AMENDMENT No. 1 (this "Amendment")
dated as of August 8, 1996, to the AMENDED AND
RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement") dated as of September 22, 1995,
among TIME WARNER INC., a Delaware corporation
("Parent"), TW INC., a Delaware corporation
("Holdco") and a direct wholly owned subsidiary
of Parent, TIME WARNER ACQUISITION CORP., a
Delaware corporation ("Delaware Sub") and a
direct wholly owned subsidiary of Holdco, TW
ACQUISITION CORP., a Georgia corporation
("Georgia Sub") and a direct wholly owned
subsidiary of Holdco, and TURNER BROADCASTING
SYSTEM, INC., a Georgia corporation (the
"Company").
WHEREAS Parent, Holdco, Delaware Sub, Georgia Sub and the
Company have agreed to amend the Agreement; and
WHEREAS the respective Boards of Directors of Parent, Holdco,
Delaware Sub, Georgia Sub and the Company have approved and adopted this
Amendment.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Amendment of Agreement. (a) Section 2.01 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
"SECTION 2.01. Effect on Parent Capital Stock. As of the
Effective Time of the Mergers, by virtue of the TW Merger and without
any action on the part of the holder of any shares of Parent Capital
Stock (as defined in Section 2.01(a)) or any shares of capital stock of
Delaware Sub:
(a) Capital Stock of Delaware Sub. Each issued and outstanding
share of Common Stock, par value $1.00 per share, of Delaware Sub shall
be converted into (i) one one-millionth (1/1,000,000th) of a fully paid
and nonassessable share of Common Stock, par value $1.00 per share, of
the TW Surviving Corporation for each share of Common Stock, par value
$1.00 per share, of Parent ("Parent Common Stock") issued and
outstanding immediately prior to the Effective Time of the Mergers, (ii)
one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of Series C
Convertible Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series C Convertible Preferred
Stock, par value $1.00 per share, of Parent ("Parent Series C Preferred
Stock"), if any, issued and outstanding immediately prior to the
Effective Time of the Mergers, (iii) one one-millionth (1/1,000,000th)
of a fully paid and nonassessable share of Series D Convertible
Preferred Stock, par value $1.00 per share, of the TW Surviving
Corporation for each share of Series D Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series D Preferred Stock"), if
any, issued and outstanding immediately prior to the Effective Time of
the Mergers, (iv) one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series E Convertible Preferred Stock, par value
$1.00 per share, of the TW Surviving Corporation for each share of
Series E Convertible Preferred Stock, par value $1.00 per share, of
Parent ("Parent Series E Preferred Stock"), if any, issued and
outstanding immediately prior to the Effective Time of the Mergers, (v)
one one-millionth (1/1,000,000th) of a fully paid and nonassessable
share of Series F Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of Series F
Convertible Preferred Stock, par value $1.00 per share, of Parent
("Parent Series F Preferred Stock"), if any, issued and outstanding
immediately prior to the Effective Time of the Mergers, (vi) one
one-millionth (1/1,000,000th) of a fully paid and nonassessable share of
Series G Convertible Preferred Stock, par value $1.00 per share, of the
TW Surviving Corporation for each share of Series G Convertible
Preferred Stock, par value $1.00 per share, of Parent ("Parent Series G
Preferred Stock"), if any, issued and outstanding immediately prior to
the Effective Time of the Mergers, (vii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of Series H
Convertible Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series H Convertible Preferred
Stock, par value $1.00 per share, of Parent ("Parent Series H Preferred
Stock"), if any, issued and outstanding immediately prior to the
Effective Time of the Mergers, (viii) one one-millionth (1/1,000,000th)
of a fully paid and nonassessable share of Series I Convertible
Preferred Stock, par value $1.00 per share, of the TW Surviving
Corporation for each share of Series I Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series I Preferred Stock"), if
any, issued and outstanding immediately prior to the
Effective Time of the Mergers, (ix) one one-millionth (1/1,000,000th) of
a fully paid and nonassessable share of Series J Convertible Preferred
Stock, par value $1.00 per share, of the TW Surviving Corporation for
each share of Series J Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series J Preferred Stock"), if any, issued and
outstanding immediately prior to the Effective Time of the Mergers, (x)
one one-millionth (1/1,000,000th) of a fully paid and nonassessable
share of 10 1/4% Series K Exchangeable Preferred Stock, par value $1.00
per share, of the TW Surviving Corporation for each share of 10 1/4%
Series K Exchangeable Preferred Stock, par value $1.00 per share, of
Parent ("Parent Series K Preferred Stock"), if any, issued and
outstanding immediately prior to the Effective Time of the Mergers, (xi)
one one-millionth (1/1,000,000th) of a fully paid and nonassessable
share of 10 1/4% Series L Exchangeable Preferred Stock, par value $1.00
per share, of the TW Surviving Corporation for each share of 10 1/4%
Series L Exchangeable Preferred Stock, par value $1.00 per share, of
Parent ("Parent Series L Preferred Stock"), if any, issued and
outstanding immediately prior to the Effective Time of the Mergers and
(xii) one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of 10 1/4% Series M Exchangeable Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation for each
share of 10 1/4% Series M Exchangeable Preferred Stock, par value $1.00
per share, of Parent ("Parent Series M Preferred Stock" and, together
with the Parent Common Stock, the Parent Series C Preferred Stock, the
Parent Series D Preferred Stock, the Parent Series E Preferred Stock,
the Parent Series F Preferred Stock, the Parent Series G Preferred
Stock, the Parent Series H Preferred Stock, the Parent Series I
Preferred Stock, the Parent Series J Preferred Stock, the Parent Series
K Preferred Stock and the Parent Series L Preferred Stock, the "Parent
Capital Stock"), if any, issued and outstanding immediately prior to the
Effective Time of the Mergers. For the purposes of this Section 2.01(a),
shares of Parent Capital Stock, other than Parent Series C Preferred
Stock, held by Parent Subsidiaries (as defined in Section 3.02(a)) shall
be deemed to be not outstanding.
(b) Cancellation of Treasury Stock. Each share of Parent
Capital Stock that is owned by Parent shall automatically be canceled
and retired and shall cease to exist, and no shares of Common Stock, par
value $.01 per share, of Holdco (the "Holdco Common Stock") or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Parent Capital Stock. Subject to Sections
2.01(d) and 2.03(e), each issued share of Parent Capital Stock (other
than shares to be canceled in accordance with Section 2.01(b) and other
than shares subject to Section 2.01(f)) shall be converted into fully
paid and nonassessable shares of the capital stock of Holdco ("Holdco
Capital Stock") in accordance with the following table (it being
acknowledged that as of August 8, 1996 (the date of the last amendment
of this Section 2.01), (x) no shares of Parent Series J Preferred Stock,
Parent Series L Preferred Stock and Parent Series M Preferred Stock are
outstanding and (y) it is anticipated that no shares of Parent Series C
Preferred Stock, Parent Series L Preferred Stock and either Parent
Series K Preferred Stock or Parent Series M Preferred Stock will be
outstanding immediately prior to the Effective Time of the Mergers):
Each Share of the Number and Class or Series
Specified Class or Series of Shares of Holdco Capital
of Parent Capital Stock Stock Into Which Converted
Parent Common Stock One Share of Holdco Common
Stock
Parent Series C Preferred 2.08264 shares of Holdco
Stock Common Stock
Parent Series D Preferred One share of Series D
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series D
Preferred Stock")
Parent Series E Preferred One share of Series E
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series E
Preferred Stock")
Parent Series F Preferred One share of Series F
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series F
Preferred Stock")
Parent Series G Preferred One share of Series G
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series G
Preferred Stock")
Parent Series H Preferred One share of Series H
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series H
Preferred Stock")
Parent Series I Preferred One share of Series I
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series I
Preferred Stock")
Parent Series J Preferred One share of Series J
Stock Convertible Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series J
Preferred Stock")
Parent Series K Preferred One share of 10 1/4% Series M
Stock Exchangeable Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series M
Preferred Stock")
Parent Series L Preferred One share of 10 1/4% Series L
Stock Exchangeable Preferred Stock,
par value $.10 per share, of
Holdco ("Holdco Series L
Preferred Stock")
Parent Series M Preferred One share of Holdco Series M
Stock Preferred Stock
As of the Effective Time of the Mergers, all such shares of
Parent Capital Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist. Subject
to Sections 2.01(d) and 2.03(e), as of the Effective Time of the Mergers
(i) each certificate theretofore representing shares of Parent Capital
Stock (other than each certificate theretofore representing Parent
Series C Preferred Stock or Parent Series K Preferred Stock (the
"Changed Parent Stock")), without any action on the part of Holdco,
Parent or the holder thereof, shall be deemed to represent an equivalent
number of shares of the class or series of Holdco Capital Stock set
forth above next to the class or series of Parent Capital Stock formerly
represented by such certificate and shall cease to represent any rights
in any shares of Parent Capital Stock, and (ii) each holder of a
certificate representing any shares of Changed Parent Stock shall cease
to have any rights with respect thereto, except the right to receive,
upon the surrender of any such certificates, certificates representing
the number of shares of the class or series of Holdco Capital Stock, and
any cash in lieu of fractional shares of such class or series of Holdco
Capital Stock, set forth above next to the series of Changed Parent
Stock formerly represented by such certificate to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 2.03, without interest.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares ("Appraisal Shares") of Parent Capital
Stock (other than Parent Common Stock) that are outstanding immediately
prior to the Effective Time of the Mergers and that are held by any
stockholder of Parent who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("Section 262")
shall not be converted into Holdco Capital Stock as provided in Section
2.01(c), but rather the holders of Appraisal Shares shall be entitled to
payment of the fair value of such Appraisal Shares in accordance with
the provisions of Section 262; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not entitled to the
relief provided by Section 262, then the right of such holder of
Appraisal Shares to be paid the fair value of such holder's Appraisal
Shares shall cease and such Appraisal Shares shall be treated as if they
had been converted as of the Effective Time of the Mergers into shares
of Holdco Capital Stock as provided in Section 2.01(c).
(e) Exchange Ratio for Parent Options and Parent Warrants. (i)
As of the Effective Time of the Mergers, each outstanding Parent Option
(as defined in Section 3.02(c)) and each outstanding warrant (a "Parent
Warrant") to purchase Parent Common Stock, originally issued in
connection with the first issuance of Parent Series B Preferred Stock,
shall be assumed by Holdco and converted into an option or warrant, as
the case may be, to purchase shares of Holdco Common Stock, as provided
below. Following the Effective Time of the Mergers, each Parent Option
shall continue to have, and shall be subject to, the same terms and
conditions set forth in the applicable Parent Stock Plan
(as defined in Section 3.02(c)) pursuant to which such Parent Option was
granted, and each Parent Warrant shall continue to have, and shall be
subject to, the same terms and conditions, in each case as in effect
immediately prior to the Effective Time of the Mergers, except that each
such Parent Option or Parent Warrant shall be exercisable for the same
number of shares of Holdco Common Stock as the number of shares of
Parent Common Stock for which such Parent Option or Parent Warrant was
exercisable immediately prior to the Effective Time of the Mergers.
(ii) As of the Effective Time of the Mergers, Holdco shall
enter into an assumption agreement with respect to each Parent Option
and each Parent Warrant, which, in the case of any Parent Option, shall
provide for Holdco's assumption of the obligations of Parent under the
applicable Parent Stock Plan. Prior to the Effective Time of the
Mergers, Parent shall make such amendments, if any, to the Parent Stock
Plans as shall be necessary to permit such assumption in accordance with
this Section 2.01(e).
(iii) It is the intention of the parties that, to the extent
that any Parent Option constitutes an "incentive stock option" (within
the meaning of Section 422 of the Code) immediately prior to the
Effective Time of the Mergers, such Parent Option shall continue to
qualify as an incentive stock option to the maximum extent permitted by
Section 422 of the Code, and that the assumption of the Parent Option
provided by this Section 2.01(e) shall satisfy the conditions of Section
424(a) of the Code.
(f) Treatment of Parent Capital Stock Held by Parent
Subsidiaries. Notwithstanding anything in this Agreement to the
contrary, each share of Parent Capital Stock (other than any Parent
Series C Preferred Stock) held by any Parent Subsidiary shall be
converted into (i) in the case of each share of Parent Common Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable share of
Common Stock of the TW Surviving Corporation, (ii) in the case of each
share of Parent Series D Preferred Stock, one one-thousandth (1/1,000th)
of a fully paid and nonassessable share of Series D Convertible
Preferred Stock of the TW Surviving Corporation, (iii) in the case of
each share of Parent Series E Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of Series E
Convertible Preferred Stock of the TW Surviving Corporation, (iv) in the
case of each share of Parent Series F Preferred Stock, one
one-thousandth (1/1,000th) of
a fully paid and nonassessable share of Series F Convertible Preferred
Stock of the TW Surviving Corporation, (v) in the case of each share of
Parent Series G Preferred Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of Series G Convertible Preferred
Stock of the TW Surviving Corporation, (vi) in the case of each share of
Parent Series H Preferred Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of Series H Convertible Preferred
Stock of the TW Surviving Corporation, (vii) in the case of each share
of Parent Series I Preferred Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of Series I Convertible Preferred
Stock of the TW Surviving Corporation, (viii) in the case of each share
of Parent Series J Preferred Stock, one one-thousandth (1/1000th) of a
fully paid and nonassessable share of Series J Convertible Preferred
Stock of the TW Surviving Corporation, (ix) in the case of each share of
Parent Series K Preferred Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of 10 1/4% Series K Exchangeable
Preferred Stock of the TW Surviving Corporation, (x) in the case of each
share of Parent Series L Preferred Stock, one one-thousandth (1/1,000th)
of a fully paid and nonassessable share of 10 1/4% Series L Exchangeable
Preferred Stock of the TW Surviving Corporation and (xi) in the case of
each share of Parent Series M Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of 10 1/4% Series M
Exchangeable Preferred Stock of the TW Surviving Corporation."
(b) Section 2.03(e)(iv) of the Agreement is hereby deleted.
(c) The definition of "Material Transaction" in the fifth
sentence of Section 5.16 of the Agreement is hereby amended and restated
in its entirety as follows:
"For purposes of this Agreement, "Material Transaction" means (i) the
issuance by Parent of more than 90,000,000 "common stock equivalents"
(one common stock equivalent being equal to one share of Parent Common
Stock, including any share of Parent Common Stock issuable by Parent
upon conversion, exercise or exchange of any other capital stock,
warrant or other security or right of Parent, any Parent Subsidiary or
any other controlled affiliate of Parent) in any single transaction or
in any series of individual transactions (excluding any transaction
involving an exchange by Parent on a one-for-one basis of newly issued
shares of Parent Series J Preferred Stock for outstanding
shares of Parent Series C Preferred Stock) 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."
(c) Section 6.01(c) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(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. The
Federal Trade Commission (the "FTC") shall have initially accepted the
FTC Agreement Containing Consent Order relating to the Mergers and
ancillary matters. Any consents, approvals and filings under any foreign
antitrust law the absence of which would prohibit the consummation of
the Mergers shall have been obtained or made."
(d) Section 6.01(h) of the Agreement is hereby deleted.
(e) Section 7.01(b)(iii) of the Agreement is hereby amended
and restated in its entirety, as follows:
"(iii) if the Mergers shall not have been consummated on
or before December 31, 1996, unless the failure to consummate
the Mergers is the result of a wilful and material breach of
this Agreement by the party seeking to terminate this
Agreement;".
SECTION 2. Miscellaneous. (a) Except as expressly set forth in
Section 1, all the provisions of the Agreement are hereby ratified and
confirmed by all the parties and shall remain in full force and effect.
All references in the Agreement to "this Agreement" shall be read as
references to the Agreement, as amended by this Amendment.
(b) Each party consents to the execution and delivery by
Parent and the Company of the Agreement Containing Consent Order
referred to in Section 6.01(c) of the Agreement, as amended by this
Amendment.
(c) This Amendment 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.
(d) This Amendment 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.
IN WITNESS WHEREOF, Parent, Holdco, Delaware Sub, Georgia Sub
and the Company have caused this Amendment to be signed by their
respective officers thereunto duly authorized, all as of the date first
written above.
TIME WARNER INC.,
by /s/ Peter R. Haje
---------------------------
Name: Peter R. Haje
Title: Executive Vice President
TW INC.,
by /s/ Thomas W. McEnerney
----------------------------
Name: Thomas W. McEnerney
Title: Vice President
TIME WARNER ACQUISITION CORP.,
by /s/ Thomas W. McEnerney
---------------------------
Name: Thomas W. McEnerney
Title: Vice President
TW ACQUISITION CORP.,
by /s/ Thomas W. McEnerney
---------------------------
Name: Thomas W. McEnerney
Title: Vice President
TURNER BROADCASTING SYSTEM,
INC.,
by /s/ Steven W. Korn
---------------------------
Name: Steven W. Korn
Title: General Counsel