CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF, OF 10 1/4% SERIES K EXCHANGEABLE PREFERRED STOCK
OF
TIME WARNER INC.
---------------------------
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
-----------------------------
TIME WARNER INC., a corporation organized and existing by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that the following resolution was duly adopted by
action of the Board of Directors of the Corporation, with the provisions
thereof fixing the number of shares of the series, the dividend rate, and
the optional redemption prices being set by action of the Pricing
Committee of the Board of Directors of the Corporation:
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Section 2 of Article IV of the Restated Certificate of Incorporation of
the Corporation, as amended from time to time (the "Certificate of
Incorporation"), and pursuant to authority expressly delegated to the
Pricing Committee of the Board of Directors of the Corporation by such
Board of Directors, and pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, there be created from the
250,000,000 shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of the Corporation authorized to be issued pursuant
to the Certificate of Incorporation, a series of Preferred Stock,
consisting of 15,200,000 shares of 10 1/4% Series K Exchangeable
Preferred Stock, the voting powers, designations, preferences and
relative, participating, optional or other special rights of which, and
qualifications, limitations or restrictions thereof, shall be as follows:
The series of Preferred Stock hereby established shall consist of
15,200,000 shares of 10 1/4% Series K Exchangeable Preferred Stock (such
series being hereinafter referred to as "Series K Preferred Stock" or
"this Series"). The rights, preferences and limitations of the Series K
Preferred Stock shall be as follows:
1. DEFINITIONS. As used herein, the following terms shall
have the following meanings:
1.1 "Accrued Dividends" shall mean, with respect to any
share of this Series, as of any date, the accrued and unpaid dividends on
such share from the most recent Dividend Payment Date (or the Issue Date
applicable to such share, if such date is prior to the first Dividend
Payment Date applicable to such share) to such date.
1.2. "Accumulated Dividends" shall mean, with respect to
any share of this Series, as of any date, the aggregate accumulated and
unpaid dividends on such share from the Issue Date applicable to such
share until the most recent Dividend Payment Date prior to such date.
There shall be no Accumulated Dividends with respect to any share of this
Series prior to the first Dividend Payment Date applicable to such share.
1.3. "Applicable Series B Redemption Date" shall mean,
with respect to any Mandatory Redemption Date, the Series B Redemption
Date occurring one year and one day prior to such Mandatory Redemption
Date.
1.4 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be taken
by the Board of Directors, any committee of the Board of Directors duly
authorized to take such action.
1.5 "Board of Representatives of TWE" shall mean the
Board of Representatives of TWE (as defined in the TWE Partnership
Agreement).
1.6 "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in the City of
New York are authorized or required by law or executive order to close.
1.7 "Change of Control" shall mean:
(i) whenever, in any three-year period, a majority
of the members of the Board of Directors elected during such three-year
period shall have been so elected against the recommendation of the
management of the Corporation or the Board of Directors in office
immediately prior to such election; it being understood that for purposes
of this clause (i) a member of such Board of Directors shall be deemed to
have been elected against the recommendation of such Board of Directors
if his or her initial election occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than such Board of Directors; or
(ii) whenever any Person shall acquire (whether by
merger, consolidation, sale, assignment, lease, transfer or otherwise, in
one transaction or any related series of transactions) or otherwise
beneficially own voting securities of the Corporation that represent in
excess of 50% of the voting power of all outstanding voting securities of
the Corporation generally entitled to vote for the election of directors,
if such Person had acquired or publicly announced its intention to
initially acquire ten percent or more of such voting securities in a
transaction that had not, within 30 days after the date of such
acquisition or public announcement, been approved by the management of
the Corporation.
1.8 "Common Stock" shall mean the class of Common Stock,
par value $1.00 per share, of the Corporation or any other class of stock
resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no
par value, or as a result of a subdivision or combination.
1.9 "Cumulative Priority Capital of the TWE Series B
Interests" shall mean, as of any date, the excess of (a) the sum of (i)
the aggregate B Contributions (as defined in the TWE Partnership
Agreement) of the Corporation (and its subsidiaries) and (ii) the
aggregate cumulative B Returns (as defined in the TWE Partnership
Agreement) of the Corporation (and its subsidiaries) as of such date,
over (b) the sum of all distributions theretofore made to the Corporation
(and its subsidiaries) with respect to the TWE Series B Interests
pursuant to the TWE Partnership Agreement.
1.10 "Dividend Payment Date" shall mean March 30, June 30,
September 30 and December 30 of each year, commencing June 30, 1996.
1.11 "Dividend Record Date" shall mean, with respect to
each Dividend Payment Date, the twentieth day immediately preceding such
Dividend Payment Date.
1.12 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.13 "Excluded Tax Distributions" shall mean, with respect
to any period, all Tax Distributions made by TWE during such period other
than Included Tax Distributions.
1.14 "Final Redemption Date" shall mean July 1, 2016.
1.15 "Included Tax Distributions" shall mean, with respect
to any period, Tax Distributions made by TWE during such period with
respect to the TWE Series B Interests, but only if the total
distributions made by TWE during such period with respect to the TWE
Series B Interests exceed such Tax Distributions.
1.16 "Initial Issue Date" shall mean April 11, 1996.
1.17 "Insolvency Distribution Date" shall mean the date of
the completion of the liquidation, winding up or dissolution of TWE upon
the Insolvency of TWE, including the distribution of all of the cash and
non-cash assets to the partners of TWE.
1.18 "Insolvency of TWE" shall mean:
(i) the entry by a court having jurisdiction in the
premises of (a) a decree or order for relief in respect of TWE in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or (b) a
decree or order adjudging TWE a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of TWE under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of TWE or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order under either clause
(a) or (b) above unstayed and in effect for a period of 60 consecutive
days; or
(ii) the commencement by TWE of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of TWE in an involuntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of TWE or of any substantial part of its property,
or the making by it of a general assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts
generally as they become due, or the adoption of a resolution by the
Board of Representatives of TWE to take any of the foregoing actions.
1.19 "Insolvency Redemption Amount" shall mean an amount
equal to the lesser of (i) the sum of (a) the Pro Rata Percentage as of
the Insolvency Distribution Date, multiplied by the sum of cash
distributions and non-cash distributions (the value of which shall be
determined pursuant to a TWE Insolvency Valuation) received by the
Corporation (and its subsidiaries) with respect to its TWE Series B
Interests and its TWE Junior Interests in connection with such
liquidation, winding up or dissolution in accordance with the TWE
Partnership Agreement, and (b) an amount equal to the aggregate dividends
payable during the period from the Insolvency Distribution Date to the
Insolvency Redemption Date on the shares of Series K Preferred Stock
outstanding from time to time during such period and (ii) the aggregate
Liquidation Preference of the outstanding shares of Series K Preferred
Stock plus Accumulated Dividends and Accrued Dividends thereon.
1.20 "Insolvency Redemption Amount Per Share" shall mean
an amount equal to (i) the Insolvency Redemption Amount divided by (ii)
the number of shares of Series K Preferred Stock outstanding on the
Insolvency Redemption Date.
1.21 "Insolvency Redemption Date" shall mean the day that
is one year and one day following the Insolvency Distribution Date.
1.22 "Issue Date" shall mean, with respect to each share
of Series K Preferred Stock, the date upon which such share is first
issued.
1.23 "Junior Stock" shall mean the Common Stock, the
Series A Participating Cumulative Preferred Stock and the shares of any
other class or series of stock of the Corporation created after the
Initial Issue Date that, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be junior to
the Series K Preferred Stock in respect of the right to receive dividends
or to participate in any other distribution of assets.
1.24 "Liquidation Preference" shall mean, with respect to
each share of Series K Preferred Stock, $1,000.
1.25 "Mandatory Redemption Amount" shall mean an amount
equal to (i) the Pro Rata Percentage (determined as of June 30, 2015
without giving effect to the Series B Redemption occurring on such date)
multiplied by the amount (as determined by a TWE Valuation) that the
Corporation (and its subsidiaries) would have received in accordance with
the TWE Partnership Agreement with respect to its TWE Series B Interests
and its TWE Junior Interests, had TWE sold all of its assets and
liquidated on June 30, 2015, plus (ii) the aggregate dividends payable
from July 1, 2015 to July 1, 2016 on the shares of Series K Preferred
Stock from time to time outstanding during such period.
1.26 "Mandatory Redemption Amount Per Share" shall mean an
amount equal to (i) the Mandatory Redemption Amount divided by (ii) the
number of shares of Series K Preferred Stock outstanding on the Final
Redemption Date.
1.27 "Mandatory Redemption Date" shall mean July 1 of each
of 2012, 2013, 2014 and 2015.
1.28 "Mandatory Redemption Price Per Share" shall mean an
amount equal to the Liquidation Preference of each share of Series K
Preferred Stock to be redeemed, plus Accumulated Dividends and Accrued
Dividends thereon.
1.29 "Material Contribution of Assets" shall mean a
contribution to TWE in a single transaction or a series of related
transactions of Relevant Assets, the fair market value of which (net of
associated debt) is in excess of $1,000,000,000 (as determined by the
Board of Directors in good faith).
1.30 "Nationally Recognized Investment Banking Firm" shall
mean an investment banking firm having a national reputation in the
United States which shall have experience in valuation or securities
rating matters, as the case may be, and which shall be approved by a
majority of the members of the Board of Directors who are not officers or
employees of the Corporation or its subsidiaries, including TWE.
1.31 "Optional Redemption Price Per Share" shall mean, as
of any date, the price at which the Corporation may, at its option,
redeem one share of the Series K Preferred Stock pursuant to Section 3.1.
1.32 "Parity Stock" shall mean the shares of the
Corporation's Series B 6.40% Preferred Stock, Series C Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series E
Convertible Preferred Stock, Series F Convertible Preferred Stock, Series
G Convertible Preferred Stock, Series H Convertible Preferred Stock,
Series I Convertible Preferred Stock, Series K Preferred Stock and any
other class or series of stock of the Corporation created after the
Initial Issue Date that, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall, in the event
that the stated dividends thereon are not paid in full, be entitled to
share ratably with the Series K Preferred Stock in the payment of
dividends, including accumulations, if any, in accordance with the sums
which would be payable on such shares if all dividends were declared and
paid in full, or shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with the
Series K Preferred Stock in any other distribution of assets in
accordance with the sums which would be payable in such distribution if
all sums payable were discharged in full; PROVIDED, HOWEVER, that the
term "Parity Stock" shall be deemed to refer (i) in Section 2.3 hereof,
to any stock which is Parity Stock in respect of dividend rights; (ii) in
Section 10 hereof, to any stock which is Parity Stock in respect of the
distribution of assets; and (iii) in Section 9.1 hereof, to any stock
which is Parity Stock in respect of either dividend rights or the
distribution of assets and which, pursuant to the Certificate of
Incorporation or any instrument in which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall
so designate, is entitled to vote as part of the Voting Rights Class.
1.33 "Person" shall mean any individual, corporation,
general partnership, limited partnership, limited liability partnership,
joint venture, association, joint-stock company, trust, limited liability
company, unincorporated organization or government or any agency or
political subdivision thereof.
1.34 "Pro Rata Percentage" shall mean, as of any date, a
fraction, the numerator of which shall be the aggregate Liquidation
Preference of the outstanding shares of Series K Preferred Stock as of
such date, plus Accumulated Dividends thereon, and the denominator of
which shall be the Cumulative Priority Capital of the TWE Series B
Interests as of such date. In calculating the Pro Rata Percentage in
connection with the mandatory redemption on the Final Redemption Date or
upon an Insolvency of TWE, the Cumulative Priority Capital of the TWE
Series B Interests shall be increased by the sum of all Tax Distributions
(other than Included Tax Distributions) made by TWE to the Corporation
(and its subsidiaries) following the Initial Issue Date with respect to
the TWE Series B Interests.
1.35 "Rating Confirmation" shall mean either (i) a
confirmation from each of Moody's Investors Service, Inc. or any
successor to its rating agency business ("Moody's") and Standard and
Poor's Corporation or any successor to its rating agency business ("S&P")
that any contemplated redemption or exchange by the Corporation would not
result in a downgrade of its rating of the Corporation's senior unsecured
long-term debt, or (ii) a good faith determination by the Board of
Directors or any committee thereof (after consultation with a Nationally
Recognized Investment Banking Firm) that any contemplated redemption or
exchange by the Corporation should not result in a downgrade in the
rating of the Corporation's senior unsecured long-term debt by either
Moody's or S&P.
1.36 "Redeemable Number" shall mean, with respect to any
Mandatory Redemption Date, a number (rounded down to the nearest whole
number) of shares of Series K Preferred Stock equal to (i) the Pro Rata
Percentage (as of the Applicable Series B Redemption Date without giving
effect to the Series B Redemption occurring on such date) of the amount
of (a) cash distributions received by the Corporation (and its
subsidiaries) in respect of the Series B Redemption occurring on the
Applicable Series B Redemption Date, plus (b) cash distributions received
by the Corporation in respect of its TWE Junior Interests from the
Applicable Series B Redemption Date to such Mandatory Redemption Date,
divided by (ii) the Liquidation Preference per share of Series K
Preferred Stock plus Accumulated Dividends and Accrued Dividends thereon;
PROVIDED, HOWEVER, that in no event shall the Redeemable Number exceed
20%, 25%, 33 1/3% and 50% of the number of shares of Series K Preferred
Stock outstanding on the Mandatory Redemption Dates occurring on July 1
of 2012, 2013, 2014 and 2015, respectively.
1.37 "Relevant Assets" shall mean filmed entertainment or
programming assets currently owned by the Corporation or any of its
subsidiaries (other than TWE) or which the Corporation or any of its
subsidiaries (other than TWE) currently has an agreement to acquire.
1.38 "Registration Rights Agreement" shall mean that
certain Registration Rights Agreement, dated April 11, 1996, among the
Corporation, Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated.
1.39 "Reorganization of TWE" shall mean (i) any merger or
consolidation of TWE or any sale of all or substantially all of the
assets of TWE, (ii) the liquidation, winding up or dissolution of TWE
other than as a result of the Insolvency of TWE, (iii) the making of any
distributions, in cash or other property (other than cash distributions
in accordance with the TWE Partnership Agreement), on the partnership
interests in TWE from and after the Initial Issue Date having an
aggregate fair market value (together with any such prior distributions)
in excess of $500,000,000 as determined by the Board of Directors in good
faith, (iv) any transaction or series of related transactions which
results in a sale or transfer of 10% or more of the total assets of TWE
(excluding asset swaps and contributions to subsidiaries or joint
ventures, other than joint ventures with any partner of TWE as of the
Initial Issue Date that is not a subsidiary of the Company) unless such
sale or transfer is made at fair market value, the proceeds of such sale
or transfer are substantially in cash and such cash is used to repay debt
or is reinvested in the business of TWE, (v) any transfer in the
beneficial ownership of a class of partnership interests in TWE that
would result in the Corporation (directly or indirectly) owning (after
giving effect to any reductions permitted by clauses (a) or (b) of this
clause (v)) less than 90% or more than 110% of its percentage ownership
interest in such class of partnership interests in TWE as of the Initial
Issue Date, other than any change resulting from (a) cash distributions
in accordance with the TWE Partnership Agreement or (b) the issuance of
partnership interests in TWE upon exercise of the U S WEST Option, (vi)
any material reduction in voting or management rights of the Corporation
(and its subsidiaries) in TWE, (vii) any issuance of additional
partnership interests in TWE which rank senior to the TWE Series B
Interests (other than (a) the TWE Contingent Interests, (b) partnership
interests in TWE issued upon exercise of the U S WEST Option or (c)
partnership interests in TWE having a fair market value (together with
any such prior issuances) no greater than $500,000,000, as determined by
the Board of Directors in good faith, issued in connection with any
contribution of assets to TWE), it being understood that allocations of
income or accretion with respect to the capital accounts associated with
the outstanding partnership interests in TWE shall not be considered
issuances of additional partnership interests in TWE, (viii) the failure
of a registration statement of the Corporation (contemplated to be filed
by the Registration Rights Agreement) to have become effective within one
year from the Initial Issue Date, (ix) any amendment to the TWE
Partnership Agreement (other than an amendment to effectuate an issuance
of partnership interests in TWE permitted by clause (vii)(c) above) that
adversely affects the allocation of income or payment of distributions
to, or priority capital rate of return or priority of, the TWE Series B
Interests or (x) the date that is six months following the occurrence of
a Material Contribution of Assets which does not otherwise result in the
occurrence of an event specified in clauses (i) through (ix) above.
1.40 "Reorganization Redemption/Exchange Date" means, with
respect to any Reorganization of TWE, the first Dividend Payment Date
following the 90th day after such Reorganization of TWE; PROVIDED that if
such first Dividend Payment Date occurs on or prior to the 30th day
following such 90th day, then the Reorganization Redemption/Exchange Date
means the second Dividend Payment Date following the 90th day after such
Reorganization of TWE.
1.41 "Reorganization Redemption Price Per Share" shall
mean, with respect to each share of Series K Preferred Stock, (i) (a)
110% of the Liquidation Preference thereof, plus (b) Accumulated
Dividends and Accrued Dividends thereon, or (ii) if the Series K
Preferred Stock may be redeemed at the option of the Corporation at such
time, the Optional Redemption Price Per Share then in effect.
1.42 "Senior Stock" shall mean the shares of any class or
series of stock of the Corporation created after the Initial Issue Date
that, by the terms of the Certificate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority
granted in the Certificate of Incorporation, shall fix the relative
rights, preferences and limitations thereof, shall be senior to the
Series K Preferred Stock in respect of the right to receive dividends or
to participate in any other distribution of assets.
1.43 "Series B Redemption" shall mean each distribution
with respect to the TWE Series B Interests in accordance with Section
8.4(c)(ii) of the TWE Partnership Agreement.
1.44 "Series B Redemption Date" shall mean June 30 of
each of 2011, 2012, 2013, 2014 and 2015.
1.45 "Series L Preferred Stock" shall mean the
Corporation's 10-1/4% Series L Exchangeable Preferred Stock which may be
issued after the Initial Issue Date upon a Reorganization of TWE pursuant
to Section 6.1(i), and which shall have the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions as are set forth
in a certificate of designation substantially in the form attached hereto
as Exhibit A.
1.46 "Tax Distributions" shall mean cash distributions
made to the Corporation (and its subsidiaries) pursuant to Section 8.5 of
the TWE Partnership Agreement.
1.47 "TBS Merger Agreement" shall mean the Amended and
Restated Agreement and Plan of Merger dated as of September 22, 1995,
among the Corporation, certain of its subsidiaries and Turner
Broadcasting System, Inc., as the same may be amended from time to time.
1.48 "TBS Transaction" shall mean the transactions
contemplated by the TBS Merger Agreement.
1.49 "TWE" shall mean Time Warner Entertainment Company,
L.P., a Delaware limited partnership.
1.50 "TWE Contingent Interests" shall mean the partnership
interests in TWE associated with the C Sub-Accounts and the D Sub-
Accounts (each as defined in the TWE Partnership Agreement) of the
Corporation (and its subsidiaries).
1.51 "TWE Insolvency Valuation" shall mean the average of
the determinations of two Nationally Recognized Investment Banking Firms
with respect to the fair market value, as of the Insolvency Distribution
Date, of each non-cash distribution from TWE received by the Corporation
(and its subsidiaries) upon a liquidation, winding up or dissolution of
TWE upon the Insolvency of TWE. The Nationally Recognized Investment
Banking Firms shall be selected by the Corporation within 30 days
following the Insolvency Distribution Date and shall render their
opinions within 90 days following the Insolvency Distribution Date. For
purposes of the foregoing, (i) the fair market value of such non-cash
distributions shall be based on the price at which such property would be
sold in an arm's-length transaction between a willing buyer and a willing
seller, and to the extent such property comprises an operating business,
it shall be valued on a going concern basis; and (ii) such value shall be
increased by the sum of all Tax Distributions (other than Included Tax
Distributions) made by TWE to the Corporation (and its subsidiaries)
following the Initial Issue Date with respect to the TWE Series B
Interests.
1.52 "TWE Junior Interests" shall mean the TWE Residual
Interests together with the TWE Contingent Interests.
1.53 "TWE Partnership Agreement" shall mean that certain
Agreement of Limited Partnership, dated as of October 29, 1991, as the
same may be amended from time to time.
1.54 "TWE Residual Interests" shall mean the partnership
interests in TWE associated with the Common Sub-Accounts (as defined in
the TWE Partnership Agreement) of the Corporation (and its subsidiaries).
1.55 "TWE Series A Interests" shall mean the partnership
interests in TWE associated with the A Sub-Accounts (as defined in the
TWE Partnership Agreement) of the Corporation (and its subsidiaries).
1.56 "TWE Series B Interests" shall mean the partnership
interests in TWE associated with the B Sub-Accounts (as defined in the
TWE Partnership Agreement) of the Corporation (and its subsidiaries).
1.57 "TWE Valuation" shall mean the average of the
determinations of two Nationally Recognized Investment Banking Firms with
respect to the fair market value of the assets of TWE as of June 30, 2015
(without giving effect to the Series B Redemption or any distribution in
respect of the TWE Junior Interests occurring on such date). The
Nationally Recognized Investment Banking Firms shall be selected by the
Corporation by September 28, 2015 and shall render their opinions by
November 27, 2015. For purposes of the foregoing, (i) the fair market
value of the assets of TWE shall be determined on a going concern basis,
assuming that each division of TWE is sold in a separate arm's-length
transaction between a willing buyer and a willing seller; and (ii) such
value shall be increased by the sum of all Tax Distributions (other than
Included Tax Distributions) made by TWE to the Corporation (and its
subsidiaries) following the Initial Issue Date with respect to the TWE
Series B Interests.
1.58 "U S WEST Option" shall mean the option granted to U
S WEST, Inc., a Delaware corporation, to increase its share of the
partnership interests in TWE pursuant to the Option Agreement, dated as
of September 15, 1992, between TWE and U S WEST, Inc.
1.59 "Voting Rights Triggering Event" shall mean the
failure of the Corporation to (i) pay dividends on the Series K Preferred
Stock in cash, or to the extent permitted by its terms, by the issuance
of additional shares of Series K Preferred Stock, for more than six
consecutive quarterly dividend periods or (ii) discharge any redemption
or exchange obligation with respect to the Series K Preferred Stock.
2. DIVIDENDS.
2.1 The holders of shares of the outstanding Series K
Preferred Stock shall be entitled, when, as and if declared by the Board
of Directors out of funds legally available therefor, to receive
dividends on each outstanding share of Series K Preferred Stock. Each
quarter-annual dividend shall be an amount per share (rounded to the
nearest $.01) equal to $25.625 per $1,000 Liquidation Preference of
Series K Preferred Stock and shall be payable on each Dividend Payment
Date, to the holders of record of Series K Preferred Stock at the close
of business on the Dividend Record Date applicable to such Dividend
Payment Date, commencing on June 30, 1996. Such dividends shall be
cumulative and shall accrue on a day-to-day basis, whether or not earned
or declared, from and after the Issue Date applicable to each share of
this Series. Dividends on the Series K Preferred Stock which are not
declared and paid when due will compound quarterly on each Dividend
Payment Date at the dividend rate. Dividends payable for any partial
dividend period shall be computed on the basis of actual days elapsed
over a 365- (or 366-) day year.
2.2 Dividends may, at the option of the Corporation, be
paid on any Dividend Payment Date either in cash or by issuing fully paid
and nonassessable shares of Series K Preferred Stock with an aggregate
Liquidation Preference equal to the amount of such dividends; PROVIDED,
HOWEVER, that dividends payable on any Dividend Payment Date shall be
paid (i) in cash, to the extent of an amount equal to the Pro Rata
Percentage as of the Dividend Record Date applicable to the immediately
preceding Dividend Payment Date (or the Issue Date, in the case of the
first Dividend Payment Date) multiplied by the amount of cash
distributions, other than Excluded Tax Distributions, if any, received by
the Corporation (and its subsidiaries) with respect to its TWE Series B
Interests and TWE Junior Interests on or after the Dividend Record Date
applicable to the immediately preceding Dividend Payment Date (or the
Issue Date, in the case of the first Dividend Payment Date) to but not
including, the current Dividend Record Date, and (ii) in Series K
Preferred Stock or cash, at the Corporation's option, to the extent of
any balance.
2.3 Except as hereinafter provided in this Section 2.3,
no full dividends or other distributions may be declared or paid or set
apart for payment on Series K Preferred Stock or any other Parity Stock,
and no Parity Stock, including the Series K Preferred Stock, may be
repurchased, exchanged, redeemed or otherwise acquired by the
Corporation, nor may funds be set apart for payment with respect thereto,
unless full cumulative dividends shall have been paid or set apart for
such payment on, and all applicable redemption, exchange and repurchase
obligations shall have been satisfied with respect to, all outstanding
shares of Series K Preferred Stock and such other Parity Stock; PROVIDED
that dividends or distributions may be made on Parity Stock if they are
payable in Junior Stock, and Parity Stock may be converted into or
exchanged for Parity Stock (having no greater preference upon
liquidation) or Junior Stock; and PROVIDED FURTHER that if the Company
shall have satisfied all applicable redemption, exchange and repurchase
obligations with respect to all outstanding shares of Series K Preferred
Stock and other Parity Stock, but if full dividends are not so paid, the
Series K Preferred Stock shall share dividends with all other Parity
Stock, so that the amount of dividends declared per share on Series K
Preferred Stock and all such other Parity Stock shall in all cases bear
to each other the same ratio that full cumulative dividends per share on
the shares of Series K Preferred Stock and all such other Parity Stock
bear to each other. No dividends or other distributions may be paid or
set apart for such payment on Junior Stock, and no Junior Stock may be
repurchased, exchanged, redeemed or otherwise acquired nor may funds be
set apart for payment with respect thereto, if full cumulative dividends
have not been paid on, or any applicable redemption, exchange or
repurchase obligations shall not have been satisfied with respect to, the
Series K Preferred Stock and all other Parity Stock; PROVIDED that
dividends or distributions may be made on Junior Stock if they are
payable-in-kind in additional shares of, or warrants, rights, calls or
options exercisable for or convertible into additional shares of Junior
Stock; and PROVIDED FURTHER that Junior Stock may be converted into or
exchanged for Junior Stock.
2.4 Holders of shares of Series K Preferred Stock shall
not be entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the
Series K Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on the Series K Preferred Stock which may be in arrears (it being
understood that the compounding of unpaid dividends shall not constitute
money in lieu of interest).
2.5 The dividend rate borne by shares of Series K
Preferred Stock shall be subject to increase in accordance with the
Registration Rights Agreement.
2.6 To the extent that the amount of any quarter-annual
dividend payable to a holder of Series K Preferred Stock (in respect of
all shares held by such holder) that is payable in additional shares of
Series K Preferred Stock, valued at the Liquidation Preference thereof,
does not equal a whole number of shares of Series K Preferred Stock, such
fractional amount shall be paid in cash to such holder of Series K
Preferred Stock.
3. OPTIONAL REDEMPTION.
3.1 At any time on or after July 1, 2006, the Corporation
may, at its sole option, subject to the provisions of Sections 2.3 and
3.2, redeem, out of funds legally available therefor, all or any part of
the outstanding shares of Series K Preferred Stock. The redemption
prices for each share of Series K Preferred Stock called for redemption
during the 12-month periods commencing on July 1 of the years set forth
below shall be the amount (expressed as a percentage of the Liquidation
Preference thereof) set forth opposite such years, plus Accumulated
Dividends and Accrued Dividends thereon to the redemption date.
PERIOD PERCENTAGE OF LIQUIDATION PREFERENCE
2006 105.125%
2007 103.844%
2008 102.563%
2009 101.281%
2010 and thereafter 100.000%
3.2 No optional redemption shall be effected unless the
Corporation shall have obtained a Rating Confirmation with respect to
such redemption.
4. MANDATORY REDEMPTION.
4.1 On each Mandatory Redemption Date, the Corporation
shall redeem, out of funds legally available therefor, the Redeemable
Number of shares of Series K Preferred Stock with respect to such
Mandatory Redemption Date at the Mandatory Redemption Price Per Share.
4.2 On the Final Redemption Date, the Corporation shall
redeem, out of funds legally available therefor, each of the then
outstanding shares of Series K Preferred Stock at the lesser of the
Mandatory Redemption Amount Per Share and the Mandatory Redemption Price
Per Share; PROVIDED that if the Corporation does not obtain a TWE
Valuation within 120 days following the final Series B Redemption Date,
the Corporation shall redeem, out of funds legally available therefor,
such shares at the Mandatory Redemption Price Per Share; and PROVIDED
FURTHER that, if the TWE Series B Interests have been fully redeemed in
accordance with the TWE Partnership Agreement, the Corporation shall
redeem, out of funds legally available therefor, such shares at the
Mandatory Redemption Price Per Share.
4.3 Upon the redemption of all of the outstanding shares
of Series K Preferred Stock on the Final Redemption Date pursuant to
Section 4.2, the Corporation's obligations with respect thereto will be
discharged.
5. REDEMPTION UPON INSOLVENCY OF TWE.
5.1 In the event of a liquidation, winding up or
dissolution of TWE upon the Insolvency of TWE, the Corporation shall
redeem, out of funds legally available therefor, each of the outstanding
shares of Series K Preferred Stock on the Insolvency Redemption Date at
the Insolvency Redemption Amount Per Share.
5.2 Upon such redemption, the Corporation's obligation
with respect to the Series K Preferred Stock will be discharged.
6. REORGANIZATION OF TWE.
6.1 In the event of a Reorganization of TWE, on the
Reorganization Redemption/Exchange Date, the Corporation shall either (at
its election) (i) exchange each outstanding share of Series K Preferred
Stock for shares of Series L Preferred Stock having an aggregate
liquidation preference of $1,000 plus the Accumulated Dividends and
Accrued Dividends on such share of Series K Preferred Stock so exchanged
(the "Reorganization Exchange") or (ii) redeem, out of funds legally
available therefor, each outstanding share of Series K Preferred Stock at
the Reorganization Redemption Price Per Share (the "Reorganization
Redemption"); PROVIDED, HOWEVER, that the Corporation may not effect a
Reorganization Redemption prior to July 1, 2011 unless the Corporation
shall have obtained a Rating Confirmation with respect to such
Reorganization Redemption; and PROVIDED, FURTHER, that the Corporation
may not effect a Reorganization Exchange on or after July 1, 2011.
Within 90 days after a Reorganization of TWE, the Corporation shall make
a public announcement that a Reorganization of TWE has occurred and as to
whether it will effect a Reorganization Exchange or Reorganization
Redemption.
6.2 The Corporation shall be entitled to effect a
Reorganization Exchange only to the extent that upon issuance of shares
of Series L Preferred Stock such shares shall be duly authorized and
validly issued, fully paid and nonassessable shares of Series L Preferred
Stock. Certificates for shares of Series L Preferred Stock issued in
exchange for surrendered shares of this Series pursuant to a
Reorganization Exchange shall be made available by the Corporation not
later than the fifth Business Day following the Reorganization
Redemption/Exchange Date.
6.3 Prior to giving notice of its intention to effect a
Reorganization Exchange, the Corporation shall execute and file with the
Secretary of State of the State of Delaware a Certificate of Designation
substantially in the form of Exhibit A hereto relating to the Series L
Preferred Stock, with such changes as may be required by law or that
would not adversely affect the interests of the holders of the Series L
Preferred Stock.
6.4 To the extent that in connection with a
Reorganization Exchange any holder of Series K Preferred Stock shall be
entitled to receive, in respect of all of its shares of Series K
Preferred Stock, a number of shares of Series L Preferred Stock that does
not equal a whole number of shares, then such holder shall receive cash
in lieu of such fractional amount.
7. PROCEDURE FOR REDEMPTION OR EXCHANGE.
7.1 In the event the Corporation shall elect or be
required to redeem or exchange shares of Series K Preferred Stock
pursuant to Sections 3, 4, 5 or 6 hereof, notice of such redemption or
exchange shall be given by first-class mail, not less than 30 nor more
than 60 days prior to the redemption or exchange date, to each record
holder of the shares to be redeemed or exchanged, at such holder's
address as the same appears on the books of the Corporation. Each such
notice shall state: (i) whether the redemption or exchange is pursuant to
Section 3, 4, 5 or 6 hereof; (ii) the time and date as of which the
redemption or exchange shall occur; (iii) the total number of shares of
Series K Preferred Stock to be redeemed or exchanged and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iv) in the case of a redemption,
the redemption price; (v) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price in the
case of a redemption, or for delivery of certificates representing shares
of Series L Preferred Stock in the case of an exchange; (vi) that
dividends on the shares to be redeemed will cease to accrue on such
redemption or exchange date unless the Corporation defaults in the
payment of the redemption price or fails to satisfy its exchange
obligation; and (vii) in the case of redemption, the name of any bank or
trust company, if any, performing the duties referred to in Section 7.3.
7.2 On or before any redemption or exchange date, each
holder of shares of Series K Preferred Stock to be redeemed or exchanged
shall surrender the certificate or certificates representing such shares
of Series K Preferred Stock to the Corporation, in the manner and at the
place designated in the notice of redemption or exchange, and on the
redemption or exchange date, the full redemption price or shares of
Series L Preferred Stock, as the case may be, for such shares of Series K
Preferred Stock shall be paid or delivered to the Person whose name
appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be returned to authorized but unissued
shares. Upon surrender (in accordance with the notice of redemption or
exchange) of the certificate or certificates representing any shares to
be so redeemed or exchanged (properly endorsed or assigned for transfer,
if the Corporation shall so require and the notice of redemption or
exchange shall so state), such shares shall be redeemed by the
Corporation at the redemption price or exchanged by the Corporation for
shares of Series L Preferred Stock. If fewer than all the shares
represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares, without cost to the
holder thereof, together with the amount of cash, if any, in lieu of
fractional shares.
7.3 If a notice of redemption or exchange shall have been
given as provided in Section 7.1, dividends on the shares of Series K
Preferred Stock so called for redemption shall cease to accrue, such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation with respect to shares
so called for redemption or exchange (except the right to receive from
the Corporation the redemption price or the Series L Preferred Stock
without interest) shall cease (including any right to receive dividends
otherwise payable on any Dividend Payment Date that would have occurred
after the time and date of redemption or exchange) either (i) from and
after the time and date fixed in the notice of redemption or exchange as
the time and date of redemption or exchange (unless the Corporation
shall default in the payment of the redemption price or shall fail to
satisfy its exchange obligation, in which case such rights shall not
terminate at such time and date) or (ii) if the Corporation shall so
elect and state in the notice of redemption, from and after the time and
date (which date shall be the date fixed for redemption or an earlier
date not less than 30 days after the date of mailing of the redemption
notice) on which the Corporation shall irrevocably deposit in trust for
the holders of the shares to be redeemed with a designated bank or trust
company doing business in the Borough of Manhattan, City and State of New
York, as paying agent, money sufficient to pay at the office of such
paying agent, on the redemption date, the redemption price. Any money so
deposited with any such paying agent which shall not be required for such
redemption shall be returned to the Corporation forthwith. Subject to
applicable escheat laws, any moneys so set aside by the Corporation and
unclaimed at the end of one year from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders
of such shares so called for redemption shall look only to the general
funds of the Corporation for the payment of the redemption price without
interest. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.
7.4 In the event that fewer than all the outstanding
shares of Series K Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined PRO RATA or by lot, as determined by the
Corporation, except that the Corporation may redeem such shares held by
any holder of fewer than 100 shares (or shares held by holders who would
hold fewer than 100 shares as a result of such redemption), as may be
determined by the Corporation.
8. CHANGE OF CONTROL.
8.1 Upon the occurrence of a Change of Control of the
Corporation, the Corporation shall make an offer (the "Change of Control
Offer") to each holder of Series K Preferred Stock to repurchase, out of
funds legally available therefor, all or any part of such holder's Series
K Preferred Stock at a purchase price per share in cash equal to 101% of
the Liquidation Preference thereof, plus an amount equal to all
Accumulated Dividends and Accrued Dividends thereon to the date of
purchase. The Change of Control Offer must be made within 30 days
following a Change of Control, shall remain open for at least 30 and not
more than 40 days and shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other applicable securities laws and
regulations.
8.2 In the event the Corporation shall be required to
make a Change of Control Offer pursuant to Section 8.1 hereof, notice of
such Change of Control Offer shall be given by first-class mail, to each
record holder of shares of Series K Preferred Stock, at such holder's
address as the same appears on the books of the Corporation. Each such
notice shall state: (i) that a Change of Control has occurred; (ii) the
last day on which the Change of Control Offer may be accepted (the
"Expiration Date"); (iii) the repurchase price; (iv) the name and address
of the paying agent; and (v) the procedures that holders must follow to
accept the Change of Control Offer.
8.3 On or before the Expiration Date, each holder of
shares of Series K Preferred Stock wishing to accept the Change of
Control Offer shall surrender the certificate or certificates
representing such shares of Series K Preferred Stock that such holder
wishes to have repurchased to the Corporation, in the manner and at the
place designated in the notice described in Section 8.2, and on the
repurchase date, the full repurchase price for such shares of Series K
Preferred Stock shall be payable to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be returned to authorized but unissued shares. Upon
surrender (in accordance with the notice described in Section 8.2) of the
certificate or certificates representing any shares to be so repurchased
(properly endorsed or assigned for transfer, if the Corporation shall so
require and the notice of a Change of Control Offer shall so state), such
shares shall be repurchased by the Corporation at the repurchase price.
In case fewer than all the shares represented by any such certificate are
to be repurchased, a new certificate shall be issued representing the
non-repurchased shares, without cost to the holder thereof, together with
the amount of cash, if any, in lieu of fractional shares.
9. VOTING.
9.1 The shares of Series K Preferred Stock shall have no
voting rights except as required by law or as set forth below:
(a) If and whenever at any time or times, a Voting
Rights Triggering Event occurs, then the number of directors constituting
the Board of Directors shall be increased by two (without duplication of
any such increase in directorships required under the terms of any other
Parity Stock) and the holders of shares of Series K Preferred Stock,
voting or consenting, as the case may be, together as a class with the
holders of any shares of Parity Stock entitled to vote thereon and as to
which (i) dividends are in arrears or unpaid in an aggregate amount equal
to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods or (ii) redemption or exchange obligations have not been
satisfied (together with the Series K Preferred Stock, the "Voting Rights
Class"), will be entitled to elect two directors of the Corporation to
fill the newly created directorships.
(b) Such voting rights may be exercised initially
either by written consent or at a special meeting of the holders of the
shares of the Voting Rights Class, called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as
all dividends in arrears on the shares of this Series shall have been
paid in full and/or all redemption or exchange obligations have been
satisfied, as applicable, at which time or times such voting rights and
the term of the directors elected pursuant to Section 9.1(a) shall
terminate.
(c) At any time when such voting rights shall have
vested in holders of shares of the Voting Rights Class described in
Section 9.1(a), and if such rights shall not already have been exercised
by written consent, a proper officer of the Corporation may call, and,
upon the written request of the record holders of shares representing
twenty-five percent (25%) of the voting power of the shares then
outstanding of the Voting Rights Class, addressed to the Secretary of the
Corporation, shall call a special meeting of the holders of shares of
Voting Rights Class. Such meeting shall be held at the earliest
practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of
the Corporation, or, if none, at a place designated by the Board of
Directors. Notwithstanding the provisions of this Section 9.1(c), no
such special meeting shall be called during a period within the 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of the Voting Rights Class shall have the
right to elect directors as provided herein, the presence in person or by
proxy of the holders of shares representing more than fifty percent (50%)
in voting power of the then outstanding shares of the Voting Rights Class
shall be required and shall be sufficient to constitute a quorum of such
class for the election of directors by such class.
(e) Any director elected pursuant to the voting
rights created under this Section 9.1 shall hold office until the next
annual meeting of stockholders (unless such term has previously
terminated pursuant to Section 9.1(b)) and any vacancy in respect of any
such director shall be filled only by vote of the remaining director so
elected by holders of the Voting Rights Class, or if there be no such
remaining director, by the holders of shares of the Voting Rights Class
by written consent or at a special meeting called in accordance with the
procedures set forth in this Section 9, or, if no such special meeting is
called or written consent executed, at the next annual meeting of
stockholders. Upon any termination of such voting rights, the term of
office of all directors elected pursuant to this Section 9 shall
terminate.
(f) So long as any shares of Series K Preferred
Stock remain outstanding, unless a greater percentage shall then be
required by law, the Corporation shall not, without the affirmative vote
at a meeting or the written consent with or without a meeting of the
holders of shares of Series K Preferred Stock representing at least a
majority of the outstanding shares of Series K Preferred Stock voting or
consenting, as the case may be, separately as one class, (i) create,
authorize or issue any Senior Stock or (ii) amend the Certificate of
Designation or the Certificate of Incorporation so as to affect adversely
the specified rights, preferences, privileges or voting rights of holders
of shares of Series K Preferred Stock. The holders of at least a
majority of the outstanding shares of Series K Preferred Stock, voting or
consenting, as the case may be, separately as one class, may waive
compliance with any provision of the Certificate of Designation.
(g) In exercising the voting rights set forth in
this Section 9.1, each share of Series K Preferred Stock shall have a
number of votes equal to its Liquidation Preference.
9.2 Except as set forth in Section 9.1, the Corporation
may (a) create, authorize or issue any shares of Junior Stock or Parity
Stock or (b) increase or decrease the amount of authorized capital stock
of any class, including any preferred stock, without the consent of the
holders of Series K Preferred Stock, voting or consenting separately as a
class, and in taking the actions specified in (a) and (b) the Corporation
shall not be deemed to have affected adversely the rights, preferences,
privileges or voting rights of holders of shares of Series K Preferred
Stock.
10. LIQUIDATION RIGHTS.
10.1 In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, the
holders of the shares of Series K Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution
to stockholders up to their Liquidation Preference of $1,000 per share
plus Accumulated Dividends and Accrued Dividends thereon in preference to
the holders of, and before any distribution is made on, any Junior Stock,
including, without limitation on any Common Stock.
10.2 Neither the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the
merger or consolidation of the Corporation into or with any other
corporation, or the merger or consolidation of any other corporation into
or with the Corporation, shall be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, for the purposes of this Section
10.
10.3 After the payment to the holders of the shares of
Series K Preferred Stock of full preferential amounts provided for in
this Section 10, the holders of Series K Preferred Stock as such shall
have no right or claim to any of the remaining assets of the Corporation.
10.4 In the event the assets of the Corporation available
for distribution to the holders of shares of Series K Preferred Stock
upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such holders are entitled pursuant to Section 10.1,
no such distribution shall be made on account of any shares of any Parity
Stock upon such liquidation, dissolution or winding up unless
proportionate distributable amounts shall be paid on account of the
shares of Series K Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all Parity Stock are entitled
upon such liquidation, dissolution or winding up.
11. MERGER, CONSOLIDATION AND SALE OF ASSETS. Subject to the
next sentence, without the affirmative vote or consent of the holders of
at least a majority of the outstanding shares of Series K Preferred
Stock, voting or consenting, as the case may be, separately as one class,
the Corporation may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any Person unless: (a) the Person
formed by such consolidation or merger (if other than the Corporation) or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made shall be a corporation organized or
existing under the laws of the United States or any State thereof or the
District of Columbia; (b) each share of Series K Preferred Stock shall be
converted into or exchanged for and shall become a share of such
successor, transferee or resulting corporation or a parent corporation of
such corporation, having in respect of such successor, transferee or
resulting corporation or parent corporation substantially the same
powers, preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon, that
the Series K Preferred Stock had immediately prior to such transaction;
and (c) immediately after giving effect to such transaction, no Voting
Rights Triggering Event shall have occurred or be continuing. The
consummation of the TBS Transaction pursuant to the TBS Merger Agreement
will not require the affirmative vote or consent of the holders of shares
of the Series K Preferred Stock.
12. TRANSFER AGENT AND REGISTRAR. The transfer agent and
registrar (the "Transfer Agent") for the Series K Preferred Stock shall
be Chemical Mellon Shareholder Services, L.L.C. The Corporation may, in
its sole discretion, remove the Transfer Agent with 10 days' prior
written notice to the Transfer Agent and appoint a successor Transfer
Agent prior to such removal.
13. COVENANT TO REPORT. Notwithstanding that the Corporation
may not be subject to the reporting requirements of Section 13 or Section
15(d) of the Exchange Act, the Corporation will provide the Transfer
Agent and the holders of Series K Preferred Stock with all information,
documents and reports specified in Section 13 and Section 15(d) of the
Exchange Act.
14. OTHER PROVISIONS.
14.1 With respect to any notice to a holder of shares of
Series K Preferred Stock required to be provided hereunder, neither
failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency of the
notice or the validity of the proceedings referred to in such notice with
respect to the other holders or affect the legality or validity of any
distribution, right, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote
upon any such action. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
14.2 Shares of Series K Preferred Stock issued and
reacquired will, upon compliance with the applicable requirements of
Delaware law, have the status of authorized but unissued shares of
Preferred Stock of the Corporation undesignated as to series and may with
any and all other authorized but unissued shares of Preferred Stock of
the Corporation be designated or redesignated and issued or reissued, as
the case may be, as part of any series of Preferred Stock of the
Corporation, except that any issuance or reissuance of shares of Series K
Preferred Stock must be in compliance with the Certificate of
Designation.
14.3 The shares of Series K Preferred Stock shall be
issuable in whole shares.
14.4 The Corporation shall be entitled to recognize the
exclusive right of a person registered on its records as the holder of
shares of Series K Preferred Stock for all purposes.
14.5 All notice periods referred to herein shall commence
on the date of the mailing of the applicable notice.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this ______ day of April, 1996.
TIME WARNER INC.
By:
----------------------------
Name:
Title:
Attest:
________________________
Name:
Title:
Exhibit A
[FORM OF]
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF, OF 10 1/4% SERIES L EXCHANGEABLE PREFERRED STOCK
OF
TIME WARNER INC.
----------------------------
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
------------------------------
TIME WARNER INC., a corporation organized and existing by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that the following resolution was duly adopted by
action of the Board of Directors of the Corporation, with the provisions
thereof fixing the number of shares of the series, the dividend rate, and
the optional redemption prices being set by action of the Pricing
Committee of the Board of Directors of the Corporation:
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Section 2 of Article IV of the Restated Certificate of Incorporation of
the Corporation, as amended from time to time (the "Certificate of
Incorporation"), and pursuant to authority expressly delegated to the
Pricing Committee of the Board of Directors of the Corporation by such
Board of Directors, and pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, there be created from the
250,000,000 shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of the Corporation authorized to be issued pursuant
to the Certificate of Incorporation, a series of Preferred Stock,
consisting of 9,000,000 shares of 10 1/4% Series L Exchangeable
Preferred Stock, the voting powers, designations, preferences and
relative, participating, optional or other special rights of which, and
qualifications, limitations or restrictions thereof, shall be as follows:
The series of Preferred Stock hereby established shall consist of
9,000,000 shares of 10 1/4% Series L Exchangeable Preferred Stock (such
series being hereinafter referred to as "Series L Preferred Stock" or
"this Series"). The rights, preferences and limitations of the Series L
Preferred Stock shall be as follows:
1. DEFINITIONS. As used herein, the following terms shall
have the following meanings:
1.1 "Accrued Dividends" shall mean, with respect to any
share of this Series, as of any date, the accrued and unpaid dividends on
such share from the most recent Dividend Payment Date (or the Issue Date
applicable to such share, if such date is prior to the first Dividend
Payment Date applicable to such share) to such date.
1.2 "Accumulated Dividends" shall mean, with respect to
any share of this Series, as of any date, the aggregate accumulated and
unpaid dividends on such share from the Issue Date applicable to such
share until the most recent Dividend Payment Date prior to such date.
There shall be no Accumulated Dividends with respect to any share of this
Series prior to the first Dividend Payment Date applicable to such share.
1.3 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be taken
by the Board of Directors, any committee of the Board of Directors duly
authorized to take such action.
1.4 "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in the City of
New York are authorized or required by law or executive order to close.
1.5 "Change of Control" shall mean:
(i) whenever, in any three-year period, a majority
of the members of the Board of Directors elected during such three-year
period shall have been so elected against the recommendation of the
management of the Corporation or the Board of Directors in office
immediately prior to such election; it being understood that for purposes
of this clause (i) a member of such Board of Directors shall be deemed to
have been elected against the recommendation of such Board of Directors
if his or her initial election occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than such Board of Directors; or
(ii) whenever any Person shall acquire (whether by
merger, consolidation, sale, assignment, lease, transfer or otherwise, in
one transaction or any related series of transactions) or otherwise
beneficially own voting securities of the Corporation that represent in
excess of 50% of the voting power of all outstanding voting securities of
the Corporation generally entitled to vote for the election of directors,
if such Person had acquired or publicly announced its intention to
initially acquire ten percent or more of such voting securities in a
transaction that had not, within 30 days after the date of such
acquisition or public announcement, been approved by the management of
the Corporation.
1.6 "Common Stock" shall mean the class of Common Stock,
par value $1.00 per share, of the Corporation or any other class of stock
resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no
par value, or as a result of a subdivision or combination.
1.7 "Debt Exchange" shall mean the exchange of Series L
Preferred Stock for Senior Subordinated Debentures pursuant to Section 5.
1.8 "Dividend Payment Date" shall mean March 30, June 30,
September 30 and December 30 of each year, commencing on the first such
date to occur after the Issue Date.
1.9 "Dividend Record Date" shall mean, with respect to
each Dividend Payment Date, the fifteenth day immediately preceding such
Dividend Payment Date.
1.10 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.11 "Exchange Date" shall mean the date upon which the
Debt Exchange occurs.
1.12 "Initial Issue Date" shall mean the first date on
which shares of Series L Preferred Stock are issued in exchange for
shares of Series K Preferred Stock.
1.13 "Issue Date" shall mean, with respect to each share
of Series L Preferred Stock, the date upon which such share is first
issued.
1.14 "Junior Stock" shall mean the Common Stock, the
Series A Participating Cumulative Preferred Stock and the shares of any
other class or series of stock of the Corporation established, authorized
or issued after April 11, 1996 that, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors,
acting pursuant to authority granted in the Certificate of Incorporation,
shall fix the relative rights, preferences and limitations thereof, shall
be junior to the Series L Preferred Stock in respect of the right to
receive dividends or to participate in any other distribution of assets.
1.15 "Liquidation Preference" shall mean, with respect to
each share of Series L Preferred Stock, $1,000.
1.16 "Mandatory Redemption Date" shall mean July 1, 2011.
1.17 "Mandatory Redemption Price Per Share" shall mean,
with respect to each share of Series L Preferred Stock to be redeemed, an
amount equal to the Liquidation Preference thereof, plus Accumulated
Dividends and Accrued Dividends thereon.
1.18 "Nationally Recognized Investment Banking Firm" shall
mean an investment banking firm having a national reputation in the
United States which shall have experience in securities rating matters
and which shall be approved by a majority of the members of the Board of
Directors who are not officers or employees of the Corporation or its
subsidiaries, including TWE.
1.19 "New Time Warner" shall mean Holdco (as defined in
the TBS Merger Agreement).
1.20 "Optional Redemption Price Per Share" shall mean, as
of any date, the price at which the Corporation may, at its option,
redeem one share of Series L Preferred Stock pursuant to Section 3.1.
1.21 "Parity Stock" shall mean the shares of the
Corporation's Series B 6.40% Preferred Stock, Series C Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series E
Convertible Preferred Stock, Series F Convertible Preferred Stock, Series
G Convertible Preferred Stock, Series H Convertible Preferred Stock,
Series I Convertible Preferred Stock, Series K Preferred Stock, Series L
Preferred Stock and any other class or series of stock of the Corporation
created after April 11, 1996 that, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors,
acting pursuant to authority granted in the Certificate of Incorporation,
shall fix the relative rights, preferences and limitations thereof,
shall, in the event that the stated dividends thereon are not paid in
full, be entitled to share ratably with the Series L Preferred Stock in
the payment of dividends, including accumulations, if any, in accordance
with the sums which would be payable on such shares if all dividends were
declared and paid in full, or shall, in the event that the amounts
payable thereon in liquidation are not paid in full, be entitled to share
ratably with the Series L Preferred Stock in any other distribution of
assets in accordance with the sums which would be payable in such
distribution if all sums payable were discharged in full; PROVIDED,
HOWEVER, that the term "Parity Stock" shall be deemed to refer (i) in
Section 2.3 hereof, to any stock which is Parity Stock in respect of
dividend rights; (ii) in Section 9 hereof, to any stock which is Parity
Stock in respect of the distribution of assets; and (iii) in Section 8.1
hereof, to any stock which is Parity Stock in respect of either dividend
rights or the distribution of assets and which, pursuant to the
Certificate of Incorporation or any instrument in which the Board of
Directors, acting pursuant to authority granted in the Certificate of
Incorporation, shall so designate, is entitled to vote as part of the
Voting Rights Class.
1.22 "Person" shall mean any individual, corporation,
general partnership, limited partnership, limited liability partnership,
joint venture, association, joint-stock company, trust, limited liability
company, unincorporated organization or government or any agency or
political subdivision thereof.
1.23 "Rating Confirmation" shall mean either (i) a
confirmation from each of Moody's Investors Service, Inc. or any
successor to its rating agency business ("Moody's") and Standard and
Poor's Corporation or any successor to its rating agency business ("S&P")
that any contemplated redemption or exchange by the Corporation would not
result in a downgrade of its rating of the Corporation's senior unsecured
long-term debt, or (ii) a good faith determination by the Board of
Directors or any committee thereof (after consultation with a Nationally
Recognized Investment Banking Firm) that any contemplated redemption or
exchange by the Corporation should not result in a downgrade in the
rating of the Corporation's senior unsecured long-term debt by either
Moody's or S&P.
1.24 "Registration Rights Agreement" shall mean that
certain Registration Rights Agreement, dated April 11, 1996, among the
Corporation, Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated.
1.25 "Senior Stock" shall mean the shares of any class or
series of stock of the Corporation created after April 11, 1996 that, by
the terms of the Certificate of Incorporation or of the instrument by
which the Board of Directors, acting pursuant to authority granted in the
Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall be senior to the Series L Preferred Stock
in respect of the right to receive dividends or to participate in any
other distribution of assets.
1.26 "Senior Subordinated Debentures" shall mean the
10 1/4% Senior Subordinated Debentures 2011 issued by the Corporation or
New Time Warner, as the case may be, pursuant to the Senior Subordinated
Indenture.
1.27 "Senior Subordinated Indenture" shall mean an
indenture substantially in the form filed as an exhibit to the
Corporation's Current Report on Form 8-K dated April 11, 1996.
1.28 "Series K Preferred Stock" shall mean the
Corporation's 10 1/4% Series K Exchangeable Preferred Stock in exchange
for which shares of this Series were first issued.
1.29 "TBS Merger Agreement" shall mean the Amended and
Restated Agreement and Plan of Merger dated as of September 22, 1995,
among the Corporation, certain of its subsidiaries and Turner
Broadcasting System, Inc., as the same may be amended from time to time.
1.30 "TBS Transaction" shall mean the transactions
contemplated by the TBS Merger Agreement.
1.31 "Trust Indenture Act" shall mean the Trust Indenture
Act of 1939, as amended.
1.32 "TWE" shall mean Time Warner Entertainment Company,
L.P., a Delaware limited partnership.
1.33 "Voting Rights Triggering Event" shall mean the
failure of the Corporation to (i) pay dividends on the Series L Preferred
Stock in cash, or to the extent permitted by its terms, by the issuance
of additional shares of Series L Preferred Stock, for more than six
consecutive quarterly dividend periods or (ii) discharge any redemption
or exchange obligation with respect to the Series L Preferred Stock.
2. DIVIDENDS.
2.1 The holders of outstanding shares of Series L
Preferred Stock shall be entitled, when, as and if declared by the Board
of Directors out of funds legally available therefor, to receive
dividends on each outstanding share of Series L Preferred Stock. Each
quarter-annual dividend shall be an amount per share (rounded to the
nearest $.01) equal to $25.625 per $1,000 Liquidation Preference of
Series L Preferred Stock and shall be payable on each Dividend Payment
Date, to the holders of record of Series L Preferred Stock at the close
of business on the Dividend Record Date applicable to such Dividend
Payment Date, commencing on the first Dividend Payment Date following the
Initial Issue Date. Such dividends shall be cumulative and shall accrue
on a day-to-day basis, whether or not earned or declared, from and after
the Issue Date applicable to each share of this Series. Dividends on the
Series L Preferred Stock which are not declared and paid when due will
compound quarterly on each Dividend Payment Date at the dividend rate.
Dividends payable for any partial dividend period shall be computed on
the basis of actual days elapsed over a 365- (or 366-) day year.
2.2 With respect to any periods ending on or prior to
June 30, 2006, dividends may, at the option of the Corporation, be paid
on any Dividend Payment Date either in cash or by issuing fully paid and
nonassessable shares of Series L Preferred Stock with an aggregate
Liquidation Preference equal to the amount of such dividends (or, in
connection with a Debt Exchange, by issuing Senior Subordinated
Debentures with an aggregate principal amount equal to the amount of such
dividends as provided in Section 5.1). Thereafter, dividends payable on
any Dividend Payment Date shall be paid only in cash.
2.3 Except as hereinafter provided in this Section 2.3,
no full dividends or other distributions may be declared or paid or set
apart for payment on Series L Preferred Stock or any other Parity Stock,
and no Parity Stock, including the Series L Preferred Stock, may be
repurchased, exchanged, redeemed or otherwise acquired by the
Corporation, nor may funds be set apart for payment with respect thereto,
unless full cumulative dividends shall have been paid or set apart for
such payment on, and all applicable redemption, exchange and repurchase
obligations shall have been satisfied with respect to, all outstanding
shares of Series L Preferred Stock and such other Parity Stock; PROVIDED
that dividends or distributions may be made on Parity Stock if they are
payable in Junior Stock, and Parity Stock may be converted into or
exchanged for Parity Stock (having no greater preference upon
liquidation) or Junior Stock; and PROVIDED FURTHER that if the Company
shall have satisfied all applicable redemption, exchange and repurchase
obligations with respect to all outstanding shares of Series K Preferred
Stock and other Parity Stock, but if full dividends are not so paid, the
Series L Preferred Stock shall share dividends with all other Parity
Stock, so that the amount of dividends declared per share on Series L
Preferred Stock and all such other Parity Stock shall in all cases bear
to each other the same ratio that full cumulative dividends per share on
the shares of Series L Preferred Stock and all such other Parity Stock
bear to each other. No dividends or other distributions may be paid or
set apart for such payment on Junior Stock, and no Junior Stock may be
repurchased, redeemed, exchanged or otherwise acquired nor may funds be
set apart for payment with respect thereto, if full cumulative dividends
have not been paid on, or any applicable redemption, exchange or
repurchase obligations shall not have been satisfied with respect to, the
Series L Preferred Stock and all other Parity Stock; PROVIDED that
dividends or distributions may be made on Junior Stock if they are
payable-in-kind in additional shares of, or warrants, rights, calls or
options exercisable for or convertible into additional shares of Junior
Stock and; and PROVIDED FURTHER that Junior Stock may be converted into
or exchanged for Junior Stock.
2.4 Holders of shares of Series L Preferred Stock shall
not be entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the
Series L Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on the Series L Preferred Stock which may be in arrears (it being
understood that compounding of unpaid dividends shall not constitute
money in lieu of interest).
2.5 The dividend rate borne by shares of Series L
Preferred Stock may be subject to increase in accordance with the
Registration Rights Agreement.
2.6 To the extent that the amount of any quarter-annual
dividend payable to a holder of Series L Preferred Stock (in respect of
all shares held by such holder) that is payable in additional shares of
Series L Preferred Stock, valued at the Liquidation Preference thereof,
does not equal a whole number of shares of Series L Preferred Stock, such
fractional amount shall be paid in cash to such holder of Series L
Preferred Stock.
3. OPTIONAL REDEMPTION.
3.1 At any time on or after July 1, 2006, the Corporation
may, at its sole option, subject to the provisions of Sections 2.3 and
3.2, redeem, out of funds legally available therefor, all or any part of
the outstanding shares of Series L Preferred Stock. The redemption
prices for each share of Series L Preferred Stock called for redemption
during the 12-month periods commencing on July 1 of the years set forth
below shall be the amount (expressed as a percentage of the Liquidation
Preference thereof) set forth opposite such years, plus Accumulated
Dividends and Accrued Dividends thereon to the redemption date.
PERIOD PERCENTAGE OF LIQUIDATION PREFERENCE
2006 105.125%
2007 103.844%
2008 102.563%
2009 101.281%
2010 and thereafter 100.000%
3.2 No optional redemption shall be effected unless the
Corporation shall have obtained a Rating Confirmation with respect to
such redemption.
4. MANDATORY REDEMPTION.
4.1 On the Mandatory Redemption Date, the Corporation
shall redeem, out of funds legally available therefor, each of the then
outstanding shares of Series L Preferred Stock as of the Mandatory
Redemption Date at the Mandatory Redemption Price Per Share.
4.2 Upon the redemption of all of the outstanding shares
of Series L Preferred Stock on the Mandatory Redemption Date pursuant to
Section 4.1, the Corporation's obligations with respect thereto will be
discharged.
5. DEBT EXCHANGE
5.1 On any Dividend Payment Date, subject to the
provisions of Sections 2.3 and 5.2, the Corporation may, at its sole
option, exchange, out of funds legally available therefor, each of the
shares of Series L Preferred Stock, in whole but not in part, for Senior
Subordinated Debentures having an aggregate principal amount equal to the
Liquidation Preference on the Series L Preferred Stock plus Accrued
Dividends thereon. Notwithstanding the foregoing, the Corporation may
not exercise such exchange option unless all Accumulated Dividends in
respect of shares of Series L Preferred Stock surrendered to the
Corporation upon exchange shall have been paid either in cash or, in
respect of Accumulated Dividends relating to any Dividend Payment Date
prior to July 1, 2006, at the option of the Corporation, in cash,
additional shares of Series L Preferred Stock or Senior Subordinated
Debentures having a principal amount equal to such amount.
5.2 No Debt Exchange shall be effected unless the
Corporation shall have obtained a Rating Confirmation with respect to the
Debt Exchange.
5.3 Upon the Debt Exchange, the Corporation shall issue
Senior Subordinated Debentures only in denominations of $1,000 and
integral multiples thereof and shall pay cash in lieu of issuing Senior
Subordinated Debentures in principal amounts of less than $1,000.
5.4 Prior to giving notice of its intention to effect the
Debt Exchange, the Corporation shall execute and deliver with a bank or
trust company selected by the Corporation, the Senior Subordinated
Indenture.
6. PROCEDURE FOR REDEMPTION OR EXCHANGE.
6.1 In the event the Corporation shall elect or be
required to redeem or exchange shares of Series L Preferred Stock
pursuant to Sections 3, 4 or 5 hereof, notice of such redemption or
exchange shall be given by first-class mail, not less than 30 nor more
than 60 days prior to the redemption or exchange date, to each record
holder of the shares to be redeemed or exchanged, at such holder's
address as the same appears on the books of the Corporation. Each such
notice shall state: (i) whether the redemption or exchange is pursuant to
Section 3, 4 or 5 hereof; (ii) the time and date as of which the
redemption or exchange shall occur; (iii) the total number of shares of
Series L Preferred Stock to be redeemed or exchanged and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iv) in the case of a redemption,
the redemption price; (v) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price in the
case of a redemption, or for delivery of Senior Subordinated Debentures
in the case of the Debt Exchange; (vi) that dividends on the shares to be
redeemed will cease to accrue on such redemption or exchange date unless
the Corporation defaults in the payment of the redemption price or fails
to satisfy its exchange obligation; and (vii) in the case of redemption,
the name of any bank or trust company, if any, performing the duties
referred to in Section 6.3.
6.2 On or before any redemption or exchange date, each
holder of shares of Series L Preferred Stock to be redeemed or exchanged
shall surrender the certificate or certificates representing such shares
of Series L Preferred Stock to the Corporation, in the manner and at the
place designated in the notice of redemption or exchange, and on the
redemption or exchange date, the full redemption price or Senior
Subordinated Debentures in the principal amount specified in Section 5.1,
as the case may be, for such shares of Series L Preferred Stock shall be
paid or delivered to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall
be returned to authorized but unissued shares. Upon surrender (in
accordance with the notice of redemption or exchange) of the certificate
or certificates representing any shares to be so redeemed or exchanged
(properly endorsed or assigned for transfer, if the Corporation shall so
require and the notice of redemption or exchange shall so state), such
shares shall be redeemed by the Corporation at the redemption price or
exchanged by the Corporation for Senior Subordinated Debentures in the
principal amount specified in Section 5.1. If fewer than all the shares
represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares, without cost to the
holder thereof, together with the amount of cash, if any, in lieu of
fractional shares.
6.3 If a notice of redemption or exchange shall have been
given as provided in Section 6.1, dividends on the shares of Series L
Preferred Stock so called for redemption or exchange shall cease to
accrue, such shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation with
respect to shares so called for redemption or exchange (except the right
to receive from the Corporation the redemption price or the Senior
Subordinated Debentures without interest) shall cease (including any
right to receive dividends otherwise payable on any Dividend Payment Date
that would have occurred after the time and date of redemption or
exchange) either (i) from and after the time and date fixed in the notice
of redemption or exchange as the time and date of redemption or exchange
(unless the Corporation shall default in the payment of the redemption
price or shall fail to satisfy its exchange obligation, in which case
such rights shall not terminate at such time and date) or (ii) if the
Corporation shall so elect and state in the notice of redemption, from
and after the time and date (which date shall be the date fixed for
redemption or an earlier date not less than 30 days after the date of
mailing of the redemption notice) on which the Corporation shall
irrevocably deposit in trust for the holders of the shares to be redeemed
with a designated bank or trust company doing business in the Borough of
Manhattan, City and State of New York, as paying agent, money sufficient
to pay at the office of such paying agent, on the redemption date, the
redemption price. Any money so deposited with any such paying agent
which shall not be required for such redemption shall be returned to the
Corporation forthwith. Subject to applicable escheat laws, any moneys so
set aside by the Corporation and unclaimed at the end of one year from
the redemption date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption
shall look only to the general funds of the Corporation for the payment
of the redemption price without interest. Any interest accrued on funds
so deposited shall be paid to the Corporation from time to time.
6.4 In the event that fewer than all the outstanding
shares of Series L Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined PRO RATA or by lot, as determined by the
Corporation, except that the Corporation may redeem such shares held by
any holder of fewer than 100 shares (or shares held by holders who would
hold fewer than 100 shares as a result of such redemption), as may be
determined by the Corporation.
7. CHANGE OF CONTROL.
7.1 Upon the occurrence of a Change of Control of the
Corporation, the Corporation shall make an offer (the "Change of Control
Offer") to each holder of Series L Preferred Stock to repurchase, out of
funds legally available therefor, all or any part of such holder's Series
L Preferred Stock at a purchase price per share in cash equal to 101% of
the Liquidation Preference thereof, plus an amount equal to all
Accumulated Dividends and Accrued Dividends thereon to the date of
purchase. The Change of Control Offer must be made within 30 days
following a Change of Control, shall remain open for at least 30 and not
more than 40 days and shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other applicable securities laws and
regulations.
7.2 In the event the Corporation shall be required to
make a Change of Control Offer pursuant to Section 7.1 hereof, notice of
such Change of Control Offer shall be given by first-class mail, to each
record holder of shares of Series L Preferred Stock, at such holder's
address as the same appears on the books of the Corporation. Each such
notice shall state: (i) that a Change of Control has occurred; (ii) the
last day on which the Change of Control Offer may be accepted (the
"Expiration Date"); (iii) the repurchase price; (iv) the name and address
of the paying agent; and (v) the procedures that holders must follow to
accept the Change of Control Offer.
7.3 On or before the Expiration Date, each holder of
shares of Series L Preferred Stock wishing to accept the Change of
Control Offer shall surrender the certificate or certificates
representing such shares of Series L Preferred Stock that such holder
wishes to have repurchased to the Corporation, in the manner and at the
place designated in the notice described in Section 7.2, and on the
repurchase date, the full repurchase price for such shares of Series L
Preferred Stock shall be payable to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be returned to authorized but unissued shares. Upon
surrender (in accordance with the notice described in Section 7.2) of the
certificate or certificates representing any shares to be so repurchased
(properly endorsed or assigned for transfer, if the Corporation shall so
require and the notice of a Change of Control Offer shall so state), such
shares shall be repurchased by the Corporation at the repurchase price.
In case fewer than all the shares represented by any such certificate are
to be repurchased, a new certificate shall be issued representing the
non-repurchased shares, without cost to the holder thereof, together with
the amount of cash, if any, in lieu of fractional shares.
8. VOTING.
8.1 The shares of Series L Preferred Stock shall have no
voting rights except as required by law or as set forth below:
(a) If and whenever at any time or times, a Voting
Rights Triggering Event occurs, then the number of directors constituting
the Board of Directors shall be increased by two (without duplication of
any such increase in directorships required under the terms of any other
Parity Stock) and the holders of shares of Series L Preferred Stock,
voting or consenting, as the case may be, together as a class with the
holders of any shares of Parity Stock entitled to vote thereon and as to
which (i) dividends are in arrears or unpaid in an aggregate amount equal
to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods or (ii) redemption or exchange obligations have not been
satisfied (together with the Series L Preferred Stock, the "Voting Rights
Class"), will be entitled to elect two directors of the Corporation to
fill the newly created directorships.
(b) Such voting rights may be exercised initially
either by written consent or at a special meeting of the holders of the
shares of the Voting Rights Class, called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as
all dividends in arrears on the shares of this Series shall have been
paid in full and/or all redemption or exchange obligations have been
satisfied, as applicable, at which time or times such voting rights and
the term of the directors elected pursuant to Section 8.1(a) shall
terminate.
(c) At any time when such voting rights shall have
vested in holders of shares of the Voting Rights Class described in
Section 8.1(a), and if such rights shall not already have been exercised
by written consent, a proper officer of the Corporation may call, and,
upon the written request of the record holders of shares representing
twenty-five percent (25%) of the voting power of the shares then
outstanding of the Voting Rights Class, addressed to the Secretary of the
Corporation, shall call a special meeting of the holders of shares of
Voting Rights Class. Such meeting shall be held at the earliest
practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of
the Corporation, or, if none, at a place designated by the Board of
Directors. Notwithstanding the provisions of this Section 8.1(c), no
such special meeting shall be called during a period within the 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of the Voting Rights Class shall have the
right to elect directors as provided herein, the presence in person or by
proxy of the holders of shares representing more than fifty percent (50%)
in voting power of the then outstanding shares of the Voting Rights Class
shall be required and shall be sufficient to constitute a quorum of such
class for the election of directors by such class.
(e) Any director elected pursuant to the voting
rights created under this Section 8.1 shall hold office until the next
annual meeting of stockholders (unless such term has previously
terminated pursuant to Section 8.1(b)) and any vacancy in respect of any
such director shall be filled only by vote of the remaining director so
elected by holders of the Voting Rights Class, or if there be no such
remaining director, by the holders of shares of the Voting Rights Class
by written consent or at a special meeting called in accordance with the
procedures set forth in this Section 8, or, if no such special meeting is
called or written consent executed, at the next annual meeting of
stockholders. Upon any termination of such voting rights, the term of
office of all directors elected pursuant to this Section 8 shall
terminate.
(f) So long as any shares of Series L Preferred
Stock remain outstanding, unless a greater percentage shall then be
required by law, the Corporation shall not, without the affirmative vote
at a meeting or the written consent with or without a meeting of the
holders of shares of Series L Preferred Stock representing at least a
majority of the outstanding shares of Series L Preferred Stock voting or
consenting, as the case may be, separately as one class, (i) create,
authorize or issue any Senior Stock or (ii) amend the Certificate of
Designation or the Certificate of Incorporation so as to affect adversely
the specified rights, preferences, privileges or voting rights of holders
of shares of Series L Preferred Stock. The holders of at least a
majority of the outstanding shares of Series L Preferred Stock, voting or
consenting, as the case may be, separately as one class, may waive
compliance with any provision of the Certificate of Designation.
(g) In exercising the voting rights set forth in
this Section 8.1, each share of Series L Preferred Stock shall have a
number of votes equal to its Liquidation Preference.
8.2 Except as set forth in Section 8.1, the Corporation
may (a) create, authorize or issue any shares of Junior Stock or Parity
Stock or (b) increase or decrease the amount of authorized capital stock
of any class, including any preferred stock, without the consent of the
holders of Series L Preferred Stock, voting or consenting separately as a
class, and in taking the actions specified in (a) and (b) the Corporation
shall not be deemed to have affected adversely the rights, preferences,
privileges or voting rights of holders of shares of Series L Preferred
Stock.
9. LIQUIDATION RIGHTS.
9.1 In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, the
holders of the shares of Series L Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution
to stockholders up to their Liquidation Preference of $1,000 per share
plus Accumulated Dividends and Accrued Dividends thereon in preference to
the holders of, and before any distribution is made on, any Junior Stock,
including, without limitation on any Common Stock.
9.2 Neither the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the
merger or consolidation of the Corporation into or with any other
corporation, or the merger or consolidation of any other corporation into
or with the Corporation, shall be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, for the purposes of this Section
9.
9.3 After the payment to the holders of the shares of
Series L Preferred Stock of full preferential amounts provided for in
this Section 9, the holders of Series L Preferred Stock as such shall
have no right or claim to any of the remaining assets of the Corporation.
9.4 In the event the assets of the Corporation available
for distribution to the holders of shares of Series L Preferred Stock
upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such holders are entitled pursuant to Section 9.1,
no such distribution shall be made on account of any shares of any Parity
Stock upon such liquidation, dissolution or winding up unless
proportionate distributable amounts shall be paid on account of the
shares of Series L Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all Parity Stock are entitled
upon such liquidation, dissolution or winding up.
10. MERGER, CONSOLIDATION AND SALE OF ASSETS. Subject to the
next sentence, without the affirmative vote or consent of the holders of
at least a majority of the outstanding shares of Series L Preferred
Stock, voting or consenting, as the case may be, separately as one class,
the Corporation may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any Person unless: (a) the Person
formed by such consolidation or merger (if other than the Corporation) or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made shall be a corporation organized or
existing under the laws of the United States or any State thereof or the
District of Columbia; (b) each share of Series L Preferred Stock shall be
converted into or exchanged for and shall become a share of such
successor, transferee or resulting corporation or a parent corporation of
such corporation, having in respect of such successor, transferee or
resulting corporation or parent corporation substantially the same
powers, preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon, that
the Series L Preferred Stock had immediately prior to such transaction;
and (c) immediately after giving effect to such transaction, no Voting
Rights Triggering Event shall have occurred or be continuing. The
consummation of the TBS Transaction pursuant to the TBS Merger Agreement
will not require the affirmative vote or consent of the holders of shares
of the Series L Preferred Stock.
11. TRANSFER AGENT AND REGISTRAR. The transfer agent and
registrar (the "Transfer Agent") for Series L Preferred Stock shall be
_______________. The Corporation may, in its sole discretion, remove the
Transfer Agent with 10 days' prior written notice to the Transfer Agent
and appoint a successor Transfer Agent prior to such removal.
12. COVENANT TO REPORT. Notwithstanding that the Corporation
may not be subject to the reporting requirements of Section 13 or Section
15(d) of the Exchange Act, the Corporation will provide the Transfer
Agent and the holders of Series L Preferred Stock with all information,
documents and reports specified in Section 13 and Section 15(d) of the
Exchange Act.
13. OTHER PROVISIONS.
13.1 With respect to any notice to a holder of shares of
Series L Preferred Stock required to be provided hereunder, neither
failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency of the
notice or the validity of the proceedings referred to in such notice with
respect to the other holders or affect the legality or validity of any
distribution, right, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote
upon any such action. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
13.2 Shares of Series L Preferred Stock issued and
reacquired will, upon compliance with the applicable requirements of
Delaware law, have the status of authorized but unissued shares of
Preferred Stock of the Corporation undesignated as to series and may with
any and all other authorized but unissued shares of Preferred Stock of
the Corporation be designated or redesignated and issued or reissued, as
the case may be, as part of any series of Preferred Stock of the
Corporation, except that any issuance or reissuance of shares of Series L
Preferred Stock must be in compliance with the Certificate of
Designation.
13.3 The shares of Series L Preferred Stock shall be
issuable in whole shares.
13.4 The Corporation shall be entitled to recognize the
exclusive right of a person registered on its records as the holder of
shares of Series L Preferred Stock for all purposes.
13.5 All notice periods referred to herein shall commence
on the date of the mailing of the applicable notice.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this ______ day of____________,_____.
TIME WARNER INC.
By:
---------------------------
Name:
Title:
Attest:
________________________
Name:
Title: