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EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
Dated as of September 22, 1995
Among
TIME WARNER INC.,
TIME WARNER ACQUISITION CORP.
And
TURNER BROADCASTING SYSTEM, INC.
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TABLE OF CONTENTS
Page
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Parties and Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
The Merger
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SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.04. Effects of the Merger . . . . . . . . . . . . . . . . . . . 3
SECTION 1.05. Certificate of Incorporation and By-Laws . . . . . . . . . 3
SECTION 1.06. Directors . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Exchange of Certificates . . . . . . . . . . . . . . . . . 7
ARTICLE III
Representations and Warranties
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SECTION 3.01. Representations and Warranties of the Company . . . . . . . 11
SECTION 3.02. Representations and Warranties of Parent and Sub . . . . . 24
ARTICLE IV
Covenants Relating to Conduct of Business
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SECTION 4.01. Conduct of Business . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . 38
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Contents, p. 2
Page
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ARTICLE V
Additional Agreements
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SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Shareholders Meeting and Parent's Stockholders
Meeting . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.02. Letter of the Company's Accountants . . . . . . . . . . . 40
SECTION 5.03. Letter of Parent's Accountants . . . . . . . . . . . . . . 41
SECTION 5.04. Access to Information; Confidentiality . . . . . . . . . . 41
SECTION 5.05. Best Efforts; Notification . . . . . . . . . . . . . . . . 41
SECTION 5.06. Board Authority . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.07. Public Announcements . . . . . . . . . . . . . . . . . . . 44
SECTION 5.08. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.09. Indemnification . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.10. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.11. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.12. Stock Exchange Listing . . . . . . . . . . . . . . . . . . 47
SECTION 5.13. Execution of the Registration Rights Agreement . . . . . . 47
SECTION 5.14. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.15. Transfer and Real Property Transfer Gains Taxes . . . . . 47
SECTION 5.16. Material Transactions by Parent . . . . . . . . . . . . . . 47
ARTICLE VI
Conditions Precedent
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SECTION 6.01. Conditions to Each Party's Obligation To Effect The Merger. 49
SECTION 6.02. Conditions to Obligations of Parent and Sub . . . . . . . . 50
SECTION 6.03. Conditions to Obligation of the Company . . . . . . . . . . 53
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Contents, p. 3
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ARTICLE VII
Termination, Amendment and Waiver
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SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . 57
SECTION 7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver . 59
ARTICLE VIII
General Provisions
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SECTION 8.01. Nonsurvival of Representations and Warranties . . . . . . . 60
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.05. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries . . . . . . 62
SECTION 8.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.10. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 63
EXHIBITS
Exhibit A Form of Affiliate Letter
Exhibit B Form of Registration Rights Agreement
Exhibit C-1 Form of Investors' Agreement with Principal Shareholder and Related Parties
Exhibit C-2 Form of Investors' Agreement with Qualified Stockholders
Exhibit D Form of Certificates and Letters of Representation regarding Tax Matters
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Index of Defined Terms
In
Agreement and Plan of Merger
Term Section
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"affiliate" 8.03(a)
"Approved Matters" 4.01(a)
"Benefit Plans" 3.01(i)
"Certificate of Merger" 1.03
"Certificates" 2.02(b)
"Class A Common Stock" 2.01(b)
"Class A Preferred Stock" 3.01(c)
"Class B Common Stock" 2.01(b)
"Class B Preferred Stock" 3.01(c)
"Class C Preferred Stock" 2.01(b)
"Class C Shareholders" 3.01(c)(ii)
"Class D Preferred Stock" 3.01(c)
"Closing" 1.02
"Closing Date" 1.02
"Code" Recitals
"Common Conversion Number" 2.01(c)
"Common Stock Equivalents" 5.16
"Communications Act" 3.01(d)
"Company" Recitals
"Company Capital Stock" 2.01(b)
"Company Disclosure Letter" 3.01(a)
"Company Material Adverse Effect" 3.01(a)
"Company Programming Subsidiary" 3.01(a)
"Company Stock Options" 3.01(c)
"Company Stock Plans" 3.01(c)
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Term Section
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"Company Subsidiary" 3.01(a)
"Confidentiality Agreement" 5.04
"Corporation" 1.05
"D&O Insurance" 5.09
"DGCL" 1.01
"Dissenting Shares" 2.01(d)
"Effective Time of the Merger" 1.03
"employee benefit plan" 3.02(m)
"employee pension benefit plan" 5.08(b)
"ERISA" 3.01(j)
"Exchange Act" 3.01(d)
"Exchange Agent" 2.02(a)
"Exchange Fund" 2.02(a)
"FCC" 3.01(d)
"Filed Parent SEC Documents" 3.02(g)
"Filed SEC Documents" 3.01(g)
"Form S-4" 3.01(f)
"Georgia BCC" 1.01
"Governmental Entity" 3.01(d)
"HSR Act" 3.01(d)
"incentive stock option" 2.01(e)
"Liens" 3.01(b)
"LMC" Recitals
"LMC Agreement" Recitals
"Material Breach" 7.01(b)(v)
"Material Company Subsidiary" 3.01(a)
"Material Parent Subsidiary" 3.02(a)
"Material Transaction" 5.16
"Maximum Premium" 5.09
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Term Section
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"Merger" Recitals
"New Line" 3.01(c)
"New Line Debentures" 3.01(c)
"New Line Options" 3.01(c)
"New Line Plans" 3.01(c)
"NYSE" 3.02(i)
"Parent" Recitals
"Parent Common Stock" Recitals
"Parent Disclosure Letter" 3.02(c)
"Parent Material Adverse Effect" 3.02(a)
"Parent Preferred Stock" 3.02(c)
"Parent SEC Documents" 3.02(e)
"Parent Stockholder Approvals" 3.02(i)
"Parent Stock Plans" 3.02(c)
"Parent Subsidiary" 3.02(a)
"Parent's Stockholders Meeting" 5.01(c)
"person" 8.03(b)
"Principal Shareholder" Recitals
"Programming Agreement" 3.01(d)
"Proxy Statement" 3.01(d)
"Registration Rights Agreement" 5.13
"Rights Agreement" 3.02(c)
"SEC" 3.01(a)
"SEC Documents" 3.01(e)
"Securities Act" 3.01(e)
"Shareholder Approvals" 3.01(d)
"Shareholders Meeting" 5.01(b)
"Sub" Recitals
"subsidiary" 8.03(c)
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Term Section
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"Support Agreement" Recitals
"Surviving Corporation" 1.01
"takeover proposal" 4.02(a)
"Taxes" 3.01(n)(A)
"Tax Returns" 3.01(n)(B)
"TWE Proceeding" 6.01(g)
"Voting Agreements" Recitals
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AGREEMENT AND PLAN OF MERGER dated as of September 22, 1995,
among TIME WARNER INC., a Delaware corporation ("Parent"), TIME
WARNER ACQUISITION CORP., a Delaware corporation ("Sub") and a
wholly owned subsidiary of Parent, and TURNER BROADCASTING
SYSTEM, INC., a Georgia corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of the Company into Sub (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding share of Company Capital Stock (as defined in
Section 2.01(b)), not owned by the Company or by Parent, except Dissenting
Shares (as defined in Section 2.01(d)), will be converted into the right to
receive common stock, par value $1.00 per share, of Parent ("Parent Common
Stock"), and have adopted this Agreement;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS for Federal income tax purposes it is intended that the
Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, as a condition to the willingness of Parent to enter into
this Agreement, (a) R. E. Turner, III (the "Principal Shareholder") and certain
of his associates and affiliates have entered into a Shareholders' Agreement
with Parent, dated as of the date hereof (the "Support Agreement") and (b)
Liberty Media Corporation ("LMC") and certain of its subsidiaries and
affiliates have entered into a LMC Agreement with Parent, dated as of the date
hereof (the "LMC Agreement" and, together with the Support Agreement, the
"Voting Agreements"), in each case providing, among other things, that such
persons will vote their shares of Company Capital Stock in favor of the Merger
and the approval and adoption of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
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ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL") and the Georgia Business Corporation Code
(the "Georgia BCC"), the Company shall be merged into Sub at the Effective Time
of the Merger (as defined in Section 1.03). Following the Merger, the separate
corporate existence of the Company shall cease and Sub shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights, properties, liabilities and obligations of the Company
in accordance with the DGCL and the Georgia BCC. At the election of Parent,
any direct wholly owned subsidiary (as defined in Section 8.03(c)) of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect such substitution. Furthermore, if Parent and the Company
agree, the structure of the Merger (as set forth in this Section 1.01) will be
changed in order to qualify the transaction as another form of tax-free
reorganization under Section 368 of the Code or as a tax-free incorporation
transaction under Section 351 of the Code (and in the latter case the Company
Capital Stock will be converted into the right to receive common stock of a
newly-formed corporation that will become the sole stockholder of Parent and
the Company and certain holders of Parent Preferred Stock (as defined in
Section 3.02(c)) may become entitled to appraisal rights under Section 262 of
the DGCL), and otherwise on substantially the same terms as set forth in this
Agreement. In such case, the parties agree to execute an appropriate amendment
to this Agreement in order to reflect such change in structure.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which (subject to satisfaction or waiver of the conditions set
forth in Sections 6.02 and 6.03) shall be no later than the second business day
after satisfaction of the conditions set forth in Section 6.01 (other than the
condition set forth in Section 6.01(d)), at the offices of Cravath, Swaine &
Moore, Worldwide Plaza, 825 Eighth Avenue, New York, N.Y. 10019,
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unless another time, date or place is agreed to in writing by the parties
hereto.
SECTION 1.03. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and the Georgia BCC and shall make all other filings,
recordings or publications required by the DGCL and the Georgia BCC in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State
and the Georgia Secretary of State, or at such other later time as may be
specified in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL and Section 14-2-1106 of the
Georgia BCC.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of Sub as in effect immediately prior to the
Effective Time of the Merger shall be amended at the Effective Time of the
Merger so that Article I thereof reads in its entirety as follows: "The name
of the corporation (hereinafter called the "Corporation") is Turner
Broadcasting System, Inc." and, as so amended, such Certificate of
Incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Sub as in effect at the Effective Time of the
Merger shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at the Effective Time
of the Merger shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be. Immediately after the
Effective Time of the Merger, Parent and Sub shall take all action necessary to
elect, among others, the Chief Executive Officer of the Company and four other
persons to be agreed upon between Parent and the Chief
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Executive Officer of the Company, as directors of the Surviving Corporation.
SECTION 1.07. Officers. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective Time
of the Merger, by virtue of the Merger and without any action on the part of
the holder of any shares of Company Capital Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall remain outstanding as one fully paid and
nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Class A Common
Stock, par value $.0625 per share, of the Company (the "Class A Common
Stock"), each share of Class B Common Stock, par value $.0625 per share,
of the Company (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Company Common Stock") and each share of Class C
Convertible Preferred Stock, par value $.125 per share, of the Company
(the "Class C Preferred Stock" and, together with the Company Common
Stock, the "Company Capital Stock") that is owned by the Company and each
share of Company Capital Stock that is owned by Parent shall
automatically be canceled and retired and shall cease to exist, and no
Parent Common Stock or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Capital Stock. Subject to Sections
2.01(d) and 2.02(e), (i) each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.01(b)), shall be converted into the right to receive 0.75 (the "Common
Conversion Number") of a fully paid and nonassessable share of Parent
Common Stock and (ii) each issued and outstanding share of Class C
Preferred Stock (other than shares to be canceled in accordance with
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Section 2.01(b)) shall be converted into the right to receive 4.80 fully
paid and nonassessable shares of Parent Common Stock. Pursuant to the
Rights Agreement (as defined in Section 3.02(c)), one Right (as defined
in the Rights Agreement) will be attached to each share of Parent Common
Stock issued upon conversion of Company Capital Stock in accordance with
this Section 2.01(c). As of the Effective Time of the Merger, all such
shares of Company Capital Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Company Capital
Stock shall cease to have any rights with respect thereto, except the
right to receive, upon the surrender of any such certificates,
certificates representing the shares of Parent Common Stock and any cash
in lieu of fractional shares of Parent Common Stock to be issued or paid
in consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Dissenting Shares. (i) The Board of Directors of the Company
has adopted a resolution pursuant to Section 1302(c)(2) of the Georgia
BCC conferring dissenters' rights with respect to the Company Common
Stock in connection with the Merger. Notwithstanding anything in this
Agreement to the contrary, shares of Company Capital Stock that are
outstanding immediately prior to the Effective Time of the Merger and
that are held by any shareholder who has delivered to the Company, prior
to the Shareholder Approvals (as defined in Section 3.01(d)), a written
notice of such shareholder's intent to demand payment for such holder's
shares of Company Capital Stock if the Merger is effected, in accordance
with Article 13 of the Georgia BCC, and who shall have not voted such
shares in favor of the approval and adoption of this Agreement
("Dissenting Shares") shall not be converted into the right to receive
Parent Common Stock as provided in Section 2.01(c), but the holders of
Dissenting Shares shall be entitled to payment of the fair value of such
Dissenting Shares in accordance with
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the provisions of such Article 13; provided, however, that if any such
holder shall fail to perfect or otherwise waive the right to demand
payment under Article 13 of the Georgia BCC or a court of competent
jurisdiction shall determine that such holder is not entitled to the
relief provided by such Article 13, then the right of such holder of
Dissenting Shares to be paid the fair value of such holder's Dissenting
Shares shall cease and such Dissenting Shares shall be treated as if they
had been converted as of the Effective Time of the Merger into the right
to receive the shares of Parent Common Stock as provided in Section
2.01(c) and any cash in lieu of fractional shares of Parent Common Stock
as provided in Section 2.02(e), without any interest thereon.
(ii) The Company shall give Parent (A) prompt notice of any
notices or other instruments received by the Company pursuant to Article
13 of the Georgia BCC and (B) the opportunity to direct all negotiations
and proceedings with respect to demands for payment for Dissenting
Shares. The Company shall not, except with the prior written consent of
Parent, voluntarily offer to make or make any payment with respect to any
demands for payment for Dissenting Shares or offer to settle or settle
any such demands.
(e) Exchange Ratio for Options. (i) At the Effective Time of the
Merger, each outstanding Company Stock Option (as defined in Section
3.01(c)) and each outstanding New Line Option (as defined in Section
3.01(c)) shall be assumed by Parent and converted into an option to
purchase shares of Parent Common Stock, as provided below. Following the
Effective Time of the Merger, each Company Stock Option shall continue to
have, and shall be subject to, the same terms and conditions set forth in
the applicable Company Stock Plan (as defined in Section 3.01(c))
pursuant to which such Company Stock Option was granted, as in effect
immediately prior to the Effective Time of the Merger, and each New Line
Option shall continue to have, and shall be subject to, the same terms
and conditions set forth in the applicable New Line Plan (as defined in
Section 3.01(c)) pursuant to which such New Line Option was granted, as
in effect immediately prior to the Effective Time of the Merger, except
that (i) each such Company Stock Option and New Line Option shall be
exercisable for that number of
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shares of Parent Common Stock equal to the product of (x) the number of
shares of Class B Common Stock for which such Company Stock Option or New
Line Option was exercisable immediately prior to the Effective Time of
the Merger and (y) the Common Conversion Number, rounded, in the case of
any Company Stock Option or New Line Option other than any "incentive
stock option" (within the meaning of Section 422 of the Code), up and, in
the case of any incentive stock option, down to the nearest whole share,
if necessary, and (ii) the exercise price per share of such Company Stock
Option or New Line Option shall be equal to the aggregate exercise price
of such Company Stock Option or New Line Option immediately prior to the
Effective Time of the Merger divided by the number of shares of Parent
Common Stock for which such Company Stock Option or New Line Option shall
be exercisable as determined in accordance with the preceding clause (i),
rounded up to the next highest cent, if necessary.
(ii) As of the Effective Time of the Merger, Parent will enter into
an assumption agreement with respect to each Company Stock Option and New
Line Option, which shall provide for Parent's assumption of the
obligations of the Company under the applicable Company Stock Plan or New
Line Plan. Prior to the Effective Time of the Merger, the Company shall
make such amendments, if any, to the Company Stock Plans and the New Line
Plans as shall be necessary to permit such assumption in accordance with
this Section 2.01(e).
(iii) It is the intention of the parties that, to the extent that any
Company Stock Option or New Line Option constitutes an incentive stock
option immediately prior to the Effective Time of the Merger, such
Company Stock Option or New Line Option shall continue to qualify as an
incentive stock option to the maximum extent permitted by Section 422 of
the Code, and that the assumption of the Company Stock Options and New
Line Options provided by this Section 2.01(e) shall satisfy the
conditions of Section 424(a) of the Code.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As
of the Effective Time of the Merger, Parent shall deposit with Chemical Bank or
such other bank or trust company as may be designated by Parent (the "Exchange
Agent"), for the benefit of the holders of
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shares of Company Capital Stock, for exchange in accordance with this Article
II, through the Exchange Agent, certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any dividends
or distributions with respect thereto with a record date after the Effective
Time of the Merger, being hereinafter referred to as the "Exchange Fund")
issuable pursuant to Section 2.01 in exchange for outstanding shares of Company
Capital Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time of the Merger, the Exchange Agent shall mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding shares of Company Capital
Stock (the "Certificates") whose shares were converted into the right to
receive shares of Parent Common Stock pursuant to Section 2.01, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Capital Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the issuance of
shares of Parent Common Stock to a person other than the registered holder of
such Certificate or establish to the satisfaction of Parent that such tax has
been paid or is not applicable. Until surrendered as
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contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the right to receive
upon such surrender the certificate representing shares of Parent Common Stock
and cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.02. No interest will be paid or will accrue on
any cash payable in lieu of any fractional shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time of the Merger shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.02(e), until the
surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other distributions
with a record date after the Effective Time of the Merger theretofore paid with
respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time of the Merger but prior to such surrender
and a payment date subsequent to such surrender payable with respect to such
whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Capital Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including any
cash paid pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares
of Company Capital Stock theretofore represented by such Certificates, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time of the
Merger which may have been declared or made by the Company on such shares of
Company Capital Stock in accordance with the terms of this
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Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time of the Merger, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Capital Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Capital Stock converted pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of Parent Common Stock multiplied by
the closing price of a share of Parent Common Stock on the Closing Date as
reported on the NYSE-Composite Transactions Tape (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time of the Merger shall be delivered to Parent,
upon demand, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock and any dividends or distributions with respect to
Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official
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pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time of the Merger (or immediately prior to such earlier date on
which any shares of Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock or any dividends or distributions with respect to Parent
Common Stock in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.01(d)),
any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each of the Material Company Subsidiaries (as defined below)
is a corporation, partnership or other legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction
in which it is organized and has the requisite power and authority to
carry on its business as now being conducted. Each of the Company and
its subsidiaries (each a "Company Subsidiary") is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse
effect on the business, properties, assets, condition (financial or
otherwise), results of operations or
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prospects of the Company and the Company Subsidiaries, taken as a whole
(a "Company Material Adverse Effect"). The Company has delivered to
Parent complete and correct copies of its Restated Articles of
Incorporation and By-laws and the certificates of incorporation and
by-laws or comparable organizational documents of the Material Company
Subsidiaries, in each case as amended to the date of this Agreement. For
purposes of this Agreement, a "Material Company Subsidiary" means each
Company Subsidiary that (i) constitutes a significant subsidiary within
the meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC") or (ii) is party to an agreement pursuant to which
such Company Subsidiary or another Company Subsidiary distributes
programming or licenses programming from any person other than a Company
Subsidiary and is listed in Section 3.01(a) of the letter from the
Company, dated the date of this Agreement, addressed to Parent (the
"Company Disclosure Letter") (a "Company Programming Subsidiary"). The
Company is not in violation of any provision of its Restated Articles of
Incorporation or By-laws and no Material Company Subsidiary is in
violation of any provision of its certificate of incorporation, by-laws
or comparable organizational documents, except to the extent that such
violations would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure
Letter sets forth each Material Company Subsidiary and the ownership or
interest therein of the Company. All the outstanding shares of capital
stock of each such Material Company Subsidiary have been validly issued
and are fully paid and nonassessable and, except as set forth in Section
3.01(b) of the Company Disclosure Letter, are owned by the Company, by
another Company Subsidiary or by the Company and another Company
Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of the Company
Subsidiaries and except for the ownership interests set forth in Section
3.01(b) of the Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other ownership interest,
with a fair market value as of the date of this Agreement greater than
$2,000,000, in any
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corporation, partnership, limited liability company, joint venture or
other entity.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 75,000,000 shares of Class A Common Stock,
300,000,000 shares of Class B Common Stock, 500,000 shares of Class A
Serial Preferred Stock, par value $.10 per share (the "Class A Preferred
Stock"), 12,600,000 shares of Class B Cumulative Preferred Stock, par
value $.125 per share (the "Class B Preferred Stock"), 12,600,000 shares
of Class C Convertible Preferred Stock and 100,000,000 shares of Class D
Serial Preferred Stock, par value $.0625 per share (the "Class D
Preferred Stock"). Each share of Class C Preferred Stock is convertible
into six shares of Class B Common Stock. At the close of business on
August 29, 1995, (A)(I) 68,330,388 shares of Class A Common Stock were
outstanding, all of which were validly issued, fully paid and
nonassessable, (II) 137,819,078 shares of Class B Common Stock were
outstanding, all of which were validly issued, fully paid and
nonassessable, (III) 12,396,976 shares of Class C Preferred Stock were
outstanding, all of which were validly issued, fully paid and
nonassessable, and (iv) no shares of Class A Preferred Stock, Class B
Preferred Stock or Class D Preferred Stock were issued or outstanding;
and (B)(I) 81,822,278 shares of Class B Common Stock were reserved for
issuance upon conversion of the Class C Preferred Stock and the Company's
Zero Coupon Subordinated Convertible Notes due 2007, (II) 13,904,724
shares of Class B Common Stock were reserved for issuance upon the
exercise of outstanding stock options (the "Company Stock Options")
granted pursuant to the Company's 1988 Stock Option Plan, the Company's
1993 Stock Option and Equity Award Plan and the agreement, dated June 1,
1993, among CNN America, Inc., the Company, Larry King Enterprises, Inc.,
and Larry King (the "Company Stock Plans") and (III) 4,892,214 shares of
Class B Common Stock were reserved for issuance upon conversion of the
6-1/2% Convertible Subordinated Debentures (the "New Line Debentures") of
New Line Cinema Corporation ("New Line"), upon the exercise of
outstanding stock options (the "New Line Options") granted pursuant to
the New Line 1986 Stock Option Plan, the New Line 1990 Stock Option Plan,
the New Line 1991 Stock Option Plan, the Stock Option Agreements, dated
January 17, 1986, and February 14, 1990, among New Line, Michael Lynne
and
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Richard L. Blumenthal, the Stock Option Agreements, dated February 14,
1990, September 27, 1990, and January 22, 1993, between New Line and
Michael Lynne, and the Stock Option Agreement, dated October 6, 1993,
between New Line and Mitch Goldman (the "New Line Plans") or upon the
exercise of outstanding warrants issued by New Line pursuant to the
Warrant to Purchase Common Stock of New Line, dated May 31, 1991,
initially issued to NHI Nelson Holdings International Ltd. Except as set
forth above, at the close of business on August 29, 1995, no shares of
capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding and, since such date, no shares of
capital stock or other voting securities or options in respect thereof
have been issued except upon the conversion of the securities or the
exercise of the Company Stock Options or other options and warrants
referred to in clauses (B)(I) through (III) above. Except as set forth in
this Section 3.01(c) or in Section 3.01(c) of the Company Disclosure
Letter and except for Company Stock Options granted in the ordinary course
of business to employees of the Company and the Company Subsidiaries who
are not senior executive officers and covering not in excess of an
aggregate of 1,000,000 shares of Class B Common Stock for all such grants
during the period from the date of this Agreement through the Effective
Time of the Merger, there are not now, and at the Effective Time of the
Merger there will not be, any options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
the Company or any Company Subsidiary is a party or by which any of them
is bound relating to the issued or unissued capital stock of the Company
or any Company Subsidiary, or obligating the Company or any Company
Subsidiary to issue, transfer, grant or sell any shares of capital stock
of, or other equity interests in, or securities convertible into or
exchangeable for any capital stock or other equity interests in, the
Company or any Company Subsidiary or obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such option, warrant,
call, right, commitment, agreement, arrangement or undertaking. All
shares of Class B Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully
paid and nonassessable. There are not any outstanding
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contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Company
Subsidiary or any other person.
(ii) The Company has previously delivered to Parent (A) a true and
complete list of the holders of record of the Class C Preferred Stock
(the "Class C Shareholders") and the number of shares of Class C
Preferred Stock owned of record by each such Class C Shareholder, (B) a
true and complete list of the number of shares of each class of capital
stock of the Company owned of record by the Principal Shareholder and
each person known by the Company to be an affiliate of the Principal
Shareholder and (C) true and complete copies of any agreement relating to
the ownership or voting of the Class C Preferred Stock to which the
Company is a party.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject
to approval of this Agreement by the holders of (i) a majority of the
voting power of the outstanding Company Capital Stock, voting as a single
class, (ii) a majority of the voting power of the outstanding Class A
Common Stock and the Class B Common Stock, voting as a single class, and
(iii) the holders of a majority of the outstanding shares of Class C
Preferred Stock, voting as a separate class (the "Shareholder
Approvals"), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate
action on the part of the Company, subject to the Shareholder Approvals.
This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. Except as set forth in
Section 3.01(d) of the Company Disclosure Letter, the execution and
delivery of this Agreement by the Company do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or
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default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company
or any Company Subsidiary under, (i) the Restated Articles of
Incorporation or By-laws of the Company or the comparable organizational
documents of any Company Subsidiary, (ii) any agreement pursuant to which
the Company or any Company Programming Subsidiary distributes programming
or licenses programming from a person other than a Company Subsidiary
individually involving annual payments to or by the Company and the
Company Subsidiaries of $20,000,000 or more (any such agreement, a
"Programming Agreement"), (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement (but excluding any
Programming Agreement), instrument, permit, concession, franchise or
license applicable to the Company or any Company Subsidiary or their
respective properties or assets or (iv) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (iii) and (iv),
any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Company Material
Adverse Effect, (y) prevent the Company from performing its obligations
under this Agreement in any material respect or (z) prevent or delay in
any material respect the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or
foreign, including the European Union (a "Governmental Entity"), is
required by or with respect to the Company or any of the Company
Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of
a premerger notification and report form by the Principal Shareholder as
the ultimate parent entity of the Company under the Hart-Scott-Rodino
Antitrust
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Improvements Act of 1976 (the "HSR Act"), (ii) the filing with the SEC of
(A) a joint proxy statement relating to the meetings of the Company's
shareholders and Parent's stockholders to be held in connection with the
Merger and the transactions contemplated by this Agreement (as amended or
supplemented from time to time, the "Proxy Statement"), and (B) such
reports under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the Delaware Secretary of State
and the Georgia Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to
do business, (iv) such filings with, and orders of, the Federal
Communications Commission (the "FCC") as may be required under the
Communications Act of 1934, as amended (the "Communications Act"), and
the FCC's rules and regulations in connection with this Agreement and the
transactions contemplated by this Agreement and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings (x) as may be required under the laws of any foreign country in
which the Company or any of the Company Subsidiaries conducts any
business or owns any property or assets or (y) which, if not obtained or
made, would not prevent or delay in any material respect the consummation
of any of the transactions contemplated by this Agreement or otherwise
prevent the Company from performing its obligations under this Agreement
in any material respect or have, individually or in the aggregate, a
Company Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed
all required reports, schedules, forms, statements and other documents
with the SEC since December 31, 1992 (as such documents have been amended
prior to the date hereof, the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the
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statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent such statements have been
modified or superseded by a later Filed SEC Document (as defined in
Section 3.01(g)). Except to the extent that information contained in any
SEC Document has been revised or superseded by a later Filed SEC
Document, neither the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, nor any SEC Document filed after December 31,
1994, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of
the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 1O-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and the consolidated
Company Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC Documents, neither
the Company nor any Company Subsidiary has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be set forth on a
consolidated balance sheet of the Company and the consolidated Company
Subsidiaries or in the notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a Company Material
Adverse Effect.
(f) Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the
Merger (the "Form S-4") will, at the time the Form S-4 is filed with the
SEC, at any
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time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) the
Proxy Statement will, at the date the Proxy Statement is first mailed to
the Company's shareholders or Parent's stockholders or at the time of the
Shareholders Meeting (as defined in Section 5.01(b)) or the Parent's
Stockholders Meeting (as defined in Section 5.01(c)), contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made
by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents"), since the date of the most recent
audited financial statements included in the Filed SEC Documents, the
Company has conducted its business only in the ordinary course, and there
has not been:
(i) any change or effect (or any development that, insofar as
can reasonably be foreseen, is likely to result in a change or
effect) which, individually or in the aggregate, has had or is
likely to have, a Company Material Adverse Effect;
(ii) except for regular quarterly dividends not in excess of
$.0175 per share of Class A Common Stock, $.0175 per share of Class
B Common Stock and $.105 per share of Class C Preferred Stock, with
customary record and payment dates, any declaration, setting aside
or payment of any dividend or other distribution (whether in cash,
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stock or property) with respect to any of the Company Capital Stock;
(iii) any split, combination or reclassification of any of
the Company's capital stock or any issuance or the authorization of
any issuance of any other securities in exchange or in substitution
for shares of the Company's capital stock;
(iv) except as disclosed in Section 3.01(g) of the Company
Disclosure Letter, (A) any granting by the Company or any Company
Subsidiary to any executive officer of the Company or any of the
Company Subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as
was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the
Filed SEC Documents, (B) any granting by the Company or any of the
Company Subsidiaries to any such executive officer of any increase
in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in
the Filed SEC Documents, or (C) any entry by the Company or any of
the Company Subsidiaries into any employment, severance or
termination agreement with any such executive officer;
(v) any damage, destruction or loss, whether or not covered
by insurance, that has had or is likely to have a Company Material
Adverse Effect; or
(vi) any change in accounting methods, principles or
practices by the Company or any Material Company Subsidiary
materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted
accounting principles.
(h) Litigation. Except as disclosed in the Filed SEC Documents or
in Section 3.01(h) of the Company Disclosure Letter, there is no suit,
action or proceeding (including any proceeding by or before the
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FCC) pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Company Subsidiaries (and the Company
is not aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, could reasonably be expected to (i)
have a Company Material Adverse Effect or (ii) prevent the Company from
performing its obligations under this Agreement in any material respect,
and there is not any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
of the Company Subsidiaries having, or which, insofar as reasonably can
be foreseen, in the future would have, any Company Material Adverse
Effect. As of the date of this Agreement, except as disclosed in the
Filed SEC Documents or in Section 3.01(h) of the Company Disclosure
Letter, there is no suit, action or proceeding pending, or, to the
knowledge of the Company, threatened, against the Company or any of the
Company Subsidiaries (and the Company is not aware of any basis for any
such suit, action or proceeding) that, individually or in the aggregate,
could reasonably be expected to prevent or delay in any material respect
the consummation of the Merger or any of the transactions contemplated by
this Agreement.
(i) Absence of Changes in Benefit Plans. Except as disclosed in
the Filed SEC Documents or in Section 3.01(i) of the Company Disclosure
Letter, since the date of the most recent audited financial statements
included in the Filed SEC Documents, there has not been any adoption or
amendment in any material respect by the Company or any of the Company
Subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical
or other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former employee, officer or
director of the Company or any of the Company Subsidiaries (collectively,
"Benefit Plans").
(j) ERISA Compliance. Except as described in the Filed SEC
Documents or in Section 3.01(j) of the Company Disclosure Letter or as
would not have a
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Company Material Adverse Effect, (i) all employee benefit plans or
programs maintained for the benefit of the current or former employees or
directors of the Company or any Company Subsidiary that are sponsored,
maintained or contributed to by the Company or any Company Subsidiary, or
with respect to which the Company or any Company Subsidiary has any
liability, including any such plan that is an "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), are in compliance with all applicable requirements of
law, including ERISA and the Code, and (ii) neither the Company nor any
Company Subsidiary has any liabilities or obligations with respect to any
such employee benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the executive officers of the Company
are any such liabilities or obligations expected to be incurred. Except
as set forth in Section 3.01(j) of the Company Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any benefit plan, policy,
arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits
or obligation to fund benefits with respect to any employee. The only
severance agreements or severance policies applicable to the Company or
the Company Subsidiaries are the agreements and policies specifically
referred to in Section 3.01(j) of the Company Disclosure Letter.
(k) Voting Requirements. The Shareholder Approvals are the only
votes of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the transactions
contemplated by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except as set forth
in Section 3.01(l) of the Company Disclosure Letter, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
The
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Company will pay the fees and expenses of the persons listed in Section
3.01(1) of the Company Disclosure Letter. The fees incurred and to be
incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement for the persons listed in
Section 3.01(l) of the Company Disclosure Letter are set forth in Section
3.01(l) of the Company Disclosure Letter. The Company has furnished to
Parent true and complete copies of all the agreements referred to in
Section 3.01(l) of the Company Disclosure Letter and all indemnification
and other agreements related to the engagement of the persons so listed.
(m) Opinions of Financial Advisors. The Company has received the
opinions of CS First Boston Corporation and Merrill Lynch & Co., each
dated the date of this Agreement, to the effect that, as of such date,
the consideration to be received in the Merger by the Company's
shareholders is fair to the Company's shareholders other than Parent from
a financial point of view, a signed copy of which opinions have been
delivered to Parent.
(n) Taxes. (i) The Company and each Company Subsidiary have
timely filed (or have had timely filed on their behalf) or will file or
cause to be timely filed, all material Tax Returns required by applicable
law to be filed by any of them prior to or as of the Effective Time of
the Merger. All such Tax Returns are, or will be at the time of filing,
true, complete and correct in all material respects.
(ii) The Company and each Company Subsidiary have paid (or
have had paid on their behalf), or where payment is not yet due, have
established (or have had established on their behalf and for their sole
benefit and recourse), or will establish or cause to be established on or
before the Effective Time of the Merger, an adequate accrual for the
payment of, all material Taxes due with respect to any period ending
prior to or as of the Effective Time of the Merger.
(iii) For purposes of this Agreement, the following terms
shall have the following meanings:
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(A) "Taxes" shall mean all Federal, state, local and
foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to
tax, or penalties applicable thereto.
(B) "Tax Returns" shall mean all Federal, state, local
and foreign tax returns, declarations, statements, reports, schedules,
forms and information returns and any amended tax return relating to
Taxes.
(o) Compliance with Laws. Neither the Company nor any of the
Company Subsidiaries has violated or failed to comply with any statute,
law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business or operations (including
the Communications Act and the FCC's rules and regulations), except for
violations and failures to comply that could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect.
SECTION 3.02. Representations and Warranties of Parent and
Sub. Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent,
Sub and each of the Material Parent Subsidiaries (as defined below) is a
corporation, partnership or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is organized and has the requisite power and authority to carry on its
business as now being conducted. Each of Parent and Parent's
subsidiaries, including Sub (each a "Parent Subsidiary"), is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have a
material adverse effect on the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of Parent
and the Parent Subsidiaries, taken as a whole (a "Parent Material Adverse
Effect"). Parent has delivered to the Company
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complete and correct copies of its Restated Certificate of Incorporation
and By-laws and the certificates of incorporation and by-laws or
comparable organizational documents of Sub and the Material Parent
Subsidiaries, in each case as amended to the date of this Agreement.
Neither Parent nor Sub is in violation of any provision of its
certificate of incorporation or by-laws and no Material Parent Subsidiary
is in violation of any provision of its certificate of incorporation,
by-laws or comparable organizational documents, except to the extent that
such violations would not, individually or in the aggregate, have a
Parent Material Adverse Effect. Time Warner Entertainment Company, L.P.
("TWE"), and each other Parent Subsidiary that constitutes a significant
subsidiary of Parent within the meaning of Rule 1-02 of Regulation S-X of
the SEC (determined without regard to paragraph (3) of the definition
thereof) is referred to herein as a "Material Parent Subsidiary".
(b) Subsidiaries. Section 3.02(b) of the Parent Disclosure Letter
(as defined in Section 3.02(c)) sets forth as of the date of this
Agreement each Material Parent Subsidiary and the ownership or interest
therein of Parent. All the outstanding shares of capital stock of each
such Material Parent Subsidiary have been validly issued and are fully
paid and nonassessable and, except as set forth in Section 3.02(b) of the
Parent Disclosure Letter, are owned by Parent, by another Parent
Subsidiary or by Parent and another Parent Subsidiary, free and clear of
all Liens. Except for the ownership interests in the Parent Subsidiaries
and except for the ownership interests set forth in Section 3.02(b) of
the Parent Disclosure Letter, as of the date of this Agreement Parent
does not own, directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of the date of this
Agreement greater than $5,000,000, in any corporation, partnership,
limited liability company, joint venture or other entity.
(c) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists of 750,000,000 shares of
Parent Common Stock and 250,000,000 shares of preferred stock, par value
$1.00 per share ("Parent Preferred Stock"). At the close of business on
August 31, 1995, (i) (A) 387,166,475 shares of Parent Common Stock were
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26
outstanding, all of which were validly issued, fully paid and
nonassessable, (B) 43,739,664 shares of Parent Common Stock were held by
Parent Subsidiaries and (C) 1,988,026 shares of Parent Common Stock were
held by Parent in treasury, (ii) 464,638 shares of Series B 6.40%
Preferred Stock were outstanding, all of which were validly issued, fully
paid and nonassessable, (iii) 3,264,508 shares of Series C Preferred
Stock were outstanding, all of which were validly issued, fully paid and
nonassessable, (iv) 11,000,000 shares of Series D Convertible Preferred
Stock were outstanding, all of which were validly issued, fully paid and
nonassessable, (v) 82,786,025 shares of Parent Common Stock were reserved
for issuance pursuant to the Time Warner 1981 Stock Option Plan, the Time
Warner 1986 Stock Option Plan, the 1988 Stock Incentive Plan of Time
Warner Inc., the Time Warner 1989 Stock Incentive Plan, the Time Warner
1989 WCI Replacement Stock Option Plan, the Time Warner 1989 Lorimar
Non-Employee Replacement Stock Option Plan, the Time Warner 1993 Stock
Option Plan, the Time Warner 1994 Stock Option Plan, the Time Warner
Corporate Group Stock Incentive Plan, the Time Warner Cable Television
Group Stock Incentive Plan, the Time Warner Filmed Entertainment Group
Stock Incentive Plan, the Time Warner Music Group Stock Incentive Plan,
the Time Warner Programming Group Stock Incentive Plan, the Time Warner
Publishing Group Stock Incentive Plan and the Time Warner 1988 Restricted
Stock Plan for Non-Employee Directors (the "Parent Stock Plans"), (vi)
4,000,000 shares of Parent Preferred Stock were reserved for issuance in
connection with the rights to purchase shares of Parent Common Stock
pursuant to the Rights Agreement dated as of January 20, 1994 (the
"Rights Agreement"), between Parent and Chemical Bank, as Rights Agent,
and (vii) additional shares of capital stock of Parent were reserved for
issuance as described in Section 3.02(c) of the letter from Parent, dated
the date of this Agreement, addressed to the Company (the "Parent
Disclosure Letter"). Except as set forth above, at the close of business
on August 31, 1995, no shares of capital stock or other voting securities
of Parent were issued, reserved for issuance or outstanding. All shares
of capital stock of Parent which may be issued pursuant to this Agreement
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth
above or in Section 3.02(c) of the
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Parent Disclosure Letter, as of the date of this Agreement, there are not
any options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent or any Parent
Subsidiary is a party or by which any of them is bound relating to the
issued or unissued capital stock of Parent or any Parent Subsidiary, or
obligating Parent or any Parent Subsidiary to issue, transfer, grant or
sell, or cause to be issued, transferred, granted or sold, additional
shares of capital stock or other voting securities of Parent or any
Material Parent Subsidiary or obligating Parent or any Parent Subsidiary
to issue, grant, extend or enter into any such option, warrant, call,
right, commitment, agreement, arrangement or undertaking. Except as set
forth in Section 3.02(c) of the Parent Disclosure Letter, as of the date
of this Agreement, there are not any outstanding contractual obligations
of Parent or any Parent Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of Parent or any Material Parent
Subsidiary or make any material investment (in the form of a loan,
capital contribution or otherwise) in any person (other than a wholly
owned Parent Subsidiary). As of the date of this Agreement, the
authorized capital stock of Sub consists of 1,000 shares of common stock,
par value $1.00 per share, all of which have been validly issued, are
fully paid and nonassessable and are owned by Parent free and clear of
any Lien.
(d) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and,
subject to the Parent Stockholder Approvals (as defined in Section
3.02(i)), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub, subject to the Parent Stockholder Approvals.
This Agreement has been duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms. Except
as set forth in Section 3.02(d) of the Parent Disclosure Letter, the
execution and delivery of this Agreement by Parent and Sub do not, and
the consummation of the transactions
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contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent, Sub
or any other Parent Subsidiary under, (i) the certificate of
incorporation or by-laws of Parent or Sub or the comparable
organizational documents of any Parent Subsidiary, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to Parent, Sub or any Parent Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent,
Sub or any other Parent Subsidiary or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not (x) have a Parent Material Adverse Effect, (y)
prevent Parent or Sub from performing their respective obligations under
this Agreement in any material respect or (z) prevent or delay in any
material respect the consummation of any of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent, Sub or any other Parent Subsidiary
in connection with the execution and delivery of this Agreement by Parent
and Sub or the consummation by Parent or Sub, as the case may be, of any
of the transactions contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by Parent under the
HSR Act and possible filings of premerger notification and report forms
by shareholders of the Company under the HSR Act with respect to the
acquisition of shares of Parent Common Stock pursuant to the Merger, (ii)
the filing with the SEC of the Proxy Statement and the Form S-4 and such
reports under Sections 13 and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated by this Agreement and the receipt of all state securities or
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"blue sky" authorizations necessary to issue the Parent Common Stock as
contemplated by this Agreement, (iii) the filing of the Certificate of
Merger with the Delaware Secretary of State and the Georgia Secretary of
State and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business, (iv) such
filings with, and orders of, the FCC under the Communications Act and the
FCC's rules and regulations as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (v) such
filings with, and orders of, cable franchising authorities as may be
required in connection with this Agreement and the transactions
contemplated by this Agreement and (vi) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (x) as
may be required under the laws of any foreign country in which Parent or
any of the Parent Subsidiaries conducts any business or owns any property
or assets or (y) which, if not obtained or made, would not prevent or
delay in any material respect the consummation of any of the transactions
contemplated by this Agreement or otherwise prevent Parent or Sub from
performing their respective obligations under this Agreement in any
material respect or have, individually or in the aggregate, a Parent
Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all
required reports, schedules, forms, statements and other documents with
the SEC since December 31, 1992 (as such documents have been amended
prior to the date hereof, the "Parent SEC Documents"). As of their
respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents, and none of the
Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the
extent such statements have been modified or superseded by a later Filed
Parent SEC Document (as defined in Section 3.02(g)). Except to the
extent that information contained in any Parent SEC Document has been
revised or superseded by a later Filed Parent SEC
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Document, neither Parent's Annual Report on Form 10-K for the year ended
December 31, 1994, nor any Parent SEC Document filed after December 31,
1994, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of
Parent included in the Parent SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 1O-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Parent and the consolidated Parent
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the Filed Parent SEC Documents, neither Parent nor
any Parent Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a
consolidated balance sheet of Parent and the consolidated Parent
Subsidiaries or in the notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a Parent Material Adverse
Effect.
(f) Information Supplied. None of the information supplied or to
be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC,
at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a
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material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
(ii) the Proxy Statement will, at the date the Proxy Statement is first
mailed to the Company's shareholders or Parent's stockholders or at the
time of the Shareholders Meeting or the Parent's Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading. The Form S-4 and the Proxy Statement will
comply as to form in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and the rules and
regulations promulgated thereunder, except that no representation or
warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference in the
Form S-4 or the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Documents filed and publicly available prior to the date
of this Agreement (the "Filed Parent SEC Documents") or in Section
3.02(g) of the Parent Disclosure Letter, since the date of the most
recent audited financial statements included in the Filed Parent SEC
Documents, Parent has conducted its business only in the ordinary course,
and there has not been:
(i) any change or effect (or any development that, insofar as
can reasonably be foreseen, is likely to result in a change or
effect) which, individually or in the aggregate, has had or is
likely to have, a Parent Material Adverse Effect;
(ii) except for regular quarterly dividends not in excess of
$0.09 per share of Parent Common Stock and the stated or required
amount of dividends on any series of Parent Preferred Stock, in
each case with customary record and payment dates, any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the Parent
Common Stock or any series of Parent Preferred Stock;
(iii) any split, combination or reclassification of the
Parent Common Stock or any issuance or the authorization of any
issuance of any other securities in exchange or in substitution for
shares of the Parent Common Stock;
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(iv) any damage, destruction or loss, whether or not covered
by insurance, that has had or is likely to have a Parent Material
Adverse Effect; or
(v) any change in accounting methods, principles or practices
by Parent or any Material Parent Subsidiary materially affecting
its assets, liabilities or business, except insofar as may have
been required by a change in generally accepted accounting
principles.
(h) Litigation. Except as disclosed in the Filed Parent SEC
Documents or in Section 3.02(h) of the Parent Disclosure Letter, there is
no suit, action or proceeding (including any proceeding by or before the
FCC) pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of the Parent Subsidiaries (and Parent is not
aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, could reasonably be expected to (i)
have a Parent Material Adverse Effect or (ii) prevent Parent or Sub from
performing their respective obligations under this Agreement in any
material respect, and there is not any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against
Parent or any of the Parent Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would have, any Parent Material
Adverse Effect. As of the date of this Agreement, except as disclosed in
the Filed Parent SEC Documents or in Section 3.02(h) of the Parent
Disclosure Letter, there is no suit, action or proceeding pending, or, to
the knowledge of Parent, threatened, against Parent or any of the Parent
Subsidiaries (and Parent is not aware of any basis for any such suit,
action or proceeding) that, individually or in the aggregate, could
reasonably be expected to prevent or delay in any material respect the
consummation of the Merger or any of the transactions contemplated by
this Agreement.
(i) Voting Requirements. The (A) approval by Parent's
stockholders of the issuance of shares of Parent Common Stock pursuant to
the Merger as required by Rule 312 of the New York Stock Exchange (the
"NYSE") and (B) approval by the holders of a majority of the outstanding
Parent Common Stock, voting as a separate
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class, and by the holders of a majority of the voting power of the
outstanding Parent Common Stock and the outstanding voting Parent
Preferred Stock, voting together as a single class, of an amendment to
the Restated Certificate of Incorporation of Parent to increase the
number of authorized shares of Parent Common Stock (collectively, the
"Parent Stockholder Approvals") are the only votes of the holders of any
class or series of Parent's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
(j) Brokers. No broker, investment banker, financial advisor or
other person, other than Morgan Stanley & Co Incorporated, the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Sub.
(k) Taxes. (i) Parent and each Parent Subsidiary have timely
filed (or have had timely filed on their behalf) or will file or cause to
be timely filed, all material Tax Returns required by applicable law to
be filed by any of them prior to or as of the Effective Time of the
Merger. All such Tax Returns are, or will be at the time of filing,
true, complete and correct in all material respects.
(ii) Parent and each Parent Subsidiary have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or
have had established on their behalf and for their sole benefit and
recourse), or will establish or cause to be established on or before the
Effective Time of the Merger, an adequate accrual for the payment of, all
material Taxes due with respect to any period ending prior to or as of
the Effective Time of the Merger.
(l) Compliance with Laws. Neither Parent nor any of the Parent
Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business or operations (including
the Communications Act and the FCC's rules and regulations), except for
violations and failures to comply that could not, individually or in the
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aggregate, reasonably be expected to result in a Parent Material Adverse
Effect.
(m) ERISA Compliance. Except as described in the Parent Filed SEC
Documents or as would not have a Parent Material Adverse Effect, (i) all
employee benefit plans or programs maintained for the benefit of the
current or former employees or directors of Parent or any Parent
Subsidiary that are sponsored, maintained or contributed to by Parent or
any Parent Subsidiary, or with respect to which Parent or any Parent
Subsidiary has any liability, including any such plan that is an
"employee benefit plan" as defined in Section 3(3) of ERISA, are in
compliance with all applicable requirements of law, including ERISA and
the Code, and (ii) neither Parent nor any Parent Subsidiary has any
liabilities or obligations with respect to any such employee benefit
plans or programs, whether accrued, contingent or otherwise, nor to the
knowledge of the executive officers of Parent are any such liabilities or
obligations expected to be incurred.
(n) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement
and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by
this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
the Company. During the period from the date of this Agreement to the
Effective Time of the Merger, the Company shall, and shall cause the Company
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws and regulations
(including the Communications Act and the FCC's rules and regulations) and, to
the extent consistent therewith, use commercially reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
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others having business dealings with them. Without limiting the generality of
the foregoing, during the period from the date of this Agreement to the
Effective Time of the Merger, the Company shall not, and shall not permit any
of the Company Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned Company
Subsidiary to its parent and regular quarterly cash dividends on the
Company Capital Stock in an amount per share per quarter for each class
of Company Capital Stock not in excess of the amount paid for the quarter
immediately preceding the date of this Agreement, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of the Company
Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than (x) the
issuance of shares of Class B Common Stock upon the exercise of Company
Stock Options outstanding on the date of this Agreement and in accordance
with their present terms and (y) the issuance of shares of Class B Common
Stock reserved for issuance as described in clauses (B)(I) and (B)(III)
of Section 3.01(c));
(iii) amend its articles of incorporation, by-laws or other
comparable organizational documents;
(iv) except for Approved Matters (as defined below), acquire or
agree to acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited liability company,
joint venture, association or other business organization or division
thereof or (y) any assets that are material, individually or in the
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aggregate, to the Company and the Company Subsidiaries taken as a whole;
(v) except for Approved Matters, sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or assets, other than encumbrances and Liens that are
incurred in the ordinary course of business;
(vi) except for Approved Matters, (y) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or any of the Company Subsidiaries,
guarantee any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect
of any of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (z) make
any loans, advances (other than advances to employees in the ordinary
course of business consistent with prior practice) or capital
contributions to, or investments in, any other person, other than to the
Company or any direct or indirect wholly owned Company Subsidiary;
(vii) except for Approved Matters, make or agree to make any new
capital expenditure or expenditures;
(viii) make any material Tax election or settle or compromise any
material Tax liability or refund;
(ix) except in the ordinary course of business pursuant to existing
employment agreements or Benefit Plans, or as required by applicable
laws, and except for Approved Matters, (A) increase the compensation
payable or to become payable to its executive officers or employees, (B)
grant any severance or termination pay to, or enter into any employment
or severance agreement with, any director, executive officer or employee
of the Company or any Company Subsidiary or (C) establish, adopt, enter
into or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement or any stock
option, employee benefit plan,
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agreement or policy except as contemplated by this Agreement;
(x) without limiting the generality of clause (ix) above, make any
amendment to any Company Stock Plan or New Line Plan as a result of this
Agreement or in contemplation of the Merger;
(xi) terminate or amend on terms less favorable to the Company any
agreement filed as an exhibit to any SEC Document or any Programming
Agreement; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
For purposes of this Agreement, "Approved Matters" means matters
that are (x) expressly included in a Master Budget contemplated by Section 3 of
Article XII of the By-Laws of the Company as in effect on the date of this
Agreement or as hereafter approved by Parent prior to its approval by the Board
of Directors of the Company or (y) otherwise approved by Parent pursuant to the
immediately succeeding sentence. Each matter subject to Section 3 of Article
XII of the By-laws of the Company shall first be submitted to Parent for its
approval and shall only thereafter be submitted to the Board of Directors of
the Company to the extent Parent shall have approved such matter.
(b) No Amendments by Parent. During the period from the date of
this Agreement to the Effective Time of the Merger, except as contemplated by
this Agreement, Parent will not amend its Restated Certificate of Incorporation
or By-laws in any manner that would be materially adverse to the holders of
Parent Common Stock.
(c) Other Actions. The Company and Parent shall not, and shall
not permit any of their respective subsidiaries to, take any action that would,
or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Merger set forth in
Article VI not being satisfied.
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(d) Advice of Changes. The Company and Parent shall promptly
advise the other orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, would have, a Company Material Adverse
Effect or a Parent Material Adverse Effect, as applicable.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor
shall it permit any of the Company Subsidiaries to, nor shall it authorize or
permit any officer, director or employee of or any investment banker, attorney
or other advisor or representative of, the Company or any Company Subsidiary
to, (i) solicit, initiate or encourage the submission of any takeover proposal
(as defined below), (ii) enter into any agreement with respect to any takeover
proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal; provided,
however, that nothing contained in this Agreement shall prevent the Company or
its Board of Directors from (A) furnishing nonpublic information to, or
entering into discussions or negotiations with, any person in connection with
an unsolicited bona fide written takeover proposal to the Company or its
shareholders, if and only to the extent that (1) the Board of Directors of the
Company determines in good faith based on written advice of its outside legal
counsel that such action is necessary for the Board of Directors of the Company
to comply with its fiduciary duties to shareholders under applicable law and
(2) prior to furnishing such nonpublic information to, or entering into
discussions or negotiations with, such person, the Board of Directors of the
Company receives from such person or entity an executed confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement (as defined in Section 5.04), or (B) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any executive
officer of the Company or any of the Company Subsidiaries or any investment
banker, attorney or other advisor or representative of the Company or any of
the Company Subsidiaries, whether or not such person is purporting to act on
behalf of the Company or any of the Company Subsidiaries or otherwise, shall be
deemed to be a breach of this Section 4.02(a) by the Company. For purposes
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of this Agreement, "takeover proposal" means any proposal for a merger,
consolidation or other business combination involving the Company or any of the
Material Company Subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly, more than 15% of any class of voting securities
of the Company or any of the Material Company Subsidiaries, or assets
representing a substantial portion of the assets of the Company and the Company
Subsidiaries, taken as a whole, other than the transactions contemplated by
this Agreement. The Company will immediately cease and cause to be terminated
any existing activities, discussions or negotiations by the Company or any of
its officers, investment bankers, attorneys or other advisors or
representatives with any parties conducted heretofore with respect to any of
the foregoing.
(b) Subject to Section 7.01(e), neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Sub, the adoption,
approval or recommendation by such Board of Directors or any such committee of
this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any takeover proposal.
(c) The Company promptly shall advise Parent orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company will keep Parent promptly and fully informed
in all material respects of the status and details of any such takeover
proposal or inquiry.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Shareholders Meeting and Parent's Stockholders Meeting. (a) As soon as
practicable following the date of this Agreement, the Company and Parent shall
prepare and file with the SEC the Proxy Statement and Parent shall prepare and
file with the SEC the Form S-4, in which the Proxy Statement will be included
as a prospectus. Each of the
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Company and Parent shall use its best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing. Each of the Company and Parent will use its best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders or Parent's
stockholders, respectively, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not
now so qualified) required to be taken under any applicable state securities or
"blue sky" laws in connection with the issuance of Parent Common Stock pursuant
to the Merger, and the Company shall furnish all information concerning the
Company and the holders of the Company Capital Stock and rights to acquire
Company Capital Stock pursuant to the Company Stock Plans or the New Line Plans
as may be reasonably requested in connection with any such action.
(b) The Company will, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting") for the purpose of obtaining the
Shareholder Approvals. Subject to Section 7.01(e), the Company will, through
its Board of Directors, recommend to its shareholders approval of this
Agreement and the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 5.01(b) shall not be
altered by the commencement, public proposal, public disclosure or
communication to the Company of any takeover proposal. Parent shall vote or
cause to be voted all the shares of Company Capital Stock owned of record by
Parent or any Parent Subsidiary in favor of the Shareholder Approvals.
(c) Parent will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Parent's Stockholders Meeting") for the purpose of obtaining
the Parent Stockholder Approvals. Subject to any contrary fiduciary
obligations, Parent will, through its Board of Directors, recommend to its
stockholders approval of the matters submitted to them for such purpose.
SECTION 5.02. Letter of the Company's Accountants. The Company
shall use its best efforts to cause to be delivered to Parent a letter of Price
Waterhouse LLP, the Company's independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall become
effective and
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addressed to Parent, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
SECTION 5.03. Letter of Parent's Accountants. Parent shall use
its best efforts to cause to be delivered to the Company a letter of Ernst &
Young LLP, Parent's independent public accountants, and, with respect to
persons or assets acquired by Parent, one or more other independent public
accountants, dated a date within two business days before the date on which the
Form S-4 shall become effective and addressed to the Company, in form and
substance reasonably satisfactory to the Company and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Each of the
Company and Parent shall, and shall cause each of its respective subsidiaries
to, afford to the other party and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such other party,
reasonable access during normal business hours during the period prior to the
Effective Time of the Merger to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties and personnel as such
other party may reasonably request. Except as required by law, each of the
Company and Parent will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information in confidence to the extent
required by, and in accordance with, the provisions of the letter dated August
26, 1995, between the Company and Parent (the "Confidentiality Agreement").
SECTION 5.05. Best Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement and, in the case of
Parent, in the LMC Agreement, each of the parties agrees to use its best
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efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the Voting Agreements, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Voting Agreements or the consummation of the transactions contemplated by
this Agreement or the Voting Agreements, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement; provided, however, that a
party shall not be obligated to take any action pursuant to the foregoing if
the taking of such action or the obtaining of any waiver, consent, approval or
exemption is reasonably likely (x) to be materially burdensome to such party
and its subsidiaries taken as a whole or to impact in a materially adverse
manner the economic or business benefits of the transactions contemplated by
this Agreement, the Voting Agreements and the Investors' Agreements referred to
in Section 6.02(f) so as to render inadvisable the consummation of the Merger
or (y) to result in the imposition of a condition or restriction of the type
referred to in clause (ii), (iii) or (iv) of Section 6.02(e). In connection
with and without limiting the foregoing, the Company and its Board of Directors
shall (i) take all reasonable action necessary so that no state takeover
statute or similar statute or regulation is or becomes applicable to the
Merger, this Agreement or any of the other transaction contemplated by this
Agreement or the Voting Agreements and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Merger, this Agreement
or any other transaction contemplated by this Agreement or any Voting
Agreement, take all action necessary so that the
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Merger and the other transactions contemplated by this Agreement and the Voting
Agreements may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Voting Agreements and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement and the Voting Agreements.
(b) The Company shall give prompt notice to Parent, and Parent or
Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.06. Board Authority. The Company represents and
warrants to Parent and Sub that (a) on or prior to the date of execution of
this Agreement, the Board of Directors of the Company has adopted resolutions
providing that (i) any action to be subsequently taken by the Board of
Directors of the Company to implement the transactions contemplated by this
Agreement (excluding any amendment to this Agreement, except as contemplated by
Section 1.01, or to the other agreements entered into in connection with the
Merger to which the Company is a party) shall be authorized if approved by a
majority vote of the directors of the Company (other than any directors that
are interested directors under Section 3 of Article XII of the Company's
By-laws) present and voting at a meeting at which a quorum is present, without
regard to class, and (ii) any action to be subsequently taken by the Company to
implement the transactions contemplated by this Agreement (excluding any
amendment to this Agreement, except as contemplated by Section 1.01, or to the
other agreements entered into in connection with the Merger to which the
Company is a party) that otherwise requires the approval of the Board of
Directors of the Company shall be authorized if approved by a majority vote of
the directors of the Company (other than any directors that are interested
directors under Section 3 of Article XII of the Company's By-laws) present and
voting
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at a meeting at which a quorum is present, without regard to class, and (b)
such resolutions were validly adopted, are in full force and effect, do not
conflict with any provision of the Company's Articles of Incorporation or
By-laws or any contract, agreement, or other instrument to which the Company is
a party and are effective in accordance with their terms. The Board of
Directors of the Company shall not amend, rescind or repeal any of such
resolutions. The Company shall not enter into any contract, agreement or other
instrument, or adopt any resolution, that, directly or indirectly, would (A)
result in any action to be taken by the Board of Directors of the Company to
implement the transactions contemplated by this Agreement (excluding any
amendment to this Agreement, except as contemplated by Section 1.01, or to the
other agreements entered into in connection with the Merger to which the
Company is a party) requiring any approval other than the approval by the
majority vote of all the directors of the Company (other than any directors
that are interested directors under Section 3 of Article XII of the Company's
By-laws) present and voting at a meeting at which a quorum is present, without
regard to class, or (B) result in any action to be taken by the Company to
implement the transactions contemplated by this Agreement requiring the
approval (if not currently required) of the directors of the Company or any
group or committee thereof. The Company represents and warrants to Parent and
Sub that neither the Company nor its Board of Directors is subject to any such
contract, agreement or other instrument as of the date of this Agreement.
SECTION 5.07. Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 5.08. Benefit Plans. (a) Maintenance of Benefits. For a
period of two years after the Effective Time of the Merger, Parent shall (i)
either (A) maintain or cause the Surviving Corporation (or in the case of a
transfer of all or substantially all the assets and business
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of the Surviving Corporation, its successors or assigns) to maintain the
Benefit Plans (other than medical plans) at the benefit levels in effect on the
date of this Agreement or (B) provide or cause the Surviving Corporation (or,
in such case, its successors or assigns) to provide benefits to employees of
the Company and the Company Subsidiaries that are not materially less favorable
in the aggregate to such employees than those in effect on the date of this
Agreement and (ii) provide or cause to be provided medical benefits to
employees of the Company and the Company Subsidiaries that are substantially
equivalent to those provided to similarly situated employees of Parent.
(b) Service. With respect to any "employee benefit plan", as
defined in Section 3(3) of ERISA, maintained by Parent or any Parent Subsidiary
(including any severance plan), for purposes of determining eligibility to
participate, vesting, entitlement to benefits, benefit accrual (but in the case
of any "employee pension benefit plan", as defined in Section 3(2) of ERISA,
solely to the extent necessary to comply with Section 5.08(a)) and in all other
respects where length of service is relevant, service with the Company or any
Company Subsidiary shall be treated as service with Parent or the Parent
Subsidiaries; provided, however, that such service need not be recognized to
the extent that such recognition would result in any duplication of benefits.
(c) Third Party Beneficiaries. This Section 5.08 is intended to
be for the benefit of and shall be enforceable by each person who is an
employee of the Company or any Company Subsidiary as of the Effective Time of
the Merger (but only with respect to those provisions applicable to such
employee), and his heirs and personal representatives and, to the extent set
forth above, shall be binding on all successors and assigns of Parent, the
Parent Subsidiaries, the Company and the Company Subsidiaries. To the extent
that any provision of this Section 5.08 shall be reflected in a plan or
arrangement subject to ERISA, the exclusive remedy of any employee referred to
in the preceding sentence with respect to such provisions or request for a
related benefit provided by such plan or arrangement shall be the claims
procedure under such plan or arrangement.
SECTION 5.09. Indemnification. Parent and Sub agree that all
rights to indemnification for acts or omissions occurring prior to the
Effective Time of the Merger
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now existing in favor of the current or former directors or officers of the
Company as provided in its Restated Articles of Incorporation or By-laws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms from the Effective Time of the Merger until the expiration of
the applicable statute of limitations with respect to any claims against the
current or former directors or officers of the Company arising out of such acts
or omissions. Parent will cause to be maintained for a period of not less than
six years from the Effective Time of the Merger the Company's current
directors' and officers' insurance and indemnification policy to the extent
that it provides coverage for events occurring prior to the Effective Time of
the Merger (the "D&O Insurance") for all persons who are directors and officers
of the Company who are covered persons under the Company's D&O insurance
policies in effect on the date of this Agreement, so long as the annual premium
therefor would not be in excess of 150% of the last annual premium paid prior
to the date of this Agreement (the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such six-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous to the covered persons than the existing D&O Insurance. The
Company represents to Parent that the Maximum Premium is $631,735.
SECTION 5.10. Fees and Expenses. Except as provided in Sections
5.15, 7.02(a), 7.02(b) and 7.02(c), all fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that expenses incurred in
connection with printing and mailing the Proxy Statement and the Form S-4 shall
be shared equally by Parent and the Company).
SECTION 5.11. Affiliates. Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are, at the time
this Agreement is submitted for approval to the shareholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each such person to deliver to
Parent on or prior to the Closing Date a written agreement substantially in the
form attached as Exhibit A.
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SECTION 5.12. Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and pursuant to the Company Stock Options, the New Line Options, the notes
referred to in Section 3.01(c)(i)(B)(I) and the other securities referred to in
Section 3.01(c)(i)(B)(III) to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
SECTION 5.13. Execution of the Registration Rights Agreement.
Parent shall execute and deliver to the other parties thereto the Registration
Rights Agreement in the form of Exhibit B (the "Registration Rights Agreement")
at or prior to the Closing.
SECTION 5.14. Tax Treatment. Each of Parent and the Company shall
use its reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code or as a tax-free incorporation transaction under Section 351 of the
Code and to obtain the opinions of counsel referred to in Sections 6.02(d) and
6.03(c).
SECTION 5.15. Transfer and Real Property Transfer Gains Taxes.
Parent shall be responsible for any liabilities, without deduction or
withholding from any amount payable to the holders of Company Capital Stock,
arising under any New York State Real Estate Transfer Tax, New York State Tax
on Gains Derived from certain Real Property Transfers, New York City Real
Property Transfer Tax, New York State Stock Transfer Tax and any similar taxes
imposed by any other State of the United States (and any penalties and interest
with respect to such Taxes), to the extent any such Taxes become payable in
connection with the transactions contemplated by this Agreement, on behalf of
the shareholders of the Company. The Company and Parent shall cooperate in
complying with the requirements of such taxes.
SECTION 5.16. Material Transactions by Parent. Parent shall
promptly notify the Company if, after the date of this Agreement and prior to
the Effective Time of the Merger, Parent or any Parent Subsidiary enters into a
definitive agreement providing for the implementation of a Material Transaction
(as defined below). In such event, the Board of Directors of the Company may
request the Company's financial advisor, CS First Boston Corporation, to
deliver a written opinion, substantially in the same form as the
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opinion referred to in Section 3.01(m), that, after giving effect to the
Material Transaction, the consideration to be received in the Merger by the
Company's shareholders is fair to the Company's shareholders other than Parent
from a financial point of view. The Company and Parent shall cooperate in
furnishing such information to CS First Boston Corporation as shall be
reasonably required in order for such opinion to be delivered as promptly as
practicable, and the Company shall use all commercially reasonable efforts to
cause such opinion or the written advice referred to in the following sentence
to be delivered within 15 days following request therefor from the Company. In
the event that CS First Boston Corporation advises the Company and Parent in
writing that it is unable to deliver such opinion, the Company shall be
entitled to terminate this Agreement pursuant to Section 7.01(f), if such
termination is approved by the Board of Directors of the Company. For purposes
of the foregoing, "Material Transaction" means (i) the issuance by Parent of
more than 90,000,000 "common stock equivalents" (one common stock equivalent
being equal to one share of Parent Common Stock, including any share of Parent
Common Stock issuable by Parent upon conversion, exercise or exchange of any
other capital stock, warrant or other security or right of Parent, any Parent
Subsidiary or any other controlled affiliate of Parent) in any single
transaction or in any series of individual transactions, each of which involves
the issuance of more than 20,000,000 common stock equivalents, whether or not
such individual transactions are related to each other, or (ii) the sale or
other disposition in any transaction or series of transactions, whether or not
related to each other, by Parent or any Parent Subsidiary of any business or
assets with an aggregate fair market value in excess of $3,500,000,000,
excluding from such amount (x) sales of inventory in the ordinary course of
business consistent with prior practice and (y) the sale or disposition, in a
single transaction or series of related transactions, of assets with an
aggregate fair market value of $500,000,000 or less. The fair market value of
any cable television systems disposed of by Parent or any Parent Subsidiary in
exchange for cable television systems owned by third parties shall be included
in such amount only to the extent, if any, in excess of the fair market value
of the cable televisions systems acquired in such exchange by Parent or any
Parent Subsidiary.
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ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Shareholder Approvals and Parent Stockholder Approvals. The
Company shall have obtained the Shareholder Approvals and Parent shall
have obtained the Parent Stockholder Approvals.
(b) NYSE Listing. The shares of Parent Company Stock issuable to
the Company's shareholders pursuant to this Agreement shall have been
approved for listing on the NYSE, subject to official notice of issuance.
(c) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired. Any consents,
approvals and filings under any foreign antitrust law the absence of
which would prohibit the consummation of the Merger shall have been
obtained or made.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or preventing LMC or any of its
subsidiaries from voting, as contemplated by the LMC Agreement, shares of
Company Capital Stock that LMC or any such subsidiary is otherwise
entitled to vote, shall be in effect; provided, however, that, subject to
the proviso in Section 5.05(a), each of the parties shall have used its
best efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any such injunction or other order
that may be entered.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop
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order, and Parent shall have received all state securities or "blue sky"
authorizations necessary to issue the Parent Common Stock pursuant to
this Agreement.
(f) FCC Approvals. All orders and approvals of the FCC required
in connection with the consummation of the transactions contemplated by
this Agreement shall have been obtained without the imposition of any
conditions or restrictions of the type referred to in Section
6.02(e)(ii), (iii) or (iv) that are not acceptable to Parent in its sole
discretion.
(g) Certain Proceedings. If any action or proceeding relating to
the issue of whether the transactions contemplated by this Agreement
violate, or require the consent of any person under, the TWE Partnership
Agreement (a "TWE Proceeding") shall have been commenced, then either (i)
such TWE Proceeding shall have been dismissed with prejudice or (ii) a
final judgment that remains unstayed for a period of 60 days shall have
been entered in such TWE Proceeding; provided, however, that this
condition shall cease to be effective on December 23, 1996.
(h) Voting Trust Approval. Either (A) Parent and the Company
shall be satisfied that, and the FCC shall have confirmed that, the
Voting Trust (as defined in the LMC Agreement) will be effective to
prevent the beneficiaries thereunder from having an attributable
interest, within the meaning of the FCC's rules and regulations, in the
assets and businesses of Parent by reason of the Parent Common Stock
subject thereto or (B) the parties to the LMC Agreement (other than
Parent) shall have acknowledged that the procedures set forth in Section
4.1 of the LMC Agreement relating to exchange for nonvoting shares of
Parent Preferred Stock are applicable.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver by Parent on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified
as to materiality
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shall be true and correct, and the representations and warranties of the
Company set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except to the extent any such representation or warranty
expressly relates to an earlier date (in which case as of such date), and
Parent shall have received a certificate signed on behalf of the Company
by the Chief Executive Officer (or the Executive Vice President) and the
Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by the Chief Executive Officer (or the Executive Vice President) and the
Chief Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have received
from each person named in the letter referred to in Section 5.11 an
executed copy of an agreement substantially in the form of Exhibit A.
(d) Tax Opinion. Parent shall have received an opinion dated the
Closing Date from Cravath, Swaine & Moore, based upon certificates and
letters, which letters and certificates are substantially in the form set
forth in Exhibit D and dated the Closing Date, to the effect that the
Merger will qualify as a reorganization under the provisions of Section
368(a) of the Code.
(e) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity (i) challenging the acquisition by
Parent or Sub of any shares of capital stock of the Company or the
Surviving Corporation, seeking to restrain or prohibit the consummation
of the Merger or any of the other transactions contemplated by this
Agreement and the LMC Agreement or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the Company
and its subsidiaries taken as a whole, (ii) seeking to prohibit or limit
the ownership or operation by the Company, Parent, any Material Company
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Subsidiary or any Material Parent Subsidiary of any material portion of
the business or assets of the Company, Parent, any Material Company
Subsidiary or any Material Parent Subsidiary or to compel the Company,
Parent or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company,
Parent, any Material Company Subsidiary or any Material Parent Subsidiary
as a result of the Merger or any of the other transactions contemplated
by this Agreement, (iii) seeking to impose limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership
of, any shares of capital stock of the Surviving Corporation, including,
without limitation, the right to vote such capital stock on all matters
properly presented to the stockholders of the Surviving Corporation, (iv)
seeking to prohibit Parent or any of the Parent Subsidiaries from
effectively controlling in any material respect the business or
operations of the Company or any Material Company Subsidiary or (v) which
otherwise is reasonably likely to have a Company Material Adverse Effect
or a Parent Material Adverse Effect.
(f) Investors' Agreements. Each of the other parties thereto
shall have executed and delivered to Parent an Investors' Agreement in
the form of Exhibit C-1 or C-2, as applicable.
(g) Cable Franchise Authorities. All necessary orders and permits
approving the transactions contemplated by this Agreement from all
applicable cable franchising authorities having jurisdiction over all or
any portion of any material cable system operated by Parent or any Parent
Subsidiary shall have been received.
(h) Dissenters' Rights. The Company shall not have received
pursuant to Section 1321(a)(1) of the Georgia BCC written notices of
intent to demand payment in connection with the Merger with respect to
shares of Company Capital Stock representing more than 28,000,000 Company
Common Stock equivalents (calculated on the basis that each share of
Company Common Stock represents one Company Common Stock equivalent and
each share of Class C Preferred Stock represents six Company Common Stock
equivalents).
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SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Sub set forth in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date, except
to the extent any such representation or warranty expressly relates to
an earlier date (in which case as of such date), and the Company shall
have received a certificate signed on behalf of Parent by the chief
executive officer (or any executive vice president) and the chief
financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf
of Parent by the chief executive officer (or any executive vice
president) and the chief financial officer of Parent to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity (i) seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to
Parent and its subsidiaries taken as a whole (determined after giving
effect to the Merger), (ii) seeking to prohibit or limit the ownership or
operation by Parent or any Material Parent Subsidiary of any material
portion of the business or assets of Parent or any Material Parent
Subsidiary (determined after giving effect to the Merger) or to compel
Parent or any of its subsidiaries to dispose of or hold separate any
material portion of the business or assets of Parent or any Material
Parent Subsidiary (determined after giving effect to the Merger), as a
result of the Merger or any of the other transactions contemplated by
this Agreement, or (iii) which otherwise is reasonably
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54
likely to have a Parent Material Adverse Effect (determined after giving
effect to the Merger).
(d) Tax Opinion. The Company shall have received an opinion dated
the Closing Date from Skadden, Arps, Slate, Meagher & Flom, based upon
certificates and letters, which letters and certificates are
substantially in the form set forth in Exhibit D and dated the Closing
Date, to the effect that the Merger will qualify as a reorganization
under the provisions of Section 368(a) of the Code.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time of the Merger, whether before or after the
Shareholder Approvals:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting of the Company or
any adjournment thereof at which the Shareholder Approvals are
voted upon, the Shareholder Approvals shall not have been obtained;
(ii) if, at a duly held stockholders meeting of Parent or any
adjournment thereof at which the Parent Stockholder Approvals are
voted upon, the Parent Stockholder Approvals shall not have been
obtained;
(iii) if the Merger shall not have been consummated on or
before September 30, 1996, unless the failure to consummate the
Merger is the result of a wilful and material breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that if all the conditions set forth in Sections
6.01 (other than 6.01(g)), 6.02 and 6.03 have been satisfied at
such date, either Parent or the Company may, by notice to the other
prior to such date, extend
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such date to the latest date so extended by either party but in no
event later than December 31, 1996;
(iv) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and non-appealable;
(v) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A) would give rise to the failure of a
condition set forth in Section 6.02(a) or 6.02(b) or Section
6.03(a) or 6.03(b), as applicable, and (B) cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach (a "Material Breach") (provided that
the terminating party is not then in breach of any representation,
warranty, covenant or other agreement that would give rise to a
failure of a condition as described in clause (A) above); or
(vi) if the FCC shall have issued an order or ruling or
taken other action denying approval of the transactions
contemplated by this Agreement, and such order, ruling or other
action shall have become final and non-appealable;
(c) by either Parent or the Company in the event that (i) all the
conditions to the obligation of such party to effect the Merger set forth
in Section 6.01 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Merger set forth in Section 6.02
(in the case of Parent) or Section 6.03 (in the case of the Company) is
not capable of being satisfied prior to the end of the period referred to
in Section 7.01(b)(iii);
(d) by Parent, if any order or approval of the FCC contemplated by
Section 6.01(f) when obtained shall have included any conditions or
restrictions of the type referred to in Section 6.02(e)(ii), (iii) or
(iv) that are not acceptable to Parent in its sole
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discretion and such order or approval shall have become final and
non-appealable;
(e) by the Company, subject to Section 7.05(b), if the Board of
Directors of the Company shall concurrently approve, and the Company
shall concurrently enter into, a definitive agreement providing for the
implementation of the transactions contemplated by a takeover proposal;
provided, however, that (i) the Company is not then in breach of Section
4.02 or in breach of any other representation, warranty, covenant or
agreement that would give rise to a failure of a condition set forth in
Section 6.02(a) or 6.02(b), (ii) the Board of Directors of the Company
shall have complied with Section 7.05(b) in connection with such takeover
proposal and (iii) no termination pursuant to this Section 7.01(e) shall
be effective unless the Company shall simultaneously make the payment
required by Section 7.02(a);
(f) by the Company, as contemplated by Section 5.16;
(g) by the Company within 30 days of (i) Parent entering into any
agreement providing for any merger or consolidation of Parent with or
into any other person in which the shares of capital stock of Parent are
to be exchanged for or converted into the right to receive anything other
than Parent Common Stock, (ii) any person becoming an Acquiring Person
(as defined in the Rights Agreement, as in effect on the date of this
Agreement), other than with the prior approval of the Board of Directors
of Parent, or (iii) any person becoming an Acquiring Person (as defined
in the Rights Agreement, as in effect on the date of this Agreement, but
determined, for purposes of this clause (iii), as if the reference
therein to "15%" were to "30%"), in the case of clauses (ii) and (iii)
above, (x) including any person excluded from the definition of
"Acquiring Person" in the Rights Agreement by virtue of the acquisition
of shares pursuant to a Qualifying Offer (as defined in the Rights
Agreement, as in effect on the date of this Agreement) and (y) regardless
of whether the Rights Agreement is then in effect (and excluding, in all
cases, any amendment of this Agreement as contemplated by Section 1.01);
or
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(h) by Parent to the extent required by Section 2.3 of the LMC
Agreement.
SECTION 7.02. Effect of Termination. (a) In the event that
any person shall make a takeover proposal and thereafter (i) this Agreement is
terminated pursuant to Section 7.01(b)(i), pursuant to Section 7.01(b)(iii) (if
at the time of termination (x) the Company is in breach of any representation,
warranty, covenant or other agreement that would give rise to a failure of a
condition set forth in Section 6.02(a) or 6.02(b) and (y) such breach cannot be
or has not been cured within 30 days after the Company becomes aware of such
breach or such shorter period as may elapse between the date the Company
becomes aware of such breach and the time of termination), by the Company
pursuant to Section 7.01(b)(iv) (if at the time of termination (x) the Company
is in breach of any representation, warranty, covenant or other agreement that
would give rise to a failure of a condition set forth in Section 6.02(a) or
6.02(b) and (y) such breach cannot be or has not been cured within 30 days
after the Company becomes aware of such breach), by Parent pursuant to Section
7.01(b)(v), pursuant to Section 7.01(b)(vi) (if at the time of termination (x)
the Company is in breach of any representation, warranty, covenant or other
agreement that would give rise to a failure of a condition set forth in Section
6.02(a) or 6.02(b) and (y) such breach cannot be or has not been cured within
30 days after the Company becomes aware of such breach), by the Company
pursuant to Section 7.01(c) or pursuant to Section 7.01(e), and (ii) a
definitive agreement with respect to a takeover proposal is executed, or a
takeover proposal is consummated, at or within eighteen months after such
termination, then the Company shall pay to Parent a fee of $175,000,000
(reduced by any amount actually paid by the Company pursuant to Section 7.02(b)
in connection with such termination), which amount shall be payable by wire
transfer of same day funds on the date such agreement is executed, or such
takeover proposal is consummated, as applicable. The Company acknowledges that
the agreements contained in this Section 7.02(a) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement; accordingly, if the
Company fails to promptly pay the amount due pursuant to this Section 7.02(a),
and, in order to obtain such payment, commences a suit which results in a
judgment against the Company for the fee set forth in this Section 7.02(a), the
Company shall also pay to Parent its costs and expenses
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(including reasonable attorneys' fees) in connection with such suit.
(b) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.01(b)(i) or by Parent pursuant to Section
7.01(b)(v), then the Company shall reimburse Parent for all its reasonable
out-of-pocket expenses actually incurred in connection with this Agreement and
the transactions contemplated hereby, up to a maximum amount of $15,000,000,
which amount shall be payable by wire transfer of same day funds within three
business days of written demand, accompanied by a reasonably detailed statement
of such expenses and appropriate supporting documentation, therefor.
(c) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.01(b)(ii) or by the Company pursuant to
Section 7.01(b)(v), then Parent shall reimburse the Company for all its
reasonable out-of-pocket expenses actually incurred in connection with this
Agreement and the transactions contemplated hereby, up to a maximum amount of
$15,000,000, which amount shall be payable by wire transfer of same day funds
within three business days of written demand, accompanied by a reasonably
detailed statement of such expenses and appropriate supporting documentation,
therefor.
(d) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 7.01, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent, Sub or the Company, other than the provisions of Sections 3.01(l)
and 3.02(j), the second sentence of Section 5.04, Section 5.10, this Section
7.02 and Article VIII and except to the extent that such termination results
from the wilful and material breach by a party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after the Shareholder Approvals; provided,
however, that after the Shareholder Approvals, there shall be made no
amendment that pursuant to the Georgia BCC requires further approval by the
shareholders of the Company without the further approval of such shareholders.
This Agreement may not be amended except
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by an instrument in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.03, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. (a) A termination of this Agreement pursuant to Section 7.01, an
amendment of this Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective, require, in the case
of Parent, Sub or the Company, action by its Board of Directors or, in the case
of an extension or waiver pursuant to Section 7.04, the duly authorized
designee of its Board of Directors.
(b) The Company shall provide to Parent written notice prior to
any termination of this Agreement pursuant to Section 7.01(e) advising Parent
(i) that the Board of Directors of the Company in the exercise of its good
faith judgment as to its fiduciary duties to the shareholders of the Company
under applicable law, after receipt of written advice of outside legal counsel,
has determined (on the basis of such takeover proposal and the terms of this
Agreement, as then in effect) that such termination is required in connection
with a takeover proposal that is more favorable to the shareholders of the
Company than the transactions contemplated by this Agreement (taking into
account all terms of such takeover proposal and this Agreement, including all
conditions) and (ii) as to the material terms of any such takeover proposal.
At any time after two business days following receipt of such notice, the
Company may terminate this Agreement as provided in Section 7.01(e) only if the
Board of Directors of the Company determines that such proposal is more
favorable to
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the shareholders of the Company than the transactions contemplated by this
Agreement (taking into account all terms of such takeover proposal and this
Agreement, including all conditions, and which determination shall be made in
light of any revised proposal made by Parent prior to the expiration of such
two business day period) and concurrently enters into a definitive agreement
providing for the implementation of the transactions contemplated by such
takeover proposal.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Attention: General Counsel
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
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(b) if to the Company, to
Turner Broadcasting System, Inc.
One CNN Center
Atlanta, GA 30303
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, CA 90071
Attention: Thomas C. Janson, Jr., Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(c) a "subsidiary" of any person means another person, an amount of
the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to a Section or Exhibit such reference shall be to a Section of, or
an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used
in this
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Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.05. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents referred to herein) (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II, Section 5.08 and
Section 5.09, are not intended to confer upon any person other than the parties
any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof (except to the extent that the provisions of the
Georgia BCC shall be mandatorily applicable to the Merger or this Agreement).
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct wholly owned Parent
Subsidiary, but no such assignment shall relieve Sub of any of its obligations
under this Agreement. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to seek
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the
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terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that it will not
initiate any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court. The Company hereby
appoints the Prentice-Hall Corporation System, Inc., 32 Lockerman Square, Suite
L-100, Dover, Delaware 19901, as its agent for service of process in Delaware.
SECTION 8.10. Waivers. Except as provided in this Agreement or
any waiver pursuant to Section 7.04, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
TIME WARNER INC.,
by
/s/ Gerald M. Levin
------------------------
Name: Gerald M. Levin
Title: Chairman and CEO
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TIME WARNER ACQUISITION CORP.,
by
/s/ Peter R. Haje
------------------------
Name: Peter R. Haje
Title: President
TURNER BROADCASTING SYSTEM, INC.,
by
/s/ R. E. Turner
------------------------
Name: R. E. Turner, III
Title: Chairman, President
and CEO
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EXHIBIT A
FORM OF AFFILIATE LETTER
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Ladies and Gentlemen:
I have been advised that as of the date of this letter
agreement I may be deemed to be an "affiliate" of Turner Broadcasting System,
Inc., a Georgia corporation (the "Company"), as such term is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), or (ii)
used in and for purposes of Accounting Series Releases 130 and 135, as amended,
of the Commission. Pursuant to the terms of the Agreement and Plan of Merger,
dated as of September __, 1995 (as amended from time to time, the "Merger
Agreement"), by and among Time Warner, Inc., a Delaware corporation ("Parent"),
the Company and Time Warner Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), the Company will be merged with and
into Sub (the "Merger").
Pursuant to the Merger each share of Class A Common Stock, par
value $.0625 per share, of the Company owned by the undersigned, and each share
of Class B Common Stock, par value $.0625 per share, of the Company owned by
the undersigned will be converted into the right to receive 0.75 of a share of
Common Stock, par value $1.00 per share, of Parent ("Parent Common Stock"), and
each share of Class C Convertible Preferred Stock, par value $.125 per share,
of the Company owned by the undersigned will be converted into the right to
receive 4.80 shares of Parent Common Stock.
I represent, warrant and covenant to Parent that, with respect
to all Parent Common Stock received as a result of the Merger:
74
1. I shall not make any sale, transfer or other
disposition of Parent Common Stock in violation of the Act or the Rules and
Regulations.
2. I have carefully read this letter and the Merger
Agreement and have had an opportunity to discuss the requirements of such
documents and any other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Parent Common Stock with my counsel or counsel
for the Company.
3. I have been advised that the issuance of Parent
Common Stock to me pursuant to the Merger has been registered with the
Commission under the Act. However, I have also been advised that, since at the
time the Merger was submitted for a vote of the stockholders of the Company, I
may be deemed to have been an affiliate of the Company and the distribution by
me of Parent Common Stock has not been registered under the Act, I may not
offer to sell, sell, transfer or otherwise dispose of Parent Common Stock
issued to me in the Merger unless (i) such offer, sale, transfer or other
disposition has been registered under the Act or is made in conformity with
Rule 145 under the Act, or (ii) in the opinion of counsel reasonably acceptable
to Parent, or pursuant to a "no action" letter obtained by the undersigned from
the staff of the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
4. I understand that, except as provided in the
Registration Rights Agreement to be entered into by Parent and the undersigned
as contemplated by the Merger Agreement, Parent is under no obligation to
register under the Act the sale, transfer or other disposition of Parent Common
Stock by me or on my behalf or to take any other action necessary in order to
make compliance with an exemption from such registration available.
5. I understand that Parent will give stop transfer
instructions to Parent's transfer agents with respect to Parent Common Stock,
that the Parent Common Stock issued to me will all be in certificated form and
that the certificates therefor, or any substitutions therefor, will bear a
legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
SOLD, TRANSFERRED OR OTHERWISE DIS-
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POSED OF IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED SEPTEMBER
__, 1995, BETWEEN THE REGISTERED HOLDER HEREOF AND TIME WARNER, INC.,
A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TIME
WARNER."
6. I also understand that unless the transfer by me of
my Parent Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Parent reserves the right to place
a legend substantially to the following effect on the certificates issued to
any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES HAVE NOT BEEN
ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes of
the Act. It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) two years shall have elapsed from the
date the undersigned acquired Parent Common Stock received in the Merger and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
three years shall have elapsed from the date the undersigned acquired Parent
Common Stock received in the Merger and the provisions of Rule 145(d)(3) are
then available to the undersigned, or (iii) Parent has received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to Parent, or a "no action" letter obtained by the undersigned from the staff
of the Commission, to the effect that
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the restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter.
Sincerely,
----------------------------------
Name:
Accepted this day of
---
September, 1995:
Time Warner Inc.
By:
------------------------------
Name:
Title:
4
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT, dated as of ,
among TIME WARNER INC., a Delaware corporation (the "Company"),
and the Holders (as defined below).
WHEREAS, in connection with the Agreement and Plan of Merger, dated
as of September 22, 1995 (the "Merger Agreement"), among the Company, Time
Warner Acquisition Corp., a Delaware corporation, and Turner Broadcasting
System, Inc., a Georgia corporation, each initial Holder will receive shares of
Common Stock (as defined below); and
WHEREAS, in order to induce the initial Holders to execute and
deliver to the Company the letters contemplated by Section 5.11 of the Merger
Agreement, the Company has agreed to provide each Holder with the registration
rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 5 hereof.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
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2
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock issued by such person, including each class of common stock and
preferred stock of such person.
"Common Stock" means the Common Stock, par value $1.00 per share,
of the Company issued pursuant to the Merger Agreement or any other shares of
capital stock or other securities of the Company into which such shares of
Common Stock shall be reclassified or changed, including, by reason of a
merger, consolidation, reorganization or recapitalization. If the Common Stock
has been so reclassified or changed, or if the Company pays a dividend or makes
a distribution on the Common Stock in shares of capital stock, or subdivides
(or combines) its outstanding shares of Common Stock into a greater (or
smaller) number of shares of Common Stock, a share of Common Stock shall be
deemed to be such number of shares of stock and amount of other securities to
which a holder of a share of Common Stock outstanding immediately prior to such
change, reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
"Company" shall have the meaning set forth in the introductory
clauses hereof.
"Delay Period" shall have the meaning set forth in Section 2(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
2(b) hereof.
"Effectiveness Period" shall have the meaning set forth in Section
2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means a person who owns Registrable Shares and is either
(i) named on the signature pages hereof
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3
as a Holder, or (ii) a person who has agreed to be bound by the terms of this
Agreement as if such person were a Holder and is (A) a person to whom a Holder
has transferred Registrable Shares pursuant to Rule "4(1-1/2)" (or any similar
private transfer exemption), (B) upon the death of any Holder, the executor of
the estate of such Holder or any of such Holder's heirs, devisees, legatees or
assigns or (iv) upon the disability of any Holder, any guardian or conservator
of such Holder.
"Interruption Period" shall have the meaning set forth in Section 5
hereof.
"Merger Agreement" shall have the meaning set forth in the
introductory clauses hereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 3 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Shares" means shares of Common Stock unless (i) they
have been effectively registered under Section 5 of the Securities Act and
disposed of pursuant to an effective Registration Statement, (ii) such
securities can be freely sold and transferred without restriction under Rule
145 or any other restrictions under the Securities Act or (iii) such securities
have been transferred pursuant to Rule 144 under the Securities Act or any
successor rule such that, after any such transfer referred to in this clause
(iii), such securities may be freely transferred without restriction under the
Securities Act.
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"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"Registration Period" shall have the meaning set forth in Section
2(a) hereof.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement, including pre-
and post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall have the meaning set forth in Section
2(b) hereof.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
SECTION 2. Demand Registration. (a) The Holders shall have the
right, during the period (the "Registration Period") commencing on the date of
this Agreement and ending on the third anniversary of the date of this
Agreement, by written notice (the "Demand Notice") given to the Company, to
request the Company to register under and in accordance with the provisions of
the Securities Act all or any portion of the Registrable Shares designated by
such Holders; provided, however, that the aggregate number of Registrable
Shares requested to be registered pursuant to any Demand Notice and pursuant to
any related Demand Notices received pursuant to the following sentence shall be
at least 5,000,000. Upon receipt of any such Demand Notice, the Company shall
promptly notify all other Holders of the receipt of such Demand Notice and
allow them the opportunity to include Registrable Shares held by them in the
proposed
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registration by submitting their own Demand Notice. In connection with any
Demand Registration in which more than one Holder participates, in the event
that such Demand Registration involves an underwritten offering and the
managing underwriter or underwriters participating in such offering advise
in writing the Holders of Registrable Shares to be included in such offering
that the total number of Registrable Shares to be included in such offering
exceeds the amount that can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of such offering (including the
price per share of the Registrable Shares to be sold), then the amount of
Registrable Shares to be offered for the account of such Holders shall be
reduced pro rata on the basis of the number of Registrable Shares to be
registered by each such Holder. The Holders as a group shall be entitled to
three Demand Registrations pursuant to this Section 2 unless any Demand
Registration does not become effective or is not maintained for a period
(whether or not continuous) of at least 120 days (or such shorter period as
shall terminate when all the Registrable Shares covered by such Demand
Registration have been sold pursuant thereto), in which case the Holders will
be entitled to an additional Demand Registration pursuant hereto.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use its best
efforts to cause to be declared effective, a Registration Statement on the
appropriate form for the registration and sale, in accordance with the intended
method or methods of distribution, of the total number of Registrable Shares
specified by the Holders in such Demand Notice, which may include a "shelf"
registration (a "Shelf Registration") pursuant to Rule 415 under the Securities
Act (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered thereby
(i) in the case of a Registration that is not a Shelf Registration, for a
period of 120 days from the date on which the SEC declares such Registration
Statement effective and (ii) in the case of a Shelf Registration, for a period
of 180 days from the date on which the SEC declares such Registration
Statement effective, in either case (x) until all the Registrable
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Shares covered by such Registration Statement have been sold pursuant to such
Registration Statement), and (y) as such period may be extended pursuant to
this Section 2.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of time,
but not in excess of 90 days (a "Delay Period"), if any executive officer of
the Company determines that in such executive officer's reasonable judgment and
good faith the registration and distribution of the Registrable Shares covered
or to be covered by such Registration Statement would materially interfere with
any pending material financing, acquisition or corporate reorganization or
other material corporate development involving the Company or any of its
subsidiaries or would require premature disclosure thereof and promptly gives
the Holders written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of the
period of the anticipated delay; provided, however, that (i) the aggregate
number of days included in all Delay Periods during any consecutive 12 months
shall not exceed the aggregate of (x) 180 days minus (y) the number of days
occurring during all Hold Back Periods and Interruption Periods during such
consecutive 12 months and (ii) a period of at least 60 days shall elapse
between the termination of any Delay Period, Hold Back Period or Interruption
Period and the commencement of the immediately succeeding Delay Period. If the
Company shall so postpone the filing of a Registration Statement, the Holders
of Registrable Shares to be registered shall have the right to withdraw the
request for registration by giving written notice from the Holders of a
majority of the Registrable Shares that were to be registered to the Company
within 45 days after receipt of the notice of postponement or, if earlier, the
termination of such Delay Period (and, in the event of such withdrawal, such
request shall not be counted for purposes of determining the number of requests
for registration to which the Holders of Registrable Shares are entitled
pursuant to this Section 2). The time period for which the Company is required
to maintain the effectiveness of any Registration Statement shall be extended
by the aggregate number of days of all Delay Periods, all Hold Back Periods and
all Interruption Periods occurring during such Registration and such period and
any extension thereof is hereinafter referred to as the "Effectiveness Period".
The Company
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shall not be entitled to initiate a Delay Period unless it shall (A) to the
extent permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under registration
statements covering securities held by such other security holders and (B) in
accordance with the Company's policies from time to time in effect, forbid
purchases and sales in the open market by senior executives of the Company.
(e) Except to the extent required by agreements with other
security holders of the Company entered into prior to the date of the Merger
Agreement, the Company shall not include any securities that are not
Registrable Shares in any Registration Statement filed pursuant to this Section
2 without the prior written consent of the Holders of a majority in number of
the Registrable Shares covered by such Registration Statement.
(f) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at any
time prior to the effective date of the Registration Statement relating to such
Registration, revoke such request by providing a written notice to the Company
revoking such request. The Holders of Registrable Shares who revoke such
request shall reimburse the Company for all its out-of-pocket expenses incurred
in the preparation, filing and processing of the Registration Statement;
provided, however, that, if such revocation was based on the Company's failure
to comply in any material respect with its obligations hereunder, such
reimbursement shall not be required.
SECTION 3. Piggyback Registration. (a) Right to Piggyback. If
at any time during the Registration Period the Company proposes to file a
registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares pursuant to a
firm commitment underwritten offering solely for cash for its own account
(other than a registration statement (i) on Form S-8 or any successor forms
thereto, or (ii) filed solely in connection with a dividend reinvestment plan
or employee benefit plan covering officers or directors of the Company or its
Affiliates) or for the account of any holder of securities of the same type as
the Registrable Shares (to the extent that the Company has the right to include
Registrable Shares in any registration statement to be filed by the Company on
behalf of such holder), then the Company shall give written notice of such
proposed filing to
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the Holders at least 15 days before the anticipated filing date. Such notice
shall offer the Holders the opportunity to register such amount of Registrable
Shares as they may request (a "Piggyback Registration"). Subject to Section
3(b) hereof, the Company shall include in each such Piggyback Registration all
Registrable Shares with respect to which the Company has received written
requests for inclusion therein within 10 days after notice has been given to
the Holders. Each Holder shall be permitted to withdraw all or any portion of
the Registrable Shares of such Holder from a Piggyback Registration at any time
prior to the effective date of such Piggyback Registration; provided, however,
that if such withdrawal occurs after the filing of the Registration Statement
with respect to such Piggyback Registration, the withdrawing Holders shall
reimburse the Company for the portion of the registration expenses payable with
respect to the Registrable Shares so withdrawn.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the managing underwriter or
underwriters participating in such offering advise the Holders in writing that
the total amount of securities requested to be included in such Piggyback
Registration exceeds the amount which can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then the amount
of securities to be offered for the account of the Holders and other holders of
securities who have piggyback registration rights with respect thereto shall be
reduced (to zero if necessary) pro rata on the basis of the number of common
stock equivalents requested to be registered by each such Holder or holder
participating in such offering.
(c) Right To Abandon. Nothing in this Section 3 shall create any
liability on the part of the Company to the Holders if the Company in its sole
discretion should decide not to file a registration statement proposed to be
filed pursuant to Section 3(a) hereof or to withdraw such registration
statement subsequent to its filing, regardless of any action whatsoever that a
Holder may have taken, whether as a result of the issuance by the Company of
any notice hereunder or otherwise.
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SECTION 4. Holdback Agreement. If (i) during the Effectiveness
Period, the Company shall file a registration statement (other than in
connection with the registration of securities issuable pursuant to an employee
stock option, stock purchase or similar plan or pursuant to a merger, exchange
offer or a transaction of the type specified in Rule 145(a) under the
Securities Act) with respect to the Common Stock or similar securities or
securities convertible into, or exchangeable or exercisable for, such
securities and (ii) with reasonable prior notice, the Company (in the case of a
nonunderwritten public offering by the Company pursuant to such registration
statement) advises the Holders in writing that a public sale or distribution of
such Registrable Shares would materially adversely affect such offering or the
managing underwriter or underwriters (in the case of an underwritten public
offering by the Company pursuant to such registration statement) advises the
Company in writing (in which case the Company shall notify the Holders) that a
public sale or distribution of Registrable Shares would materially adversely
impact such offering, then each Holder shall, to the extent not inconsistent
with applicable law, refrain from effecting any public sale or distribution of
Registrable Shares during the ten days prior to the effective date of such
registration statement and until the earliest of (A) the abandonment of such
offering, (B) 90 days from the effective date of such registration statement
and (C) if such offering is an underwritten offering, the termination in whole
or in part of any "hold back" period obtained by the underwriter or
underwriters in such offering from the Company in connection therewith (each
such period, a "Hold Back Period").
SECTION 5. Registration Procedures. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the Company
shall use commercially reasonable efforts to effect such registration to permit
the sale of such Registrable Shares in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company shall as
expeditiously as possible (but subject to Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration Statement for the
sale of the Registrable Shares on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate in
accordance with such Holders' intended method or
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methods of distribution thereof, subject to Section 2(b) hereof, and,
subject to the Company's right to terminate or abandon a registration
pursuant to Section 3(c) hereof, use commercially reasonable efforts to
cause such Registration Statement to become effective and remain
effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the rules,
regulations or instructions applicable to the Securities Act during the
applicable period in accordance with the intended methods of disposition
specified by the Holders of the Registrable Shares covered by such
Registration Statement, make generally available earnings statements
satisfying the provisions of Section 11(a) of the Securities Act
(provided that the Company shall be deemed to have complied with this
clause if it has complied with Rule 158 under the Securities Act), and
cause the related Prospectus as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; provided, however, that before filing
a Registration Statement or Prospectus, or any amendments or supplements
thereto (other than reports required to be filed by it under the Exchange
Act), the Company shall furnish to the Holders of Registrable Shares
covered by such Registration Statement and their counsel for review and
comment, copies of all documents required to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the SEC for amendments or
supplements to such Registration Statement or the related Prospectus or
for additional information regarding such Holders, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Shares for sale in any
jurisdiction or
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the initiation or threatening of any proceeding for such purpose, and (v)
of the happening of any event that requires the making of any changes in
such Registration Statement, Prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading:
(d) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement, or
the lifting of any suspension of the qualification or exemption from
qualification of any Registrable Shares for sale in any jurisdiction in
the United States;
(e) furnish to the Holder of any Registrable Shares covered by such
Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the SEC, and of each
post-effective amendment thereto, in each case including financial
statements and schedules and all exhibits and reports incorporated or
deemed to be incorporated therein by reference; and deliver, without
charge, such number of copies of the preliminary prospectus, any amended
preliminary prospectus, each final Prospectus and any post-effective
amendment or supplement thereto, as such Holder may reasonably request in
order to facilitate the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in conformity with the
requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use commercially reasonable efforts to
register or qualify such Registrable Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Holders of such
Registrable Shares shall reasonably request in writing; provided,
however, that the Company shall in no event be required to qualify
generally to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not at the time so qualified or to execute or
file a general consent to service of process in any such jurisdiction
where it
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has not theretofore done so or to take any action that would subject it
to general service of process or taxation in any such jurisdiction where
it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
5(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder (including
upon the termination of any Delay Period), such Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each
securities exchange or automated interdealer quotation system, if any, on
which similar securities issued by the Company are then listed or quoted;
(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares covered by such
Registration Statement, which are in a form eligible for deposit with The
Depository Trust Company;
(j) if such offering is an underwritten offering, make available
for inspection by any Holder of Registrable Shares included in such
Registration Statement, any underwriter participating in any offering
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by any such Holder or underwriter (collectively, the
"Inspectors"), all financial and other records and other information,
pertinent corporate documents and properties of any of the Company and
its subsidiaries and affiliates (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibilities; provided, however, that the Records that the Company
determines,
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in good faith, to be confidential and which it notifies the Inspectors in
writing are confidential shall not be disclosed to any Inspector unless
such Inspector signs a confidentiality agreement reasonably satisfactory
to the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid or
correct a material misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission
in such Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; provided further, however, that (A) any decision regarding
the disclosure of information pursuant to subclause (i) shall be made
only after consultation with counsel for the applicable Inspectors and
the Company and (B) with respect to any release of Records pursuant to
subclause (ii), each Holder of Registrable Shares agrees that it shall,
promptly after learning that disclosure of such Records is sought in a
court having jurisdiction, give notice to the Company so that the
Company, at the Company's expense, may undertake appropriate action to
prevent disclosure of such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Shares being sold in connection therewith
(including those reasonably requested by the managing underwriters) in
order to expedite or facilitate the disposition of such Registrable
Shares, and in such connection, (i) use commercially reasonable efforts
to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters and counsel to the Holders of
the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably
requested by such counsel and underwriters, (ii) use commercially
reasonable
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efforts to obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each selling holder
of Registrable Shares covered by the Registration Statement (unless such
accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings, (iii) if requested and if an underwriting
agreement is entered into, provide indemnification provisions and
procedures substantially to the effect set forth in Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such Holder
and such Holder's intended method of disposition of such Registrable Shares as
it may from time to time reasonably request in writing. If any such
information is not furnished within a reasonable period of time after receipt
of such request, the Company may exclude such Holder's Registrable Shares from
such Registration Statement.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) or 5(c)(v) hereof, that such Holder shall forthwith discontinue
disposition of any Registrable Shares covered by such Registration Statement or
the related Prospectus until receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(g) hereof, or until such Holder is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be
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incorporated, by reference in such Prospectus (such period during which
disposition is discontinued being an "Interruption Period") and, if requested
by the Company, the Holder shall deliver to the Company (at the expense of the
Company) all copies then in its possession, other than permanent file copies
then in such holder's possession, of the Prospectus covering such Registrable
Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the applicable
current preliminary prospectus or Prospectus in connection with the offering of
such Registrable Shares.
SECTION 6. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, the Company shall pay all costs, fees
and expenses incident to the Company's performance of or compliance with this
Agreement, including (i) all registration and filing fees, including NASD
filing fees, (ii) all fees and expenses of compliance with securities or Blue
Sky laws, including reasonable fees and disbursements of counsel in connection
therewith, (iii) printing expenses (including expenses of printing certificates
for Registrable Shares and of printing prospectuses if the printing of
prospectuses is requested by the Holders or the managing underwriter, if any),
(iv) messenger, telephone and delivery expenses, (v) fees and disbursements of
counsel for the Company, (vi) fees and disbursements of all independent
certified public accountants of the Company (including expenses of any "cold
comfort" letters required in connection with this Agreement) and all other
persons retained by the Company in connection with such Registration Statement,
(vii) fees and disbursements of one counsel, other than the Company's counsel,
selected by Holders of a majority of the Registrable Shares being registered,
to represent all such Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or compliance
with this Agreement. Notwithstanding the foregoing, the fees and expenses of
any persons retained by any Holder, other than one counsel for all such
Holders, and any discounts, commissions or brokers' fees or fees of similar
securities industry professionals and any transfer taxes relating to the
disposition of the Registrable Shares by a Holder, will be payable by such
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Holder and the Company will have no obligation to pay any such amounts.
SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b)
hereof, any Holder shall have the right, by written notice, to request that any
Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Holders of a majority of the Registrable Shares to be
disposed of in connection therewith shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the Company. In the case of
any underwritten offering pursuant to a Piggyback Registration, the Company
shall select the institution or institutions that shall manage or lead such
offering. No Holder shall be entitled to participate in an underwritten
offering unless and until such Holder has entered into an underwriting or other
agreement with such institution or institutions for such offering in such form
as the Company and such institution or institutions shall determine.
SECTION 8. Indemnification. (a) Indemnification by the Company.
The Company shall, without limitation as to time, indemnify and hold harmless,
to the full extent permitted by law, each Holder of Registrable Shares whose
Registrable Shares are covered by a Registration Statement or Prospectus, the
officers, directors and agents and employees of each of them, each Person who
controls each such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling person, to the fullest extent lawful, from
and against any and all losses, claims, damages, liabilities, judgment, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees) and expenses (collectively, "Losses"), as incurred, arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in such Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based upon information furnished in writing to the Company by or
on behalf of such Holder expressly for use therein;
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provided, however, that the Company shall not be liable to any such Holder to
the extent that any such Losses arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (i) having previously been furnished by or on
behalf of the Company with copies of the Prospectus, such Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Shares by such Holder to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; and provided further, however,
that the Company shall not be liable in any such case to the extent that any
such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission in the Prospectus, if (x) such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in all material respects in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is participating,
such Holder shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with such Registration
Statement or the related Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, its directors, officers, agents or employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act) and the directors, officers,
agents or employees of such controlling Persons, from and against all Losses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such Registration Statement or the related
Prospectus or any amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement or omission or alleged omission is
based upon any information so furnished in
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writing by or on behalf of such Holder to the Company expressly for use in such
Registration Statement or Prospectus.
(c) Conduct of Indemnification Proceedings. If any Person shall
be entitled to indemnity hereunder (an "indemnified party"), such indemnified
party shall give prompt notice to the party from which such indemnity is sought
(the "indemnifying party") of any claim or of the commencement of any
proceeding with respect to which such indemnified party seeks indemnification
or contribution pursuant hereto; provided, however, that the delay or failure
to so notify the indemnifying party shall not relieve the indemnifying party
from any obligation or liability except to the extent that the indemnifying
party has been prejudiced by such delay or failure. The indemnifying party
shall have the right, exercisable by giving written notice to an indemnified
party promptly after the receipt of written notice from such indemnified party
of such claim or proceeding, to assume, at the indemnifying party's expense,
the defense of any such claim or proceeding, with counsel reasonably
satisfactory to such indemnified party; provided, however, that (i) an
indemnified party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (1) the indemnifying party agrees to pay such fees and expenses; (2)
the indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to it that are inconsistent with
those available to the indemnifying party or that a conflict of interest is
likely to exist among such indemnified party and any other indemnified parties
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party); and (ii) subject
to clause (3) above, the indemnifying party shall not, in connection with any
one such claim or proceeding or separate but substantially similar or related
claims or proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
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all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory
to the indemnified party, from all liability in respect of such claim or
litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been taken by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or expenses incurred by such
party in connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provision of
this Section 8(d), an indemnifying party that is a Holder shall not be required
to contribute any amount which is in excess of the amount by which the total
proceeds
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received by such Holder from the sale of the Registrable Shares sold by such
Holder (net of all underwriting discounts and commissions) exceeds the amount
of any damages that such indemnifying party has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
SECTION 9. Miscellaneous. (a) Termination. This Agreement and
the obligations of the Company and the Holders hereunder (other than Section 8
hereof) shall terminate on the first date on which no Registrable Shares remain
outstanding.
(b) Notices. All notices or communications hereunder shall be in
writing (including telecopy or similar writing), addressed as follows:
To the Company:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Telecopier: (212) 765-0899
Attention: General Counsel
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telecopier: (212) 474-3700
Attention: Peter S. Wilson, Esq.
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To the Holders:
R.E. Turner, III
c/o Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Telecopier: (404) 827-3000
For Courier delivery
100 International Boulevard
Atlanta, GA 3030
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopier: (213) 687-5600
Attention: Thomas C. Janson, Jr., Esq.
Any such notice or communication shall be deemed given (i) when
made, if made by hand delivery, (ii) upon transmission, if sent by confirmed
telecopier, (iii) one business day after being deposited with a next-day
courier, postage prepaid, or (iv) three business days after being sent
certified or registered mail, return receipt requested, postage prepaid, in
each case addressed as above (or to such other address or to such other
telecopier number as such party may designate in writing from time to time).
(c) Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which
shall remain in full force and effect.
(d) Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns.
(e) Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings
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between the parties hereto with respect to the subject matter hereof.
(f) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of at
least a majority in number of the Registrable Shares then outstanding.
(g) Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
consent of the other parties, except to the extent that such party is advised
by counsel that such release or announcement is necessary or advisable under
applicable law or the rules or regulations of any securities exchange, in which
case the party required to make the release or announcement shall to the extent
practicable provide the other party with an opportunity to review and comment
on such release or announcement in advance of its issuance.
(h) Expenses. Whether or not the transactions contemplated hereby
are consummated, except as otherwise provided herein, all costs and expenses
incurred in connection with the execution of this Agreement shall be paid by
the party incurring such costs or expenses, except as otherwise set forth
herein.
(i) Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same agreement, and shall
become effective when counterparts have been signed by each of the parties and
delivered to each other party.
(k) Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of New York.
(l) Calculation of Time Periods. Except as otherwise indicated,
all periods of time referred to herein shall include all Saturdays, Sundays and
holidays; provided,
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however, that if the date to perform the act or give any notice with respect to
this Agreement shall fall on a day other than a Business Day, such act or
notice may be timely performed or given if performed or given on the next
succeeding Business Day.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first written above.
TIME WARNER INC.,
by
--------------------------------------
Name:
Title:
------------------------------------------
R.E. Turner, III
TURNER OUTDOOR, INC.,
by
--------------------------------------
Name:
Title:
TURNER FOUNDATION, INC.,
by
--------------------------------------
Name:
Title:
ROBERT E. TURNER CHARITABLE
REMAINDER UNITRUST NO. 2,
by
--------------------------------------
Name:
Title:
100
EXHIBIT C-1
INVESTORS' AGREEMENT (NO. 1) dated as of
, among TIME WARNER INC., a Delaware
corporation ("Parent"), and the other parties
signatory hereto (each an "Investor").
This Agreement is entered into pursuant to Section 6.02(f) of
the Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement") dated as of September 22, 1995, among Parent, Time Warner
Acquisition Corp. ("Sub"), a Delaware corporation and a wholly owned subsidiary
of Parent, and Turner Broadcasting System, Inc. (the "Company"), a Georgia
corporation. In the Merger (as defined in the Merger Agreement), subject to
certain exceptions, (a) each share of Class A Common Stock, par value $.0625
per share, of the Company and each share of Class B Common Stock, par value
$.0625 per share, of the Company will be converted into the right to receive
0.75 shares of Common Stock, par value $1.00 per share, of Parent ("Parent
Common Stock") and (b) each share of Class C Convertible Preferred Stock, par
value $.125 per share, of the Company will be converted into the right to
receive 4.80 shares of Parent Common Stock. As a condition to the obligations
of Parent and Sub to effect the Merger, Parent and Sub have required that each
initial Investor enter into this Agreement.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Merger
Agreement. For purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the Exchange Act, as in effect on the date of this Agreement. Neither
Parent nor any of its subsidiaries or controlled Affiliates, on the one hand,
nor the Principal Investor, on the other hand, shall be an "Affiliate" or an
"Associate" of the other. The
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Turner Foundation, Inc. and the Robert E. Turner Charitable Foundation Unitrust
No. 2 shall be deemed not to be Affiliates or Associates of any Investor.
A person shall be deemed the "beneficial owner" of, and shall
be deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Board" shall mean the board of directors of Parent.
"Charitable Transferee" shall mean any charitable organization
described in Section 501(c)(3) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement
in such capacity and each successor, assign and other person that pursuant to
the terms hereof is required to become a party hereto as an Investor.
"Investors' Agreement (No. 2)" shall mean an Investors'
Agreement (No. 2), substantially in the form of Exhibit C-2 to the Merger
Agreement.
"permitted transferee" of any natural person shall mean (i) in
the case of the death of such person, such person's executors, administrators,
testamentary trustees,
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heirs, devisees and legatees and (ii) such person's current or future spouse,
parents, siblings or descendants or such parents', siblings' or descendants'
spouses (the "Family Members").
"person" shall have the meaning given such term in the Merger
Agreement.
"Principal Investor" shall mean R.E. Turner, III.
"Qualified Stockholder" shall mean any Charitable Transferee
or Qualified Trust from time to time bound as an "Investor" under an Investors'
Agreement (No. 2).
"Qualified Trust" shall mean any trust described in Section
664 of the Code of which the Principal Investor and members of his family are
income beneficiaries.
"Voting Power", when used with reference to any class or
series of securities of Parent, or any classes or series of securities of
Parent entitled to vote together as a single class or series, shall mean the
power of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or classes or series) beneficially owned by any
person, any securities not outstanding which are subject to conversion rights,
exchange rights, rights, warrants, options or similar securities held by such
person shall be deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class or series (or classes or
series) beneficially owned by such person, but shall not be deemed to be
outstanding for the purpose of computing the percentage of the class or series
(or classes or series) beneficially owned by any other person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any securities
convertible into or exchangeable for any securities having Voting Power.
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ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Parent Common Stock. None of the
Investors may offer for sale or sell any shares of Parent Common Stock acquired
pursuant to the Merger Agreement, or any interest therein, except (a) pursuant
to a registration of such shares under the Securities Act and applicable state
securities laws or (b) in a transaction as to which such Investor has delivered
an opinion of counsel or other evidence reasonably satisfactory to Parent, to
the effect that such transaction is exempt from, or not subject to, the
registration requirements of, the Securities Act and applicable state
securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall
hold in certificate form all shares of Parent Common Stock owned by such
Investor. Each certificate for shares of Parent Common Stock issued to or
beneficially owned by a person that is subject to the provisions of this
Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
INVESTORS' AGREEMENT (NO. 1) DATED AS OF (THE
"INVESTORS' AGREEMENT"), AMONG THE CORPORATION, THE ORIGINAL HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND CERTAIN OTHER
STOCKHOLDERS OF THE CORPORATION. A COPY OF THE INVESTORS' AGREEMENT
MAY BE OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN
ALL RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS' AGREEMENT.
ARTICLE III
Covenants of the Parties
SECTION 3.01. Standstill. None of the Investors may (and
each Investor shall cause its Affiliates and Associates that it controls, and
use reasonable efforts to cause its other Affiliates and Associates, not to),
without the prior written consent of the Board:
(a) publicly propose that any Investor or Qualified
Stockholder or any Affiliate or Associate of any
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Investor or Qualified Stockholder enter into, directly or indirectly, any
merger or other business combination involving Parent or propose to purchase,
directly or indirectly, a material portion of the assets of Parent or any
Material Parent Subsidiary, or make any such proposal privately if it would
reasonably be expected to require Parent to make a public announcement
regarding such proposal;
(b) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in
Regulation 14A promulgated under the Exchange Act) to vote or consent with
respect to any Voting Securities of Parent or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11 under the
Exchange Act) with respect to Parent;
(c) form, join or participate in or encourage the formation of
a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any Voting Securities of Parent, other than a group consisting
solely of Investors and Qualified Stockholders;
(d) deposit any Voting Securities of Parent into a voting
trust or subject any such Voting Securities to any arrangement or agreement
with respect to the voting thereof, other than any such trust, arrangement or
agreement (i) the only parties to, or beneficiaries of, which are Investors and
Qualified Stockholders and (ii) the terms of which do not require or expressly
permit any party thereto to act in a manner inconsistent with this Agreement;
(e) initiate, propose or otherwise solicit stockholders of
Parent for the approval of one or more stockholder proposals with respect to
Parent as described in Rule 14a-8 under the Exchange Act, or induce or attempt
to induce any other person to initiate any stockholder proposal with respect to
Parent;
(f) except in accordance with Section 3.04, seek election to
or seek to place a representative on the Board or seek the removal of any
member of the Board;
(g) call or seek to have called any meeting of the
stockholders of Parent;
(h) (A) solicit, seek to effect, negotiate with or provide
non-public information to any other person with
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respect to, (B) make any statement or proposal, whether written or oral, to the
Board or any director or officer of Parent with respect to, or (C) otherwise
make any public announcement or proposal whatsoever with respect to any form of
business combination transaction (with any person) involving a change of
control of Parent or the acquisition of a substantial portion of the equity
securities or assets of Parent or any Material Parent Subsidiary, including a
merger, consolidation, tender offer, exchange offer or liquidation of Parent's
assets, or any restructuring, recapitalization or similar transaction with
respect to Parent or any Material Parent Subsidiary; provided, however, that
the foregoing shall not (x) apply to any discussion between or among the
Investors and the Qualified Stockholders or any of their respective officers,
employees, agents or representatives or (y) in the case of clause (B) above, be
interpreted to limit the ability of any Investor or Qualified Stockholder, or
any designee of any Investor or Qualified Stockholder, on the Board to make any
such statement or proposal or to discuss any such proposal with any officer or
director of or advisor to Parent or advisor to the Board unless, in either
case, it would reasonably be expected to require Parent to make a public
announcement regarding such discussion, statement or proposal;
(i) otherwise act, alone or in concert with others, to seek to
control or influence the management or policies of Parent (except for (A)
voting as a holder of Voting Securities in accordance with the terms of such
Voting Securities and (B) actions taken as a director or officer of Parent);
(j) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing, or make any such disclosure privately if it
would reasonably be expected to require Parent to make a public announcement
regarding such intention, plan or arrangement; or
(k) advise, assist (including by knowingly providing or
arranging financing for that purpose) or knowingly encourage any other person
in connection with any of the foregoing.
SECTION 3.02. Transfer Restrictions. None of the Investors
may, without the prior written consent of Parent, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge, encumber
or otherwise dispose of, any Voting Securities of Parent, or any rights
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or options to acquire such Voting Securities, except in a transaction complying
with any of the following clauses:
(a) to the underwriters in connection with an underwritten
public offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of such
securities is in a manner that is intended to effect a broad distribution;
(b) to any wholly owned subsidiary of such Investor; provided,
however, that such transferee becomes a party to this Agreement as an Investor;
(c) to any person in a transaction that complies with the
volume and manner of sale provisions contained in Rules 144(e) and Rule 144(f)
as in effect on the date hereof under the Securities Act (whether or not Rule
144 is in effect on the date of such transaction); provided, however, that
dispositions pursuant to this clause (c) may not be made during any period that
a person has made and not withdrawn or terminated a tender or exchange offer
for Voting Securities of Parent or announced its intention to make such an
offer;
(d) to any person (including any pledgee of shares of Voting
Securities), other than a person that such Investor, or any of its Affiliates
or Associates, knows or, after commercially reasonable inquiry should have
known, beneficially owns or, after giving effect to such sale, will
beneficially own more than 5% of the aggregate Voting Power of the Voting
Securities of Parent;
(e) in the case of a natural person, to any permitted
transferee of such person; provided, however, that such transferee becomes a
party to this Agreement as an Investor;
(f) in a bona fide pledge of shares of Voting Securities of
Parent to a financial institution to secure borrowings as permitted by
applicable laws, rules and regulations; provided, however, that (i) such
financial institution agrees to be bound by this Section 3.02 and (ii) the
borrowings so secured are full recourse obligations of the pledgor and are
entered into substantially simultaneously with such pledge;
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(g) upon five Business Days' prior notice to Parent, pursuant
to the terms of any tender or exchange offer for Voting Securities of Parent
made pursuant to the applicable provisions of the Exchange Act or pursuant to
any merger or consolidation of Parent (but in the case of any tender or
exchange offer, only so long as each Investor and Qualified Stockholder is at
the time in substantial compliance with the provisions of Sections 3.01 and
3.05(c), whether or not bound by such provisions, and such tender or exchange
offer is not materially related to any past noncompliance with such provisions
by any Investor or Qualified Stockholder (whether or not bound by such
provisions);
(h) a gift to a Charitable Transferee or Qualified Trust;
provided, however, that (i) at the time of such gift, the Principal Investor
and his Family Members constitute a sufficient number of the directors or
trustees, as appropriate, of such Charitable Transferee or Qualified Trust to
permit approval of matters by such Charitable Transferee or Qualified Trust
without the approval of any other director or trustee of such Charitable
Transferee or Qualified Trust and (ii) such Charitable Transferee or Qualified
Trust is or simultaneously becomes a Qualified Stockholder (and Parent agrees
upon request to enter into an Investors' Agreement (No. 2) with such Charitable
Transferee or Qualified Trust);
(i) to TCI Turner Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement dated as of the same date as this
Agreement among TCITP, Parent and certain stockholders of Parent; or
(j) to Parent.
SECTION 3.03. Additional Agreements. None of the Investors
may (and each Investor shall cause its Affiliates and Associates that it
controls, and use reasonable efforts to cause its other Affiliates and
Associates, not to) (a) publicly request Parent or any of its agents, directly
or indirectly, to amend or waive any provision of this Agreement or (b)
knowingly take any action that would reasonably be expected to require Parent
to make a public announcement regarding the possibility of a transaction with
such Investor.
SECTION 3.04. Board Representation. (a) Upon execution of
this Agreement, Parent shall use reasonable
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efforts to cause to be elected to the Board two persons designated by the
Principal Investor who are Eligible Persons. "Eligible Person" means (i) the
Principal Investor and (ii) any other individual (A) who is reasonably
acceptable to the Board, (B) whose election to the Board would not, in the
opinion of counsel for Parent, violate or be in conflict with, or result in any
material limitation on the ownership or operation of any business or assets of
Parent or any of its subsidiaries under, any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity and (C)
who has agreed in writing with Parent to comply with Section 3.01 and to resign
as a director of Parent if requested to do so pursuant to this Section 3.04.
With respect to each meeting of stockholders of Parent at which any designee of
the Principal Investor on the Board comes up for reelection, Parent shall use
reasonable efforts to cause such designee (or another Eligible Person
designated by the Principal Investor) to be included in the list of candidates
recommended by the Board for election to the Board. Upon the death,
resignation or removal of any designee of the Principal Investor on the Board,
Parent shall use reasonable efforts to have the vacancy thereby created filled
with an Eligible Person designated by the Principal Investor.
(b) Upon the Investors and (subject to Section 3.06) the
Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least 50% of the Voting Securities of Parent owned by the
Investors and the Qualified Stockholders, taken together, immediately following
the Merger (appropriately adjusted for stock dividends, stock splits, reverse
stock splits and similar transactions), the number of persons that the
Principal Investor shall be entitled to designate for election to the Board
shall be reduced to one. If at such time there are two designees of the
Principal Investor on the Board, the Principal Investor shall specify which of
such designees shall continue to be entitled to the benefits of Section
3.04(a), and the other designee shall thereafter cease to constitute a designee
of the Principal Investor for the purposes of Section 3.04(a) (and, if
requested by Parent, such other designee shall resign from the Board).
(c) Upon (i) (A) the Investors and (subject to Section 3.06)
the Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least one-third of the Voting Securities of Parent owned by the
Investors and the Qualified Stockholders, taken together, immediately
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following the Merger (appropriately adjusted for stock dividends, stock splits,
reverse stock splits and similar transactions) and (B) the Principal Investor
ceasing to be an employee of Parent or any Parent Subsidiary, (ii) the death or
incapacity of the Principal Investor, (iii) the wilful violation in any
material respect of this Article by any Investor or (iv) five business days'
prior written notice of termination from the Principal Investor, the number of
persons that the Principal Investor shall be entitled to designate for election
to the Board shall be reduced to zero. At such time, if requested by Parent,
each designee of the Principal Investor shall resign from the Board.
(d) The right of the Principal Investor to membership on the
Board, as set forth in his employment agreement with Parent to be entered into
at the Effective Time of the Merger, is not in addition to his rights under
this Section 3.04.
(e) For the purposes of the calculations required by the
first sentence of Section 3.04(b) and by Section 3.04(c)(i)(A), any Exempt
Stock (as defined below) shall be excluded from the calculation of each of (i)
the Voting Securities of Parent owned of record and beneficially by the
Qualified Stockholders on the date of such calculation and (ii) the Voting
Securities of Parent owned by the Qualified Stockholders immediately following
the Merger. "Exempt Stock" shall mean (A) any Parent Common Stock acquired by
any Qualified Stockholder pursuant to the Merger in exchange for Company
Capital Stock owned by such Qualified Stockholder on the date of the Merger
Agreement and (B) any Parent Common Stock acquired after the Effective Time of
the Merger by any Qualified Stockholder other than pursuant to Section 3.02(h).
SECTION 3.05. Additional Covenants. (a) None of the
Investors shall permit any other Investor that is at any time after the date
hereof a wholly owned subsidiary of such Investor to cease to be a wholly owned
subsidiary of such Investor for so long as such other Investor owns any Voting
Securities of Parent.
(b) None of the Investors shall permit any of its
subsidiaries, other than any such subsidiaries that are Investors, to hold,
directly or indirectly, any shares of Voting Securities of Parent.
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(c) Each Investor shall use reasonable efforts to cause each
of its officers, employees, agents and representatives not to take any action
that would be prohibited under Section 3.01 if taken by such Investor.
SECTION 3.06. Certain Special Provisions. If at any time the
Principal Investor and his Family Members cease to constitute a sufficient
number of the directors or trustees, as applicable, of any Qualified
Stockholder to permit approval of matters by such Qualified Stockholder without
the approval of any other director or trustee of such Qualified Stockholder,
the Voting Securities of Parent held by such Qualified Stockholder shall
thereafter be deemed not to be owned of record and beneficially by such
Qualified Stockholder (or any Investor) for the purposes of Sections 3.04(b)
and 3.04(c). The Principal Investor shall be liable to Parent under this
Agreement for any actions taken by any Qualified Stockholder that would have
been violations of Section 3.01, 3.03 or 3.05(c) had such Qualified Stockholder
been bound by such Sections.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. (a) The covenants and agreements
of the Investors in Sections 3.01, 3.03 and 3.05(c) shall terminate, except
with respect to liability for prior breaches thereof, upon the last to occur of
(i) the Principal Investor ceasing to be an employee of Parent or any Parent
Subsidiary, (ii) the Principal Investor ceasing to be a member of the Board,
and (iii) the Principal Investor ceasing pursuant to Section 3.04(c) to be
entitled to designate any Eligible Persons for election to the Board.
(b) The covenants and agreements of the Investors in
Section 3.02 shall terminate, except with respect to liability for prior
breaches thereof, on the fifth anniversary of the Effective Time of the Merger.
(c) The covenants and agreements of Parent in Section 3.04
shall terminate, except with respect to liability for prior breaches thereof,
upon the Principal Investor ceasing pursuant to Section 3.04(c) to be entitled
to designate any Eligible Persons for election to the Board.
(d) Without limiting Sections 4.01(a) and 4.01(b), the
covenants and agreements of the Investors in
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Article III shall terminate, except with respect to liability for prior
breaches thereof, if the Board does not (i) on the date of execution of this
Agreement, elect to the Board the two Eligible Persons designated by the
Principal Investor, (ii) recommend for election by the stockholders of Parent
to the Board any Eligible Person designated by the Principal Investor in
accordance with Section 3.04 or (iii) reasonably promptly after request from
the Principal Investor, fill any vacancy created on the Board upon the death,
resignation or removal of any designee of the Principal Investor on the Board
with another Eligible Person designated by the Principal Investor, in each case
if the effect of such failure is that the Principal Investor does not have the
representation on the Board to which he is entitled under Section 3.04.
(e) The other covenants and agreements set forth in this
Agreement shall terminate, except with respect to liability for prior breaches
thereof, upon the later of (i) the termination of Section 3.01 pursuant to
Section 4.01(a) or 4.01(d) and (ii) the termination of Section 3.02 pursuant to
Section 4.01(b) or 4.01(d).
SECTION 4.02. Entire Agreement; Assignment. This Agreement
(i) constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) except as provided in Section 3.02, shall not be
assigned by operation of law or otherwise without the prior written consent of
the other parties. Any person who agrees pursuant to Section 3.02 to become a
party to this Agreement as an Investor shall thereupon become, and have all the
rights and obligations of, an Investor hereunder. Any attempted assignment or
transfer in violation of this Section 4.02 shall be void and of no effect.
Subject to the foregoing, the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
estates, heirs, successors and assigns.
SECTION 4.03. Amendments; Waivers. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. The waiver by
any party of a breach of any provision of this Agreement shall not operate, or
be construed, as a waiver of any subsequent breach thereof.
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SECTION 4.04. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
deemed given (i) on the first Business Day following the date received, if
delivered personally or by telecopy (with telephonic confirmation of receipt by
the addressee), (ii) on the Business Day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery and (iii) on the first Business Day that is at least five days
following deposit in the mails, if sent by first class mail, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
If to any Investor, to:
R.E. Turner, III
c/o Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
For Courier delivery:
100 International Boulevard
Atlanta, GA 30303
Facsimile: (404) 827-3000
Attention: General Counsel
If to Parent, to:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Facsimile: (212) 956-7281
Attention: General Counsel
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with a copy (which shall not constitute notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Peter S. Wilson, Esq.
SECTION 4.05. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes
and acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy at
law for money damages, and therefore each party agrees that in the event of any
such breach any of the other parties shall be entitled to seek the remedy of
specific performance of such Article III and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
SECTION 4.07. Counterparts; Effectiveness. This Agreement
may be executed in two or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the other
parties.
SECTION 4.08. Descriptive Headings. The descriptive headings
used herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
SECTION 4.09. Severability. Whenever possible, each
provision or portion of any provision of this Agreement shall be interpreted in
such manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein. The
parties shall endeavor in good faith negotiations to replace any invalid,
illegal or
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unenforceable provision with a valid provision the effects of which come as
close as possible to those of such invalid, illegal or unenforceable provision.
SECTION 4.10. Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such party
may be entitled.
IN WITNESS WHEREOF, Parent and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TIME WARNER INC.,
by
________________________________
Name:
Title:
______________________________
R.E. Turner, III
TURNER OUTDOOR, INC.,
by
________________________________
Name:
Title:
115
EXHIBIT C-2
INVESTORS' AGREEMENT (NO. 2) dated as of
, among TIME WARNER INC., a Delaware
corporation ("Parent"), and the other parties
signatory hereto (each an "Investor").
This Agreement is entered into pursuant to Section 6.02(f) of
the Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement") dated as of September 22, 1995, among Parent, Time Warner
Acquisition Corp. ("Sub"), a Delaware corporation and a wholly owned subsidiary
of Parent, and Turner Broadcasting System, Inc. (the "Company"), a Georgia
corporation. In the Merger (as defined in the Merger Agreement), subject to
certain exceptions, (a) each share of Class A Common Stock, par value $.0625
per share, of the Company and each share of Class B Common Stock, par value
$.0625 per share, of the Company will be converted into the right to receive
0.75 shares of Common Stock, par value $1.00 per share, of Parent ("Parent
Common Stock") and (b) each share of Class C Convertible Preferred Stock, par
value $.125 per share, of the Company will be converted into the right to
receive 4.80 shares of Parent Common Stock.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Merger
Agreement. For purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the Exchange Act, as in effect on the date of this Agreement.
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A person shall be deemed the "beneficial owner" of, and shall
be deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Covered Parent Common Stock" shall mean (i) any shares of
Parent Common Stock transferred to an Investor pursuant to Section 3.02(h) of
the Investors' Agreement (No. 1) dated as of [ ] among Parent and
certain stockholders of Parent and (ii) any shares of Parent Common Stock
acquired by any Investor pursuant to the Merger otherwise than in exchange for
Company Common Stock owned by such Investor on the date of the Merger
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement
in such capacity.
"person" shall have the meaning given such term in the Merger
Agreement.
"Voting Power", when used with reference to any class or
series of securities of Parent, or any classes or series of securities of
Parent entitled to vote together as a single class or series, shall mean the
power of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or
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classes or series) beneficially owned by any person, any securities not
outstanding which are subject to conversion rights, exchange rights, rights,
warrants, options or similar securities held by such person shall be deemed to
be outstanding for the purpose of computing the percentage of outstanding
securities of the class or series (or classes or series) beneficially owned by
such person, but shall not be deemed to be outstanding for the purpose of
computing the percentage of the class or series (or classes or series)
beneficially owned by any other person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any securities
convertible into or exchangeable for any securities having Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Parent Common Stock. None of the
Investors may offer for sale or sell any shares of Parent Common Stock acquired
pursuant to the Merger Agreement, or any interest therein, except (a) pursuant
to a registration of such shares under the Securities Act and applicable state
securities laws or (b) in a transaction as to which such Investor has delivered
an opinion of counsel or other evidence reasonably satisfactory to Parent, to
the effect that such transaction is exempt from, or not subject to, the
registration requirements of, the Securities Act and applicable state
securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall
hold in certificate form all shares of Covered Parent Common Stock owned by
such Investor. Each certificate for shares of Covered Parent Common Stock
issued to or beneficially owned by a person that is subject to the provisions
of this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
INVESTORS' AGREEMENT (NO. 2) DATED AS OF , (THE
"INVESTORS' AGREEMENT"), BETWEEN THE CORPORATION AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE INVESTORS'
AGREEMENT MAY BE OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS
ACCEPTANCE HEREOF,
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THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL RESPECTS WITH
THE REQUIREMENTS OF THE INVESTORS' AGREEMENT.
ARTICLE III
Covenants of the Investors
SECTION 3.01. Transfer Restrictions. None of the Investors
may, without the prior written consent of Parent, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge, encumber
or otherwise dispose of, any Covered Parent Common Stock, or any rights or
options to acquire Covered Parent Common Stock, except in a transaction
complying with any of the following clauses:
(a) to the underwriters in connection with an underwritten
public offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of such
securities is in a manner that is intended to effect a broad distribution;
(b) to any person in a transaction that complies with the
volume and manner of sale provisions contained in Rules 144(e) and Rule 144(f)
as in effect on the date hereof under the Securities Act (whether or not Rule
144 is in effect on the date of such transaction); provided, however, that
dispositions pursuant to this clause (b) may not be made during any period that
a person has made and not withdrawn or terminated a tender or exchange offer
for Voting Securities of Parent or announced its intention to make such an
offer;
(c) to any person (including any pledgee of Covered Parent
Common Stock), other than a person that such Investor, or any of its
Affiliates, Associates, directors or trustees, knows or, after commercially
reasonable inquiry should have known, beneficially owns or, after giving effect
to such sale, will beneficially own more than 5% of the aggregate Voting Power
of the Voting Securities of Parent;
(d) in a bona fide pledge of shares of Covered Parent Common
Stock to a financial institution to secure borrowings as permitted by
applicable laws, rules and regulations; provided, however, that (i) such
financial institution agrees to be bound by this Section 3.01 and
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(ii) the borrowings so secured are full recourse obligations of the pledgor and
are entered into substantially simultaneously with such pledge;
(e) upon five Business Days' prior notice to Parent, pursuant
to the terms of any tender or exchange offer for Covered Parent Common Stock
made pursuant to the applicable provisions of the Exchange Act or pursuant to
any merger or consolidation of Parent;
(f) to TCI Turner Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement dated as of the date of this
Agreement among TCITP, Parent and certain stockholders of Parent; or
(g) to Parent.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. The covenants and agreements of
the Investors in Section 3.01 shall terminate, except with respect to liability
for prior breaches thereof, on the earlier of (a) the fifth anniversary of the
Effective Time of the Merger and (b) the date on which the covenants and
agreements contained in Section 3.02 of the Investors' Agreement (No. 1) dated
as of [ ], among Parent and certain of its other stockholders, have
been terminated.
SECTION 4.02. Entire Agreement; Assignment. This Agreement
(i) constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise without the prior written consent of the other parties. Any
attempted assignment or transfer in violation of this Section 4.02 shall be
void and of no effect. Subject to the foregoing, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
SECTION 4.03. Amendments; Waivers. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a
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written agreement executed by the parties hereto. The waiver by any party of a
breach of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach thereof.
SECTION 4.04. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
deemed given (i) on the first Business Day following the date received, if
delivered personally or by telecopy (with telephonic confirmation of receipt by
the addressee), (ii) on the Business Day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery and (iii) on the first Business Day that is at least five days
following deposit in the mails, if sent by first class mail, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
If to any Investor, to:
R.E. Turner, III
c/o Turner Broadcasting System, Inc.
One CNN Center
Box 105366
For courier delivery:
100 International Boulevard
Atlanta, GA 30303
Facsimile: (404) 827-3000
Attention: General Counsel
If to Parent, to:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Facsimile: (212) 956-7281
Attention: General Counsel
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with a copy (which shall not constitute notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Peter S. Wilson, Esq.
SECTION 4.05. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes
and acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy at
law for money damages, and therefore each party agrees that in the event of any
such breach any of the other parties shall be entitled to seek the remedy of
specific performance of such Article III and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
SECTION 4.07. Counterparts; Effectiveness. This Agreement
may be executed in two or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the other
parties.
SECTION 4.08. Descriptive Headings. The descriptive headings
used herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
SECTION 4.09. Severability. Whenever possible, each
provision or portion of any provision of this Agreement shall be interpreted in
such manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced as if such invalid, illegal or unenforceable
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8
provision or portion of any provision had never been contained herein. The
parties shall endeavor in good faith negotiations to replace any invalid,
illegal or unenforceable provision with a valid provision the effects of which
come as close as possible to those of such invalid, illegal or unenforceable
provision.
SECTION 4.10. Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such party
may be entitled.
IN WITNESS WHEREOF, Parent and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TIME WARNER INC.,
by
__________________________________
Name:
Title:
INITIAL INVESTORS:
TURNER FOUNDATION, INC.
by
__________________________________
Name:
Title:
ROBERT E. TURNER CHARITABLE
FOUNDATION UNITRUST NO. 2,
by
__________________________________
Name:
Title:
123
Exhibit D(i)
[Letterhead of]
TIME WARNER INC.
TIME WARNER ACQUISITION CORP.
[Closing Date], 199_
Dear Sirs:
In connection with the opinions to be delivered by you
pursuant to Sections 6.02(d) and 6.03(d) of the Agreement and Plan of Merger
(the "Agreement") dated as of September 22, 1995, among Time Warner Inc., a
Delaware corporation ("Parent"), Time Warner Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), and Turner
Broadcasting System, Inc., a Georgia corporation (the "Company"), I certify,
after due inquiry and investigation, that to the best of my knowledge and
belief, the facts relating to the contemplated merger (the "Merger") of the
Company with and into Sub pursuant to the Agreement, as described in the
Agreement and the Proxy Statement [dated ], are, in each case, insofar
as such facts pertain to Parent or Sub, true, correct and complete in all
material respects. I further certify, after
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due inquiry and investigation, that to the best of my knowledge and belief: 1/
1. The formula set forth in the Agreement, pursuant to which
each issued and outstanding share of Class A Common Stock, par value $0.0625,
Class B Common Stock, par value $0.0625, and Class C Convertible Preferred
Stock, par value $0.125, of the Company (collectively, "Company Capital Stock")
(other than Company Capital Stock owned by the Company or Parent) will be
exchanged for common stock, par value $1.00, of Parent ("Parent Common Stock"),
is the result of arm's length bargaining.
2. Neither Parent nor Sub (nor any other subsidiary or
affiliate of Parent) has acquired any shares of Company Capital Stock in
contemplation of the Merger, or otherwise as part of a plan of which the Merger
is a part.
3. Cash payments to be made to stockholders of the Company in
lieu of fractional shares of Parent Common Stock that would otherwise be issued
to such stockholders in the Merger will be made for the purpose of saving
Parent the expense and inconvenience of issuing and transferring fractional
shares of Parent Common Stock and do not represent separately bargained for
consideration.
____________________
1/ Capitalized terms not defined herein shall have the meanings ascribed
to them in the Agreement.
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4. Prior to the Merger, Parent will be in control of Sub
within the meaning of Section 368(c) of the Code.
5. Sub has no plan or intention, and Parent has no plan or
intention to cause Sub, to sell, exchange or otherwise dispose of assets (other
than through dispositions in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code) in an amount that, if all such
assets were treated as held by the Company immediately prior to the Merger but
as not acquired by Sub, would result in Sub acquiring less than 90 percent of
the fair market value of the net assets, or less than 70 percent of the fair
market value of the gross assets, held by the Company immediately prior to the
Merger. For purposes of this representation, assets of the Company held by the
Company immediately prior to the Merger but not acquired by Sub shall include
assets of the Company used to pay (i) any transfer, real estate transfer gains
and similar taxes (including expenses relating thereto) pursuant to Section
5.15 of the Agreement, (ii) any Dissenting Shareholders, (iii) any other
reorganization expenses and (iv) any redemptions or distributions (except for
regular, normal dividends) made by the Company immediately preceding the Merger
or otherwise in contemplation of the Merger.
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6. Parent has no plan or intention to cause Sub to issue
additional shares of its stock that would result in Parent's losing control of
Sub within the meaning of Section 368(c) of the Code.
7. Following the Merger, Sub intends to continue the historic
business of the Company or to use a significant portion of the Company's
business assets in a business.
8. Parent has no plan or intention to liquidate Sub, to merge
Sub with and into another corporation or to sell or otherwise dispose of the
stock of Sub.
9. Parent has no plan or intention to cause Sub to incur any
borrowing (other than in the ordinary course of business) the proceeds of which
are to be distributed or loaned to Parent or any subsidiary of Parent (other
than Sub) on other than an arm's-length basis.
10. Sub has no plan or intention, and Parent has no plan or
intention to cause Sub, to make distributions that are extraordinary in
comparison to previous distributions by the Company.
11. Except to the extent provided in Section 5.15 of the
Agreement, Parent, Sub, the Company and the stockholders of the Company will
each pay their respective expenses, if any, incurred in connection with the
Merger.
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12. None of Parent, Sub or any other subsidiary or affiliate
of Parent has any plan or intention to reacquire any of the Parent Common Stock
issued in the Merger.
13. There is no intercorporate indebtedness existing between
Parent and the Company or between Sub and the Company that was issued, acquired
or will be settled at a discount.
14. Neither Parent nor Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
15. No stock of Sub will be issued in the Merger.
16. Neither Parent nor Sub will take any position on any
Federal, state or local income or franchise tax return, or take any other
action or reporting position, that is inconsistent with the treatment of the
Merger as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code or with the representations made herein.
17. None of the compensation received by any
stockholder-employee of the Company represents separate consideration for, or
is allocable to, any of his or her Company Capital Stock. None of the Parent
Common Stock that will be received by any Company stockholder-employee in the
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Merger represents separately bargained for consideration that is allocable to
any employment agreement or arrangement. Any compensation to be paid to a
Company stockholder-employee who continues as an employee of Parent or Sub
subsequent to the Merger will be for services rendered and will be commensurate
with amounts paid to third parties bargaining at arm's-length for similar
services.
18. The Agreement represents the entire understanding of the
Company, Parent and Sub with respect to the Merger.
19. Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the consummation of the
Merger has had assets or business operations other than minimal assets required
to satisfy state minimum capitalization requirements.
20. Parent has no plan or intention to cause Parent
Subsidiaries that are shareholders of the Company to sell, exchange or
otherwise dispose of more than 50 percent of the shares of Parent Common Stock
received by such Parent Subsidiaries in the Merger.
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I understand that you will be relying on the representations
contained in this letter in rendering the aforementioned opinion.
TIME WARNER INC.
by
______________________________
Title:
Date:
TIME WARNER ACQUISITION CORP.
by
______________________________
Title:
Date:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10017
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, CA 90071
130
Exhibit D(ii)
[Letterhead of]
TURNER BROADCASTING SYSTEM, INC.
[Closing Date], 1995
Dear Sirs:
In connection with the opinion to be delivered by you pursuant to
Sections 6.02(d) and 6.03(d) of the Agreement and Plan of Merger (the
"Agreement") dated as of September 22, 1995, among Turner Broadcasting System,
Inc., a Georgia corporation (the "Company"), Time Warner Inc., a Delaware
Corporation ("Parent") and Time Warner Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), I certify, after
due inquiry and investigation, that to the best of my knowledge and belief the
facts relating to the contemplated merger (the "Merger") of the Company with
and into Sub pursuant to the Agreement, as described in the Agreement and the
Proxy Statement [dated ], are, in each case, insofar as such facts
pertain to the Company, true, correct and complete in all material respects. I
further certify, after due inquiry and
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investigation, that to the best of my knowledge and belief: 1/
1. The formula set forth in the Agreement, pursuant to which each
issued and outstanding share of Class A Common Stock, par value $0.0625, Class
B Common Stock, par value $0.0625, and Class C Convertible Preferred Stock, par
value $0.125, of the Company (collectively, "Company Capital Stock") (other
than Company Capital Stock owned by the Company or by Parent) will be exchanged
for common stock, par value $1.00, of Parent ("Parent Common Stock"), is the
result of arm's length bargaining.
2. Neither the Company nor any of its subsidiaries or affiliates has
acquired any shares of Company Capital Stock in contemplation of the Merger, or
otherwise as part of a plan of which the Merger is a part.
3. Cash payments to be made to stockholders of the Company in lieu of
fractional shares of Parent Common Stock that would otherwise be issued to such
stockholders in the Merger will be made for the purpose of saving Parent the
expense and inconvenience of issuing and transferring fractional shares of
Parent Common Stock, and do not represent separately bargained for
consideration.
____________________
1/ Capitalized terms not defined herein shall have the meanings ascribed
to them in the Agreement.
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4. There is no plan or intention on the part of the stockholders of the
Company to sell, exchange or otherwise dispose of more than 50 percent of the
shares of Parent Common Stock received in the Merger. The Company does not
know the plans or intentions of the Capital Group Companies, Inc. (the "Capital
Group") with respect to the shares of Parent Common Stock to be received by the
Capital Group in the Merger.
5. Sub will acquire at least 90 percent of the fair market value of the
net assets and at least 70 percent of the fair market value of the gross assets
held by the Company immediately prior to the Merger. For purposes of this
representation, assets of the Company used to pay (i) any transfer, real estate
transfer gains and similar taxes (including expenses relating thereto) pursuant
to Section 5.15 of the Agreement, (ii) any Dissenting Shareholders, (iii) any
other reorganization expenses and (iv) any redemptions or distributions (except
for regular, normal dividends) made by the Company immediately preceding the
Merger or otherwise in contemplation of the Merger, will be included as assets
of the Company held immediately prior to the Merger. The Company has not
disposed of any assets in contemplation of, or otherwise as part of a plan in
connection with, the Merger.
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6. Except as otherwise provided in Section 5.15 of the Agreement,
Parent, Sub, the Company and the stockholders of the Company will each pay
their respective expenses, if any, incurred in connection with the Merger.
7. The liabilities of the Company assumed by Sub and the liabilities to
which the transferred assets of the Company are subject were incurred by the
Company in the ordinary course of its business.
8. There is no intercorporate indebtedness existing between Parent and
the Company or between Sub and the Company that was issued, acquired or will be
settled at a discount.
9. The fair market value of and adjusted tax basis of the assets of the
Company transferred to Sub will equal or exceed the sum of the liabilities
assumed by Sub, plus the amount of liabilities, if any, to which the
transferred assets are subject.
10. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
11. The Company will not take, and the Company is not aware of any plan
or intention of Company stockholders to take, any position on any Federal,
state or local income or franchise tax return, or take any other action or
reporting position, that is inconsistent with the treatment
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of the Merger as a reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Code or with the representations made above.
12. None of the compensation received by any stockholder-employee of
the Company represents separate consideration for, or is allocable to, any of
his or her Company Capital Stock. None of the Parent Common Stock that will be
received by any Company stockholder-employee in the Merger represents
separately bargained for consideration that is allocable to any employment
agreement or arrangement.
13. The Agreement represents the entire understanding of the Company,
Parent and Sub with respect to the Merger.
14. The Company has no plan or intention to make any distributions
other than regular, normal dividends to stockholders prior to the Merger and
the Company has not made any such distributions in contemplation of the Merger,
or otherwise as part of a plan of which the Merger is a part.
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I understand that you will be relying on the representations contained
in this letter in rendering the aforementioned opinion.
TURNER BROADCASTING SYSTEM,
INC.
By:
_________________________
Title:
Date:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10017
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, CA 90071
136
Exhibit D(iii)
Certificate by R. E. Turner, III
[Closing Date], 1995
In connection with the opinions to be delivered by (i) Cravath,
Swaine & Moore, counsel to Time Warner Inc., a Delaware corporation ("Parent"),
pursuant to Section 6.02(d) of the Agreement and Plan of Merger dated as of
September 22, 1995 (the "Agreement"), by and among Parent, Time Warner
Acquisition Corp., a Delaware corporation ("Sub"), and Turner Broadcasting
System, Inc., a Georgia corporation (the "Company") and (ii) Skadden, Arps,
Slate, Meagher & Flom, counsel to the Company, pursuant to Section 6.03(d) of
the Agreement, I hereby certify, recognizing that such counsel will rely on
this certificate in delivering such opinions, that as of the date hereof (i)
stock of the Company previously held by me has not been sold, redeemed,
exchanged or otherwise disposed of, and stock of the Company currently held by
me has not been acquired, in each case in contemplation of the Merger (such
term and all other capitalized terms not defined herein having the meanings
ascribed to them in the Agreement) and (ii) I have no plan or intention to
sell, exchange or
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2
otherwise dispose of more than 50 percent of the shares of Parent Common Stock
received by me in the Merger.
By:
________________________________
R. E. Turner, III
Date:
138
Exhibit D(iv)
Certificate by TCI Turner Preferred, Inc.
[Closing Date], 1995
In connection with the opinions to be delivered by (i) Cravath,
Swaine & Moore, counsel to Time Warner Inc., a Delaware corporation ("Parent"),
pursuant to Section 6.02(d) of the Agreement and Plan of Merger dated as of
September 22, 1995 (the "Agreement"), by and among Parent, Time Warner
Acquisition Corp., a Delaware corporation ("Sub"), and Turner Broadcasting
System, Inc., a Georgia corporation (the "Company") and (ii) Skadden, Arps,
Slate, Meagher & Flom, counsel to the Company, pursuant to Section 6.03(d) of
the Agreement, I hereby certify, recognizing that such counsel will rely on
this certificate in delivering such opinions, that as of the date hereof (i)
stock of the Company previously held by TCI Turner Preferred, Inc., a Delaware
corporation ("TCITP"), has not been sold, redeemed, exchanged or otherwise
disposed of, and stock of the Company currently held by the TCITP has not been
acquired, in each case in contemplation of the Merger (such term and all
capitalized terms not defined herein having the meanings ascribed to them in
the Agreement) and (ii) there is no plan or intention by the TCITP to sell,
exchange or otherwise dispose of more than 50 percent of the
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2
shares of Parent Common Stock received by TCITP in the Merger.
TCI TURNER PREFERRED, INC.
By:
_________________________________
Title:
Date:
140
Exhibit D(v)
Turner Outdoor Inc. Certificate
[Closing Date], 1995
In connection with the opinions to be delivered by (i) Cravath,
Swaine & Moore, counsel to Time Warner Inc., a Delaware corporation ("Parent"),
pursuant to Section 6.02(d) of the Agreement and Plan of Merger dated as of
September 22, 1995 (the "Agreement"), by and among Parent, Time Warner
Acquisition Corp., a Delaware corporation ("Sub"), and Turner Broadcasting
System, Inc., a Georgia corporation (the "Company") and (ii) Skadden, Arps,
Slate, Meagher & Flom, counsel to the Company, pursuant to Section 6.03(d) of
the Agreement, I hereby certify, recognizing that such counsel will rely on
this certificate in delivering such opinions, that as of the date hereof (i)
stock of the Company previously held by Turner Outdoor Inc. ("Outdoor"), has
not been sold, redeemed, exchanged or otherwise disposed of, and stock of the
Company currently held by Outdoor has not been acquired, in each case in
contemplation of the Merger (such terms and all capitalized terms not defined
herein having the meanings ascribed to them in the Agreement) and (ii) Outdoor
has no plan or intention to sell, exchange or otherwise dispose of more
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2
than 50 percent of the shares of Parent Common Stock received by Outdoor in the
Merger.
TURNER OUTDOOR, INC.
By:
________________________________
Title:
Date: