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EXHIBIT 99.3
LMC AGREEMENT
AMONG
TIME WARNER INC.,
LIBERTY MEDIA CORPORATION,
and certain subsidiaries of
Liberty Media Corporation
Dated as of September 22, 1995
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
COVENANTS WITH RESPECT TO THE MERGER
SECTION 2.1 Agreement to Vote; Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.2 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.3 Agreement to Abandon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.5 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of LMC Parent and the Shareholders . . . . . . . . . . . . . 13
SECTION 3.2 Representations and Warranties of TW Parent . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
CERTAIN POST-CLOSING COVENANTS
SECTION 4.1 Voting Trust; Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2 No Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3 Certain Post-Closing Compensation Obligations . . . . . . . . . . . . . . . . . . . . . . . 20
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TABLE OF CONTENTS
(continued)
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ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.3 Amendments; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.8 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.9 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.11 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
EXHIBITS AND SCHEDULES
EXHIBIT A Terms of Non-Voting Exchange Preferred Stock
EXHIBIT B Form of First Refusal Agreement
EXHIBIT C Terms of Voting Exchange Preferred Stock
EXHIBIT D Form of Option Agreement
EXHIBIT E Program Service Agreement
EXHIBIT F Form of LMC Registration Rights Agreement
EXHIBIT G Form of Rights Amendment
EXHIBIT H Form of SportSouth Agreement
EXHIBIT I Form of Sunshine Agreement
EXHIBIT J Form of Voting Trust Agreement
Schedule I Schedule of Shareholder Shares
Schedule 3.1 Litigation
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LMC AGREEMENT, dated as of September
22, 1995, among TIME WARNER INC., a
Delaware corporation ("TW Parent"),
LIBERTY MEDIA CORPORATION, a Delaware
corporation ("LMC Parent"), TCI XXXXXX
PREFERRED, INC., a Colorado
corporation ("LMC Sub") and certain
other subsidiaries of LMC Parent listed
with LMC Sub under "Subsidiaries of
LMC Parent" on the signature pages
hereto (LMC Sub and such subsidiaries
collectively, the "Shareholders").
Concurrently with the execution and delivery of this
Agreement, TW Parent, Time Warner Acquisition Corp. ("Merger Sub"), a Delaware
corporation and a wholly owned subsidiary of TW Parent, and Xxxxxx Broadcasting
System, Inc. (the "Company"), a Georgia corporation, are entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"). The Merger (as defined in the Merger Agreement) is subject to
certain conditions, including the approval of the Merger and the approval and
adoption of the Merger Agreement: by the holders of a majority of the
outstanding shares of Class C Convertible Preferred Stock, par value $.125 per
share, of the Company (the "Class C Preferred Stock"), voting as a separate
class; by the holders of a majority of the voting power of the outstanding
shares of Class A Common Stock, par value $.0625 per share, of the Company (the
"Class A Common Stock"), and Class B Common Stock, par value $.0625 per share,
of the Company (the "Class B Common Stock"; together with the Class A Common
Stock, the "Common Stock"), voting as a single class; and by the holders of a
majority of the voting power of the outstanding shares of Common Stock and
Class C Preferred Stock, voting as a single class. The term "Merger Agreement"
as used herein includes the Merger Agreement as the same may be amended
pursuant to, and solely in the respects contemplated by, Section 1.01 of the
Merger Agreement as in effect on the date hereof and, in the event the Merger
Agreement is amended pursuant to the last sentence of said Section, the term
"TW Parent" shall, if applicable, mean the newly formed corporation that will
become the sole stockholder of TW Parent and the Company.
Each Shareholder is the record and beneficial owner of the
number of shares of Class A Common Stock, Class B Common Stock and Class C
Preferred Stock, set forth opposite such Shareholder's name on Schedule I
hereto (such shares of Class A Common Stock, Class B Common Stock and Class C
Preferred Stock, together with any shares of capital stock of the Company
acquired by such Shareholder after the date hereof and prior to the Effective
Time of the Merger (as defined in the Merger Agreement) being collectively
referred to herein as the "Shareholder Shares").
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NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used but not
defined herein and the term "subsidiary" shall have the meanings assigned to
such terms in the Merger Agreement. In this Agreement:
"Action" shall mean any of (i) the direct or indirect
acquisition (through purchase, exchange, merger or consolidation, exercise of
rights or otherwise) by TW Parent or any Controlled Affiliate of TW Parent of
any assets, securities or business; (ii) any merger or consolidation of TW
Parent with or into any other person; (iii) the commencement by TW Parent or
any of its Controlled Affiliates of any new business; (iv) any investment by TW
Parent or any Controlled Affiliate of TW Parent in any other person; and (v)
the sale or issuance by TW Parent or any Controlled Affiliate of TW Parent of
TW Securities to any person or the repurchase, redemption or other acquisition
by TW Parent or any Controlled Affiliate of TW Parent of any TW Securities;
excluding, in all of the cases, any of the foregoing actions that TW Parent or
any Controlled Affiliate of TW Parent is required to take pursuant to, or that
is expressly contemplated by, this Agreement, the Merger Agreement, any
Additional Agreement or any other agreement expressly contemplated by this
Agreement, the Merger Agreement or any Additional Agreement.
"Additional Agreements" shall mean the Voting Trust, the
Registration Rights Agreement, the First Refusal Agreement, the Option
Agreement, the Program Service Agreement, the Rights Amendment, the TW/LMC
Letter Agreement, the SportSouth Agreement and the Sunshine Agreement.
"Adjustment Amount", with respect to the disposition of any TW
Securities as to which TW Parent is obligated to pay an Adjustment Amount to a
Liberty Party, means an amount equal to the Nominal Tax Amount divided by the
Gross-up Factor. For purposes of this definition, the "Nominal Tax Amount"
means an amount equal to the product of (i) the gain or income recognized for
Federal income tax purposes from the disposition of such TW Securities and (ii)
the Blended Rate, and the "Gross-up Factor" is equal to 1 minus the Blended
Rate.
"Affiliate", when used with respect to a specified person,
means any other person which directly or indirectly Controls, is under common
Control with or is Controlled by such first person. The term "affiliated"
(whether or not capitalized) shall have a correlative meaning. For purposes of
this Agreement, no Liberty Party shall be deemed to be an Affiliate of TW
Parent or any of its subsidiaries and neither TW Parent nor any of its
Affiliates shall be deemed to be an Affiliate of any Liberty Party. Prior to
the Effective Time of the Merger, neither TW Parent
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nor any of its Affiliates nor TCI, LMC Parent or any of their respective
Affiliates shall be deemed to be an Affiliate of the Company or any of its
subsidiaries.
"Blended Rate", as to any Liberty Party for any relevant
taxable year, means the tax rate that is the highest combined corporate
Federal, state and local marginal capital gain rate (determined by taking into
account any deduction for net capital gain) applicable to gain or income upon
dispositions of TW Securities beneficially owned by such Liberty Party during
such taxable year as contemplated by Section 4.3, provided, however, that if
the tax liability of the Liberty Party (or of the consolidated group of which
such Liberty Party is a member for tax purposes) with respect to such income or
gain for such taxable year is not determined under Section 1201 of the Internal
Revenue Code of 1986, as amended (or any successor Section), such tax rate
shall be the highest combined regular corporate Federal, state and local
ordinary income tax rate applicable to such Liberty Party (or such consolidated
group) for such taxable year. Such tax rate shall be determined taking into
account such Liberty Party's (or its consolidated group's) relevant state and
local apportionment factors with respect to such gain or income, the
deductibility of state and local taxes for Federal income tax purposes (and the
deductibility of taxes imposed by any taxing jurisdiction for purposes of
computing the tax liability to any other taxing jurisdiction), the dividends
received deduction (where such gain or income is eligible for such deduction)
and any other relevant considerations.
"Change in Control Event" shall mean any of the following
events: (i) any person becoming an Acquiring Person (as defined in the Rights
Agreement as in effect on the date hereof as if amended in accordance with the
Rights Amendment), including any person that would otherwise be 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 hereof, as if amended in accordance with the
Rights Amendment) and regardless of whether the Rights Agreement continues to
be in effect or is so amended, or (ii) TW Parent's entering into any agreement
(other than the Merger Agreement or any amendment thereto) providing for any
merger or consolidation of TW Parent into any other person, a binding share
exchange, or a merger of TW Parent with any other person in which the shares of
capital stock of TW Parent are exchanged for or converted into the right to
receive anything other than common stock, par value $1.00 per share, of TW
Parent.
"Communications Laws" shall mean the Communications Act of
1934 (as amended and supplemented from time to time and any successor statute
or statutes regulating tele-communications companies) and the rules and
regulations (and interpretations thereof and determinations with respect
thereto) promulgated, issued or adopted from time to time by the FCC. All
references herein to the Communications Laws shall include as of any relevant
date in question the Communications Laws as then in effect (including any
Communications Law or part thereof the effectiveness of which is then stayed)
and as then formally proposed by the FCC by publication in the Federal Register
or promulgated with a delayed effective date.
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"Company Letter" shall mean the letter dated the date hereof
from the Company to TW Parent and LMC Parent.
"Contract" shall mean any agreement, contract, commitment,
indenture, lease, license, instrument, note, bond, security, undertaking,
promise, covenant, or legally binding arrangement or understanding.
"Control", as to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person (whether through ownership of
securities, partnership interests or other ownership interests, by contract, by
participation or involvement in the board of directors, management committee or
other management structure of such person, or otherwise). The terms
"Controlled," "Controlling" and similar variations shall have correlative
meanings.
"Controlled Affiliate" of any specified person shall mean an
Affiliate of such specified person that is Controlled by such specified person
and is not Controlled by another person (other than another Controlled
Affiliate of the specified person), except that as used in the definition of
"Action" in this Section 1.1, the term "Controlled Affiliate" shall include an
Affiliate of the specified person that is also Controlled by another person if
the specified person has the power (by contract, ownership of voting securities
or otherwise) to cause such Affiliate to refrain from taking the Action in
question.
"Covered TW Securities" shall mean (i) (A) if the Merger is
consummated, the shares of TW Parent Common Stock beneficially owned by LMC
Parent immediately following the consummation of the Merger as a result of the
conversion in the Merger of the shares of Company Capital Stock beneficially
owned by LMC Parent on the date hereof, (B) if the Contribution Election (as
defined in the Elective Merger Agreement) is made and LMC Sub makes the
contribution of its assets described therein, the shares of TW Parent Common
Stock received by LMC Sub in connection with such contribution, determined in
accordance with the Elective Merger Agreement assuming that the shares of
Company Capital Stock so contributed by LMC Sub or owned by the subsidiaries of
LMC Sub so contributed did not include any shares of Company Capital Stock not
beneficially owned by LMC Parent on the date hereof, or (C) if the Elective
Merger is consummated, the shares of TW Parent Common Stock received by LMC
Parent or its designee in connection with the consummation of the Elective
Merger (determined in accordance with the Elective Merger Agreement assuming
that the shares of Company Capital Stock owned by LMC Sub and its subsidiaries
immediately prior to the consummation of the Elective Merger did not include
any shares of Company Capital Stock not beneficially owned by LMC Parent on the
date hereof), plus, if the Merger is thereafter consummated, such additional
number of shares of TW Parent Common Stock, if any, issuable to LMC Parent or
its designee pursuant to Section 3.3 of the Elective Merger Agreement, (ii) the
shares of Voting Exchange Preferred Stock issued pursuant to the Option
Agreement and (iii) all shares of Voting Exchange Preferred Stock and
Non-Voting Exchange Preferred Stock for which the shares of TW Parent Common
Stock and Voting Exchange Preferred Stock referred to in clauses (i) and (ii)
above and
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this clause (iii) may be exchanged pursuant to Section 4.1, in each case as
such shares may have been changed after issuance thereof. The number of
Covered TW Securities shall be appropriately adjusted from time to time to take
into account the occurrence of any stock dividends, splits, reverse splits,
combinations and the like.
"Elective Merger" shall mean the merger of LMC Sub into TW
Parent or, at the election of TW Parent, into a wholly owned subsidiary of TW
Parent contemplated by the Elective Merger Agreement.
"Elective Merger Agreement" shall mean that certain Agreement
and Plan of Merger, to be dated as of the date hereof, among TW Parent, LMC
Parent and LMC Sub, as contemplated by the TW/LMC Letter Agreement.
"FCC" shall mean the Federal Communications Commission and any
successor agency or other agency charged with the administration of any
Communications Law.
"First Refusal Agreement" shall mean that certain Stockholders
Agreement substantially in the form of Exhibit B hereto to be entered into by
TW Parent, the Shareholders and certain other shareholders of the Company at or
prior to the Closing.
"Horizontal Rule" shall mean the rule promulgated by the FCC
that is set forth at 47 C.F.R. 76.503 on the date hereof.
"Judgment" shall mean any order, judgment, writ, decree,
injunction, award or other determination, decision or ruling of any court, any
other Governmental Entity or any arbitrator.
"Liberty Party" shall mean LMC Parent and each Affiliate of
LMC Parent that is controlled by LMC Parent from time to time and, for so long
as LMC Parent is an Affiliate of TCI that is controlled by TCI, shall also mean
TCI and each Affiliate of TCI that is controlled by TCI.
"Non-Voting Exchange Preferred Stock" shall mean the Series J
Non-Voting Participating Convertible Preferred Stock of TW Parent, having the
terms set forth on Exhibit A hereto.
"Option Agreement" shall mean that certain Option Agreement
substantially in the form of Exhibit D hereto to be entered into by TW Parent
and LMC Parent at or prior to the Closing.
"Option Consideration" shall mean the shares of Voting
Exchange Preferred Stock to be issued and delivered by TW Parent pursuant to
the Option Agreement.
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"person" shall have the meaning ascribed to such term in the
Merger Agreement and shall include any Governmental Entity.
"Prohibited Effect" shall mean the effect or consequence (in
each case either immediately or following any notice, demand, hearing,
proceeding, determination or other action by any Governmental Entity) (a) of
making the continued ownership by the Liberty Parties or any of them of any TW
Securities then owned by the Liberty Parties or any of them illegal under any
Specified Law or (b) of imposing or resulting in the imposition under any
Specified Law on the Liberty Parties or any of them of damages or penalties by
reason of or as a result of such continued ownership or (c) of requiring the
divestiture of, or resulting in the requirement to divest, any of such TW
Securities by any Liberty Party under any Specified Law, or (d) of requiring,
or resulting in the requirement, under any Specified Law that any Liberty Party
discontinue any business or divest of any business or assets or that any
license that such Liberty Party holds or is required to hold under the
Communications Laws be modified in any significant respect or not be renewed as
a result of such continued ownership.
"Program Service Agreement" shall mean the letter agreement,
dated September 15, 1995 between Satellite Services, Inc. ("SSI") and the
Company with respect to the provision of certain program services to SSI, a
copy of which is annexed as Exhibit E hereto.
"Registration Rights Agreement" shall mean the LMC
Registration Rights Agreement substantially in the form of Exhibit F hereto to
be entered into by TW Parent, LMC Parent and the Shareholders at or prior to
the Closing.
"Requirement of Law", when used with respect to any person,
shall mean any law, statute, code, rule, regulation or Judgment, and any
interpretation of or determination with respect to any of the foregoing, of any
court or other Governmental Entity applicable to or binding upon such person,
or to which such person, any of its assets or any business conducted by it is
subject, whether now existing or at any time hereafter enacted, promulgated,
issued, entered or otherwise becoming effective.
"Restriction Period" shall mean the period of time commencing
on the date any Covered TW Securities are first issued and continuing until the
first time that the ownership or deemed ownership by the Liberty Parties of the
TW Parent Common Stock and other voting securities of TW Parent then owned by
the Liberty Parties (assuming conversion in full of all Non-Voting Exchange
Preferred Stock) would, unless the exercise by the Liberty Parties of the
rights of a holder of TW Common Stock or other voting securities of TW Parent
were restricted through a voting trust or other arrangement satisfactory to the
FCC, have a Prohibited Effect under any Communications Law (determined on the
assumption that the Horizontal Rule, unless previously declared invalid by a
final unappealable Judgment, is in full force and effect). Notwithstanding the
foregoing, (a) if the Voting Trust is terminated prior to the expiration of the
Restriction Period and the TW Securities held by the trustee thereunder are
released to the Liberty Parties, then unless LMC Parent complies with its
covenant pursuant to Section 4.1 to deliver
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such TW Securities to TW Parent for exchange for Non-Voting Exchange Preferred
Stock within five business days thereafter, the Restriction Period shall be
deemed to terminate upon the expiration of such five business day period, and
(b) if any Non-Voting Exchange Preferred Stock is converted into TW Parent
Common Stock or into Voting Exchange Preferred Stock by the Liberty Parties,
then the Restriction Period shall be deemed to terminate upon such conversion.
"Rights Amendment" shall mean those amendments described on
Exhibit G hereto to the terms of the Rights Agreement.
"Specified Law", when used with respect to the Liberty
Parties, shall mean (i) the Communications Laws, (ii) any United States federal
law or statute and any law or statute of any state of the United States or of
the District of Columbia and (iii) the rules and regulations (and
interpretations thereof or determinations with respect thereto) of any agency
charged with the administration of any Specified Law within the meaning of
clause (ii), applicable to or binding upon a Liberty Party or to which a
Liberty Party, any of its assets or any business conducted by it is subject.
All references herein to Specified Law shall include as of any relevant date in
question each Specified Law as then in effect (including any Specified Law or
part thereof the effectiveness of which is then stayed) and as then formally
proposed by the relevant Governmental Entity or promulgated with a delayed
effective date.
"SportSouth Agreement" shall mean the Stock Purchase
Agreement, dated as of September 22, 1995, between the Company and LMC
Southeast Sports, Inc., and the Exhibits and Schedules thereto, a copy of which
is annexed as Exhibit H hereto.
"Sunshine Agreement" shall mean an agreement substantially in
the form of Exhibit I to be entered into by Time Warner Entertainment Company,
L.P. and Liberty Sports, Inc. at or prior to the Closing.
A "Takeover Proposal" shall be pending if any bona fide tender
or exchange offer for the TW Parent Common Stock shall have been commenced or
publicly announced and not terminated or withdrawn if consummation of such
offer in accordance with its terms would result in a Change in Control Event.
A tender offer will not be deemed to be bona fide that is not fully financed
unless it is made or guaranteed by a person whose senior debt securities have
investment grade ratings in one of the four highest investment grade
categories.
"Transactions" shall mean the Merger, the other transactions
contemplated by the Merger Agreement and the transactions contemplated by this
Agreement and the Additional Agreements.
"Xxxxxx Letter" shall mean that certain letter dated the date
hereof from R.E. Xxxxxx, III to TW Parent and LMC Parent.
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"TW/LMC Letter Agreement" shall mean the letter dated
September 22, 1995 from TW Parent to LMC Parent with respect to the
negotiation, execution and delivery of the Elective Merger Agreement.
"TW Parent Common Stock" shall mean the common stock, par
value $1.00 per share, of TW Parent as it exists on the date hereof and shall
include, where appropriate, in the case of any reclassification,
recapitalization or other change in the TW Parent Common Stock, or in the case
of a consolidation or merger of TW Parent with or into another person affecting
the TW Parent Common Stock, such capital stock or other securities to which a
holder of TW Parent Common Stock shall be entitled upon the occurrence of such
event.
"TW Securities" shall mean any and all shares of capital stock
and any and all other equity securities of TW Parent of any class, series,
issue or other type, whether now authorized or existing or hereafter authorized
or designated or otherwise created, including the TW Parent Common Stock, the
Voting Exchange Preferred Stock and the Non-Voting Exchange Preferred Stock.
"Voting Exchange Preferred Stock" shall mean the Series K
Voting Participating Convertible Preferred Stock of TW Parent, having the terms
set forth on Exhibit C hereto.
"Voting Trust" shall mean the Voting Trust Agreement
substantially in the form of Exhibit J hereto to be entered into by the
Shareholders and the Trustee named therein at the Closing, subject however to
Section 4.1.
SECTION 1.2 Terms Generally. The definitions of terms
contained in this Agreement shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The
words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The words "herein", "hereof" and "hereunder"
and words of similar import refer to this Agreement in its entirety and not to
any part hereof unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Any reference in this Agreement to
a "day" or number of "days" (without the explicit qualification of "business")
shall be interpreted as a reference to a calendar day or number of calendar
days. If any action or notice is to be taken or given on or by a particular
calendar day, and such calendar day is not a business day, then such action or
notice shall be deferred until, or may be taken or given on, the next business
day.
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ARTICLE II
COVENANTS WITH RESPECT TO THE MERGER
SECTION 2.1 Agreement to Vote; Related Matters.
(a) Subject to the terms and conditions of this
Agreement, each of the Shareholders agrees that such Shareholder shall attend,
and LMC Parent shall cause the Shareholders to attend, the Shareholders Meeting
and each adjournment thereof (provided in each case that the same is held prior
to the Termination Date), in person or by proxy, and shall vote all the
Shareholder Shares (and each class thereof) of such Shareholder that such
Shareholder is entitled to vote, in favor of the approval of the Merger and
each of the other transactions contemplated by the Merger Agreement and in
favor of the approval of the Merger Agreement (as the same may be amended from
time to time to the extent consistent with clause (i) of the following
sentence). The foregoing agreement of LMC Parent and each Shareholder is
subject to the satisfaction of the following conditions as of the time of the
Shareholders Meeting or any adjournment thereof at which the Shareholder
Approvals are sought: (i) the Merger Agreement shall be in full force and
effect in the form originally executed and shall not have been amended in any
respect, nor shall any right of the Company or obligation of TW Parent
thereunder (including any condition to the obligation of the Company to
consummate the Merger and the other transactions contemplated by the Merger
Agreement) have been waived, other than (x) amendments contemplated by Section
1.01 of the Merger Agreement as in effect on the date hereof and (y) any
amendments and waivers that do not change the consideration to be received in
exchange for Company Capital Stock in the Merger or the exchange ratio therefor
(except to increase the number of shares of TW Parent Common Stock to be issued
in exchange for each share of Company Capital Stock or to provide additional
consideration to all stockholders of the Company that does not affect the
tax-free nature of the transaction) and that, when taken together with all
other amendments and waivers, do not have a material adverse effect on the
value of the consideration to be received in exchange for Company Capital Stock
in the Merger; (ii) R.E. Xxxxxx, III, as a shareholder of the Company, shall
have voted or shall simultaneously be voting all his shares of Company Capital
Stock in favor of the approval of the Merger; (iii) if the Parent Stockholder
Approvals shall have been voted upon, the Parent Stockholder Approvals shall
have been obtained; (iv) no Judgment shall have been entered and be continuing
that restrains or enjoins (preliminarily, temporarily or permanently) LMC
Parent or any Shareholder from voting the Shareholder Shares; and (v) no Change
of Control Event shall have occurred.
(b) While this Agreement is in effect, each Shareholder
agrees that it shall not, and LMC Parent agrees to cause each Shareholder not
to, (i) grant or permit any of its subsidiaries to grant any proxy or other
right with respect to the voting of the Shareholder Shares of such Shareholder
or (ii) transfer or permit any of its subsidiaries to transfer (including by
operation of law in a merger) any of such shares to any person (other than TW
Parent) unless such transferee agrees to be bound with respect to such
transferred shares by this Section 2.1 to the same extent as the transferor was
so bound with respect to such transferred shares and such
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transfer is made in compliance with all applicable requirements of the Stock
Agreements (as defined in Section 3.1(a)).
(c) To the extent that such consent or waiver is
required by the terms of any agreement (any "Relevant Agreement") to which the
Company, TW Parent, Time TBS Holdings, Inc. ("Time-TBS"), Tele-Communications,
Inc. ("TCI"), TCI Communications, Inc. ("TCIC") and/or any of the Shareholders
is a party which relates to the ownership, voting or disposition of any shares
of the capital stock of the Company of any class or series (including the Stock
Agreements), each of TW Parent, Time-TBS, TCI, TCIC and each Shareholder hereby
consents to the execution, delivery and performance of the Support Agreement,
this Agreement, the Additional Agreements, the Merger Agreement and the
Elective Merger Agreement by all parties (and intended parties) to each such
agreement and waives any inconsistent provision of any Relevant Agreement and
any rights or remedies which such party might otherwise have under any Relevant
Agreement or by virtue thereof by reason of such execution, delivery or
performance. Each of TW Parent, Time-TBS, TCI, TCIC, LMC Parent and each
Shareholder confirms and agrees that the execution, delivery and performance of
this Agreement, the Merger Agreement, the Additional Agreements, the Elective
Merger Agreement and the Support Agreement by all parties (and intended
parties) thereto do not and will not conflict with any provision of the Amended
and Restated Articles of Incorporation of the Company and do not and will not
result in the loss of any right, power, privilege, remedy or benefit which any
holder of Class C Preferred Stock otherwise has or might have or in the
reduction, qualification or other modification of any such right, power,
privilege, remedy or benefit; none of them shall make, join in, endorse or
recognize any claim to the contrary, and each of them shall vigorously oppose
any such claim made by any other person.
(d) Nothing contained in this Agreement shall create any
obligation on the part of LMC Parent, any Shareholder or any of LMC Parent's
Affiliates or restrict LMC Parent, any Shareholder or any of LMC Parent's
Affiliates in the exercise and enjoyment of full rights of ownership of shares
of capital stock of the Company, except as expressly provided in this Section
2.1. Without limiting the generality of the immediately preceding sentence, if
the grant or effectiveness of any consent or approval of any Governmental
Entity required in connection with the consummation of the Transactions shall
be conditioned upon the surrender or modification in any significant respect of
any license, franchise or permit held by TCI or any of its Affiliates, the
divestiture or rearrangement of the composition of any assets of TCI or any of
its Affiliates, the holding of any assets of any such person in a trust or
otherwise separate and apart from such person's other assets, limitations on
any such person's freedom of action with respect to future acquisitions of
assets or with respect to any existing or future business or activities or its
enjoyment of the full rights of ownership, possession and use of any asset now
owned or hereafter acquired by such person (including any requirement not to
receive shares of TW Parent Common Stock or Voting Exchange Preferred Stock
pursuant to the Merger Agreement, the Option Agreement, the First Refusal
Agreement or otherwise), or to agree to divest of any such shares, or any
requirement not to receive, or to agree to divest, shares of Voting Exchange
Preferred Stock or Non-Voting Exchange Preferred Stock to be received pursuant
to Section 4.1,
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any change in such person's ownership or in any rights of or arrangements among
its equity holders or any other restrictions, limitations, requirements or
conditions which are or might be burdensome or adverse to any such person
(other than, in any case, the holding of TW Parent Common Stock and other TW
Securities in the voting trust created by, and in accordance with the terms of,
the Voting Trust, the required exchange of TW Parent Common Stock for Voting or
Non-Voting Exchange Preferred Stock, as contemplated by Section 4.1, or
compliance with this Agreement and the Additional Agreements), then nothing in
this Agreement (including Section 2.2) shall be construed as imposing any
obligation or duty on the part of TCI or any of its Affiliates to agree to,
approve or otherwise be bound by or satisfy any such condition. Nothing
contained in this Agreement shall require LMC Parent, any Shareholder or any of
LMC Parent's other Affiliates to terminate or modify the terms of any existing
pledge of any shares of capital stock of the Company held by LMC Parent, such
Shareholder or Affiliate until the Closing.
SECTION 2.2 Reasonable Efforts. Prior to the Termination
Date, TCI and LMC Parent shall, and LMC Parent shall cause each Shareholder to,
and TW Parent shall, use reasonable efforts (a) to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
each other in good faith in doing, all things necessary to obtain, in the most
expeditious manner practicable, all actions or nonactions, waivers, consents
and approvals from Governmental Entities and the making of all necessary
registrations and filings with Governmental Entities, in each case as may be
necessary for the consummation of the Transactions or to avoid any action or
proceeding by any Governmental Entity; and (b) to defend any lawsuits or other
legal proceedings, whether judicial or administrative, challenging the Merger
Agreement, this Agreement, any of the Additional Agreements or the consummation
of the Transactions, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed; provided, however, that nothing in this Section 2.2 shall require
any such person (i) to agree to, approve or otherwise be bound by or satisfy
any condition of any kind referred to in Section 2.1(d), (ii) to agree to enter
into or be bound by any settlement or judgment, or (iii) subject to Section
4.1, to agree to any change to the terms of the Voting Trust (including the
identity of the Trustee), this Agreement or any of the other Additional
Agreements.
SECTION 2.3 Agreement to Abandon. Unless the Elective
Merger has theretofore occurred, TW Parent shall, upon the written request of
LMC Parent, terminate the Merger Agreement and abandon the Merger if:
(a) on the date fixed for the Closing (i) this Agreement,
any Additional Agreement or the Merger Agreement or consummation of the Merger
or any other Transaction shall be illegal, (ii) the consummation of the Merger
or any other Transaction would result in the imposition on the Liberty Parties
of damages or penalties (other than any such damages or penalties arising out
of a breach of this Agreement or any Additional Agreement by LMC Parent or any
of its Affiliates or for which TW Parent has agreed to indemnify LMC Parent and
its Affiliates) or (iii) there shall be pending any suit, action or proceeding
by any Governmental
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Entity in which the relief sought would have any of the effects described in
clause (i) and (ii) above or in Section 2.1(d); or
(b) on the date fixed for the Closing, any consent or
approval of any Governmental Entity required in connection with the
consummation of the Transactions shall be subject to any condition of any kind
referred to in Section 2.1(d) and LMC Parent, any Shareholder or any other
Affiliate of LMC Parent has (without the consent of TCI or LMC Parent) become
bound to comply with such condition; or
(c) at or prior to the Closing, the Rights Agreement, if
still in effect, (i) shall have been amended in any material respect other than
as contemplated by this Agreement or (ii) shall not have been amended in
accordance with the Rights Amendment; or
(d) on or prior to the date fixed for the Closing, a
Change in Control Event shall have occurred or on the Closing Date a Takeover
Proposal shall be pending; or
(e) on the date fixed for the Closing, the condition set
forth in Section 6.03(a) of the Merger Agreement to the Company's obligations
has not been satisfied (determined without regard to the Company's willingness
to waive the failure of such condition); or
(f) any Action shall have been taken by TW Parent or any
of its Controlled Affiliates after the date hereof and prior to the Closing
which if taken after the Effective Time of the Merger would result in a
Prohibited Effect; or
(g) as of the date fixed for the Closing, (i) the
representations and warranties of TW Parent made herein and to be made in each
Additional Agreement to which TW Parent is intended to be a party shall not be
true and correct in all material respects as of such date with the same force
and effect as if then made, or (ii) any signatory hereto (other than TCI, LMC
Parent and the Shareholders) shall be in breach or default in any material
respect of any of its obligations hereunder, or (iii) any party (other than
TCI, LMC Parent or any of their respective Affiliates) to any of the Additional
Agreements then in effect shall be in breach or default in any material respect
of any of its obligations thereunder or any intended party (other than TCI, LMC
Parent or any of their respective Affiliates) to any of the Additional
Agreements shall have failed to execute and deliver to the other parties
thereto any such Additional Agreement or any of the other closing deliveries
contemplated by the Xxxxxx Letter or the Company Letter shall not have been
made; or
(h) as of the date fixed for the Closing, any required
approval by the stockholders of TW Parent of the issuance of the Option
Consideration or of this Agreement, any of the Additional Agreements or the
Transactions has not been obtained.
Notwithstanding anything in this Agreement or any other agreement to the
contrary, if TW Parent notifies LMC Parent within 15 days following the date
hereof that it is unwilling to execute and
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deliver the Option Agreement, then TW Parent shall have no obligation to do so,
provided that in such event LMC Parent shall have the right to elect, within
five business days of such notice, not to consummate all (but not less than
all) of the transactions contemplated by this Agreement and the Additional
Agreements, without any further liability on the part of any party hereunder or
thereunder, and in such event TW Parent shall terminate the Merger Agreement
and abandon the Merger.
SECTION 2.4 Closing Deliveries. At the Closing, TW
Parent, LMC Parent and the Shareholders shall (and shall cause their respective
Affiliates which are named as parties in the Additional Agreements to) execute
and deliver to the other parties thereto each Additional Agreement to which he
or it is intended to be a party or, in the case of the Program Service
Agreement and any other Additional Agreement entered into prior to the Closing,
deliver an officer's certificate signed by its president or a senior vice
president confirming that such Additional Agreement is effective in accordance
with its terms and such party is in compliance with its obligations thereunder
in all material respects. Immediately following the Effective Time of the
Merger, TW Parent shall deliver to LMC Parent, or to LMC Parent's designee
(which shall be a wholly-owned subsidiary of LMC Parent) the Option
Consideration. LMC Parent and TW Parent shall each deliver to the other at the
Closing, an officer's certificate signed by its president or a senior vice
president to the effect that the representations and warranties set forth in
Section 3.1 and Section 3.2, respectively, are true in all material respects on
and as of the Closing Date with the same force and effect as if then made.
SECTION 2.5 Dissenters' Rights. None of the Shareholders
shall, nor shall LMC Parent permit any Shareholder to, give notice pursuant to
Section 1321 of the Georgia BCC of such Shareholder's intent to demand payment
for any shares of Company Capital Stock, or take any other action to exercise
dissenters' rights under Article 13 of the Georgia BCC, if the Merger is
effectuated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of LMC Parent
and the Shareholders. Each Shareholder represents and warrants to TW Parent,
as to itself, and LMC Parent represents and warrants to TW Parent as to itself
and as to each Shareholder, that (assuming that the consents, waivers and
agreements given and made by TW Parent and Time-TBS pursuant to Section 2.1(c)
and by the Company in the Company Letter and by R.E. Xxxxxx, III in the Xxxxxx
Letter are valid and effective for the intended purposes):
(a) Each Shareholder is as of the date hereof the record and
beneficial owner of the Shareholder Shares set forth opposite the name of such
Shareholder on Schedule I hereto, such Shareholder has the right to vote such
Shareholder Shares in the manner provided in Section 2.1(a), and such
Shareholder Shares constitute all of the shares of capital stock of the Company
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owned of record or beneficially by such Shareholder. The Shareholder Shares
constitute all shares of capital stock of the Company beneficially owned by
TCI, other than the Excluded Shares (as defined in Section 4.1). None of the
Shareholder Shares owned by any Shareholder is subject to any proxy, voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shareholder Shares which is inconsistent with the agreement of such
Shareholder pursuant to Section 2.1 hereof, other than the Stock Agreements.
The "Stock Agreements" means (a) the Investors Agreement dated as of June 3,
1987, among the Company and the original holders of the Class C Preferred
Stock; (b) the Shareholders' Agreement dated as of June 3, 1987, as amended by
the First Amendment dated as of April 15, 1988, among the Company, R.E. Xxxxxx,
III, and the original holders of the Class C Preferred Stock; (c) the Voting
Agreement dated as of June 3, 1987, among certain holders of Class C Preferred
Stock and (d) the Agreement dated as of June 3, 1987 among TW Parent, certain
of the Shareholders and certain other holders of Class C Preferred Stock
affiliated with TW Parent and/or LMC Parent. To the knowledge of TCI and LMC
Parent, none of TCI, LMC Parent or any of their respective Affiliates are party
to any agreement with the Company, any of the Company's Affiliates, TW Parent
or any of TW Parent's Affiliates that would require the consent, waiver or
approval of or by TCI, LMC Parent or any of their respective Affiliates of the
Merger or for the consummation of any of the Transactions, or the execution,
delivery or performance of the Merger Agreement, this Agreement or the
Additional Agreements, other than the Stock Agreements.
(b) LMC Parent and the Shareholders each have the
requisite corporate power and authority to enter into this Agreement and each
of the Additional Agreements to which it is contemplated to be a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and each of such Additional Agreements by LMC Parent
and the Shareholders and the consummation by them of the Transactions have been
duly authorized by all necessary corporate action. This Agreement has been,
and when delivered at or prior to the Closing of the Merger each of such
Additional Agreements will have been, duly executed and delivered by LMC
Parent, the Shareholders and the applicable Affiliates of LMC Parent named as
parties thereto (each, an "Applicable LMC Affiliate") and constitutes, or in
the case of such Additional Agreements will as of the Closing constitute, a
valid and binding obligation of each such party, enforceable against each such
party in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies). The execution and delivery of this
Agreement and each of the Additional Agreements to which it is contemplated to
be a party by LMC Parent and each Applicable LMC Affiliate do not, and the
performance by them of their respective obligations hereunder and thereunder
and the consummation of the Transactions 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 the loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of LMC Parent or any
Applicable LMC Affiliate under, (i) the Certificate of Incorporation or By-laws
of LMC Parent or the comparable organizational documents of any
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Applicable LMC Affiliate, (ii) any Contract to which LMC Parent or any
Applicable LMC Affiliate is a party or by which any of them or their respective
properties or assets are bound, or (iii) subject to the governmental filings
and other matters referred to in Sections 3.01(d) and 3.02(d) of the Merger
Agreement and in the following sentence, any Requirement of Law applicable to
LMC Parent or any Applicable LMC Affiliate or their respective properties or
assets, other than the Horizontal Rule as to which no representation is being
made, and 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) prevent LMC Parent or any Applicable LMC Affiliate from
performing its obligations under this Agreement or any applicable Additional
Agreement in any material respect or (y) prevent or delay in any material
respect the consummation of any of the Transactions. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to LMC Parent or any
Applicable LMC Affiliate in connection with the execution and delivery of this
Agreement or any applicable Additional Agreement by them or the consummation by
them of the Transactions, except for (i) filings under the HSR Act, (ii) such
filings with, and orders of, the FCC as may be required under the
Communications Laws in connection with the Transactions and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the Transactions or prevent LMC
Parent or any Applicable LMC Affiliate from performing its obligations under
this Agreement or any applicable Additional Agreement in any material respect.
(c) Except as disclosed on Schedule 3.1, as of the date
of this Agreement, there is no suit, action or proceeding (including any
proceeding by or before the FCC) pending or, to the knowledge of LMC Parent and
TCI, threatened against or affecting LMC Parent or any of its Affiliates (and
LMC Parent and TCI are not aware of any basis for any such suit, action or
proceeding) that, individually or in the aggregate, could reasonably be
expected to (i) prevent LMC Parent or any Applicable LMC Affiliate from
performing its obligations under this Agreement or any applicable Additional
Agreement in any material respect or (ii) prevent or delay in any material
respect the consummation of the Merger or any of the other Transactions. As of
the date of this Agreement, and other than the Horizontal Rule, neither LMC
Parent nor any Applicable LMC Affiliate is aware of any current or formally
proposed Communications Law that would prevent any Shareholder from receiving,
or would require any Shareholder to divest all or any part of, the TW Parent
Common Stock issuable to such Shareholder in connection with the Merger
(assuming no exchange of such TW Parent Common Stock pursuant to Section 4.1).
(d) 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 based upon
arrangements made by or on behalf of LMC Parent or any Shareholder.
SECTION 3.2 Representations and Warranties of TW Parent.
TW Parent represents and warrants to LMC Parent and each Shareholder that
(assuming that the consents,
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waivers and agreements given and made by TCI, LMC Parent and the Shareholders
pursuant to Section 2.1(c) and by the Company in the Company Letter and by R.E.
Xxxxxx, III in the Xxxxxx Letter are valid and effective for the intended
purposes):
(a) TW Parent has delivered to LMC Parent complete and
correct copies of its Restated Certificate of Incorporation, By-laws and the
Rights Agreement and of the certificates of incorporation and by-laws or
comparable organizational documents of the Material Parent Subsidiaries, in
each case as amended to the date of this Agreement. As of the date hereof, no
amendments to the Rights Agreement have been authorized, approved or adopted
and there is no commitment, arrangement or understanding by TW Parent to effect
any amendment other than the Rights Amendment. All shares of Voting Exchange
Preferred Stock and Non-Voting Exchange Preferred Stock which may be issued
pursuant to Sections 4.1 or 4.2 of this Agreement or pursuant to the Option
Agreement will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
(b) TW Parent has all requisite corporate power and
authority to enter into this Agreement and each of the Additional Agreements to
which it is contemplated to be a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each such Additional Agreement by TW Parent and the consummation by it of
the Transactions have been duly authorized by all necessary corporate action
subject to the Parent Stockholder Approvals. This Agreement has been, and when
delivered at or prior to the Closing each of such Additional Agreements will
have been, duly executed and delivered by TW Parent and the applicable
Affiliates of TW Parent named as parties thereto (if any) (each, an "Applicable
TW Affiliate") and constitutes, or in the case of such Additional Agreements
will as of the Closing of the Merger constitute, a valid and binding obligation
of each such party, enforceable against each such party in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Except as otherwise set forth in the Merger Agreement or in the
Parent Disclosure Letter, the execution and delivery of this Agreement and each
of the Additional Agreements to which it is contemplated to be a party by TW
Parent and each Applicable TW Affiliate and the consummation by them of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof 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
the loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of TW Parent or any Parent Subsidiary
under, (i) the Restated Certificate of Incorporation or By-laws of TW Parent or
the comparable organizational documents of any Parent Subsidiary, (ii) any
Contract to which TW Parent or any Parent Subsidiary is a party or by which any
of them or their respective properties or assets are bound, other than the
Stock Agreements as to which no representation is being made or (iii) subject
to the governmental filings and other matters referred to in Sections 3.01(d)
and 3.02(d) of the Merger Agreement and in the following sentence, any
Requirement of Law applicable to TW Parent or any Parent Subsidiary or their
respective properties or assets, other
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than the Horizontal Rule as to which no representation is being made, and 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 TW Parent or any Applicable
TW Affiliate from performing its obligations under this Agreement or any
applicable Additional Agreement in any material respect or (z) prevent or delay
in any material respect the consummation of any of the Transactions. Except as
otherwise set forth in the Merger Agreement or in the Parent Disclosure Letter,
no consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to TW
Parent or any Applicable TW Affiliate in connection with the execution and
delivery of this Agreement or any applicable Additional Agreement by TW Parent
or any Applicable TW Affiliate or the consummation by TW Parent or any
Applicable TW Affiliate, as the case may be, of any of the Transactions, except
for (i) filings under the HSR Act, (ii) such filings with, and orders of, the
FCC as may be required under the Communications Laws in connection with the
Transactions, (iii) approvals of cable franchising authorities and (iv) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the Transactions or otherwise
prevent TW Parent or any Applicable TW Affiliate from performing its
obligations under this Agreement or any applicable Additional Agreement in any
material respect or have, individually or in the aggregate, a Parent Material
Adverse Effect. To the knowledge of TW Parent, none of TW Parent or any of its
Affiliates are party to any agreement with the Company, any of the Company's
Affiliates, TCI or any of TCI's Affiliates that would require the consent,
waiver or approval of or by TW Parent or any of its Affiliates of the Merger or
for the consummation of any of the Transactions, or the execution, delivery or
performance of the Merger Agreement, this Agreement or the Additional
Agreements, other than the Stock Agreements.
(c) Except as disclosed in the Parent Disclosure Letter,
as of the date of this Agreement, there is no suit, action or proceeding
(including any proceeding by or before the FCC) pending or, to the knowledge of
TW Parent, threatened against or affecting TW Parent or any its Affiliates (and
TW 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)
prevent TW Parent or any Applicable TW Affiliate from performing its
obligations under this Agreement or any applicable Additional Agreement in any
material respect, or (ii) prevent or delay in any material respect the
consummation of the Merger or any of the other Transactions.
(d) As of the date of this Agreement, and other than the
Horizontal Rule, TW Parent is not aware of any current or formally proposed
Communications Law that would prevent any Shareholder from receiving, or would
require any Shareholder to divest all or any part of, the TW Parent Common
Stock issuable to such Shareholder in connection with the Merger (assuming no
exchange of such TW Parent Common Stock pursuant to Section 4.1).
(e) No broker, investment banker, financial advisor or
other person, other than Xxxxxx Xxxxxxx & Co Incorporated, the fees and
expenses of which will be paid by TW Parent,
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is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of TW Parent.
ARTICLE IV
CERTAIN POST-CLOSING COVENANTS
SECTION 4.1 Voting Trust; Share Exchange. Immediately
following the Effective Time of the Merger or the Elective Merger (and subject
to the third sentence of this Section), each Shareholder shall cause all of its
Covered TW Securities that consist of shares of TW Parent Common Stock to be
delivered to TW Parent for exchange into, and TW Parent shall issue in exchange
therefor, shares of Voting Exchange Preferred Stock. Each Shareholder shall
deposit the shares of Voting Exchanged Preferred Stock received for such
Covered TW Securities with the Trustee under the Voting Trust and take such
other action as may be required of it pursuant to the Voting Trust.
Notwithstanding the foregoing, if the FCC conditions its required consent or
approval in connection with the Merger upon any changes to the terms of the
Voting Trust or the identity of the Trustee thereunder, or does not accept that
the Voting Trust, without such changes, would be sufficient to preclude the
Liberty Parties from having an attributable interest in the assets and
businesses of TW Parent, and LMC Parent is unwilling to agree to such changes,
then at the request of either TW Parent or LMC Parent, in lieu of entering into
the Voting Trust, each Shareholder will cause to be delivered to TW Parent all
such Covered TW Securities for exchange into, and TW Parent shall issue in
exchange therefor, shares of Non-Voting Exchange Preferred Stock. The rate of
any exchange pursuant to the foregoing provisions of this Section 4.1 shall be
1,000 shares of TW Parent Common Stock for each whole share of Voting Exchange
Preferred Stock or Non-Voting Exchange Preferred Stock (and fractional shares
of Voting or Non-Voting Exchange Preferred Stock, as the case may be, will be
issued to each Shareholder for the balance of its shares of TW Parent Common
Stock). An exchange for Voting Exchange Preferred Stock or Non-Voting Exchange
Preferred Stock shall be effected through a direction from each Shareholder to
the Exchange Agent to register all of the shares of TW Common Stock issuable to
such Shareholder in the Merger in the name of, and to deliver the appropriate
certificates to, TW Parent and, upon receipt by TW Parent of such certificates,
the issuance and delivery by TW Parent to each Shareholder of the appropriate
number of shares of Voting Exchange Preferred Stock or Non-Voting Exchange
Preferred Stock, as the case may be. All shares of Voting Exchange Preferred
Stock and Non-Voting Exchange Preferred Stock delivered to the Liberty Parties
shall be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. If any shares of Voting Exchange Preferred Stock are
deposited under the Voting Trust, then until the Voting Trust shall have
terminated in accordance with its terms (and irrespective of the termination of
any other provision of this Agreement), all voting securities of TW Parent from
time to time owned beneficially or of record by LMC Parent or any of its
Controlled Affiliates shall be deposited with the Trustee under the Voting
Trust and, for so long as LMC Parent is a Controlled Affiliate of TCI, all
voting securities of TW Parent owned beneficially or of record by TCI or any of
its Controlled Affiliates, other
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than the shares (the "Excluded Shares") described in the letter from Xxxxx &
Xxxxx, L.L.P., counsel to TCI, to Xxxxx Xxxx, Esq., General Counsel of TW
Parent, dated the date hereof, shall be deposited with the Trustee unless TCI
has made alternative arrangements for the voting of such shares that are
satisfactory to the FCC. If the Voting Trust is terminated prior to the
expiration of the Restriction Period, LMC Parent shall as promptly as
practicable notify TW Parent of such termination in writing and shall cause to
be delivered to TW Parent all TW Parent Common Stock and Voting Exchange
Preferred Stock distributed to the Liberty Parties from the trust, for exchange
for Non-Voting Exchange Preferred Stock. For so long prior to the expiration
of the Restriction Period as the Liberty Parties hold any Non-Voting Exchange
Preferred Stock, then until the expiration of the Restriction Period all of the
TW Parent Common Stock and Voting Exchange Preferred Stock from time to time
owned beneficially or of record by LMC Parent or any of its Controlled
Affiliates shall be delivered to TW Parent for exchange for Non-Voting Exchange
Preferred Stock and for so long as LMC Parent is a Controlled Affiliate of TCI
all TW Parent Common Stock and Voting Exchange Preferred Stock owned
beneficially or of record by TCI or any of its Controlled Affiliates (other
than any Excluded Shares) shall also be delivered to TW Parent for exchange for
Non-Voting Exchange Preferred Stock. TW Parent shall issue, in exchange for
the TW Parent Common Stock delivered to it pursuant to the two immediately
preceding sentences, a number of shares of Non-Voting Exchange Preferred Stock
equal to (i) the number of shares of TW Parent Common Stock so delivered
divided by (ii) the Formula Number then in effect pursuant to the terms of the
Non-Voting Exchange Preferred Stock, and, in exchange for each share of Voting
Exchange Preferred Stock delivered to it at any time pursuant to the two
immediately preceding sentences, one share of Non-Voting Exchanged Preferred
Stock.
SECTION 4.2 No Redemption.
The Voting Exchange Preferred Stock and the Non-Voting
Exchange Preferred Stock shall not be redeemable at the option of TW Parent,
including pursuant to Section 5 of Article IV of its Restated Certificate of
Incorporation, as amended, as in effect on the date hereof (or any equivalent
provision in any further amendment to or restatement of TW Parent's Restated
Certificate of Incorporation) ("TW Article IV"). TW Parent further agrees that
it shall not exercise any right pursuant to TW Article IV to require the
redemption from any Liberty Party of any of its shares of TW Common Stock
unless it has first given at least 10 business days prior written notice of
such redemption to each Liberty Party (which notice shall state that TW Parent
intends to effect the redemption of shares of TW Common Stock by such Liberty
Party, the number of shares to be redeemed and the proposed redemption date (in
addition to any other information required by TW Article IV)), and each Liberty
Party shall have the right at any time prior to the redemption date to exchange
the shares to be redeemed for a number of shares of Voting Exchange Preferred
Stock that are convertible into the same number of shares of TW Parent Common
Stock so called for redemption.
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SECTION 4.3 Certain Post-Closing Compensation Obligations.
(a) If, after the Effective Time of the Merger and during
the Restriction Period,
(i) any Action shall be taken by TW Parent or any
of its Controlled Affiliates (including, after the Effective
Time, the Company and its Controlled Affiliates) which has a
Prohibited Effect under any Specified Law then in effect
(including any Specified Law the effectiveness of which has
been stayed if such stay is subsequently lifted) or then
formally proposed or promulgated with a delayed effective date
if such Specified Law becomes effective thereafter, and
(ii) such Prohibited Effect did not exist prior to
the taking of such Action and did not result from any breach
of this Agreement by LMC Parent or any Applicable LMC
Affiliate or any breach by them of the Voting Trust,
then, in any such case, the provisions of this Section 4.3 shall apply.
(b) As promptly as practicable after obtaining actual
knowledge that TW Parent intends to take an Action and that such Action will
likely result in a Prohibited Effect, LMC Parent shall notify TW Parent
thereof. If such notice is received by TW Parent prior to the taking of the
referenced Action, then either TW Parent and its Controlled Affiliates shall
not take such Action or if the Action is taken and a Prohibited Effect
described in Section 4.3(a) occurs, TW Parent shall be obligated to compensate
the Liberty Parties pursuant to this Section 4.3.
(c) As promptly as practicable after obtaining actual
knowledge that a Prohibited Effect has occurred or will likely occur (other
than a Prohibited Effect with respect to which notice has been given under
Section 4.3(b)), LMC Parent shall notify TW Parent thereof. Following the
giving of such notice, LMC Parent shall at TW Parent's request consult with TW
Parent as to such Prohibited Effect and its causes and discuss in good faith
the actions that either party might take to avoid or cure such Prohibited
Effect. If LMC Parent and TW Parent agree that certain actions can be taken by
TW Parent and its Controlled Affiliates to cure or avoid the Prohibited Effect,
then TW Parent and its Controlled Affiliates shall either take such actions or
become obligated to compensate the Liberty Parties pursuant to this Section 4.3
if a Prohibited Effect described in Section 4.3(a) occurs; provided, however,
that if LMC Parent and TW Parent also agree that certain actions could be taken
by LMC Parent and its Controlled Affiliates to eliminate the Prohibited Effect
which would be substantially less burdensome to LMC Parent and its Controlled
Affiliates than the actions that TW Parent and its Controlled Affiliates would
be required to take in order to cure the Prohibited Effect would be to TW
Parent and its Controlled Affiliates and the costs to effect such actions would
be substantially less than the cost to compensate the Liberty Parties pursuant
to this Section 4.3, then subject to the following sentence the Liberty Parties
shall, at TW Parent's expense, use reasonable efforts to take such actions.
Notwithstanding the foregoing, unless such Liberty Party otherwise agrees, no
Liberty Party shall be required to dispose of any of its TW Securities (other
than by way of
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exchange of TW Securities held pursuant to the Voting Trust for Non-Voting
Exchange Preferred Stock), to dispose of any assets or discontinue any business
or investments that LMC Parent determines in good faith are material to the
Liberty Parties or their respective strategic objectives, or to agree to any
restrictions or limitations that LMC Parent deems significant on the future
operation of its business.
(d) If the Prohibited Effect cannot be cured or avoided,
or for any reason (including the failure of the parties to agree upon any
course of action or alternative courses of action that would cure or avoid the
Prohibited Effect or the relative burdens thereof) has not been cured or
avoided (x) within 60 days after notice has been given to TW Parent pursuant to
this Section 4.3 (unless prior to the expiration of such 60-day period, TW
Parent or the Liberty Parties, as agreed by TW Parent and LMC Parent, have
commenced an agreed upon course of action to cure such Prohibited Effect and
such cure is effected within an agreed period of time thereafter), or (y) if
earlier, by such date as any Liberty Party would be required by any
Governmental Entity or pursuant to any Judgment against it or its properties to
divest of any TW Securities or suffer any consequences of the kind enumerated
in clauses (b) through (d) of the definition of Prohibited Effect, then in any
such event TW Parent shall be obligated to compensate the Liberty Parties
pursuant to this Section 4.3.
(e) If TW Parent becomes obligated to compensate the
Liberty Parties pursuant to this Section 4.3, then TW Parent shall be required
to (i) compensate any Liberty Party that disposes of Covered TW Securities to
the extent required by or to the extent necessary to avoid the applicable
Prohibited Effect and (ii) if the aggregate number of Covered TW Securities
disposed of by the Liberty Parties pursuant to clause (i) above equals or
exceeds (on an as converted basis, if applicable) 5% of the number of Covered
TW Securities of all Shareholders immediately after the Effective Time of the
Merger or the Elective Merger (including the Option Consideration) (as such
number shall be appropriately adjusted from time to time to take into account
the occurrence of any stock dividends, splits, reverse splits, combinations and
the like), then, at the option of LMC Parent (exercised by notice in writing to
TW Parent within 60 days of the first disposition pursuant to clause (i)
above), compensate all Liberty Parties for the disposition of all the Covered
TW Securities if all TW Securities of all Liberty Parties are disposed of
within 12 months of such notice. If TW Parent becomes obligated to compensate
any Liberty Party pursuant to this Section 4.3, then such Liberty Party, if it
desires to assert a claim for compensation hereunder, shall provide to TW
Parent a statement, certified by independent public accountants of national
standing, setting forth the estimated Blended Rate for the taxable year in
which the disposition occurred and the estimated Adjustment Amount owed to such
Liberty Party with respect to its TW Securities so disposed of. Within 30 days
after delivery of such statement, TW Parent shall pay to such Liberty Party the
estimated Adjustment Amount by wire transfer of immediately available funds to
such account and in accordance with such instructions as such Liberty Party
shall have previously advised TW Parent in writing. Within 30 days after the
end of the taxable year in which the disposition of TW Securities by such
Liberty Party occurred, such Liberty Party shall provide to TW Parent a
statement, certified by independent public accountants of national standing,
setting forth the actual Blended Rate for
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such taxable year and the actual Adjustment Amount owed to such Liberty Party.
Within five days after delivery of such statement, (i) TW Parent shall pay to
Liberty Party an amount equal to the amount by which the Adjustment Amount
exceeds the estimated Adjustment Amount, or (ii) such Liberty Party shall pay
to TW Parent an amount equal to the amount by which the estimated Adjustment
Amount exceeds the Adjustment Amount. Any such payment shall be made by wire
transfer of immediately available funds to such account and in accordance with
such instructions as such payee shall have previously advised such payor in
writing.
(f) LMC Parent shall upon request from time to time
advise TW Parent of the identity of each Liberty Party.
(g) LMC Parent shall promptly notify TW Parent in writing
of (i) any acquisition of "Beneficial Ownership" of "Common Shares" by any of
its "Affiliates" or Associates", and (ii) any "Person" who has "Beneficial
Ownership" of any "Common Shares" becoming its "Affiliate" or "Associate", in
each case promptly following LMC Parent's obtaining actual knowledge of such
occurrence. Terms used in this Section 4.3(g) in quotation marks have the
meanings given such terms in the Rights Agreement, as amended by the Rights
Amendment and as the same may be further amended to the actual knowledge of LMC
Parent from time to time.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 5.2 Specific Performance. Each of LMC Parent and
the Shareholders, on the one hand, and TW Parent, on the other hand, agrees
that the other parties would be irreparably damaged if for any reason such
party fails to perform any of such party's obligations under this Agreement,
and that the other parties would not have an adequate remedy at law for money
damages in such event. Accordingly, any of the other parties shall be entitled
to seek specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by such party. This provision is
without prejudice to any other rights the parties may have against each other
for any failure to perform their respective obligations under this Agreement.
SECTION 5.3 Amendments; Termination. 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
representations, warranties, covenants and agreements set forth herein shall
terminate, except with respect to liability for prior breaches thereof, upon
the first to occur of (x) December 31, 1996, if the Effective Time of the
Merger has not occurred on or prior to such date unless the Elective Merger has
theretofore been
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consummated, (y) the termination of the Merger Agreement in accordance with its
terms or the abandonment thereof by TW Parent if required pursuant to Section
2.3 hereof unless the Elective Merger has theretofore been consummated and (z)
LMC Parent having timely made the election not to consummate the Transactions
pursuant to Section 2.3 (the "Termination Date"). The representations,
warranties, covenants and agreements set forth herein (other than in Article
II) shall survive the Effective Time of the Merger (and, if applicable, the
Elective Merger).
SECTION 5.4 Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; provided,
however, that a party may not assign, delegate or otherwise transfer any of
such party's rights or obligations under this Agreement without the consent of
the other parties hereto and any purported assignment, delegation or transfer
without such consent shall be null and void. Each Liberty Party from time to
time, provided that it is a Liberty Party as of the relevant time, shall be an
intended third party beneficiary of the covenants of TW Parent contained in
Article IV.
SECTION 5.5 Entire Agreement. This Agreement (including
Exhibits and Schedules), the TW/LMC Letter Agreement and the Elective Merger
Agreement contemplated thereby, together with the Stock Agreements, constitute
the entire agreement among the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
SECTION 5.6 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 TW Parent, to it at:
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to LMC Parent or any Shareholder, to it at:
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy (which shall not constitute notice) to
each of:
Xxxxxxx X. Xxxxx, Esq.
General Counsel
Tele-Communications, Inc.
Terrace Tower II
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Xxxxx & Xxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
SECTION 5.7 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware.
SECTION 5.8 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.
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SECTION 5.9 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 5.10 Severability. Whenever possible, each
provision or portion of any provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law but if any
provision or portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein. The parties shall endeavor in good-faith
negotiations to replace any invalid, illegal or unenforceable provision with a
valid provision the effects of which come as close as possible to those of such
invalid, illegal or unenforceable provisions.
SECTION 5.11 Attorney's 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 attorney's fees, costs and
necessary disbursements, in addition to any other relief to which such party
may be entitled.
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IN WITNESS WHEREOF, TW Parent, LMC Parent and the
Shareholders have caused this Agreement to be duly executed as of the day and
year first above written.
TIME WARNER INC.
By:
----------------------------------------------------
Name:
Title:
With respect to LIBERTY MEDIA CORPORATION
Sections 2.1(c), 2.2, 3.1(c) and 4.1 only:
TELE-COMMUNICATIONS, INC. By:
----------------------------------------------------
Name:
Title:
By:
-----------------------------------------------------
Name:
Title:
With respect to SUBSIDIARIES OF LMC PARENT:
Section 2.1(c) only:
TCI XXXXXX PREFERRED, INC.
TCI COMMUNICATIONS, INC.
By: By:
----------------------------------------------------- ------------------------------------
Name: Name:
Title: Title:
TIME TBS HOLDINGS, INC. COMMUNICATIONS CAPITAL CORP.
By:
-----------------------------------------------------
Name: By:
Title: ----------------------------------------------------
Name:
Title:
UNITED CABLE XXXXXX INVESTMENT INC.
By:
----------------------------------------------------
Name:
Title:
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