Exhibit 99.1
[Letterhead of Investment Bank]
[ ], 2006
Prepaid Share Repurchase Transaction
Time Warner Inc.
One Time Warner Center
New York, New York 10019-8016
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Dear Sir/Madam:
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between [Bank Name]
("Investment Bank") and Time Warner Inc. ("Time Warner"), on the Trade Date
specified below (the "Transaction").
The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (as published by the International Swaps and Derivatives
Association, Inc. ("ISDA")) (the "Equity Definitions") are incorporated into
this Confirmation. In the event of any conflict between the Equity Definitions
and this Confirmation, the terms of this Confirmation shall govern. Any
reference to a currency shall have the meaning contained in Annex A to the 1998
FX and Currency Option Definitions, as published by ISDA, the Emerging Markets
Traders Association and the Foreign Exchange Committee. For the avoidance of
doubt, this Transaction shall be deemed to be a "Share Forward Transaction" for
purposes of the Equity Definitions.
In connection with the entry into this Confirmation, Time Warner is also
entering into similar transactions with other investment banks, including a
transaction with one investment bank referred to herein as the "Surplus
Investment Bank."
1. ISDA Master Agreement. All provisions contained in the form of the 1992 ISDA
Master Agreement (Multicurrency-Cross Border) (the "ISDA Form" or the
"Agreement"), will govern this Confirmation except as expressly modified below.
This Confirmation shall supplement, form a part of, and be subject to the ISDA
Form as if Investment Bank and Time Warner had executed the Agreement (but
without any Schedule), except as follows:
Termination Currency: USD
Section 2(c)(ii) of the ISDA Form: Not Applicable
Specified Transaction: Not Applicable
Cross Default: Not Applicable
Automatic Early Termination: Not Applicable
Specified Entity: None
Choice of Law: State of New York (without reference to its choice of law
principles)
Additional Termination Event: A decision by Time Warner to terminate this Transaction.
For purposes of this Additional Termination
Event, Time Warner will be the Affected Party and this
Transaction will be the sole Affected Transaction.
Payments on Early Termination: Notwithstanding anything to the contrary in this Confirmation,
the Agreement (including Section 6(e) thereof) or the Equity
Definitions, (i) the Transaction shall settle pursuant to the
terms of this Confirmation and clauses (ii) and (iii) below
following any Termination Event, (ii) all obligations of the
parties hereto shall immediately terminate upon any Termination
Event, except for the obligation of Investment Bank to settle
the Transaction by delivering the Number of Shares and any
Surplus Settlement Amount to Time Warner or the Surplus
Investment Bank, and (iii) the Calculation Period shall end on,
but exclude, the Early Termination Date, the Valuation Date
shall be the Early Termination Date and the Settlement Date
shall be three Exchange Business Days after the Valuation Date.
2. Terms of this Transaction. The terms of this Transaction are as follows:
GENERAL TERMS:
Trade Date: As specified in Schedule I
Buyer: Time Warner
Seller: Investment Bank
Issuer: Time Warner
Calculation Agent: Investment Bank
Shares: Common Stock of Time Warner (Ticker: TWX)
Number of Shares: The number of Shares delivered in accordance with Physical
Settlement below
Daily Forward Amount: For each Trading Day or portion thereof during the Calculation
Period, a USD amount equal to (i) a price per Share (as
determined by the Calculation Agent) equal to the sum of (a)
the Daily 10b-18 VWAP for such Trading Day plus (b) the
Commission Amount per Share plus (c) any applicable SEC fees
per share, multiplied by (ii) the Daily Repurchase Share Amount
for such Trading Day
Daily Repurchase Share Amount: For each Trading Day or portion thereof during the Calculation
Period, a number of Shares calculated in accordance with
Schedule I.
Aggregate Forward Amount: For any day, a USD amount equal to the sum of the Daily
Forward Amounts for all Trading Days in the Calculation Period
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from and including the Commencement Date to and including the
third Exchange Business Day preceding such day.
Aggregate Repurchase Share Amount: A number of Shares equal to the sum of the Daily
Repurchase Share Amounts for all Trading Days during
the Calculation Period (rounded down to the nearest whole Share).
Daily 10b-18 VWAP: For each Trading Day or portion thereof during the Calculation
Period, a USD price per Share (as determined by the Calculation
Agent) equal to the volume-weighted average price of the Rule
10b-18 eligible trades in the Shares for the entirety or such
portion of such Trading Day as determined by reference to the
screen entitled "TWX.N Equity AQR SEC" as reported by Bloomberg
L.P., or if such price is not available on Bloomberg L.P., the
volume-weighted average price of the Rule 10b-18 eligible
trades in the Shares, as determined by the Calculation Agent in
its reasonable discretion (in each case, without regard to
pre-open or after hours trading outside of any regular trading
session for such Trading Day).
Commencement Date: As specified in Schedule I
Calculation Period: The period from and including the Commencement Date to and
including the Valuation Date
Trading Day: Any Exchange Business Day that is not a Disrupted Day
Share Delivery Date: The Settlement Date. On the Share Delivery Date, Investment
Bank shall deliver a number of shares equal to the
Aggregate Repurchase Share Amount as of the Valuation
Date to Time Warner in accordance with Section 9.4
of the Equity Definitions, with the Share Delivery
Date deemed to be a "Settlement Date" for
purposes of such Section 9.4. Section 9.2 of the
Equity Definitions shall not apply to any Share Delivery Date.
Prepayment: Applicable
Prepayment Amount: As specified in Schedule I
Prepayment Date: The Trade Date
Commission Amount per Share: As specified in Schedule I
Exchange: New York Stock Exchange
Related Exchange: The primary exchange on which options or futures on the
relevant Shares are traded.
Market Disruption Event: The definition of "Market Disruption Event" in
Section 6.3(a) of the Equity Definitions is
hereby amended by inserting the words "at any time on
any Scheduled Trading Day during the Calculation
Period or" after the word "material," in the third
line thereof.
Notwithstanding anything to the contrary in the Equity
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Definitions or herein, if any Scheduled Trading Day
in the Calculation Period is a Disrupted Day, the
Calculation Agent shall have the option in its
reasonable discretion to determine whether all or a
portion of any such Disrupted Day shall be
deemed to be a Trading Day for purposes of calculating
the Aggregate Repurchase Share Amount and related
terms. If the Calculation Agent makes a determination
that a portion of any such Disrupted Day shall be
deemed not to be a Trading Day, the Calculation Agent
shall determine the Daily Repurchase Share Amount for
the portion of such Disrupted Day that is a Trading Day based upon the
Daily 10b-18 VWAP for the portion of such Disrupted
Day that is a Trading Day. If all or a portion of any
such Disrupted Day shall be deemed not to be a Trading
Day, the Calculation Agent shall provide notice to
Time Warner by the close of business on such Disrupted
Day of such election.
Rule 10b5-1: Time Warner and Investment Bank intend that
this Confirmation comply with the requirements of
Rule 10b5-1(c)(1) under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
VALUATION:
Valuation Time: The Scheduled Closing Time on the Exchange
Valuation Date: The earlier of (i) the Scheduled Valuation Date, as specified
in Schedule I, and (ii) the first Trading Day on which
the Remaining Amount equals zero.
Settlement Amount: For any day, a USD amount equal to the
Prepayment Amount (i) minus the Aggregate Forward
Amount as of such day (ii) plus the Aggregate Daily
Adjustment Amount as of such day.
Aggregate Daily Adjustment Amount: For any day, a USD amount equal to the sum of the Daily
Adjustment Amounts for all calendar days from and including the
Trade Date, to but excluding such day.
Daily Adjustment Amount: For any day, a USD amount equal to the product of (i) the
Settlement Amount as of such day multiplied by (ii) the Daily
Rate as of such day. If, for any day, the Daily Adjustment
Amount is less than $1,000.00, the Daily Adjustment Amount
shall be deemed to be $0.00 for such day and all remaining days
to and including the Settlement Date.
Remaining Amount: For any day, a USD amount equal to the
difference between (i) the Prepayment Amount as of
such day plus the Aggregate Daily Adjustment Amount as
of such day and (ii) the sum of all Daily Forward
Amounts as of such day.
Daily Rate: For any day, an amount equal to the Federal Funds rate
determined by reference to the screen entitled "FDFD index hp"
as reported by Bloomberg L.P. plus [ ] basis
points, divided by 365.
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SETTLEMENT TERMS:
Notification to Time Warner: On the Valuation Date, the Calculation Agent shall calculate
the Aggregate Repurchase Share Amount and an estimate of the
Surplus Settlement Amount as of the Settlement Date, if any,
and shall deliver this information to Time Warner. If the
Surplus Settlement Amount is greater than zero and Investment
Bank will be delivering Shares to Time Warner on the Settlement
Date, Time Warner shall deliver to Investment Bank appropriate
account information for the Surplus Settlement Amount that is
required to be delivered to the Surplus Investment Bank.
Physical Settlement: On the Settlement Date, Investment Bank shall deliver a number
of Shares equal to the Aggregate Repurchase Share
Amount as of the Valuation Date.
Surplus Settlement Amount: On the Settlement Date, if the Settlement Amount is greater
than zero (a "Surplus Settlement Amount") and Investment Bank
is delivering Shares to Time Warner on the Settlement Date,
Investment Bank shall deliver, via wire transfer, in same day
funds, the Surplus Settlement Amount to the Surplus Investment
Bank to the account provided to Investment Bank by Time Warner
pursuant to the terms of "Notification to Time Warner" above.
All Cash Surplus Settlement Amount: On the Settlement Date, if the Surplus Settlement Amount is
greater than zero and Investment Bank is not
delivering Shares to Time Warner on the Settlement
Date, Investment Bank shall deliver the Surplus
Settlement Amount to Time Warner, via wire transfer,
in same day funds, to the account noted in Section 10 below.
Settlement Currency: USD
Settlement Date: Three Exchange Business Days after the Valuation Date, or if such
date is not a Clearance System Business Day or if
there is a Settlement Disruption Event on such
day, the immediately succeeding Clearance System
Business Day on which there is no Settlement Disruption Event.
SHARE ADJUSTMENTS:
Method of Adjustment: Calculation Agent Adjustment
EXTRAORDINARY EVENTS:
Consequences of Merger Events: Notwithstanding anything to the contrary in this Confirmation,
the Agreement or the Equity Definitions, (i) the Transaction
shall settle pursuant to the terms of this Confirmation and
clauses (ii) and (iii) below following the Announcement Date of
any Merger Event, (ii) all obligations of the parties hereto
shall immediately
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terminate upon the Announcement Date of any
Merger Event, except for the obligation of Investment Bank to
settle the Transaction by delivering the Number of Shares and
any Surplus Settlement Amount to Time Warner or the Surplus
Investment Bank, and (iii) the Calculation Period shall end on
the Announcement Date of the Merger Event, the Valuation Date
shall be the Announcement Date of the Merger Event and the
Settlement Date shall be three Exchange Business Days after the
Valuation Date.
Tender Offer: Applicable
Consequences of Tender Offers: Notwithstanding anything to the contrary in this Confirmation,
the Agreement or the Equity Definitions, (i) the Transaction
shall settle pursuant to the terms of this Confirmation and
clauses (ii) and (iii) below following the Announcement Date of
any Tender Offer, (ii) all obligations of the parties hereto
shall immediately terminate upon the Announcement Date of the
Tender Offer, except for the obligation of Investment Bank to
settle the Transaction by delivering the Number of Shares and
any Surplus Settlement Amount to Time Warner or the Surplus
Investment Bank, and (iii) the Calculation Period shall end on
the Announcement Date of the Tender Offer, the Valuation Date
shall be the Announcement Date of the Tender Offer and the
Settlement Date shall be three Exchange Business Days after the
Valuation Date.
Nationalization, Insolvency or Notwithstanding anything to the contrary in this Confirmation,
Delisting: the Agreement or the Equity Definitions, (i) the Transaction
shall settle pursuant to the terms of this Confirmation and
clauses (ii) and (iii) below following the Announcement Date of
any Nationalization, Insolvency or Delisting, (ii) all
obligations of the parties hereto shall immediately terminate
upon the Announcement Date of any Nationalization, Insolvency
or Delisting, except for the obligation of Investment Bank to
settle the Transaction by delivering the Number of Shares and
any Surplus Settlement Amount to Time Warner or the Surplus
Investment Bank, and (iii) the Calculation Period shall end on
the Announcement Date of the Nationalization, Insolvency or
Delisting, the Valuation Date shall be such Announcement Date
and the Settlement Date shall be three Exchange Business Days
after the Valuation Date.
Determining Party for all Calculation Agent
Extraordinary Events:
Announcement Date: Notwithstanding anything to the contrary in the Equity
Definitions, "Announcement Date" means, in respect of an
Extraordinary Event, (i) in the case of a Merger Event, the
date of the first public announcement of a firm intention to
engage in a transaction (whether or not subsequently amended)
that, in the reasonable discretion
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of the Calculation Agent, will lead to a Merger Event, (ii) in the case
of a Tender Offer, the date of the first public announcement of a firm
intention to purchase or otherwise obtain the requisite number
of voting shares (whether or not subsequently amended) that, in
the reasonable discretion of the Calculation Agent, will lead
to a Tender Offer, (iii) in the case of a Nationalization, the
date of the first public announcement to nationalize (whether
or not subsequently amended) that, in the reasonable discretion
of the Calculation Agent, will lead to a Nationalization, (iv)
in the case of an Insolvency, the date of the first public
announcement of the institution of a proceeding or presentation
of a petition or passing of a resolution (or other analogous
procedure in any jurisdiction) that, in the reasonable
discretion of the Calculation Agent, will lead to an Insolvency
and (v) in the case of a Delisting, the date of the first
public announcement by the Exchange that the Shares will cease
to be listed, traded or publicly quoted in the manner described
in Section 12.6(a)(iii) of the Equity Definitions. In respect
of any Extraordinary Event, if the announcement of such
Extraordinary Event is made after the actual closing time for
the regular trading session on the relevant Exchange, without
regard to any after hours or any other trading outside of such
regular trading session hours, the Announcement Date shall be
deemed to be the next following Scheduled Trading Day.
ADDITIONAL DISRUPTION EVENTS:
Change in Law: Applicable. Notwithstanding anything to the contrary in this
Confirmation, the Agreement or the Equity Definitions, (i) the
Transaction shall settle pursuant to the terms of this
Confirmation and clauses (ii) and (iii) below following the
occurrence of a Change in Law, (ii) all obligations of the
parties hereto shall immediately terminate upon the occurrence
of a Change in Law, except for the obligation of Investment
Bank to settle the Transaction by delivering the Number of
Shares and any Surplus Settlement Amount to Time Warner or the
Surplus Investment Bank, and (iii) the Calculation Period shall
end upon the occurrence of a Change in Law, the Valuation Date
shall be the date of such Change in Law and the Settlement Date
shall be three Exchange Business Days after the Valuation Date.
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable. Notwithstanding anything to the contrary in this
Confirmation, the Agreement or the Equity Definitions, (i) the
Transaction shall settle pursuant to the terms of this
Confirmation and clauses (ii) and (iii) below following the
occurrence of an Insolvency Filing, (ii) all obligations of the
parties hereto shall immediately terminate upon an Insolvency
Filing, except for the obligation of Investment Bank to settle
the Transaction by delivering the Number of Shares and any
Surplus Settlement Amount to Time Warner or the Surplus
Investment Bank, and (iii) the Calculation Period shall end
upon the occurrence of an Insolvency Filing, the Valuation Date
shall be the date of such Insolvency Filing and the Settlement
Date shall be three Exchange Business Days after the Valuation
Date.
Hedging Disruption: Not Applicable
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Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Not Applicable
Increased Cost of Stock Borrow: Not Applicable
Determining Party for All Additional Investment Bank
Disruption Events:
MISCELLANEOUS:
Non-Reliance: Applicable
Agreements and Acknowledgements
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
3. Special Provisions for Merger Transactions. Notwithstanding anything to the
contrary herein or in the Equity Definitions, to the extent that an Announcement
Date for a potential Merger Transaction (as defined below) occurs during the
term of this Transaction and such Announcement Date does not cause this
Transaction to terminate in whole under the provisions of "Extraordinary Event"
in Section 2 above:
(a) As soon as practicable following the public announcement of such
potential Merger Transaction, Time Warner shall provide Investment Bank with
written notice of such announcement.
(b) Promptly after request from Investment Bank, Time Warner shall provide
Investment Bank with written notice specifying (i) Time Warner's average daily
Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar
months immediately preceding the Announcement Date that were not effected
through Investment Bank or its affiliates and (ii) the number of Shares
purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act
for the three full calendar months preceding the Announcement Date. Such written
notice shall be deemed to be a certification by Time Warner to Investment Bank
that such information is true and correct. Time Warner understands that
Investment Bank will use this information in calculating the trading volume for
purposes of Rule 10b-18.
(c) "Merger Transaction" means any merger, acquisition or similar
transaction involving a recapitalization of Time Warner as contemplated by Rule
10b-18(a)(13)(iv) under the Exchange Act.
4. Investment Bank Adjustments
(a) In the event that Investment Bank reasonably determines either that (i)
it is required by any legal, regulatory or self-regulatory requirements (whether
or not such requirements are imposed by law or have been voluntarily adopted by
Investment Bank, and including, without limitation, Regulation M, Rule 10b-18
("Rule 10b-18"), Rule 10b-5, Regulation 13D-G and Regulation 14E, in each case
under the Exchange Act, the "Requirements"), to refrain from engaging in any
hedging activity that it would otherwise engage in on any Trading Day in
connection with this Transaction or (ii) any hedging activity that it would
otherwise engage in on any Trading Day in connection with this Transaction would
cause Investment Bank to breach any term of this Agreement, then such
determination shall be treated as a Potential Adjustment Event subject to
Calculation Agent Adjustment. The Calculation Agent shall exercise reasonable
discretion in making any determinations or adjustments required under the
definition of "Calculation Agent Adjustment" and any such determinations or
adjustments shall be limited to the determinations and adjustments described in
the second paragraph under the heading "Market Disruption Event" in Section 2
above.
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(b) Investment Bank shall notify Time Warner, in writing, upon the exercise
of Investment Bank's right pursuant to Section 4(a), and the notice shall
include a reasonable description of the facts and circumstances surrounding
Investment Bank's exercise of such right, and Investment Bank shall subsequently
notify Time Warner before the commencement of trading on the day on which
Investment Bank reasonably believes that the circumstances giving rise to such
exercise have changed.
5. Covenants.
(a) Time Warner covenants and agrees:
(i) that during the term of this Confirmation, neither it nor any of
its affiliates shall take any action that would cause the purchase by
Investment Bank of any Shares pursuant to this Confirmation during the
Calculation Period not to comply with Rule 10b-18 (assuming for the
purposes of this paragraph that such Rule were otherwise applicable to such
purchases);
(ii) to comply with all laws, rules and regulations applicable to it
(including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act) in connection with the
transactions contemplated by this Confirmation; and
(iii) that neither it nor any affiliates shall take any action that
would cause Regulation M under the Exchange Act ("Regulation M"), to be
applicable to any purchases of Shares, or any security for which Shares is
a reference security (as defined in Regulation M), by Time Warner or any
affiliated purchasers (as defined in Regulation M) during the Calculation
Period.
(b) Investment Bank covenants and agrees:
(i) that, with respect to the purchase of any Shares in connection
with this Confirmation, Investment Bank will use reasonable best efforts to
comply with the timing, price and volume provisions of Rule 10b-18(b)(2),
(3) and (4) under the Exchange Act; and
(ii) to comply with all laws, rules and regulations applicable to it
(including, without limitation, the Securities Act and the Exchange Act) in
connection with the transactions contemplated by this Confirmation.
(c) Time Warner and Investment Bank each covenant and agree that each shall
report the Transaction as and to the extent required by the Exchange Act.
6. Representations, Warranties and Acknowledgments.
(a) Time Warner hereby represents and warrants to Investment Bank that:
(i) as of the date hereof, Time Warner (A) is not in possession of any
material, nonpublic information with respect to Time Warner or any of its
securities, and is entering into this Confirmation in good faith and not as
part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the
Exchange Act and (B) agrees not to alter or deviate from the terms of this
Confirmation or enter into or alter a corresponding or hedging transaction
or position with respect to the Shares (including, without limitation, with
respect to any securities convertible or exchangeable into the Shares)
during the Calculation Period in a manner contrary to Rule 10b5-1(c)(1)(C);
(ii) the transactions contemplated by this Confirmation have been
authorized under Time Warner's publicly announced program to repurchase
Shares;
(iii) Time Warner is not entering into this Confirmation to facilitate
a distribution of the Shares (or any security convertible into or
exchangeable for Shares) or in connection with a future issuance of
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securities except pursuant to Time Warner's employee benefit plans and
dividend reinvestment plan or other publicly disclosed transaction;
(iv) Time Warner is not entering into this Confirmation to create
actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for Shares) or to raise or depress the
price of the Shares (or any security convertible into or exchangeable for
Shares); and
(v) Time Warner is as of the date hereof, and after giving effect to
the transactions contemplated hereby will be, Solvent. As used in this
paragraph, the term "Solvent" means, with respect to a particular date,
that on such date (A) the present fair market value (or present fair
saleable value) of the assets of Time Warner is not less than the total
amount required to pay the liabilities of Time Warner on its total existing
debts and liabilities (including contingent liabilities) as they become
absolute and matured, (B) Time Warner is able to realize upon its assets
and pay its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business,
(C) assuming consummation of the transactions as contemplated by this
Confirmation, Time Warner is not incurring debts or liabilities beyond its
ability to pay as such debts and liabilities mature, (D) Time Warner is not
engaged in any business or transaction, and does not propose to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which Time Warner is engaged and (E) Time
Warner is not a defendant in any civil action that could reasonably be
expected to result in a judgment that Time Warner is or would become unable
to satisfy.
(b) Investment Bank and Time Warner each hereby acknowledges that any
transactions by Investment Bank in the Shares will be undertaken by Investment
Bank, as the case may be, as principal for its own account. All of the actions
to be taken by Investment Bank in connection with this Confirmation shall be
taken by Investment Bank independently and without any advance or subsequent
consultation with Time Warner.
7. Acknowledgements of Time Warner Regarding Hedging and Market Activity. Time
Warner agrees, understands and acknowledges that:
(a) during the period from (and including) the Trade Date to (and
including) the Settlement Date, Investment Bank and its affiliates may buy or
sell Shares or other securities or buy or sell options or futures contracts or
enter into swaps or other derivative securities in order to adjust its hedge
position with respect to the transactions contemplated by this Transaction;
(b) Investment Bank and its affiliates also may be active in the market for
the Shares other than in connection with hedging activities in relation to the
transactions contemplated by this Transaction;
(c) Investment Bank shall make its own determination as to whether, when or
in what manner any hedging or market activities in Time Warner's securities
shall be conducted and shall do so in a manner that it deems appropriate to
hedge its price and market risk with respect to Daily 10b-18 VWAP; and
(d) any market activities of Investment Bank and its affiliates with
respect to the Shares may affect the market price and volatility of the Shares,
as well as the Daily 10b-18 VWAP, each in a manner that may be adverse to Time
Warner.
8. Non-Confidentiality. (a) Subject to the terms of the Non-Disclosure
Agreement, dated the date hereof, between Investment Bank and Time Warner (the
"Non-Disclosure Agreement"), Investment Bank and Time Warner hereby agree and
acknowledge that Investment Bank has authorized Time Warner to disclose this
Transaction to any and all persons, and there are no express or implied
agreements, arrangements or understandings to the contrary, and authorizes Time
Warner to use any information that Time Warner receives or has received with
respect to this Transaction in any manner.
(b) Notwithstanding anything herein or in the Non-Disclosure Agreement to
the contrary, Investment Bank and Time Warner agree that each (and their
employees, representatives, and other agents) may disclose to any and
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all persons, without limitation of any kind from the commencement of
discussions, the U.S. Federal and state income tax treatment and tax structure
of the Transaction and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to the tax treatment and tax
structure. For this purpose, "tax structure" is limited to facts relevant to the
U.S. Federal and state income tax treatment of the Transaction and does not
include information relating to the identity of the parties, their affiliates,
agents or advisors.
9. Treatment in Bankruptcy; No Setoff; No Collateral.
(a) In the event Time Warner becomes the subject of proceedings
("Bankruptcy Proceedings") under the U.S. Bankruptcy Code or any other
applicable bankruptcy or insolvency statute from time to time in effect, any
rights or claims of Investment Bank hereunder in respect of this Transaction
shall rank for all purposes no higher than, but on a parity with, the rights or
claims of holders of Shares, and Investment Bank hereby agrees that its rights
and claims hereunder shall be subordinated to those of all parties with claims
or rights against Time Warner (other than common stockholders) to the extent
necessary to assure such ranking. Without limiting the generality of the
foregoing, after the commencement of Bankruptcy Proceedings, the claims of
Investment Bank hereunder shall for all purposes have rights equivalent to the
rights of a holder of a percentage of the Shares equal to the aggregate amount
of such claims (the "Claim Amount") taken as a percentage of the sum of (i) the
Claim Amount and (ii) the aggregate fair market value of all outstanding Shares
on the record date for distributions made to the holders of such Shares in the
related Bankruptcy Proceedings. Notwithstanding any right it might otherwise
have to assert a higher priority claim in any such Bankruptcy Proceedings,
Investment Bank shall be entitled to receive a distribution solely to the extent
and only in the form that a holder of such percentage of the Shares would be
entitled to receive in such Bankruptcy Proceedings, and, from and after the
commencement of such Bankruptcy Proceedings, Investment Bank expressly waives
(i) any other rights or distributions to which it might otherwise be entitled in
such Bankruptcy Proceedings in respect of its rights and claims hereunder and
(ii) any rights of setoff it might otherwise be entitled to assert in respect of
such rights and claims.
(b) Notwithstanding any provision of this Confirmation or any other
agreement between the parties to the contrary, neither the obligations of Time
Warner nor the obligations of Investment Bank hereunder are secured by any
collateral, security interest, pledge or lien.
(c) The parties hereto agree and acknowledge that Investment Bank is a
"financial participant" within the meaning of Section 101(22) of Title 11 of the
United States Code (the "Bankruptcy Code"). The parties hereto further agree and
acknowledge that this Transaction is either (i) a "securities contract" as such
term is defined in Section 741(7) of the Bankruptcy Code, in which case each
payment and delivery made pursuant to this Transaction is a "settlement
payment", as such term is defined in Section 741(8) of the Bankruptcy Code, and
that Investment Bank is entitled to the protections afforded by, among other
sections, Sections 362(b)(6), 546(e) and 555 of the Bankruptcy Code, or (ii) a
"swap agreement", as such term is defined in Section 101(53B) of the Bankruptcy
Code, in which case each party is a "swap participant", as such term is defined
in Section 101(53C) of the Bankruptcy Code, and that Investment Bank is entitled
to the protections afforded by, among other sections, Sections 362(b)(17),
546(g) and 560 of the Bankruptcy Code.
10. WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS CONFIRMATION OR ANY TRANSACTION CONTEMPLATED HEREBY.
11. Account Details.
Account for Payments to Investment Bank: [ ]
[ ]
[ ]
Account for Payments to Time Warner: [ ]
[ ]
[ ]
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12. Notices. All notices and other communications made pursuant to the terms of
this Confirmation shall be given, in writing, between the parties hereto by
e-mail or facsimile, followed by overnight mail, to the following addresses:
If to Time Warner:
Time Warner Inc.
One Time Warner Center
New York, New York 10019-8016
Attention: [ ]
Fax: [ ]
E-mail: [ ]
with a copy to:
[ ]
E-mail: [ ]
Fax: [ ]
If to Investment Bank:
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12
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us.
Confirmed as of the date first written above:
Time Warner Inc. [Investment Bank]
By:_______________________________ By:________________________________
Name: Name:
Title: Title: