RIGHTS AGREEMENT dated as of
October 10, 1996, between TW INC., a
Delaware corporation, which will be
renamed "Time Warner Inc." (the
"Company"), and CHASEMELLON SHAREHOLDER
SERVICES L.L.C., as Rights Agent (the
"Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one Right (as hereinafter defined) for each
share of Common Stock, par value $.01 per share, of the Company (the
"Common Stock") outstanding at the Close of Business (as hereinafter
defined) on the date hereof (the "Record Date"), and has authorized
the issuance of one Right (as such number may hereafter be adjusted
pursuant to the provisions of this Rights Agreement) with respect to
each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption
Date or the Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date
and prior to the earlier of the Redemption Date or the Expiration Date
in accordance with the provisions of Section 23. Each Right shall
initially represent the right to purchase one one-thousandths
(1/1,000ths) of a share of Series A Participating Cumulative Preferred
Stock, par value $.10 per share, of the Company (the "Preferred
Shares"), having the powers, rights and preferences set forth in the
Certificate of Designation attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall after the date hereof mean, as of
any time, any Person who or which, alone or together with all
Affiliates and Associates of such Person, shall be the Beneficial
Owner of more than 15% of the Common Shares outstanding as of such
time, other than (a) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any of its Subsidiaries, or
any Person holding Common Shares for or pursuant to the terms of
any such employee benefit plan, or (b) any Person who or which, alone
or together with one or more of its Affiliates or Associates, becomes
or became the Beneficial Owner of more than 15% of the Common Shares
outstanding as of such time pursuant to a Qualifying Offer.
Notwithstanding the foregoing, the term "Acquiring Person" shall not
include any Person who or which as of any time becomes the Beneficial
Owner of more than 15% of the Common Shares outstanding as of such
time (i) solely as the result of a change in the number of Common
Shares outstanding since the most recent preceding date on which such
Person acquired Beneficial Ownership of any Common Shares or (ii)
solely as the result of the acquisition by such Person or one or more
of its Affiliates or Associates of Beneficial Ownership of additional
Common Shares if such acquisition was made in the good faith belief
that such acquisition would not cause either the number of Common
Shares beneficially owned by such Person, together with its Affiliates
and Associates, to exceed 15% of the Common Shares outstanding at the
time of such acquisition or otherwise cause a Distribution Date or the
adjustment provided in Section 11(a) to occur and such good faith
belief was based on the good faith reliance on information contained
in publicly filed reports or documents of the Company which were
inaccurate or out-of-date or (iii) solely as the result of the
acquisition of beneficial ownership of any Common Shares by any of
such Person's Affiliates or Associates who or which are not Controlled
Related Parties of such Person or (iv) solely as the result of any
transaction or event pursuant to which any Person who or which
beneficially owns any Common Shares and was not previously an
Affiliate or Associate of such Person becomes an Affiliate or
Associate of such Person or (v) solely as the result of the
acquisition by such Person or one or more of its Affiliates or
Associates of Beneficial Ownership of additional Common Shares if such
acquisition was made in the good faith belief that such acquisition
would not cause the number of Common Shares beneficially owned by such
Person, together with its Affiliates and Associates, to exceed 15% of
the Common Shares outstanding at the time of such acquisition or
otherwise cause a Distribution Date or the adjustment provided in
Section 11(a) to occur and such good faith belief was based on the
good faith reliance on inaccurate or out-of-date information
concerning the number of Common Shares beneficially owned by any
Affiliates or Associates of such Person who or which are not
Controlled Related Parties of such Person; provided, however, that in
the case of any of clauses (i) through (v), the percentage of the
Common Shares outstanding represented by the number
of Common Shares beneficially owned by such Person is reduced to 15%
or less within the applicable cure period. For purposes of the
immediately preceding sentence, the "applicable cure period" shall be
the period commencing on (and including) the date that such Person
becomes aware that the number of Common Shares beneficially owned by
such Person exceeds 15% of the Common Shares outstanding (except that
if such Person has separately agreed in writing with the Company to
notify the Company once such Person becomes aware of such fact, the
cure period shall commence on (and include) the date of receipt by
such Person of written notice from the Company that the number of
Common Shares beneficially owned by such Person exceeds, as of the
date such notice is given, 15% of the Common Shares outstanding as of
such date) and ending upon the Close of Business on (i) the fifth
Business Day after such date in the case of any Person described in
clause (i) or (ii) of the immediately preceding sentence or (ii) the
tenth Business Day after such date in the case of any Person described
in clause (iii), (iv) or (v) of the immediately preceding sentence;
provided, however, that if such reduction would require the
disposition by such Person or any of its Affiliates or Associates of
any Common Shares and such Person notifies the Company in writing
that, in such Person's good faith belief, such disposition within such
period could not reasonably be accomplished without violation of
applicable law or could reasonably be accomplished only for
consideration or on terms materially disadvantageous as compared to
the consideration or terms on which such disposition could be
accomplished during some longer period of time, then such period shall
be extended for such time as the directors of the Company whose
approval would be required to redeem the Rights under Section 24 shall
reasonably deem to be required in order to prevent such violation of
applicable law or shall reasonably deem to be sufficient to minimize
such disadvantageous effect (as the case may be), subject to the
condition that such Person shall during the cure period, as extended
(or until such earlier time at which such Person, together with its
Affiliates and Associates, otherwise ceases to beneficially own more
than 15% of the outstanding Common Shares), diligently and in good
faith proceed to effect the required disposition as expeditiously as
reasonably practicable and comply with any arrangements regarding the
voting of a number of Common Shares beneficially owned by such Person,
together with its Affiliates and Associates, equal to the number so
required to be disposed of pending completion of such disposition as
such directors of the Company shall
request (including arrangements not to vote such number of Common
Shares or only to vote such number of Common Shares in a manner
approved by such directors of the Company). For purposes of this
definition, the determination of whether any Person (other than a
director of the Company, in his or her capacity as a director of the
Company) acted in "good faith" shall be conclusively determined in
good faith by those directors of the Company whose approval would be
required to redeem the Rights under Section 24.
"Affiliate" and "Associate", when used with reference to any
Person, shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", and shall be deemed to have
"Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has: (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (written
or oral), or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
under this clause (A) to be the Beneficial Owner of, or to
beneficially own, or to have Beneficial Ownership of, any
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange thereunder; or (B) the right to vote
pursuant to any agreement, arrangement or understanding (written
or oral); provided, however, that a Person shall not be deemed
under this clause (B) to be the Beneficial Owner of, or to
beneficially own, any security if (1) the agreement, arrangement
or understanding (written or oral) to vote such security arises
solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2)
the beneficial ownership of such security is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding (written or oral) for the purpose of acquiring,
holding, voting or disposing of any Common Shares, any other
securities of the Company generally entitled to vote together
with the Common Shares or any rights, warrants, options or other
securities exercisable or exchangeable for, or convertible into,
Common Shares or other securities of the Company generally
entitled to vote together with the Common Shares.
A Person shall also be deemed to be the "Beneficial Owner"
of, and to "beneficially own", and to have "Beneficial Ownership" of,
Common Shares of the Company if such Person is the Beneficial Owner
of, or beneficially owns, or has Beneficial Ownership of (as the case
may be), any other securities of the Company (whether or not
convertible into or exchangeable for Common Shares) generally entitled
to vote together with the Common Shares. If the preceding sentence is
applicable in any case, such Person shall be deemed by virtue of
Beneficial Ownership of such other securities to be the "Beneficial
Owner" of, and to "beneficially own", and to have "Beneficial
Ownership" of, that number of Common Shares of the Company equal to
the greater of (x) the number of votes entitled to be cast in respect
of such other securities upon any matter being voted upon by the
holders of Common Shares and the holders of such other securities,
voting together as a single class, and (y) if applicable, the number
of Common Shares of the Company issuable upon conversion in full into,
or exchange in full for, Common Shares of the Company of such other
securities.
In the event any Common Shares are subject to a voting trust
approved by the directors of the Company whose approval would be
required to redeem the Rights under Section 24, then (x) the trustee
or trustees under such voting trust shall be deemed not to be the
"Beneficial
Owner" of any such Common Shares and (y) each beneficiary of such
voting trust shall be deemed to be the "Beneficial Owner" of all such
Common Shares.
Notwithstanding the foregoing, (a) no Person ordinarily engaged in
business as an underwriter of securities shall be deemed to be the
"Beneficial Owner" of, to "beneficially own", or to have any
"Beneficial Ownership" of, any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the
Company; and (b) no Person shall be deemed to be the "Beneficial
Owner" of, to "beneficially own", or to have any "Beneficial
Ownership" of, any securities by reason of such Person or any of such
Person's Affiliates or Associates having the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) such securities pursuant to a right of first refusal, right of
first offer or similar agreement, arrangement or understanding
(written or oral) granted by another Person (the "subject Person") (I)
that does not provide any direct or indirect limitations or
restrictions on the ability of the subject Person to exercise (or
refrain from exercising) any voting rights associated with such
securities or contain any other agreement, arrangement or
understanding with respect to such voting rights, (II) that does not
contain any incentive for the subject Person to support or oppose any
particular Business Combination or otherwise to exercise (or refrain
from exercising) any voting rights associated with such securities in
a manner advantageous to such Person or any of such Person's
Affiliates or Associates and (III) prior written notice of which shall
have been given to the Company.
"Book Value", when used with reference to Common Shares
issued by any Person, shall mean the amount of equity of such Person
applicable to each Common Share, determined (i) in accordance with
generally accepted accounting principles in effect on the date as of
which such Book Value is to be determined, (ii) using all the
consolidated assets and all the consolidated liabilities of such
Person on the date as of which such Book Value is to be determined,
except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after
giving effect to (A) the exercise of all rights, options and warrants
to purchase such Common Shares (other than the Rights), and the
conversion of all securities convertible into such Common Shares, at
an exercise or conversion price, per Common Share, which is less than
such
Book Value before giving effect to such exercise or conversion
(whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to
the date as of which such Book Value is to be determined and to be
paid or made after such date, and (C) any other agreement, arrangement
or understanding (written or oral), or transaction or other action
prior to the date as of which such Book Value is to be determined
which would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in
Section 11(c)(I).
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions
in the Borough of Manhattan, The City of New York, are authorized or
obligated by law or executive order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of Series A Participating Cumulative Preferred Stock
setting forth the powers, preferences, rights, qualifications,
limitations and restrictions of such series of Preferred Stock of the
Company, a copy of which is attached as Exhibit A.
"Close of Business" on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that, if such
date is not a Business Day, "Close of Business" shall mean 5:00 p.m.,
New York City time, on the next succeeding Business Day.
"Common Shares", when used with reference to the Company
prior to a Business Combination, shall mean the shares of Common Stock
of the Company or any other shares of capital stock of the Company
into which the Common Stock shall be reclassified or changed. "Common
Shares", when used with reference to any Person (other than the
Company prior to a Business Combination), shall mean shares of capital
stock of such Person (if such Person is a corporation) of any class or
series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not
limit (as a maximum amount and not merely in proportional terms) the
amount of dividends or income payable or distributable on such class
or series or the
amount of assets distributable on such class or series upon any
voluntary or involuntary liquidation, dissolution or winding up of
such Person and do not provide that such class or series is subject to
redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that, if at any time there
shall be more than one such class or series of capital stock or equity
interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the
total number of shares or other units of each such class or series
outstanding at such time.
"Common Shares outstanding" or "outstanding Common Shares"
when used in this Section 1 in the definition of "Acquiring Person"
and when used in Section 3(b), with respect to any Person who is, as
of any time, the Beneficial Owner of, beneficially owns, or has
Beneficial Ownership of, any specified percentage of "Common Shares
outstanding" or "outstanding Common Shares", shall mean the sum of (i)
all Common Shares and any other securities generally entitled to vote
together with the Common Shares (in the case of such other securities,
counted as a number of Common Shares equal to the greater of (x) the
number of votes entitled to be cast in respect of such other
securities upon any matter being voted upon by the holders of Common
Shares and the holders of such other voting securities, voting
together as a single class and (y) if applicable, the number of Common
Shares issuable upon conversion in full into, or exchangeable in full
for, Common Shares of such other securities) actually issued as of
such time, except Common Shares or such other securities, if any, then
owned by the Company or any Subsidiary of the Company which, under the
laws of the jurisdiction of incorporation of the Company, could not
then be voted at a meeting of the holders of Common Shares called for
the purpose of electing directors of the Company plus (ii) the maximum
aggregate number of Common Shares and such other securities which
would be issued upon the exercise in full of all then outstanding
options, warrants and rights, however denominated (but in each case
only if issued by the Company or any of its Subsidiaries, and
excluding the Rights and excluding any securities included in clause
(i) of this calculation), to subscribe for, purchase or otherwise
acquire any Common Shares or such other securities, and the conversion
into, or exchange for, Common Shares or such other securities in full
of all then outstanding securities of the Company or any of
its Subsidiaries that are convertible into or exchangeable for Common
Shares or such other securities (excluding any securities included in
clause (i) of this calculation), in each case with or without payment
of additional consideration in cash or property, whether or not such
options, warrants, rights or securities are then exercisable,
convertible or exchangeable, as the case may be, regardless of whether
or not any of such Common Shares or such other securities would be
deemed to be outstanding under generally accepted accounting
principles for purposes of determining book value or net income per
share and regardless of whether or not any of such Common Shares or
such other securities would be deemed to be outstanding under
paragraph (d)(1)(i) of Rule 13d-3 of the General Rules and Regulations
under the Exchange Act (either as in effect on the date of this Rights
Agreement or as subsequently amended) or under any other rule,
regulation or statute for the purpose of computing the percentage of
Common Shares outstanding owned by any particular Person as of any
time or for any other purpose.
"Common Stock" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of
this Rights Agreement; provided, however, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section
11(c)(III).
The term "control" with respect to any Person shall mean the
power to direct the management and policies of such Person, directly
or indirectly, by or through stock ownership, agency or otherwise, or
pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other Persons by or
through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Controlled Related Party" means, when used with respect to
any specified Person, each Affiliate or Associate of such Person if
such Person possesses, directly or indirectly, by or through stock
ownership, agency or otherwise, or pursuant to or in connection with
an agreement, arrangement or understanding (written or oral) with one
or more other persons, the power to direct decisions regarding the
acquisition, disposition or voting
by such Affiliate or Associate of Common Shares or rights to acquire
or vote Common Shares.
"Distribution Date" shall have the meaning set forth in
Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of
1934, as in effect on the date in question, unless otherwise
specifically provided.
"Exchange Consideration" shall have the meaning set forth in
Section 11(b)(I).
"Expiration Date" shall have the meaning set forth in
Section 7(a).
"Major Part", when used with reference to the assets of the
Company and its Subsidiaries as of any date, shall mean assets (i)
having a fair market value aggregating 50% or more of the total fair
market value of all the assets of the Company and its Subsidiaries
(taken as a whole) as of the date in question, (ii) accounting for 50%
or more of the total value (net of depreciation and amortization) of
all the assets of the Company and its Subsidiaries (taken as a whole)
as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in
accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of
earnings before interest, taxes, depreciation and amortization or
revenues of the Company and its Subsidiaries (taken as a whole) as
would be shown on, or derived from, a consolidated or combined
statement of income of the Company and its Subsidiaries for the period
of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in
accordance with generally accepted accounting principles then in
effect.
"Market Value", when used with reference to Common Shares on
any date, shall be deemed to be the average of the daily closing
prices, per share, of such Common Shares for the period which is the
shorter of (1) 30 consecutive Trading Days immediately prior to the
date in question or (2) the number of consecutive Trading Days
beginning on the Trading Day immediately after the date of the first
public announcement of the event requiring a determination of the
Market Value and ending on the Trading Day immediately prior to the
record date of such event; provided, however, that,
in the event that the Market Value of such Common Shares is to be
determined in whole or in part during a period following the
announcement by the issuer of such Common Shares of any action of the
type described in Section 12(a) that would require an adjustment
thereunder, then, and in each such case, the Market Value of such
Common Shares shall be appropriately adjusted to reflect the effect of
such action on the market price of such Common Shares. The closing
price for each Trading Day shall be the closing price quoted on the
composite tape for securities listed on the New York Stock Exchange,
or, if such securities are not quoted on such composite tape or if
such securities are not listed on such exchange, on the principal
United States securities exchange registered under the Exchange Act
(or any recognized foreign stock exchange) on which such securities
are listed, or, if such securities are not listed on any such
exchange, the average of the closing bid and asked quotations with
respect to a share of such securities on the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or
such other system then in use, or if no such quotations are available,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such securities selected
by the Board of Directors of the Company. If on any such Trading Day
no market maker is making a market in such securities, the closing
price of such securities on such Trading Day shall be deemed to be the
fair value of such securities as determined in good faith by the Board
of Directors of the Company (whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
Rights Agent, the holders of Rights and all other Persons); provided,
however, that for the purpose of determining the closing price of the
Preferred Shares for any Trading Day on which there is no such market
maker for the Preferred Shares the closing price on such Trading Day
shall be deemed to be the Formula Number (as defined in the
Certificate of Designation) times the closing price of the Common
Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or
other entity.
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this
Rights Agreement to Preferred Shares shall be deemed to include any
authorized
fraction of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a
Business Combination; provided, however, that, if such Surviving
Person is a direct or indirect Subsidiary of any other Person,
"Principal Party" shall mean the Person which is the ultimate parent
of such Surviving Person and which is not itself a Subsidiary of
another Person. In the event ultimate control of such Surviving Person
is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $150,
as such amount may from time to time be adjusted as provided herein,
and shall be payable in lawful money of the United States of America.
All references herein to the Purchase Price shall mean the Purchase
Price as in effect at the time in question.
"Qualifying Offer" shall mean an all-cash tender offer for
all outstanding Common Shares which meets all of the following
requirements:
(1) on or prior to the date such offer is commenced within
the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, such Person has, and has provided to the
Company, firm written commitments from responsible financial
institutions, which have been accepted by such Person (or one of
its Affiliates), to provide, subject only to customary terms and
conditions, funds for such offer which, when added to the amount
of cash and cash equivalents which such Person then has available
and has irrevocably committed in writing to the Company to
utilize for purposes of such offer, will be sufficient to pay for
all Common Shares outstanding on a fully diluted basis pursuant
to the offer and the second-step transaction required by clause
(v) below and all related expenses, together with copies of all
written materials prepared by such Person for such financial
institutions in connection with obtaining such financing
commitments;
(2) after the consummation of such offer, such Person, alone
or together with any of its Affiliates and Associates, owns
Common Shares representing a majority of the then outstanding
Common Shares;
(3) such offer remains open for at least 45 Business Days;
provided, however, that (x) if there is any increase in the price
of such offer, such offer must remain open for at least an
additional 20 Business Days after the last such increase, (y)
such offer must remain open for at least 20 Business Days after
the date that any bona fide alternative offer is made which, in
the opinion of one or more investment banking firms designated by
the Company, provides for consideration per share in excess of
that provided for in such offer, and (z) such offer must remain
open for at least 20 Business Days after the date on which such
Person reduces the per share price offered in accordance with
clause (5)(y) below; provided further, however, that such offer
need not remain open, as a result of this clause (3), beyond (i)
the time which any other offer satisfying the criteria for a
Qualifying Offer is then required to be kept open under this
clause (3), or (ii) the scheduled expiration date, as such date
may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender or exchange offer
for Common Shares with respect to which the Board of Directors
has agreed to redeem the Rights immediately prior to acceptance
for payment of Common Shares thereunder (unless such other offer
is terminated prior to its expiration without any Common Shares
having been purchased thereunder);
(4) such offer is accompanied by a written opinion, in
customary form, of a nationally recognized investment banking
firm which is addressed to the holders of Common Shares other
than such Person and states that the price to be paid to holders
pursuant to the offer is fair from a financial point of view to
such holders and includes any written presentation of such firm
showing the analysis and range of values underlying such
conclusions; and
(5) prior to or on the date that such offer is commenced
within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, such Person makes an
irrevocable written commitment to the Company (x) to consummate a
transaction or transactions promptly upon the completion of such
offer, whereby all Common Shares not purchased in such offer will
be acquired at the same price per share paid in such offer,
subject only to the condition that the Board of Directors shall
have granted any approvals
required to enable such Person to consummate such transaction or
transactions following consummation of such offer without
obtaining the vote of any other stockholder, (y) that such Person
will not make any amendment to the original offer which reduces
the per share price offered (other than a reduction to reflect
any dividend declared by the Company after the commencement of
such offer or any material change in the capital structure of the
Company initiated by the Company after the commencement of such
offer, whether by way of recapitalization, reorganization,
repurchase or otherwise), changes the form of consideration
offered, or reduces the number of shares being sought or which is
in any other respect materially adverse to the Company's
stockholders, and (z) that neither such Person nor of any its
Affiliates or Associates will make any offer for any equity
securities of the Company for a period of six months after the
commencement of the original offer if such original offer does
not result in the tender of the number of Common Shares required
to be purchased pursuant to clause (2) above, unless another
tender offer by another party for all outstanding Common Shares
is commenced that (a) constitutes a Qualifying Offer or (b) is
approved by the Board of Directors of the Company (in which
event, any new offer by such Person or of any of its Affiliates
or Associates must be at a price no less than that provided for
in such approved offer).
"Record Date" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in
Section 24(a).
"Redemption Price" with respect to each Right shall mean
$.01, as such amount may from time to time be adjusted in accordance
with Section 12. All references herein to the Redemption Price shall
mean the Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares which
are, as of the date of consummation of a Business Combination, and
have continuously been for the 12 months immediately preceding such
date, registered under Section 12 of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a
Right in substantially the form attached as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares
(or other securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
in effect on the date in question, unless otherwise specifically
provided.
"Subsidiary" shall mean a Person, at least a majority of the
total outstanding voting power (being the power under ordinary
circumstances (and not merely upon the happening of a contingency) to
vote in the election of directors of such Person (if such Person is a
corporation) or to participate in the management and control of such
Person (if such Person is not a corporation)) of which is owned,
directly or indirectly, by another Person or by one or more other
Subsidiaries of such other Person or by such other Person and one or
more other Subsidiaries of such other Person.
"Surviving Person" shall mean (1) the Person which is the
continuing or surviving Person in a consolidation or merger specified
in Section 11(c)(I)(i) or 11(c)(I)(ii) or (2) the Person to which the
Major Part of the assets of the Company and its Subsidiaries is sold,
leased, exchanged or otherwise transferred or disposed of in a
transaction specified in Section 11(c)(I)(iii); provided, however,
that, if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or
disposed of in one or more related transactions specified in Section
11(c)(I)(iii) to more than one Person, the "Surviving Person" in such
case shall mean the Person that acquired assets of the Company and/or
its Subsidiaries with the greatest fair market value in such
transaction or transactions.
"Trading Day" shall mean a day on which the principal
national securities exchange (or principal recognized foreign stock
exchange, as the case may be) on which any securities or Rights, as
the case may be, are listed or admitted to trading is open for the
transaction of business or, if the securities or Rights in question
are not listed or admitted to trading on any national securities
exchange (or recognized foreign stock exchange, as the case may be), a
Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time
appoint one or more co-Rights Agents as it may deem necessary or
desirable (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights
Agents). In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One
Right shall be associated with each Common Share outstanding on the
Record Date, each additional Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date or the Expiration Date and each
additional Common Share with which Rights are issued after the
Distribution Date but prior to the earlier of the Redemption Date or
the Expiration Date as provided in Section 23; provided, however,
that, if the number of outstanding Rights are combined into a smaller
number of outstanding Rights pursuant to Section 12(a), the
appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such Common Share.
(b) Until the earlier of (i) such time as the Company learns
that a Person has become an Acquiring Person or (ii) the Close of
Business on such date, if any, as may be designated by the Board of
Directors of the Company following the commencement of, or first
public disclosure of an intent to commence, a tender or exchange offer
by any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any of its
Subsidiaries, or any Person holding Common Shares for or pursuant to
the terms of any such employee benefit plan and other than a
Qualifying Offer) for outstanding Common Shares, if upon consummation
of such tender or exchange offer such Person could be the Beneficial
Owner of more than 15% of the outstanding Common Shares (the Close of
Business on the earlier of such dates being the "Distribution Date"),
(x) the Rights will be evidenced by the certificates for Common Shares
registered in the names of the holders thereof
and not by separate Right Certificates and (y) the Rights, including
the right to receive Right Certificates, will be transferable only in
connection with the transfer of Common Shares. As soon as practicable
after the Distribution Date, the Rights Agent will send, by
first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate evidencing
one whole Right for each Common Share (or for the number of Common
Shares with which one whole Right is then associated if the number of
Rights per Common Share held by such record holder has been adjusted
in accordance with the proviso in Section 3(a)). If the number of
Rights associated with each Common Share has been adjusted in
accordance with the proviso in Section 3(a), at the time of
distribution of the Right Certificates the Company may make any
necessary and appropriate rounding adjustments so that Right
Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Right in accordance with
Section 15(a). As of and after the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.
(c) With respect to any certificate for Common Shares, until
the earliest of the Distribution Date, the Redemption Date or the
Expiration Date, the Rights associated with the Common Shares
represented by any such certificate shall be evidenced by such
certificate alone, the registered holders of the Common Shares shall
also be the registered holders of the associated Rights and the
surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record
Date (including, without limitation, upon transfer or exchange of
outstanding Common Shares), but prior to the earliest of the
Distribution Date, the Redemption Date or the Expiration Date, may
have printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement dated
as of October 10, 1996, as it may be amended from time to time
(the "Rights Agreement"), between Time Warner Inc. (the
"Company") and ChaseMellon Shareholder Services L.L.C., as Rights
Agent (the "Rights Agent"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Rights Agent will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement)
and by any subsequent holder of such Rights are null and void and
nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
SECTION 4. Form of Right Certificates. The Right
Certificates (and the form of election to purchase and form of
assignment to be printed on the reverse side thereof) shall be in
substantially the form set forth as Exhibit B and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Rights Agreement,
or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Sections 7, 11 and 23, the Right Certificates, whenever issued, shall
be dated as of the Distribution Date, and on their face shall entitle
the holders thereof to purchase such number of Preferred Shares as
shall be set forth therein for the Purchase Price set forth therein,
subject to adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a)
The Right Certificates shall be executed on behalf of the Company by
the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, the Treasurer or a Vice President
(whether preceded by any additional title) of the Company, either
manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary, an Assistant Secretary or a Vice
President (whether preceded by any additional title, provided that
such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid or obligatory for any purpose
unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such an
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such an
officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of
execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of
execution of this Rights Agreement any such person was not such an
officer of the Company.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office in New York, New
York, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced by each of the Right Certificates, the certificate number of
each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates; Uncertificated Rights. (a) Subject to the provisions of
Sections 7(e) and 15, at any time after the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption
Date or the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split-up, combined or exchanged for
another Right Certificate or Right Certificates representing, in the
aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder
desiring to transfer, split-up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights
Agent and shall surrender the Right Certificate or Right Certificates
to be transferred, split-
up, combined or exchanged at the principal office of the Rights Agent;
provided, however, that neither the Rights Agent nor the Company shall
be obligated to take any action whatsoever with respect to the
transfer of any Right Certificate surrendered for transfer until the
registered holder shall have completed and signed the certification
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Sections 7(e)
and 15, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection
with any transfer, split-up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a valid Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancelation of the
Right Certificate if mutilated, the Company will make a new Right
Certificate of like tenor and deliver such new Right Certificate to
the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company
and the Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced
by Right Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights.
(a) Subject to Section 7(e) and except as otherwise provided herein
(including Section 11), each Right shall entitle the registered holder
thereof, upon exercise thereof as provided herein, to purchase for the
Purchase Price, at any time after the Distribution Date and at or
prior to the earlier of (i) the Close of Business on January 20, 2004
(the Close of Business on such date being the "Expiration Date"), or
(ii) the Redemption Date, one one-thousandths (1/1,000ths) of a
Preferred Share, subject
to adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date,
upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent in New York, New
York, together with payment of the Purchase Price for each one
one-thousandths (1/1,000ths) of a Preferred Share as to which the
Rights are exercised, at or prior to the earlier of (i) the Expiration
Date or (ii) the Redemption Date.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
Preferred Shares to be purchased together with an amount equal to any
applicable transfer tax, in lawful money of the United States of
America, in cash or by certified check or money order payable to the
order of the Company, the Rights Agent shall thereupon (i) either (A)
promptly requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests or (B) if the Company shall have elected to
deposit the Preferred Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of one one-thousandths
(1/1,000ths) of a Preferred Share to be purchased (in which case
certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
all such requests, (ii) when appropriate, promptly requisition from
the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 15, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise fewer than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by an
Acquiring Person or any Affiliate or Associate of an Acquiring Person
shall be null and void and nontransferable, and any holder of any such
Right (including any purported transferee or subsequent holder) shall
not have any right to exercise or transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder of any
Right Certificates upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
(g) The Company may temporarily suspend, for a period of
time not to exceed 90 calendar days after the Distribution Date, the
exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act, on appropriate form,
with respect to the Preferred Shares purchasable upon exercise of the
Rights and permit such registration statement to become effective;
provided, however, that no such suspension shall remain effective
after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the
effectiveness of such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended and
shall issue a further public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision
herein to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification under the blue sky
or securities laws of such jurisdiction shall not have been obtained
or the exercise of the Rights shall not be permitted under applicable
law.
SECTION 8. Cancelation and Destruction of Right
Certificates. All Right Certificates surrendered or presented for the
purpose of exercise, transfer, split-up, combination or exchange
shall, and any Right Certificate representing Rights that have become
null and void and nontransferable pursuant to Section 7(e) surrendered
or presented for any purpose shall, if surrendered or presented to the
Company or to any of its agents, be delivered to the Rights Agent for
cancelation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by this
Rights Agreement. The Company shall deliver to the Rights Agent for
cancelation and retirement, and the Rights Agent shall so cancel and
retire, any Right Certificate purchased or acquired by the Company.
The Rights Agent shall deliver all canceled Right Certificates to the
Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares
or any authorized and issued Preferred Shares held in its treasury,
free from preemptive rights or any right of first refusal, a number of
Preferred Shares sufficient to permit the exercise in full of all
outstanding Rights.
(b) In the event that there shall not be sufficient
Preferred Shares issued but not outstanding or authorized but unissued
to permit the exercise or exchange of Rights in accordance with
Section 11, the Company covenants and agrees that it will take all
such action as may be necessary to authorize additional Preferred
Shares for issuance upon the exercise or exchange of Rights pursuant
to Section 11; provided, however, that if the Company is unable to
cause the authorization of additional Preferred Shares, then the
Company shall, or in lieu of seeking any such authorization, the
Company may, to the extent necessary and permitted by applicable law
and any agreements or instruments in effect prior to the
Distribution Date to which it is a party, (A) upon surrender of a
Right, pay cash equal to the Purchase Price in lieu of issuing
Preferred Shares and requiring payment therefor, (B) upon due exercise
of a Right and payment of the Purchase Price for each Preferred Share
as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares which otherwise would
have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected
by the Board or (C) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is
exercised, distribute a combination of Preferred Shares, cash and/or
other equity and/or debt securities having an aggregate value equal to
the value of the Preferred Shares which otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a
nationally recognized investment banking firm selected by the Board.
To the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to
which it is party) prevent the Company from paying the full amount
payable in accordance with the foregoing sentence, the Company shall
pay to holders of the Rights as to which such payments are being made
all amounts which are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise or exchange of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the
exercise or exchange of Rights are to be listed on any national
securities exchange, the Company covenants and agrees to use its best
efforts to cause, from and after such time as the Rights become
exercisable or exchangeable, all Preferred Shares reserved for such
issuance to be listed on such securities exchange upon official notice
of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all Federal and state transfer taxes
and charges which may be payable in
respect of the issuance or delivery of Right Certificates or of any
Preferred Shares or Common Shares or other securities upon the
exercise or exchange of the Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than,
or in respect of the issuance or delivery of certificates for the
Preferred Shares or Common Shares or other securities, as the case may
be, in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or exchange or
to issue or deliver any certificates for Preferred Shares or Common
Shares or other securities, as the case may be, upon the exercise or
exchange of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in
whose name any certificate for Preferred Shares or Common Shares or
other securities is issued upon the exercise or exchange of Rights
shall for all purposes be deemed to have become the holder of record
of the Preferred Shares or Common Shares or other securities, as the
case may be, represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of any Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the transfer
books of the Company for the Preferred Shares or Common Shares or
other securities, as the case may be, are closed, such Person shall be
deemed to have become the record holder of such Preferred Shares or
Common Shares or other securities, as the case may be, on, and such
certificate shall be dated, the next succeeding Business Day on which
the transfer books of the Company for the Preferred Shares or Common
Shares or other securities, as the case may be, are open.
SECTION 11. Adjustments in Rights After There Is an
Acquiring Person; Exchange of Rights for Shares; Business
Combinations. (a) Upon a Person becoming an Acquiring Person, proper
provision shall be made so that each holder of a Right, except as
provided in Section 7(e), shall thereafter have a right to receive,
upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of one one-thousandths
(1/1,000ths) of a Preferred Share as shall equal the result obtained
by multiplying the Purchase Price by a fraction, the numerator of
which is the number of one one-thousandths (1/1,000ths) of a Preferred
Share for which a Right is then exercisable and the denominator of
which is 50% of the Market Value of the Common Shares on the date on
which a Person becomes an Acquiring Person. As soon as practicable
after a Person becomes an Acquiring Person (provided the Company shall
not have elected to make the exchange permitted by Section 11(b)(I)
for all outstanding Rights), the Company covenants and agrees to use
its best efforts to:
(I) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the
Preferred Shares purchasable upon exercise of the Rights;
(II) cause such registration statement to become effective
as soon as practicable after such filing;
(III) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
(IV) qualify or register the Preferred Shares purchasable
upon exercise of the Rights under the blue sky or securities laws
of such jurisdictions as may be necessary or appropriate.
(b)(I) The Board of Directors of the Company may, at its
option, at any time after a Person becomes an Acquiring Person,
mandatorily exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that shall have
become null and void and nontransferable pursuant to the provisions of
Section 7(e)) for consideration per Right consisting of one-half of
the securities that would be issuable at such time upon the exercise
of one Right in accordance with Section 11(a) or, if applicable,
Section 9(b) (the consideration issuable per Right pursuant to this
Section 11(b)(I) being the "Exchange Consideration"). The Board of
Directors of the Company may, at its option, issue, in substitution
for Preferred Shares, Common Shares in an amount per Preferred Share
equal to the Formula Number (as defined in the Certificate of
Designation) if there are sufficient Common Shares issued but not
outstanding or authorized but unissued. If the Board of Directors of
the Company elects to exchange all the
Rights for Exchange Consideration pursuant to this Section 11(b)(I)
prior to the physical distribution of the Rights Certificates, the
Corporation may distribute the Exchange Consideration in lieu of
distributing Right Certificates, in which case for purposes of this
Rights Agreement holders of Rights shall be deemed to have
simultaneously received and surrendered for exchange Right
Certificates on the date of such distribution.
(II) Any action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 11(b)(I) shall
be irrevocable and, immediately upon the taking of such action and
without any further action and without any notice, the right to
exercise any such Right pursuant to Section 11(a) shall terminate and
the only right thereafter of a holder of such Right shall be to
receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have
been paid or issued, to exercise any such Right pursuant to Section
11(c)(I). The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state
the method by which the exchange of the Rights for the Exchange
Consideration will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights
(other than Rights which shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) held by
each holder of Rights.
(c)(I) In the event that, following a Distribution Date,
directly or indirectly, any transactions specified in the following
clause (i), (ii) or (iii) of this Section 11(c) (each such transaction
being a "Business Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of
an Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for capital stock or other
securities of the Company or of any Acquiring Person or Affiliate
or Associate of an Acquiring Person or cash or any other
property; or
(iii) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall
sell, lease, exchange or otherwise transfer or dispose of), in
one or more transactions, the Major Part of the assets of the
Company and its Subsidiaries (taken as a whole) to any Acquiring
Person or any Affiliate or Associate of an Acquiring Person,
then, in each such case, proper provision shall be made so that each
holder of a Right, except as provided in Section 7(e), shall
thereafter have the right to receive, upon the exercise thereof for
the Purchase Price in accordance with the terms of this Rights
Agreement, the securities specified below (or, at such holder's
option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights
Agreement, such number of Registered Common Shares of such
Principal Party, free and clear of all liens, encumbrances or
other adverse claims, as shall have an aggregate Market Value
equal to the result obtained by multiplying the Purchase Price by
two;
(B) If the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding,
each Right shall thereafter represent the right to receive, upon
the exercise thereof for the Purchase Price in accordance with
the terms of this Rights Agreement, at the election of the holder
of such Right at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an
aggregate Book Value immediately
after giving effect to such Business Combination equal to
the result obtained by multiplying the Purchase Price by
two;
(2) such number of Common Shares of the Principal Party
in such Business Combination (if the Principal Party is not
also the Surviving Person in such Business Combination) as
shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(3) if the Principal Party in such Business Combination
is an Affiliate of one or more Persons which has Registered
Common Shares outstanding, such number of Registered Common
Shares of whichever of such Affiliates of the Principal
Party has Registered Common Shares with the greatest
aggregate Market Value on the date of consummation of such
Business Combination as shall have an aggregate Market Value
on the date of such Business Combination equal to the result
obtained by multiplying the Purchase Price by two.
(II) The Company shall not consummate any Business
Combination unless each issuer of Common Shares for which Rights may
be exercised, as set forth in this Section 11(c), shall have
sufficient authorized Common Shares that have not been issued or
reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of
first refusal or any other restrictions or limitations on the transfer
or ownership thereof) to permit the exercise in full of the Rights in
accordance with this Section 11(c) and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights,
shall be effective under the Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a
supplemental agreement providing for the
assumption by such issuer of the obligations set forth in
this Section 11(c) (including the obligation of such issuer
to issue Common Shares upon the exercise of Rights in
accordance with the terms set forth in Sections 11(c)(I) and
11(c)(III)) and further providing that such issuer, at its
own expense, will use its best efforts to:
(1) cause a registration statement under the
Securities Act on an appropriate form, with respect to
the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(2) qualify or register the Rights and the Common
Shares of such issuer purchasable upon exercise of the
Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate; and
(3) list the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights on each
national securities exchange on which the Common Shares
were listed prior to the consummation of the Business
Combination or, if the Common Shares were not listed on
a national securities exchange prior to the
consummation of the Business Combination, on a national
securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement
is a valid, binding and enforceable agreement of such
issuer; and
(C) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants
setting forth the number of Common Shares of such issuer
which may be purchased upon the exercise of each Right after
the consummation of such Business Combination.
(III) After consummation of any Business Combination and
subject to the provisions of Section 11(c)(II), (i) each issuer of
Common Shares for which Rights may be exercised as set forth in this
Section 11(c) shall be liable for, and shall assume, by virtue of such
Business Combination, all the obligations and duties of the Company
pursuant to this Rights Agreement, (ii) the term "Company" shall
thereafter be deemed to refer to such issuer, (iii) each such issuer
shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the
provisions of Sections 11(a) and 11(c)) shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights, and
(iv) the number of Common Shares of each such issuer thereafter
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions
of Sections 7, 9 and 10 with respect to the Preferred Shares shall
apply, as nearly as reasonably may be, on like terms to any such
Common Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual
or potential economic value of the Rights, if at any time after the
date of this Rights Agreement there shall be any change in the Common
Shares or the Preferred Shares, whether by reason of stock dividends,
stock splits, recapitalizations, mergers, consolidations, combinations
or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any
distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares
or Preferred Shares, as the case may be (other than distribution of
the Rights or regular quarterly cash dividends) or otherwise, then, in
each such event the Board of Directors of the Company shall make such
appropriate adjustments in the number of Preferred Shares (or the
number and kind of other securities) issuable upon exercise of each
Right, the Purchase Price and Redemption Price in effect at such time
and the number of Rights outstanding at such time (including the
number of Rights or fractional Rights associated with each Common
Share) such that following such adjustment such event shall not have
had the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to
Section 12(a), the holder of any Right thereafter exercised shall
become entitled to receive any securities other than Preferred Shares,
thereafter the number of such securities so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions of Sections 11 and 12 and the provisions of Sections 7, 9
and 10 with respect to the Preferred Shares shall apply, as nearly as
reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent
to any adjustment made to the amount of Preferred Shares or other
securities relating to a Right shall evidence the right to purchase,
for the Purchase Price, the adjusted number and kind of securities
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(d) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares or number or kind of other
securities issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express
the terms which were expressed in the initial Right Certificates
issued hereunder.
(e) In any case in which action taken pursuant to Section
12(a) requires that an adjustment be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date the Preferred Shares and/or other
securities, if any, issuable upon such exercise over and above the
Preferred Shares and/or other securities, if any, issuable before
giving effect to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional
securities upon the occurrence of the event requiring such adjustment.
SECTION 13. Certificate of Adjustment. Whenever an
adjustment is made as provided in Section 11 or 12, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment (b)
promptly file with the Rights Agent and with each transfer agent for
the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, prior to the Distribution
Date, of the Common Shares) in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
SECTION 14. Additional Covenants. (a) Notwithstanding any
other provision of this Rights Agreement, no adjustment to the number
of Preferred Shares (or fractions of a share) or other securities for
which a Right is exercisable or the number of Rights outstanding or
associated with each Common Share or any similar or other adjustment
shall be made or be effective if such adjustment would have the effect
of reducing or limiting the benefits the holders of the Rights would
have had absent such adjustment, including, without limitation, the
benefits under Sections 11 and 12, unless the terms of this Rights
Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the
Distribution Date, except as permitted by Section 26, it will not take
(or permit any Subsidiary of the Company to take) any action if at the
time such action is taken it is intended or reasonably foreseeable
that such action will reduce or otherwise limit the benefits the
holders of the Rights would have had absent such action, including,
without limitation, the benefits under Sections 11 and 12. Any action
taken by the Company during any period after any Person becomes an
Acquiring Person but prior to the Distribution Date shall be null and
void unless such action could be taken under this Section 14(b) from
and after the Distribution Date. The Company shall not consummate any
Business Combination if any issuer of Common Shares for which Rights
may be exercised after such Business Combination in accordance with
Section 11(c) shall have taken any action that reduces or otherwise
limits the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under
Sections 11 and 12.
SECTION 15. Fractional Rights and Fractional Shares. (a) The
Company may, but shall not be required to, issue fractions of Rights
or distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, the Company may pay to the registered
holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 15(a), the current market value of
a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market
Value contained in Section 1) for the Trading Day immediately prior to
the date on which such fractional Rights would have been otherwise
issuable.
(b) The Company may, but shall not be required to, issue
fractions of Preferred Shares upon exercise of the Rights or
distribute certificates which evidence fractional Preferred Shares. In
lieu of fractional Preferred Shares, the Company may elect to (i)
utilize a depository arrangement as provided by the terms of the
Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one one-thousandths (1/1,000ths) of a Preferred
Share or any integral multiple thereof), pay to the registered holders
of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share, if any are outstanding and
publicly traded (or the Formula Number times the current market value
of one Common Share if the Preferred Shares are not outstanding and
publicly traded). For purposes of this Section 15(b), the current
market value of a Preferred Share (or Common Share) shall be the
closing price of a Preferred Share (or Common Share) (as determined
pursuant to the second and third sentences of the definition of Market
Value contained in Section 1) for the Trading Day immediately prior to
the date of such exercise. If, as a result of an adjustment made
pursuant to Section 12(a), the holder of any Right thereafter
exercised shall become entitled to receive any securities other than
Preferred Shares, the provisions of this Section 15(b) shall apply, as
nearly as reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue
fractions of Common Shares upon exchange of Rights pursuant to Section
11(b), or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company may pay
to the registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current Market Value
of one Common Share as of the date on which a Person became an
Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right except as provided in this
Section 15.
SECTION 16. Rights of Action. (a) All rights of action in
respect of this Rights Agreement are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and
any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares) may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Rights Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Rights Agreement and
shall be entitled to specific performance of the obligations of any
Person under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Rights
Agreement.
(b) Any holder of Rights who prevails in an action to
enforce the provisions of this Rights Agreement shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees,
incurred in such action.
SECTION 17. Transfer and Ownership of Rights and Right
Certificates. (a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares.
(b) After the Distribution Date, the Right Certificates will
be transferable, subject to Section 7(e), only on the registry books
of the Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer.
(c) The Company and the Rights Agent may deem and treat the
Person in whose name a Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated certificate for
Common Shares made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.
SECTION 18. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be
entitled to vote or receive dividends or be deemed, for any purpose,
the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in
any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the
Company, including, without limitation, any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders, or to receive dividends or other distributions or
subscription rights, or otherwise, until the Right or Rights evidenced
by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties
hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement
in reliance upon any Right Certificate or certificate for the Common
Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
SECTION 20. Merger or Consolidation or Change of Rights
Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the stock transfer
or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that
such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 22. In case, at the time
such successor Rights Agent shall succeed to the agency created by
this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates
so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Rights
Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement
upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates (or, prior to the Distribution
Date, of the Common Shares), by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken, suffered or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity
of any Acquiring Person) be proved or established by the Company prior
to taking, refraining from taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, a Vice President
(whether preceded by any additional title), the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights
Agreement or in the Right Certificates (except as to its
countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Rights Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Rights Agreement or in any Right Certificate; nor
shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual
notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any Preferred Shares or Common Shares to be issued
pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares or Common Shares will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, a Vice
President (whether preceded by any additional title), the Secretary or
the Treasurer of the Company, in connection with its duties and it
shall not be liable for any action taken or suffered to be taken by it
in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this
Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct
provided reasonable care was exercised in the selection and continued
employment thereof.
(j) The Company agrees to indemnify and to hold the Rights
Agent harmless against any loss, liability, damage or expense
(including reasonable fees and expenses of legal counsel) which the
Rights Agent may incur resulting from its actions as Rights Agent
pursuant to this Rights Agreement; provided, however, that the Rights
Agent shall not be indemnified or held harmless with respect to any
such loss, liability, damage or expense incurred by the Rights Agent
as a result of, or arising out of, its own negligence, bad faith or
wilful misconduct. In no case shall the Company be liable with respect
to any action, proceeding, suit or claim against the Rights Agent
unless the Rights Agent shall have notified the Company, by letter or
by facsimile confirmed by letter, of the assertion of any action,
proceeding, suit or claim against the Rights Agent, promptly after the
Rights Agent shall have notice of any such assertion of an action,
proceeding, suit or claim or have been served with the summons or
other first legal process giving information as to the nature and
basis of the action, proceeding, suit or claim. The Company shall be
entitled to participate at its own expense in the defense of any such
action, proceeding, suit or claim, and, if the Company so elects, the
Company shall assume the defense of any such action, proceeding, suit
or claim. In the event that the Company assumes such defense, the
Company shall not thereafter be liable for the fees and expenses of
any additional counsel retained by the Rights Agent, so long as the
Company shall retain counsel satisfactory to the Rights Agent, in the
exercise of its reasonable judgment, to defend such action,
proceeding, suit or claim. The Rights Agent agrees not to settle any
litigation in connection with any action, proceeding, suit or claim
with respect to which it may seek indemnification from the Company
without the prior written consent of the Company.
SECTION 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Rights Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Shares and the
Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates (or, prior to the Distribution Date, of the
Common Shares) by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates (or,
prior to the Distribution Date, of the Common Shares) by first-class
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (or, prior to the Distribution Date,
of the Common Shares) (who shall, with such notice, submit his Right
Certificate or, prior to the Distribution Date, the certificate
representing his Common Shares, for inspection by the Company), then
the registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares) may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the
laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized
to conduct a stock transfer or corporate trust business in the State
of New York), in good standing, having a principal office in the State
of New York, which is authorized under such laws to exercise stock
transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000; provided that the principal transfer agent for the
Common Shares shall in any event be qualified to be the Rights Agent.
After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Shares and the Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates (or, prior
to the Distribution Date, of the Common Shares). Failure to
give any notice provided for in this Section 22, however, or any
defect therein shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 23. Issuance of Additional Rights and Right
Certificates. Notwithstanding any of the provisions of this Rights
Agreement or of the Rights to the contrary, the Company may, at its
option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or
change made in accordance with the provisions of this Rights
Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the earlier
of the Redemption Date and the Expiration Date, the Company (a) shall,
with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement,
or upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right
Certificate would be issued, and (ii) no such Right Certificate
shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
SECTION 24. Redemption and Termination. (a) The Board of
Directors of the Company may, at its option, at any time prior to the
earlier of (i) such time as a Person becomes an Acquiring Person and
(ii) the Expiration Date, order the redemption of all, but not fewer
than all, the then outstanding Rights at the Redemption Price (the
date of such redemption being the "Redemption Date"), and the Company,
at its option, may pay the Redemption Price either in cash or Common
Shares or other securities of the Company deemed by the Board of
Directors of the Company, in the exercise of its sole discretion, to
be at least equivalent in value to the Redemption Price; provided,
however, that, in addition to any other limitations contained herein
on the right to redeem outstanding Rights (including the occurrence
of any event or the expiration of any period after which the Rights
may no longer be redeemed), for the 120-day period after any date of a
change (resulting from a proxy or consent solicitation) in a majority
of the Board of Directors of the Company in office at the commencement
of such solicitation, the Rights may only be redeemed if (A) there are
directors then in office who were in office at the commencement of
such solicitation and (B) the Board of Directors of the Company, with
the concurrence of a majority of such directors then in office,
determines that such redemption is, in their judgment, in the best
interests of the Company and its stockholders.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within 10 Business
Days after the action of the Board of Directors of the Company
ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent
for the Common Shares. Each such notice of redemption will state the
method by which payment of the Redemption Price will be made. The
notice, if mailed in the manner herein provided, shall be conclusively
presumed to have been duly given, whether or not the holder of Rights
receives such notice. In any case, failure to give such notice by
mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of
Rights.
SECTION 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of
a Right Certificate (or, prior to the Distribution Date, of the Common
Shares) to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Time Warner Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Subject to the provisions of Section 22, any notice or demand
authorized by this Rights Agreement to be given or made by the Company
or by the holder of a Right Certificate (or, prior to the Distribution
Date, of the Common Shares) to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Company) as follows:
ChaseMellon Shareholder Services L.L.C.
00 Xxxxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Notices or demands authorized by this Rights Agreement to be given or
made by the Company or the Rights Agent to any holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares)
shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to
the Distribution Date and subject to the last sentence of this Section
26, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Rights Agreement
(including, without limitation, the date on which the Distribution
Date shall occur, the time during which the Rights may be redeemed
pursuant to Section 24 or any provision of the Certificate of
Designation) without the approval of any holder of the Rights. From
and after the Distribution Date and subject to applicable law, the
Company may, and the Rights Agent shall if the Company so directs,
amend this Rights Agreement without the approval of any holders of
Right Certificates (i) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision of this Rights Agreement or
(ii) to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem
necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Any supplement or amendment adopted during any period after any Person
has become an Acquiring Person but prior to the Distribution Date
shall be null and void unless such supplement or amendment could have
been adopted under the prior sentence from and after the Distribution
Date. Any supplement or amendment to this Rights Agreement duly
approved by the Company that does not amend Sections 19, 20, 21 or 22
in a manner adverse to the Rights Agent shall become effective
immediately upon execution by the Company, whether or not also
executed by the Rights Agent. Notwithstanding anything contained in
this Rights Agreement to the contrary, during the 120-day period after
any date of a change (resulting from a proxy or consent solicitation)
in a majority of the Board of Directors of the Company in office at
the commencement of such solicitation, this Rights Agreement may be
supplemented or amended only if (A) there are directors then in office
who were in office at the commencement of such solicitation and (B)
the Board of Directors of the Company, with the concurrence of a
majority of such directors then in office, determines that such
supplement or amendment is, in their judgment, in the best interests
of the Company and its stockholders and, after the Distribution Date,
the holders of the Right Certificates. In addition, notwithstanding
anything to the contrary contained in this Rights Agreement, no
supplement or amendment to this Rights Agreement shall be made which
(a) reduces the Redemption Price (except as required by Section 12(a))
or (b) provides for an earlier Expiration Date.
SECTION 27. Successors. All the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 28. Benefits of Rights Agreement; Determinations and
Actions by the Board of Directors, etc. (a) Nothing in this Rights
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, of the Common
Shares) any legal or equitable right, remedy or claim under this
Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the
exclusive power and authority to administer this Rights Agreement and
to exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Rights Agreement, including,
without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Rights
Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and a determi-
nation of whether an offer constitutes a Qualifying Offer and whether
there is an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be
deemed to be in derogation of the obligation of the Board of Directors
of the Company to exercise its fiduciary duty. Without limiting the
foregoing, nothing contained herein shall be construed to suggest or
imply that the Board of Directors shall not be entitled to reject any
Qualifying Offer or any other tender offer, or to recommend that
holders of Common Shares reject any Qualifying Offer or any other
tender offer, or to take any other action (including, without
limitation, the commencement, prosecution, defense or settlement of
any litigation and the submission of additional or alternative offers
or other proposals) with respect to any Qualifying Offer or any other
tender offer that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant
or restriction of this Rights Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
SECTION 30. Governing Law. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract
made under the law of the State of Delaware and for all purposes shall
be governed by and construed in
accordance with the law of such State applicable to contracts to be
made and performed entirely within such State.
SECTION 31. Counterparts; Effectiveness. This Rights
Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the
same instrument. This Rights Agreement shall be effective as of the
Close of Business on the date hereof.
SECTION 32. Descriptive Headings. Descriptive headings of
the several Sections of this Rights Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Rights Agreement to be duly executed as of the day and year first
above written.
TW INC.,
by /s/ Xxxxxx X. XxXxxxxxx
--------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
CHASEMELLON SHAREHOLDER
SERVICES L.L.C., as Rights
Agent,
by
--------------------------
Name:
Title:
EXHIBIT A
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS, AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF, OF SERIES A
PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
TW INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TW INC., hereafter to be renamed "Time Warner Inc." (the
"Corporation"), a corporation organized and existing by virtue of the
General Corporation Law of the State of Delaware (the "DGCL"), does hereby
certify that the following resolution was duly adopted by action of the
Board of Directors of the Corporation (the "Board of Directors") at a
meeting duly held on October 9, 1996.
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors by the provisions of Section 2 of Article
IV of the Restated Certificate of Incorporation of the Corporation, as
amended from time to time (the "Certificate of Incorporation"), and Section
151(g) of the DGCL, the Board of Directors hereby creates, from the
authorized shares of Preferred Stock, par value $.10 per share ("Preferred
Stock"), of the Corporation authorized to be issued pursuant to the
Certificate of Incorporation, a series of Preferred Stock, and hereby fixes
the voting powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, of the shares of such series as follows:
SECTION 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating Cumulative
Preferred Stock" ("Series A Stock"). The number of shares initially
constituting the Series A Stock shall be 8,000,000; provided, however,
that, if more than a total of 8,000,000 shares of Series A Stock shall
be issuable upon the exercise of Rights (the "Rights") issued pursuant
to the Rights Agreement dated as of
October 10, 1996, between the Corporation and ChaseMellon Shareholder
Services L.L.C., as Rights Agent (the "Rights Agreement"), the Board
of Directors, pursuant to Section 151(g) of the DGCL, shall direct by
resolution or resolutions that a certificate be properly executed,
acknowledged, filed and recorded, in accordance with the provisions of
Section 103 thereof, providing for the total number of shares of
Series A Stock authorized to be issued to be increased (to the extent
that the Certificate of Incorporation then permits) to the largest
number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of such Rights.
SECTION 2. Dividends or Distributions. (a) Subject to the
prior and superior rights of the holders of shares of any other series
of Preferred Stock or other class of capital stock of the Corporation
ranking prior and superior to the shares of Series A Stock with
respect to dividends, the holders of shares of the Series A Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available
therefor, (1) quarterly dividends payable in cash on the last day of
each fiscal quarter in each year, or such other dates as the Board of
Directors shall approve (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or a
fraction of a share of Series A Stock, in the amount of $.01 per whole
share (rounded to the nearest cent) less the amount of all cash
dividends declared on the Series A Stock pursuant to the following
clause (2) since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series
A Stock (the total of which shall not, in any event, be less than
zero) and (2) dividends payable in cash on the payment date for each
cash dividend declared on the common stock, par value $.01 per share
("Common Stock"), of the Corporation in an amount per whole share
(rounded to the nearest cent) equal to the Formula Number (as
hereinafter defined) then in effect times the cash dividends then to
be paid on each share of Common Stock. In addition, if the Corporation
shall pay any dividend or make any distribution on the Common Stock
payable in assets, securities or other forms of noncash consideration
(other than dividends or distributions solely in shares of Common
Stock), then, in each such case, the Corporation shall simultaneously
pay or make on each outstanding whole share of Series A Stock a
dividend or distribution in like kind equal to the Formula Number then
in effect times such dividend or distribution on each share of the
Common Stock. As used herein, the "Formula Number" shall be 1,000;
provided, however, that, if at any time after the date of this
Certificate, the Corporation shall (i) declare or pay any dividend on
the Common Stock payable in shares of Common Stock or make any
distribution on the Common Stock in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (iii)
combine (by a reverse stock split or otherwise) the outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then
in each such event the Formula Number shall be adjusted to a number
determined by multiplying the Formula Number in effect immediately
prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that are outstanding immediately prior to such event
(and rounding the result to the nearest whole number); and provided
further, that, if at any time after the date of this Certificate, the
Corporation shall issue any shares of its capital stock in a merger,
reclassification, or change of the outstanding shares of Common Stock,
then in each such event the Formula Number shall be appropriately
adjusted to reflect such merger, reclassification or change so that
each share of Series A Stock continues to be the economic equivalent
of a Formula Number of shares of Common Stock prior to such merger,
reclassification or change.
(b) The Corporation shall declare a dividend or distribution
on the Series A Stock as provided in Section 2(a) immediately prior to
or at the same time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution solely in shares
of Common Stock); provided, however, that, in the event no dividend or
distribution (other than a dividend or distribution in shares of
Common Stock) shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per
share on the Series A Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may
fix a record date for the determination of holders of shares of Series
A Stock entitled to receive a dividend or distribution declared
thereon, which record date
shall be the same as the record date for any corresponding dividend or
distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Stock from and after the Quarterly Dividend
Payment Date next preceding the date of original issue of such shares of
Series A Stock; provided, however, that dividends on such shares that are
originally issued after the record date for the determination of holders of
shares of Series A Stock entitled to receive a quarterly dividend and on or
prior to the next succeeding Quarterly Dividend Payment Date shall begin to
accrue and be cumulative from and after such Quarterly Dividend Payment
Date. Notwithstanding the foregoing, dividends on shares of Series A Stock
that are originally issued prior to the record date for the determination
of holders of shares of Series A Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated
as if cumulative from and after the last day of the fiscal quarter next
preceding the date of original issuance of such shares. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
(d) So long as any shares of the Series A Stock are outstanding,
no dividends or other distributions shall be declared, paid or distributed,
or set aside for payment or distribution, on the Common Stock unless, in
each case, the dividend required by this Section 2 to be declared on the
Series A Stock shall have been declared.
(e) The holders of the shares of Series A Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
SECTION 3. Voting Rights. The holders of shares of Series A Stock
shall have the following voting rights:
(a) Each holder of Series A Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each
share of Series A Stock held of record on each matter on which holders
of the Common Stock or stockholders generally are entitled to vote,
multiplied by the maximum number of votes per share that any holder of
the Common Stock then has with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares
is satisfied).
(b) Except as otherwise provided herein or by applicable
law, the holders of shares of Series A Stock and the holders of shares
of Common Stock shall vote together as one class for the election of
directors and on all other matters submitted to a vote of
stockholders.
(c) If, at the time of any annual meeting of stockholders
for the election of directors, the equivalent of six quarterly
dividends (whether or not consecutive) payable on any share or shares
of Series A Stock are in default, the number of directors constituting
the Board of Directors shall be increased by two. In addition to
voting together with the holders of Common Stock for the election of
other directors, the holders of record of the Series A Stock, voting
separately as a class to the exclusion of the holders of Common Stock,
shall be entitled at said meeting of stockholders (and at each
subsequent annual meeting of stockholders), unless all dividends in
arrears have been paid or declared and set apart for payment prior
thereto, to vote for the election of two directors, the holders of any
Series A Stock being entitled to cast a number of votes per share of
Series A Stock equal to the Formula Number. Until the default in
payments of all dividends that permitted the election of said
directors shall cease to exist, any director who shall have been so
elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of
the holders of the shares of Series A Stock at the time entitled to
cast a majority of the votes entitled to be cast for the election of
any such director at a special meeting of such holders called for that
purpose, and any vacancy thereby created may be filled by the vote of
such holders. If and when such default shall cease to exist, the
holders of the Series A Stock shall be divested of the foregoing
special voting rights, subject to revesting in the event of each and
every subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of
office of all persons who may have been elected directors pursuant to
said special voting rights shall forthwith terminate, and the number
of directors constituting the Board of Directors shall be reduced by
two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the
Series A Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by
applicable law, holders of Series A Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for authorizing or taking any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly
dividends or other dividends or distributions payable on the Series A
Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Stock outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Stock,
except dividends paid ratably on the Series A Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Stock;
provided, however, that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series A Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Stock, or any shares of stock ranking on a parity with the
Series A Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
SECTION 5. Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Stock unless,
prior thereto, the holders of shares of Series A Stock shall have
received an amount equal to the accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, plus an amount equal to the greater of (x) $.01 per whole
share or (y) an aggregate amount per share equal to the Formula Number
then in effect times the aggregate amount to be distributed per share
to holders of Common Stock or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Stock, except distributions made ratably
on the Series A Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up.
SECTION 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash or any other
property, then in any such case the then outstanding shares of Series
A Stock shall at the same time be similarly exchanged or changed into
an amount per share equal to the Formula Number then in effect times
the aggregate amount of stock, securities, cash or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is exchanged or changed. In the event both this
Section 6 and Section 2 appear to apply to a transaction, this Section
6 will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of
Series A Stock shall not be subject to redemption by the Corporation
or at the option of any holder of Series A Stock except as set forth
in Section 5 of Article IV of the Certificate of Incorporation;
provided, however, that the Corporation may purchase or otherwise
acquire outstanding shares of Series A Stock in the open market or by
offer to any holder or holders of shares of Series A Stock.
(b) The shares of Series A Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Stock shall rank junior to
all other series of Preferred Stock, unless the Board of Directors
shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations and restrictions thereof.
SECTION 9. Fractional Shares. The Series A Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights
Agreement in whole shares or in any fraction of a share that is one
one-thousandths (1/1,000ths) of a share or any integral multiple of
such fraction that shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, exercise voting
rights, participate in distributions and to have the benefit of all
other rights of holders of Series A Stock. In lieu of fractional
shares, the Corporation, prior to the first issuance of a share or a
fraction of a share of Series A Stock, may elect (1) to make a cash
payment as provided in the Rights Agreement for fractions of a share
other than one one-thousandths (1/1,000ths) of a share or any integral
multiple thereof or (2) to issue depository receipts evidencing such
authorized fraction of a share of Series A Stock pursuant to an
appropriate agreement between the Corporation and a depository
selected by the Corporation; provided, however, that such agreement
shall provide that the holders of such depository receipts shall have
all the rights, privileges and preferences to which they are entitled
as holders of the Series A Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such
shares shall upon their retirement become authorized but unissued
shares of Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series by the
Board of Directors pursuant to the provisions of Section 2 of Article
IV of the Certificate of Incorporation.
SECTION 11. Amendment. None of the powers, preferences and
relative, participating, optional or other special rights of the
Series A Stock as provided herein or in the Certificate of
Incorporation shall be amended in any manner that would alter or
change the powers, preferences, rights or privileges of the holders of
Series A Stock so as to affect them adversely without the affirmative
vote of the holders of at least 66-2/3% of the outstanding shares of
Series A Stock, voting as a separate class; provided, however, that no
such amendment approved by the holders of at least 66-2/3% of the
outstanding shares of Series A Stock shall be deemed to apply to the
powers, preferences, rights or privileges of any holder of shares of
Series A Stock originally issued upon exercise of the Rights after the
time of such approval without the approval of such holder.
IN WITNESS WHEREOF, TW INC. has caused this Certificate to
be duly executed in its corporate name on this 10th day of October,
1996.
TW INC.,
by /s/ Xxxxxx X. XxXxxxxxx
--------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER JANUARY 20, 2004, OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT,
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
TIME WARNER INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of October
10, 1996 (the "Rights Agreement"), between Time Warner Inc., a
Delaware corporation formerly known as "TW Inc." (the "Company"), and
ChaseMellon Shareholder Services L.L.C., as Rights Agent (the "Rights
Agent"), unless the Rights evidenced hereby shall have been previously
redeemed by the Company, to purchase from the Company at any time
after the Distribution Date (as defined in the Rights Agreement) and
prior to 5:00 p.m., New York City time, on January 20, 2004 (the
"Expiration Date"), at the principal office of the Rights Agent, or
its successors as Rights Agent, in the City of New York, one
one-thousandths (1/1,000ths) of a fully paid, nonassessable share of
Series A Participating Cumulative Preferred Stock, par value $.10 per
share, of the Company (the "Preferred Shares"), at a purchase price
per one one-thousandths (1/1,000ths) of a share equal to $150 (the
"Purchase Price") payable in cash, upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly
executed.
The Purchase Price and the number and kind of shares which
may be purchased upon exercise of each Right evidenced by this Right
Certificate, as set forth above, are the Purchase Price and the number
and kind of shares which may be so purchased as of [ ]. As
provided in the Rights Agreement, the Purchase Price and the number
and kind of shares which may be purchased upon the exercise of each
Right evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any
time beneficially owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement), such Rights shall be null and void and
nontransferable and the holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to
exercise or transfer any such Right.
This Right Certificate is subject to all the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which reference to the Rights
Agreement is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certifi-
xxxxx. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available from
the Company upon written request.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal stock transfer or
corporate trust office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like
aggregate number and kind of shares as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate may be redeemed by the
Company at its option at a redemption price
(in cash or shares of Common Stock or other securities of the Company
deemed by the Board of Directors to be at least equivalent in value)
of $.01 per Right (which amount shall be subject to adjustment as
provided in the Rights Agreement) at any time prior to the earlier
of (i) such time as a Person becomes an Acquiring Person and (ii) the
Expiration Date; provided, however, that, for the 120-day period after
any date of a change (resulting from a proxy or consent solicitation)
in a majority of the Board of Directors of the Company in office at
the commencement of such solicitation, the Rights may only be redeemed
if (A) there are directors then in office who were in office at the
commencement of such solicitation and (B) the Board of Directors of
the Company, with the concurrence of a majority of such directors then
in office, determines that such redemption is, in their judgment, in
the best interests of the Company and its stockholders.
The Company may, but shall not be required to, issue
fractions of Preferred Shares or distribute certificates which
evidence fractions of Preferred Shares upon the exercise of any Right
or Rights evidenced hereby. In lieu of issuing fractional shares, the
Company may elect to make a cash payment as provided in the Rights
Agreement for fractions of a share other than one one-thousandths
(1/1,000ths) of a share or any integral multiple thereof or to issue
certificates or utilize a depository arrangement as provided in the
terms of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
the Preferred Shares or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of
the Company, including, without limitation, any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or other distributions or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in accordance with
the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of:
TIME WARNER INC.,
by
---------------------------
Name:
Title:
Attest:
--------------------
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
as Rights Agent,
by
--------------------------
Authorized Officer
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Right Certificate to purchase
the Preferred Shares (or other shares) issuable upon the exercise of
such Rights and requests that certificates for such shares be issued
in the name of:
Please insert social security
or other identifying number
---------------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right
Certificate for the balance remaining of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
---------------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------------
Dated: , 19
----------------------------
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Form of Election to Purchase
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
