whom a Holder has transferred
Registrable Shares pursuant to Rule "4(1-1/2)" (or any
similar private transfer exemption), (B) upon the death of
any Holder, the executor of the estate of such Holder or any
of such Holder's heirs, devisees, legatees or assigns or
(iii) 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.
"Merger Agreement" shall have the meaning set
forth in the introductory clauses hereof.
"person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning
set forth in Section 3 hereof.
"Prospectus" means the prospectus included in any
Registration Statement (including a prospectus that
discloses information previously omitted from a prospectus
filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Shares covered by
such Registration Statement and all other amendments and
supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Shares" means shares of Common Stock
unless (i) they have been effectively registered under
Section 5 of the Securities Act and disposed of pursuant to
an effective Registration Statement, (ii) such securities
can be freely sold and transferred without restriction under
Rule 145 or any other restrictions under the Securities Act
or (iii) such securities have been transferred pursuant to
Rule 144 under the Securities Act or any successor rule such
that, after any such transfer referred to in this clause
(iii), such securities may be freely transferred without
restriction under the Securities Act.
"Registration" means registration under the
Securities Act of an offering of Registrable Shares pursuant
to a Demand Registration or a Piggyback Registration.
"Registration Period" shall have the meaning set
forth in Section 2(a) hereof.
"Registration Statement" means any registration
statement under the Securities Act of the Company that
covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such
registration statement, including pre- and post-effective
amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933,
as amended, and the rules and regulations of the SEC
promulgated thereunder.
"Shelf Registration" shall have the meaning set
forth in Section 2(b) hereof.
"underwritten registration or underwritten
offering" means a registration under the Securities Act in
which securities of the Company are sold to an underwriter
for reoffering to the public.
SECTION 2. Demand Registration. (a) The Holders
shall have the right, during the period (the "Registration
Period") commencing on the date of this Agreement and ending
on the third anniversary of the date of this Agreement, by
written notice (the "Demand Notice") given to the Company,
to request the Company to register under and in accordance
with the provisions of the Securities Act all or any portion
of the Registrable Shares designated by such Holders;
provided, however, that the aggregate number of Registrable
Shares requested to be registered pursuant to any Demand
Notice and pursuant to any related Demand Notices received
pursuant to the following sentence shall be at least
5,000,000. Upon receipt of any such Demand Notice, the
Company shall promptly notify all other Holders of the
receipt of such Demand Notice and allow them the opportunity
to include Registrable Shares held by them in the proposed
registration by submitting their own Demand Notice. In
connection with any Demand Registration in which more than
one Holder participates, in the event that such Demand
Registration involves an underwritten offering and the
managing underwriter or underwriters participating in such
offering advise in writing the Holders of Registrable Shares
to be included in such offering that the total number of
Registrable Shares to be included in such offering exceeds
the amount that can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of
such offering (including the price per share of the
Registrable Shares to be sold), then the amount of
Registrable Shares to be offered for the account of such
Holders shall be reduced pro rata on the basis of the number
of Registrable Shares to be registered by each such Holder.
The Holders as a group shall be entitled to three Demand
Registrations pursuant to this Section 2 unless any Demand
Registration does not become effective or is not maintained
for a period (whether or not continuous) of at least 120
days (or such shorter period as shall terminate when all the
Registrable Shares covered by such Demand Registration have
been sold pursuant thereto), in which case the Holders will
be entitled to an additional Demand Registration pursuant
hereto.
(b) The Company, within 45 days of the date on
which the Company receives a Demand Notice given by Holders
in accordance with Section 2(a) hereof, shall file with the
SEC, and the Company shall thereafter use its best efforts
to cause to be declared effective, a Registration Statement
on the appropriate form for the registration and sale, in
accordance with the intended method or methods of
distribution, of the total number of Registrable Shares
specified by the Holders in such Demand Notice, which may
include a "shelf" registration (a "Shelf Registration")
pursuant to Rule 415 under the Securities Act (a "Demand
Registration").
(c) The Company shall use commercially reasonable
efforts to keep each Registration Statement filed pursuant
to this Section 2 continuously effective and usable for the
resale of the Registrable Shares covered thereby (i) in the
case of a Registration that is not a Shelf Registration, for
a period of 120 days from the date on which the SEC declares
such Registration Statement effective and (ii) in the case
of a Shelf Registration, for a period of 180 days from the
date on which the SEC declares such Registration Statement
effective, in either case (x) until all the Registrable
Shares covered by such Registration Statement have been sold
pursuant to such Registration Statement), and (y) as such
period may be extended pursuant to this Section 2.
(d) The Company shall be entitled to postpone the
filing of any Registration Statement otherwise required to
be prepared and filed by the Company pursuant to this
Section 2, or suspend the use of any effective Registration
Statement under this Section 2, for a reasonable period of
time, but not in excess of 90 days (a "Delay Period"), if
any executive officer of the Company determines that in such
executive officer's reasonable judgment and good faith the
registration and distribution of the Registrable Shares
covered or to be covered by such Registration Statement
would materially interfere with any pending material
financing, acquisition or corporate reorganization or other
material corporate development involving the Company or any
of its subsidiaries or would require premature disclosure
thereof and promptly gives the Holders written notice of
such determination, containing a general statement of the
reasons for such postponement and an approximation of the
period of the anticipated delay; provided, however, that (i)
the aggregate number of days included in all Delay Periods
during any consecutive 12 months shall not exceed the
aggregate of (x) 180 days minus (y) the number of days
occurring during all Hold Back Periods and Interruption
Periods during such consecutive 12 months and (ii) a period
of at least 60 days shall elapse between the termination of
any Delay Period, Hold Back Period or Interruption Period
and the commencement of the immediately succeeding Delay
Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Shares to
be registered shall have the right to withdraw the request
for registration by giving written notice from the Holders
of a majority of the Registrable Shares that were to be
registered to the Company within 45 days after receipt of
the notice of postponement or, if earlier, the termination
of such Delay Period (and, in the event of such withdrawal,
such request shall not be counted for purposes of
determining the number of requests for registration to which
the Holders of Registrable Shares are entitled pursuant to
this Section 2). The time period for which the Company is
required to maintain the effectiveness of any Registration
Statement shall be extended by the aggregate number of days
of all Delay Periods, all Hold Back Periods and all
Interruption Periods occurring during such Registration and
such period and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company
shall not be entitled to initiate a Delay Period unless it
shall (A) to the extent permitted by agreements with other
security holders of the Company, concurrently prohibit sales
by such other security holders under registration statements
covering securities held by such other security holders and
(B) in accordance with the Company's policies from time to
time in effect, forbid purchases and sales in the open
market by senior executives of the Company.
(e) Except to the extent required by agreements
with other security holders of the Company entered into
prior to the date of the Merger Agreement, the Company shall
not include any securities that are not Registrable Shares
in any Registration Statement filed pursuant to this
Section 2 without the prior written consent of the Holders
of a majority in number of the Registrable Shares covered by
such Registration Statement.
(f) Holders of a majority in number of the
Registrable Shares to be included in a Registration
Statement pursuant to this Section 2 may, at any time prior
to the effective date of the Registration Statement relating
to such Registration, revoke such request by providing a
written notice to the Company revoking such request. The
Holders of Registrable Shares who revoke such request shall
reimburse the Company for all its out-of-pocket expenses
incurred in the preparation, filing and processing of the
Registration Statement; provided, however, that, if such
revocation was based on the Company's failure to comply in
any material respect with its obligations hereunder, such
reimbursement shall not be required.
SECTION 3. Piggyback Registration. (a) Right to
Piggyback. If at any time during the Registration Period
the Company proposes to file a registration statement under
the Securities Act with respect to a public offering of
securities of the same type as the Registrable Shares
pursuant to a firm commitment underwritten offering solely
for cash for its own account (other than a registration
statement (i) on Form S-8 or any successor forms thereto, or
(ii) filed solely in connection with a dividend reinvestment
plan or employee benefit plan covering officers or directors
of the Company or its Affiliates) or for the account of any
holder of securities of the same type as the Registrable
Shares (to the extent that the Company has the right to
include Registrable Shares in any registration statement to
be filed by the Company on behalf of such holder), then the
Company shall give written notice of such proposed filing to
the Holders at least 15 days before the anticipated filing
date. Such notice shall offer the Holders the opportunity
to register such amount of Registrable Shares as they may
request (a "Piggyback Registration"). Subject to
Section 3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Shares with respect
to which the Company has received written requests for
inclusion therein within 10 days after notice has been given
to the Holders. Each Holder shall be permitted to withdraw
all or any portion of the Registrable Shares of such Holder
from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration; provided,
however, that if such withdrawal occurs after the filing of
the Registration Statement with respect to such Piggyback
Registration, the withdrawing Holders shall reimburse the
Company for the portion of the registration expenses payable
with respect to the Registrable Shares so withdrawn.
(b) Priority on Piggyback Registrations. The
Company shall permit the Holders to include all such
Registrable Shares on the same terms and conditions as any
similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the
managing underwriter or underwriters participating in such
offering advise the Holders in writing that the total amount
of securities requested to be included in such Piggyback
Registration exceeds the amount which can be sold in (or
during the time of) such offering without delaying or
jeopardizing the success of the offering (including the
price per share of the securities to be sold), then the
amount of securities to be offered for the account of the
Holders and other holders of securities who have piggyback
registration rights with respect thereto shall be reduced
(to zero if necessary) pro rata on the basis of the number
of common stock equivalents requested to be registered by
each such Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 3
shall create any liability on the part of the Company to the
Holders if the Company in its sole discretion should decide
not to file a registration statement proposed to be filed
pursuant to Section 3(a) hereof or to withdraw such
registration statement subsequent to its filing, regardless
of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Company of any
notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) during the
Effectiveness Period, the Company shall file a registration
statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option,
stock purchase or similar plan or pursuant to a merger,
exchange offer or a transaction of the type specified in
Rule 145(a) under the Securities Act) with respect to the
Common Stock or similar securities or securities convertible
into, or exchangeable or exercisable for, such securities
and (ii) with reasonable prior notice, the Company (in the
case of a nonunderwritten public offering by the Company
pursuant to such registration statement) advises the Holders
in writing that a public sale or distribution of such
Registrable Shares would materially adversely affect such
offering or the managing underwriter or underwriters (in the
case of an underwritten public offering by the Company
pursuant to such registration statement) advises the Company
in writing (in which case the Company shall notify the
Holders) that a public sale or distribution of Registrable
Shares would materially adversely impact such offering, then
each Holder shall, to the extent not inconsistent with
applicable law, refrain from effecting any public sale or
distribution of Registrable Shares during the ten days prior
to the effective date of such registration statement and
until the earliest of (A) the abandonment of such offering,
(B) 90 days from the effective date of such registration
statement and (C) if such offering is an underwritten
offering, the termination in whole or in part of any "hold
back" period obtained by the underwriter or underwriters in
such offering from the Company in connection therewith (each
such period, a "Hold Back Period").
SECTION 5. Registration Procedures. In
connection with the registration obligations of the Company
pursuant to and in accordance with Sections 2 and 3 hereof
(and subject to Sections 2 and 3 hereof), the Company shall
use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares
in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible (but subject to Sections 2 and
3 hereof):
(a) prepare and file with the SEC a Registration
Statement for the sale of the Registrable Shares on any
form for which the Company then qualifies or which
counsel for the Company shall deem appropriate in
accordance with such Holders' intended method or
methods of distribution thereof, subject to
Section 2(b) hereof, and, subject to the Company's
right to terminate or abandon a registration pursuant
to Section 3(c) hereof, use commercially reasonable
efforts to cause such Registration Statement to become
effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments
(including post-effective amendments) to such
Registration Statement, and such supplements to the
related Prospectus, as may be required by the rules,
regulations or instructions applicable to the
Securities Act during the applicable period in
accordance with the intended methods of disposition
specified by the Holders of the Registrable Shares
covered by such Registration Statement, make generally
available earnings statements satisfying the provisions
of Section 11(a) of the Securities Act (provided that
the Company shall be deemed to have complied with this
clause if it has complied with Rule 158 under the
Securities Act), and cause the related Prospectus as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act; provided, however, that before filing a
Registration Statement or Prospectus, or any amendments
or supplements thereto (other than reports required to
be filed by it under the Exchange Act), the Company
shall furnish to the Holders of Registrable Shares
covered by such Registration Statement and their
counsel for review and comment, copies of all documents
required to be filed;
(c) notify the Holders of any Registrable Shares
covered by such Registration Statement promptly and (if
requested) confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect
to such Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of
any request by the SEC for amendments or supplements to
such Registration Statement or the related Prospectus
or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for
such purpose, and (v) of the happening of any event
that requires the making of any changes in such
Registration Statement, Prospectus or documents
incorporated or deemed to be incorporated therein by
reference so that they will not contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading:
(d) use commercially reasonable efforts to obtain
the withdrawal of any order suspending the
effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or
exemption from qualification of any Registrable Shares
for sale in any jurisdiction in the United States;
(e) furnish to the Holder of any Registrable
Shares covered by such Registration Statement, each
counsel for such Holders and each managing underwriter,
if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the
SEC, and of each post-effective amendment thereto, in
each case including financial statements and schedules
and all exhibits and reports incorporated or deemed to
be incorporated therein by reference; and deliver,
without charge, such number of copies of the
preliminary prospectus, any amended preliminary
prospectus, each final Prospectus and any post-
effective amendment or supplement thereto, as such
Holder may reasonably request in order to facilitate
the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in
conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable
Shares covered by such Registration Statement, use
commercially reasonable efforts to register or qualify
such Registrable Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as
the Holders of such Registrable Shares shall reasonably
request in writing; provided, however, that the Company
shall in no event be required to qualify generally to
do business as a foreign corporation or as a dealer in
any jurisdiction where it is not at the time so
qualified or to execute or file a general consent to
service of process in any such jurisdiction where it
has not theretofore done so or to take any action that
would subject it to general service of process or
taxation in any such jurisdiction where it is not then
subject;
(g) upon the occurrence of any event contemplated
by paragraph 5(c)(v) above, prepare a supplement or
post-effective amendment to such Registration Statement
or the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference and
file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Shares
being sold thereunder (including upon the termination
of any Delay Period), such Prospectus will not contain
an untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading;
(h) use commercially reasonable efforts to cause
all Registrable Shares covered by such Registration
Statement to be listed on each securities exchange or
automated interdealer quotation system, if any, on
which similar securities issued by the Company are then
listed or quoted;
(i) on or before the effective date of such
Registration Statement, provide the transfer agent of
the Company for the Registrable Shares with printed
certificates for the Registrable Shares covered by such
Registration Statement, which are in a form eligible
for deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering,
make available for inspection by any Holder of
Registrable Shares included in such Registration
Statement, any underwriter participating in any
offering pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any
such Holder or underwriter (collectively, the
"Inspectors"), all financial and other records and
other information, pertinent corporate documents and
properties of any of the Company and its subsidiaries
and affiliates (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise
their due diligence responsibilities; provided,
however, that the Records that the Company determines,
in good faith, to be confidential and which it notifies
the Inspectors in writing are confidential shall not be
disclosed to any Inspector unless such Inspector signs
a confidentiality agreement reasonably satisfactory to
the Company (which shall permit the disclosure of such
Records in such Registration Statement or the related
Prospectus if necessary to avoid or correct a material
misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the
disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration
Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; provided further,
however, that (A) any decision regarding the disclosure
of information pursuant to subclause (i) shall be made
only after consultation with counsel for the applicable
Inspectors and the Company and (B) with respect to any
release of Records pursuant to subclause (ii), each
Holder of Registrable Shares agrees that it shall,
promptly after learning that disclosure of such Records
is sought in a court having jurisdiction, give notice
to the Company so that the Company, at the Company's
expense, may undertake appropriate action to prevent
disclosure of such Records; and
(k) if such offering is an underwritten offering,
enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary
in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the
Holders of a majority of the Registrable Shares being
sold in connection therewith (including those
reasonably requested by the managing underwriters) in
order to expedite or facilitate the disposition of such
Registrable Shares, and in such connection, (i) use
commercially reasonable efforts to obtain opinions of
counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing
underwriters and counsel to the Holders of the
Registrable Shares being sold), addressed to each
selling Holder of Registrable Shares covered by such
Registration Statement and each of the underwriters as
to the matters customarily covered in opinions
requested in underwritten offerings and such other
matters as may be reasonably requested by such counsel
and underwriters, (ii) use commercially reasonable
efforts to obtain "cold comfort" letters and updates
thereof from the independent certified public
accountants of the Company (and, if necessary, any
other independent certified public accountants of any
subsidiary of the Company or of any business acquired
by the Company for which financial statements and
financial data are, or are required to be, included in
the Registration Statement), addressed to each selling
holder of Registrable Shares covered by the
Registration Statement (unless such accountants shall
be prohibited from so addressing such letters by
applicable standards of the accounting profession) and
each of the underwriters, such letters to be in
customary form and covering matters of the type
customarily covered in "cold comfort" letters in
connection with underwritten offerings, (iii) if
requested and if an underwriting agreement is entered
into, provide indemnification provisions and procedures
substantially to the effect set forth in Section 8
hereof with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at
each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
The Company may require each Holder of Registrable
Shares covered by a Registration Statement to furnish such
information regarding such Holder and such Holder's intended
method of disposition of such Registrable Shares as it may
from time to time reasonably request in writing. If any
such information is not furnished within a reasonable period
of time after receipt of such request, the Company may
exclude such Holder's Registrable Shares from such
Registration Statement.
Each Holder of Registrable Shares covered by a
Registration Statement agrees that, upon receipt of any
notice from the Company of the happening of any event of the
kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or
5(c)(v) hereof, that such Holder shall forthwith discontinue
disposition of any Registrable Shares covered by such
Registration Statement or the related Prospectus until
receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(g) hereof, or until
such Holder is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental
filings which are incorporated, or deemed to be
incorporated, by reference in such Prospectus (such period
during which disposition is discontinued being an
"Interruption Period") and, if requested by the Company, the
Holder shall deliver to the Company (at the expense of the
Company) all copies then in its possession, other than
permanent file copies then in such holder's possession, of
the Prospectus covering such Registrable Shares at the time
of receipt of such request.
Each Holder of Registrable Shares covered by a
Registration Statement further agrees not to utilize any
material other than the applicable current preliminary
prospectus or Prospectus in connection with the offering of
such Registrable Shares.
SECTION 6. Registration Expenses. Whether or not
any Registration Statement is filed or becomes effective,
the Company shall pay all costs, fees and expenses incident
to the Company's performance of or compliance with this
Agreement, including (i) all registration and filing fees,
including NASD filing fees, (ii) all fees and expenses of
compliance with securities or Blue Sky laws, including
reasonable fees and disbursements of counsel in connection
therewith, (iii) printing expenses (including expenses of
printing certificates for Registrable Shares and of printing
prospectuses if the printing of prospectuses is requested by
the Holders or the managing underwriter, if any),
(iv) messenger, telephone and delivery expenses, (v) fees
and disbursements of counsel for the Company, (vi) fees and
disbursements of all independent certified public
accountants of the Company (including expenses of any "cold
comfort" letters required in connection with this Agreement)
and all other persons retained by the Company in connection
with such Registration Statement, (vii) fees and
disbursements of one counsel, other than the Company's
counsel, selected by Holders of a majority of the
Registrable Shares being registered, to represent all such
Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and
(ix) all other costs, fees and expenses incident to the
Company's performance or compliance with this Agreement.
Notwithstanding the foregoing, the fees and expenses of any
persons retained by any Holder, other than one counsel for
all such Holders, and any discounts, commissions or brokers'
fees or fees of similar securities industry professionals
and any transfer taxes relating to the disposition of the
Registrable Shares by a Holder, will be payable by such
Holder and the Company will have no obligation to pay any
such amounts.
SECTION 7. Underwriting Requirements. (a)
Subject to Section 7(b) hereof, any Holder shall have the
right, by written notice, to request that any Demand
Registration provide for an underwritten offering.
(b) In the case of any underwritten offering
pursuant to a Demand Registration, the Holders of a majority
of the Registrable Shares to be disposed of in connection
therewith shall select the institution or institutions that
shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the
Company. In the case of any underwritten offering pursuant
to a Piggyback Registration, the Company shall select the
institution or institutions that shall manage or lead such
offering. No Holder shall be entitled to participate in an
underwritten offering unless and until such Holder has
entered into an underwriting or other agreement with such
institution or institutions for such offering in such form
as the Company and such institution or institutions shall
determine.
SECTION 8. Indemnification. (a) Indemnification
by the Company. The Company shall, without limitation as to
time, indemnify and hold harmless, to the full extent
permitted by law, each Holder of Registrable Shares whose
Registrable Shares are covered by a Registration Statement
or Prospectus, the officers, directors and agents and
employees of each of them, each Person who controls each
such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such
controlling person, to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities,
judgment, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or
based upon any untrue or alleged untrue statement of a
material fact contained in such Registration Statement or
Prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or based upon
any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based
upon information furnished in writing to the Company by or
on behalf of such Holder expressly for use therein;
provided, however, that the Company shall not be liable to
any such Holder to the extent that any such Losses arise out
of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any
preliminary prospectus if (i) having previously been
furnished by or on behalf of the Company with copies of the
Prospectus, such Holder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Shares by such
Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected in
all material respects such untrue statement or alleged
untrue statement or such omission or alleged omission; and
provided further, however, that the Company shall not be
liable in any such case to the extent that any such Losses
arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission in
the Prospectus, if (x) such untrue statement or alleged
untrue statement, omission or alleged omission is corrected
in all material respects in an amendment or supplement to
the Prospectus and (y) having previously been furnished by
or on behalf of the Company with copies of the Prospectus as
so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior
to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable
Shares. In connection with any Registration Statement in
which a Holder is participating, such Holder shall furnish
to the Company in writing such information as the Company
reasonably requests for use in connection with such
Registration Statement or the related Prospectus and agrees
to indemnify, to the full extent permitted by law, the
Company, its directors, officers, agents or employees, each
Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, agents or
employees of such controlling Persons, from and against all
Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such
Registration Statement or the related Prospectus or any
amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or
alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such
untrue or alleged untrue statement or omission or alleged
omission is based upon any information so furnished in
writing by or on behalf of such Holder to the Company
expressly for use in such Registration Statement or
Prospectus.
(c) Conduct of Indemnification Proceedings. If
any Person shall be entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall give
prompt notice to the party from which such indemnity is
sought (the "indemnifying party") of any claim or of the
commencement of any proceeding with respect to which such
indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or
failure to so notify the indemnifying party shall not
relieve the indemnifying party from any obligation or
liability except to the extent that the indemnifying party
has been prejudiced by such delay or failure. The
indemnifying party shall have the right, exercisable by
giving written notice to an indemnified party promptly after
the receipt of written notice from such indemnified party of
such claim or proceeding, to assume, at the indemnifying
party's expense, the defense of any such claim or
proceeding, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) an
indemnified party shall have the right to employ separate
counsel in any such claim or proceeding and to participate
in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party
unless: (1) the indemnifying party agrees to pay such fees
and expenses; (2) the indemnifying party fails promptly to
assume the defense of such claim or proceeding or fails to
employ counsel reasonably satisfactory to such indemnified
party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and
the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more
legal defenses available to it that are inconsistent with
those available to the indemnifying party or that a conflict
of interest is likely to exist among such indemnified party
and any other indemnified parties (in which case the
indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party);
and (ii) subject to clause (3) above, the indemnifying party
shall not, in connection with any one such claim or
proceeding or separate but substantially similar or related
claims or proceedings in the same jurisdiction, arising out
of the same general allegations or circumstances, be liable
for the fees and expenses of more than one firm of attorneys
(together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses
that are not reasonable. Whether or not such defense is
assumed by the indemnifying party, such indemnified party
shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance
reasonably satisfactory to the indemnified party, from all
liability in respect of such claim or litigation for which
such indemnified party would be entitled to indemnification
hereunder.
(d) Contribution. If the indemnification
provided for in this Section 8 is unavailable to an
indemnified party in respect of any Losses (other than in
accordance with its terms), then each applicable
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by
such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the
actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other
hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue
statement of a material fact or omission or alleged omission
to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct
or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that
it would not be just and equitable if contribution pursuant
to this Section 8(d) were determined by pro rata allocation
or by any other method of allocation that does not take
account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the
provision of this Section 8(d), an indemnifying party that
is a Holder shall not be required to contribute any amount
which is in excess of the amount by which the total proceeds
received by such Holder from the sale of the Registrable
Shares sold by such Holder (net of all underwriting
discounts and commissions) exceeds the amount of any damages
that such indemnifying party has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation.
SECTION 9. Miscellaneous. (a) Termination. This
Agreement and the obligations of the Company and the Holders
hereunder (other than Section 8 hereof) shall terminate on
the first date on which no Registrable Shares remain
outstanding.
(b) Notices. All notices or communications
hereunder shall be in writing (including telecopy or similar
writing), addressed as follows:
To the Company:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
To the Holders:
R.E. ▇▇▇▇▇▇, III
c/o Turner Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
For Courier delivery
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ 3030
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Any such notice or communication shall be deemed
given (i) when made, if made by hand delivery, (ii) upon
transmission, if sent by confirmed telecopier, (iii) one
business day after being deposited with a next-day courier,
postage prepaid, or (iv) three business days after being
sent certified or registered mail, return receipt requested,
postage prepaid, in each case addressed as above (or to such
other address or to such other telecopier number as such
party may designate in writing from time to time).
(c) Separability. If any provision of this
Agreement shall be declared to be invalid or unenforceable,
in whole or in part, such invalidity or unenforceability
shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(d) Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and
their respective heirs, devisees, legatees, legal
representatives, successors and assigns.
(e) Entire Agreement. This Agreement represents
the entire agreement of the parties and shall supersede any
and all previous contracts, arrangements or understandings
between the parties hereto with respect to the subject
matter hereof.
(f) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of
Holders of at least a majority in number of the Registrable
Shares then outstanding.
(g) Publicity. No public release or announcement
concerning the transactions contemplated hereby shall be
issued by any party without the prior consent of the other
parties, except to the extent that such party is advised by
counsel that such release or announcement is necessary or
advisable under applicable law or the rules or regulations
of any securities exchange, in which case the party required
to make the release or announcement shall to the extent
practicable provide the other party with an opportunity to
review and comment on such release or announcement in
advance of its issuance.
(h) Expenses. Whether or not the transactions
contemplated hereby are consummated, except as otherwise
provided herein, all costs and expenses incurred in
connection with the execution of this Agreement shall be
paid by the party incurring such costs or expenses, except
as otherwise set forth herein.
(i) Interpretation. The headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(j) Counterparts. This Agreement may be executed
in two or more counterparts, all of which shall be one and
the same agreement, and shall become effective when
counterparts have been signed by each of the parties and
delivered to each other party.
(k) Governing Law. This Agreement shall be
construed, interpreted, and governed in accordance with the
internal laws of New York.
(l) Calculation of Time Periods. Except as
otherwise indicated, all periods of time referred to herein
shall include all Saturdays, Sundays and holidays; provided,
however, that if the date to perform the act or give any
notice with respect to this Agreement shall fall on a day
other than a Business Day, such act or notice may be timely
performed or given if performed or given on the next
succeeding Business Day.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date and year first
written above.
TIME WARNER INC.,
by
________________________
Name:
Title:
__________________________
R.E. ▇▇▇▇▇▇, III
▇▇▇▇▇▇ OUTDOOR, INC.,
by
________________________
Name:
Title:
▇▇▇▇▇▇ FOUNDATION, INC.
by
_________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST NO. 2,
by
_________________________
Name:
Title:
EXHIBIT C-1
INVESTORS' AGREEMENT (NO. 1) dated as of
, among TIME WARNER INC., a
Delaware corporation ("Parent"), and the
other parties signatory hereto (each an
"Investor").
This Agreement is entered into pursuant to
Section 6.02(f) of the Agreement and Plan of Merger (as
amended from time to time, the "Merger Agreement") dated as
of September 22, 1995, among Parent, Time Warner Acquisition
Corp. ("Sub"), a Delaware corporation and a wholly owned
subsidiary of Parent, and ▇▇▇▇▇▇ Broadcasting System, Inc.
(the "Company"), a Georgia corporation. In the Merger (as
defined in the 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 $1.00 per share, of Parent
("Parent 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 Parent Common Stock. As a condition to the
obligations of Parent and Sub to effect the Merger, Parent
and 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 Merger Agreement. For purposes of this
Agreement, the following terms shall have the following
meanings:
"Affiliate" and "Associate", when used with
reference to any person, shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Exchange Act, as
in effect on the date of this Agreement. Neither Parent 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
Parent.
"Charitable Transferee" shall mean any charitable
organization described in Section 501(c)(3) of the Code.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as in effect on the date in question, unless
otherwise specifically provided.
"Investor" shall mean each person that executes
this Agreement in such capacity and each successor, assign
and other person that pursuant to the terms hereof is
required to become a party hereto as an Investor.
"Investors' Agreement (No. 2)" shall mean an
Investors' Agreement (No. 2), substantially in the form of
Exhibit C-2 to the 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 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
and members of his family are income beneficiaries.
"Voting Power", when used with reference to any
class or series of securities of Parent, or any classes or
series of securities of Parent entitled to vote together as
a single class or series, shall mean the power of such class
or series (or such classes or series) to vote for the
election of directors. For purposes of determining the
percentage of Voting Power of any class or series (or
classes or series) beneficially owned by any person, any
securities not outstanding which are subject to conversion
rights, exchange rights, rights, warrants, options or
similar securities held by such person shall be deemed to be
outstanding for the purpose of computing the percentage of
outstanding securities of the class or series (or classes or
series) beneficially owned by such person, but shall not be
deemed to be outstanding for the purpose of computing the
percentage of the class or series (or classes or series)
beneficially owned by any other person.
"Voting Securities", when used with reference to
any person, shall mean any securities of such person having
Voting Power or any securities convertible into or
exchangeable for any securities having Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Parent Common Stock.
None of the Investors may offer for sale or sell any shares
of Parent Common Stock acquired pursuant to the 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 Parent, 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 Parent
Common Stock owned by such Investor. Each certificate for
shares of Parent Common Stock issued to or beneficially
owned by a person that is subject to the provisions of this
Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 1) DATED AS OF
(THE "INVESTORS' AGREEMENT"), AMONG
THE CORPORATION, THE ORIGINAL HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND CERTAIN OTHER
STOCKHOLDERS OF THE CORPORATION. A COPY OF THE
INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Parties
SECTION 3.01. Standstill. None of the Investors
may (and each Investor shall cause its Affiliates and
Associates that it controls, and use reasonable efforts to
cause its other Affiliates and Associates, not to), without
the prior written consent of the Board:
(a) publicly propose that any Investor or
Qualified Stockholder or any Affiliate or Associate of any
Investor or Qualified Stockholder enter into, directly or
indirectly, any merger or other business combination
involving Parent or propose to purchase, directly or
indirectly, a material portion of the assets of Parent or
any Material Parent Subsidiary, or make any such proposal
privately if it would reasonably be expected to require
Parent 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 Parent 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 Parent;
(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 Parent, other than a group consisting
solely of Investors and Qualified Stockholders;
(d) deposit any Voting Securities of Parent 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 Parent for the approval of one or more
stockholder proposals with respect to Parent 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 Parent;
(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 Parent;
(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
Parent 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 Parent or the acquisition
of a substantial portion of the equity securities or assets
of Parent or any Material Parent Subsidiary, including a
merger, consolidation, tender offer, exchange offer or
liquidation of Parent's assets, or any restructuring,
recapitalization or similar transaction with respect to
Parent or any Material Parent Subsidiary; 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 Parent or advisor
to the Board unless, in either case, it would reasonably be
expected to require Parent 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 Parent (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 Parent);
(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 Parent to make a public announcement regarding
such intention, plan or arrangement; or
(k) advise, assist (including by knowingly
providing or arranging financing for that purpose) or
knowingly encourage any other person in connection with any
of the foregoing.
SECTION 3.02. Transfer Restrictions. None of the
Investors may, without the prior written consent of Parent,
sell, transfer, pledge, encumber or otherwise dispose of, or
agree to sell, transfer, pledge, encumber or otherwise
dispose of, any Voting Securities of Parent, 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 Parent 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 Parent;
(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 Parent 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
Parent, pursuant to the terms of any tender or exchange
offer for Voting Securities of Parent made pursuant to the
applicable provisions of the Exchange Act or pursuant to any
merger or consolidation of Parent (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 Parent agrees upon request to enter into an
Investors' Agreement (No. 2) with such Charitable Transferee
or Qualified Trust);
(i) to TCI ▇▇▇▇▇▇ Preferred, Inc. ("TCITP") or its
designee in accordance with the Stockholders' Agreement
dated as of the same date as this Agreement among TCITP,
Parent and certain stockholders of Parent; or
(j) to Parent.
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 Parent 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 Parent 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, Parent 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 Parent, violate or
be in conflict with, or result in any material limitation on
the ownership or operation of any business or assets of
Parent 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 Parent to comply with Section 3.01 and to resign as a
director of Parent if requested to do so pursuant to this
Section 3.04. With respect to each meeting of stockholders
of Parent at which any designee of the Principal Investor on
the Board comes up for reelection, Parent 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, Parent 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 Parent owned by the Investors and
the Qualified Stockholders, taken together, immediately
following the Merger (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
Parent, 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 Parent owned by the Investors
and the Qualified Stockholders, taken together, immediately
following the Merger (appropriately adjusted for stock
dividends, stock splits, reverse stock splits and similar
transactions) and (B) the Principal Investor ceasing to be
an employee of Parent or any Parent Subsidiary, (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 Parent, 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 Parent to be entered into at the Effective
Time of the Merger, 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 Parent owned of record and beneficially
by the Qualified Stockholders on the date of such
calculation and (ii) the Voting Securities of Parent owned
by the Qualified Stockholders immediately following the
Merger. "Exempt Stock" shall mean (A) any Parent Common
Stock acquired by any Qualified Stockholder pursuant to the
Merger in exchange for Company Capital Stock owned by such
Qualified Stockholder on the date of the Merger Agreement
and (B) any Parent Common Stock acquired after the Effective
Time of the Merger 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 Parent.
(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 Parent.
(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 Parent
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 Parent under this Agreement for any actions
taken by any Qualified Stockholder that would have been
violations of Section 3.01, 3.03 or 3.05(c) had such
Qualified Stockholder been bound by such Sections.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. (a) The covenants and
agreements of the Investors in Sections 3.01, 3.03 and
3.05(c) shall terminate, except with respect to liability
for prior breaches thereof, upon the last to occur of
(i) the Principal Investor ceasing to be an employee of
Parent or any Parent Subsidiary, (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 Merger.
(c) The covenants and agreements of Parent 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
Parent to the Board any Eligible Person designated by the
Principal Investor in accordance with Section 3.04 or
(iii) reasonably promptly after request from the Principal
Investor, fill any vacancy created on the Board upon the
death, resignation or removal of any designee of the
Principal Investor on the Board with another Eligible Person
designated by the Principal Investor, in each case if the
effect of such failure is that the Principal Investor does
not have the representation on the Board to which he is
entitled under Section 3.04.
(e) The other covenants and agreements set forth
in this Agreement shall terminate, except with respect to
liability for prior breaches thereof, upon the later of
(i) the termination of Section 3.01 pursuant to
Section 4.01(a) or 4.01(d) and (ii) the termination of
Section 3.02 pursuant to Section 4.01(b) or 4.01(d).
SECTION 4.02. Entire Agreement; Assignment. This
Agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter hereof and (ii) except as provided in
Section 3.02, shall not be assigned by operation of law or
otherwise without the prior written consent of the other
parties. Any person who agrees pursuant to Section 3.02 to
become a party to this Agreement as an Investor shall
thereupon become, and have all the rights and obligations
of, an Investor hereunder. Any attempted assignment or
transfer in violation of this Section 4.02 shall be void and
of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective estates,
heirs, successors and assigns.
SECTION 4.03. Amendments; Waivers. This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto. The
waiver by any party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of
any subsequent breach thereof.
SECTION 4.04. Notices. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be deemed given (i) on the first
Business Day following the date received, if delivered
personally or by telecopy (with telephonic confirmation of
receipt by the addressee), (ii) on the Business Day
following timely deposit with an overnight courier service,
if sent by overnight courier specifying next day delivery
and (iii) on the first Business Day that is at least five
days following deposit in the mails, if sent by first class
mail, to the parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
If to any Investor, to:
R.E. ▇▇▇▇▇▇, III
c/o Turner Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
For Courier delivery:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to Parent, to:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute
notice) to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 4.05. Governing Law. This Agreement
shall be governed by and construed in accordance with the
internal laws of the State of Delaware.
SECTION 4.06. Specific Performance. Each party
recognizes and acknowledges that a breach by it of
Article III would cause the other parties to sustain damages
for which they would not have an adequate remedy at law for
money damages, and therefore each party agrees that in the
event of any such breach any of the other parties shall be
entitled to seek the remedy of specific performance of such
Article III and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at
law or in equity.
SECTION 4.07. Counterparts; Effectiveness. This
Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and
shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the
other parties.
SECTION 4.08. Descriptive Headings. The
descriptive headings used herein are inserted for
convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this
Agreement.
SECTION 4.09. Severability. Whenever possible,
each provision or portion of any provision of this Agreement
shall be interpreted in such manner as to be effective but
if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or portion of any
provision, and this Agreement will be reformed, construed
and enforced as if such invalid, illegal or unenforceable
provision or portion of any provision had never been
contained herein. The parties shall endeavor in good faith
negotiations to replace any invalid, illegal or
unenforceable provision with a valid provision the effects
of which come as close as possible to those of such invalid,
illegal or unenforceable provision.
SECTION 4.10. Attorneys' Fees. If any action at
law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Parent and each Investor have
caused this Agreement to be duly executed as of the day and
year first above written.
TIME WARNER INC.,
by
________________________
Name:
Title:
____________________________
R.E. ▇▇▇▇▇▇, III
▇▇▇▇▇▇ OUTDOOR, INC.,
by
________________________
Name:
Title:
EXHIBIT C-2
INVESTORS' AGREEMENT (NO. 2) dated as of
, among TIME WARNER INC., a Delaware corporation
("Parent"), and the other parties signatory hereto
(each an "Investor").
This Agreement is entered into pursuant to
Section 6.02(f) of the Agreement and Plan of Merger (as
amended from time to time, the "Merger Agreement") dated as
of September 22, 1995, among Parent, Time Warner Acquisition
Corp. ("Sub"), a Delaware corporation and a wholly owned
subsidiary of Parent, and ▇▇▇▇▇▇ Broadcasting System, Inc.
(the "Company"), a Georgia corporation. In the Merger (as
defined in the 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 $1.00 per share, of Parent
("Parent 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 Parent 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 Merger Agreement. For purposes of this
Agreement, the following terms shall have the following
meanings:
"Affiliate" and "Associate", when used with
reference to any person, shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Exchange Act, as
in effect on the date of this Agreement.
A person shall be deemed the "beneficial owner"
of, and shall be deemed to "beneficially own", and shall be
deemed to have "beneficial ownership" of:
(i) any securities that such person or any of such
person's Affiliates or Associates is deemed to
"beneficially own" within the meaning of Rule 13d-3
under the Exchange Act, as in effect on the date of
this Agreement; and
(ii) any securities (the "underlying securities")
that such person or any of such person's Affiliates or
Associates has the right to acquire (whether such right
is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise
of conversion rights, exchange rights, rights, warrants
or options, or otherwise (it being understood that such
person shall also be deemed to be the beneficial owner
of the securities convertible into or exchangeable for
the underlying securities).
"Covered Parent Common Stock" shall mean (i) any
shares of Parent Common Stock transferred to an Investor
pursuant to Section 3.02(h) of the Investors' Agreement
(No. 1) dated as of [ ] among Parent and certain
stockholders of Parent and (ii) any shares of Parent Common
Stock acquired by any Investor pursuant to the Merger
otherwise than in exchange for Company Common Stock owned by
such Investor on the date of the Merger Agreement.
"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 Merger Agreement.
"Voting Power", when used with reference to any
class or series of securities of Parent, or any classes or
series of securities of Parent entitled to vote together as
a single class or series, shall mean the power of such class
or series (or such classes or series) to vote for the
election of directors. For purposes of determining the
percentage of Voting Power of any class or series (or
classes or series) beneficially owned by any person, any
securities not outstanding which are subject to conversion
rights, exchange rights, rights, warrants, options or
similar securities held by such person shall be deemed to be
outstanding for the purpose of computing the percentage of
outstanding securities of the class or series (or classes or
series) beneficially owned by such person, but shall not be
deemed to be outstanding for the purpose of computing the
percentage of the class or series (or classes or series)
beneficially owned by any other person.
"Voting Securities", when used with reference to
any person, shall mean any securities of such person having
Voting Power or any securities convertible into or
exchangeable for any securities having Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Parent Common Stock.
None of the Investors may offer for sale or sell any shares
of Parent Common Stock acquired pursuant to the 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 Parent, 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 Parent Common Stock owned by such Investor. Each
certificate for shares of Covered Parent Common Stock issued
to or beneficially owned by a person that is subject to the
provisions of this Agreement shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 2) DATED AS OF
, (THE "INVESTORS' AGREEMENT"),
BETWEEN THE CORPORATION AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF
THE INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Investors
SECTION 3.01. Transfer Restrictions. None of the
Investors may, without the prior written consent of Parent,
sell, transfer, pledge, encumber or otherwise dispose of, or
agree to sell, transfer, pledge, encumber or otherwise
dispose of, any Covered Parent Common Stock, or any rights
or options to acquire Covered Parent 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 Parent or announced its intention to
make such an offer;
(c) to any person (including any pledgee of
Covered Parent 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 Parent;
(d) in a bona fide pledge of shares of Covered
Parent 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
Parent, pursuant to the terms of any tender or exchange
offer for Covered Parent Common Stock made pursuant to the
applicable provisions of the Exchange Act or pursuant to any
merger or consolidation of Parent;
(f) to TCI ▇▇▇▇▇▇ Preferred, Inc. ("TCITP") or its
designee in accordance with the Stockholders' Agreement
dated as of the date of this Agreement among TCITP, Parent
and certain stockholders of Parent; or
(g) to Parent.
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 Merger 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 Parent and
certain of its other stockholders, have been terminated.
SECTION 4.02. Entire Agreement; Assignment. This
Agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter hereof and (ii) shall not be assigned by
operation of law or otherwise without the prior written
consent of the other parties. Any attempted assignment or
transfer in violation of this Section 4.02 shall be void and
of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns.
SECTION 4.03. Amendments; Waivers. This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto. The
waiver by any party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of
any subsequent breach thereof.
SECTION 4.04. Notices. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be deemed given (i) on the first
Business Day following the date received, if delivered
personally or by telecopy (with telephonic confirmation of
receipt by the addressee), (ii) on the Business Day
following timely deposit with an overnight courier service,
if sent by overnight courier specifying next day delivery
and (iii) on the first Business Day that is at least five
days following deposit in the mails, if sent by first class
mail, to the parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
If to any Investor, to:
R.E. ▇▇▇▇▇▇, III
c/o Turner Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
For courier delivery:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to Parent, to:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute notice)
to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 4.05. Governing Law. This Agreement
shall be governed by and construed in accordance with the
internal laws of the State of Delaware.
SECTION 4.06. Specific Performance. Each party
recognizes and acknowledges that a breach by it of
Article III would cause the other parties to sustain damages
for which they would not have an adequate remedy at law for
money damages, and therefore each party agrees that in the
event of any such breach any of the other parties shall be
entitled to seek the remedy of specific performance of such
Article III and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at
law or in equity.
SECTION 4.07. Counterparts; Effectiveness. This
Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and
shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the
other parties.
SECTION 4.08. Descriptive Headings. The
descriptive headings used herein are inserted for
convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this
Agreement.
SECTION 4.09. Severability. Whenever possible,
each provision or portion of any provision of this Agreement
shall be interpreted in such manner as to be effective but
if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or portion of any
provision, and this Agreement will be reformed, construed
and enforced as if such invalid, illegal or unenforceable
provision or portion of any provision had never been
contained herein. The parties shall endeavor in good faith
negotiations to replace any invalid, illegal or
unenforceable provision with a valid provision the effects
of which come as close as possible to those of such invalid,
illegal or unenforceable provision.
SECTION 4.10. Attorneys' Fees. If any action at
law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Parent and each Investor have
caused this Agreement to be duly executed as of the day and
year first above written.
TIME WARNER INC.,
by
________________________
Name:
Title:
INITIAL INVESTORS:
▇▇▇▇▇▇ FOUNDATION, INC.
by
________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHARITABLE
FOUNDATION UNITRUST NO. 2,
by
________________________
Name:
Title: