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EXHIBIT 10(X)(3)
TIME WARNER INC.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
November 18, 1996
Houston Industries Incorporated (the "Stockholder")
1111 Louisiana
Houston, TX 77002
Re: Certain Amendments and Agreements
Dear Sirs:
Reference is made to (i) the Registration Rights Agreement dated as of
July 6, 1995 (as amended from time to time, the "Registration Rights
Agreement"), among Time Warner Companies Inc., formerly named Time Warner Inc.
("Buyer") and the Stockholder, (ii) the Stockholder's Agreement dated as of
July 6, 1995 (as amended from time to time, the "Stockholder's Agreement"),
among Buyer and the Stockholder and (iii) the Agreement and Plan of Merger
dated as of January 26, 1995 (as amended from time to time, the "Merger
Agreement"), among Buyer, KBLCOM Incorporated, Houston Industries Incorporated
and TW KBLCOM Acquisition Corp. Capitalized terms used but not defined in any
of the numbered paragraphs of this letter agreement have the meanings assigned
thereto in the applicable agreement referred to in such numbered paragraph (as
it may be amended by this letter agreement).
This letter agreement is being entered into in connection with Buyer's
acquisition of ▇▇▇▇▇▇ Broadcasting System, Inc. ("TBS"), in which Buyer and TBS
have merged (the "Holding Company Transaction") with separate subsidiaries of
Time Warner Inc., formerly named TW Inc. (the "Holding Company").
As part of the Holding Company Transaction, the Holding Company has
issued a share of Series D Convertible Preferred Stock, par value $0.10 per
share (the "Holdco Preferred Stock"), in exchange for each outstanding share of
Buyer Preferred Stock, par value $1.00 per share (the "Buyer Preferred Stock"),
and one share of common stock, par value $.0l per share, of the Holding Company
in exchange for each outstanding share of common stock, par value $1.00 per
share, of Buyer. The Holdco Preferred Stock has terms which are the same as
those of the Buyer Preferred Stock (other than being convertible for the common
stock of the Holding Company rather than the common stock of Buyer).
Effective as of the execution of this Agreement, the following
agreements shall be amended as provided below:
1. Registration Rights Agreement. In as much as the Holding Company
Transaction resulted in the Stockholder receiving capital stock of the Holding
Company in exchange for capital stock of Buyer in a transaction that was
registered under the Securities Act of 1933, the parties have
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concluded that the Registration Rights Agreement is no longer necessary.
Accordingly, the Registration Rights Agreement is hereby terminated.
2. Stockholder's Agreement. The Stockholder's Agreement shall be amended
as follows:
a. The following definitions shall be amended and restated as
follows:
"Parent" means Time Warner Inc., a Delaware corporation, which
was formerly named TW Inc. and is the public holding company
of Old Time Warner as a result of the Holding Company
Transaction.
"Parent Common Stock" means the common stock, par value $.01
per share, of Parent.
"Parent Series D Preferred Stock" means the Series D
Convertible Preferred Stock, par value $0.10 per share, of
Parent.
"Parent Stock" means the Parent Common Stock and the Parent
Series D Preferred Stock.
b. The following definitions shall be added:
"Certificate of Designations" means the Certificate of the
Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Special Rights, and
Qualifications, Limitations or Restrictions Thereof, of Series
D Convertible Preferred Stock of Parent as filed with the
Secretary of State of the State of Delaware pursuant to
Section 151 of the DGCL.
"Holding Company Transaction" means the mergers of Old Time
Warner and ▇▇▇▇▇▇ Broadcasting System, Inc. ("TBS") with
separate subsidiaries of the Company pursuant to the Amended
and Restated Agreement and Plan of Merger dated as of
September 22, 1995 (as amended prior to October 10, 1996),
among Old Time Warner, Parent, Time Warner Acquisition Corp.,
TW Acquisition Corp. and TBS.
"Old Time-Warner" means the corporation known immediately
prior to the Holding Company Transaction as Time Warner Inc.,
a Delaware corporation (which was renamed Time Warner
Companies Inc. as part of the Holding Company Transaction).
c. Section 2.02 shall be amended and restated as follows:
SECTION 2.02. Restrictions on Transfer. (a) Subject
to paragraph (b) of this Section 2.02, the Stockholder agrees
that it shall not (and shall use commercially
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reasonable efforts to cause its Affiliates not to), without
the prior written consent of the board of directors of Parent,
sell, transfer, pledge, encumber or otherwise dispose of, or
agree to sell, transfer, pledge, encumber or otherwise dispose
of, any securities of Parent, or any rights or options to
acquire such securities, in a transaction or series of related
transactions with a third party where the senior executives of
Stockholder, at the time the Stockholder agrees to make (or if
earlier with respect to a particular third party, at the time
it acquires the right to make) such disposition, know, or
after reasonable inquiry should have known, that such third
party would, after giving effect to such transaction
(including the exercise of any option or right that is the
subject of the transaction), beneficially own directly or
indirectly more than 5% of the aggregate Voting Power of all
classes and series of Voting Securities of Parent that vote
together as a single class on matters on which holders of
Parent Common Stock are entitled to vote.
(b) Without limiting the generality of Section 2.02(a), the
restrictions of Section 2.02(a) shall in no event be applicable
to (i) any disposition pursuant to a firm commitment
underwriting of securities conducted in a manner designed to
effect a broad distribution of securities, (ii) a transaction
that complies with the volume and manner of sale provisions of
Rule 144(e) and (f) as in effect on the date hereof, (iii) a
distribution or exchange offer by Stockholder that is intended
in good faith to be reasonably available to all holders of
Stockholder's equity securities or all holders of its common
equity securities, (iv) any disposition pursuant to a bona fide
pledge to a financial institution as security for money
borrowed or the foreclosure of any such pledge, (v) any
disposition pursuant to the terms of any tender or exchange
offer for Voting Securities of Parent approved by the board of
directors of Parent, (vi) any disposition to an Affiliate of
the Stockholder that agrees in writing substantially in the
form of Annex I hereto to be bound by the terms of this Section
2.02, (vii) any transfer of Voting Securities of Parent to
Parent, (viii) transactions by one or more employee benefit
plans (or trusts for such plans) of Stockholder and its
Subsidiaries, provided that all decisions whether to purchase
or sell Voting Securities of Parent are made by Persons
independent of Stockholder and its Affiliates, (ix) shares of
Parent Common Stock held by individuals that are Affiliates of
the Stockholder within the limits set forth in clause (vii) of
the last sentence of Section 2.01, (x) any shares of Parent
Common Stock issued to the Stockholder pursuant to Section
8.01(g)(iii) of the Merger Agreement and (xi) any shares of
Parent Common Stock issued to the Stockholder pursuant to
Section 3.1 or 4.1 of the Certificate of Designations in
payment of accrued and unpaid dividends on Parent Preferred
Stock. Except as set forth in the immediately preceding
sentence, no transferee will be required to be bound by this
Agreement.
(c) For purposes of this Section 2.02, all determinations
of the total number of outstanding shares of Parent Common
Stock or the total number of
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outstanding Voting Securities of Parent shall be made on the
basis of Parent's most recently filed Annual Report on Form
10-K, Quarterly Report on Form 10-Q or Current Report on Form
8-K, as applicable.
d. Upon the Stockholder's surrender to Parent of its certificates
for shares of Parent Stock (as defined in the Stockholder's Agreement prior to
these amendments) issued pursuant to the Merger Agreement, Parent shall deliver
to the Stockholder certificates for the same number and type of shares of
Parent Stock without the legend referred to in Section 3.01(b) of the
Stockholder's Agreement (as in effect prior to the amendments effected hereby),
but which shares shall otherwise comply with the provisions of the
Stockholder's Agreement as amended hereby.
e. Sections 3.01(b), (d) and (e) of the Stockholder's Agreement
shall be deleted in their entirety and Sections 3.01 (c) and (f) shall be
redesignated as Sections 3.01(a) and (b) and shall be amended and restated as
follows:
SECTION 3.01. Legends on Certificates for Parent Stock.
(a) The Stockholder agrees that each certificate for
shares of Parent Stock (other than shares of Parent Common Stock issued to the
Stockholder pursuant to (i) Section 8.01(g)(ii) of the Merger Agreement or (ii)
Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and
unpaid dividends on the Parent Preferred Stock) issued to or held (directly or
indirectly, including through a nominee) by a Person that is subject to the
provisions of this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A STOCKHOLDER'S AGREEMENT DATED AS OF JULY 6, 1995, AS AMENDED
BY LETTER DATED NOVEMBER 18, 1996 (AS SO AMENDED, THE
"STOCKHOLDER'S AGREEMENT"), BETWEEN THE CORPORATION AND THE
ORIGINAL HOLDER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE. A COPY OF THE STOCKHOLDER'S AGREEMENT MAY BE
OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO
COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE
STOCKHOLDER'S AGREEMENT.
(b) Parent shall deliver new certificates for the Parent
Preferred Stock and shares of Parent Common Stock without the legend specified
by paragraph (a) of this Section 3.01, (x) after the termination of this
Agreement (other than the covenants and agreements of this Article III) and (y)
in connection with any transaction not prohibited by Section 2.02. In the case
of a transaction covered by the foregoing clause (y), the Stockholder shall
upon request provide a certificate signed by an executive officer (i)
certifying as to the Stockholder's compliance with the condition specified in
such clause and (ii) setting forth the basis therefor.
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f. The form of Annex I hereto shall be deemed to constitute Annex
I to the Stockholder's Agreement.
g. The Holding Company shall become a party to the Stockholder's
Agreement and hereby agrees to assume the rights and obligations of Old Time
Warner thereunder; provided, however, that Old Time Warner shall remain a party
thereto and remain bound by all its obligations thereunder.
3. Merger Agreement. The Merger Agreement shall be amended as follows:
a. The following definitions shall be added:
"Holding Company" means Time Warner Inc., a Delaware
corporation, which was formerly named TW Inc. and is the
public holding company of Buyer as a result of the Holding
Company Transaction.
"Holding Company Common Stock" means the Common Stock, par
value $.01 per share, of the Holding Company.
"Holding Company Transaction" means the mergers of Buyer and
▇▇▇▇▇▇ Broadcasting System, Inc. ("TBS") with separate
subsidiaries of the Holding Company pursuant to the Amended
and Restated Agreement and Plan of Merger dated as of
September 22, 1995 (as amended prior to October 10, 1996),
among Buyer, the Holding Company, Time Warner Acquisition
Corp., TW Acquisition Corp. and TBS.
b. Section 8.01(g)(ii) shall be amended to read as follows:
(ii) The amount payable by the Indemnity
Obligor to an Indemnified Party with respect to a Loss shall
be reduced by the amount of any insurance proceeds received by
the Indemnified Party with respect to the Loss, and each of
the parties hereby agrees to use its best efforts to collect
any and all insurance proceeds to which it may be entitled in
respect of any Loss. Any amount payable by Parent as an
Indemnity Obligor shall, at the option of Parent, be paid
either in cash or by delivering Holding Company Common Stock
of equal value calculated on the basis of the Current Market
Price as of the date such payment is made. If reasonably
required by Stockholder, any such payment by Parent shall be
made in shares of Holding Company Common Stock, valued as
provided in the preceding sentence. For purposes of this
section the definition of the term "Current Market Price"
shall be deemed to refer to Holding Company Common Stock,
rather than Parent Common Stock.
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c. The Holding Company shall become a party to the Merger
Agreement, and shall agree to be bound thereby, for the sole purpose of
ensuring that the obligations of Parent under Article X thereof are performed
as set forth in said Article X.
4. No Other Amendment. Except as expressly amended by this letter
agreement, the Stockholders Agreement and the Merger Agreement shall in all
respects be ratified and confirmed and the terms of each thereof (as so
expressly amended) shall remain in full force and effect in accordance with
their terms.
5. Governing Law; Counterparts; Entire Agreement. This letter agreement
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed wholly within that
State (other than its rules of conflicts of laws to the extent that the
application of the laws of another jurisdiction would be required thereby).
This letter agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement. This letter agreement and the agreements expressly
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings between the parties with respect
to such subject matter.
Please indicate your agreement to the foregoing terms of this
letter agreement by executing it in the applicable space provided below and
returning it to us.
Sincerely,
TIME WARNER, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name:
Title:
TIME WARNER COMPANIES INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name:
Title:
TW/KBLCOM INC.
(formerly named KBLCOM
INCORPORATED),
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by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name:
Title:
Accepted and agreed to
as of the date first written
above:
HOUSTON INDUSTRIES INCORPORATED,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name:
Title:
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ANNEX I
FORM OF LETTER AGREEMENT
Time Warner Inc.
Time Warner Companies, Inc.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Houston Industries Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Stockholder's Agreement dated as of
July 6, 1995, as amended (the "Stockholder's Agreement"), by and among Time
Warner Inc., formerly TW Inc., Time Warner Companies, Inc., and Houston
Industries Incorporated. Capitalized terms used but not defined herein are
used as defined in the Stockholder's Agreement.
In consideration of the assignment by
[Stockholder] to ________________________ ("Assignee") of _____________ shares
of Parent Common Stock and/or ____________ shares of Parent Preferred Stock on
_____________, 19___, Assignee hereby agrees to be bound by the provisions of
the Stockholder's Agreement applicable to Stockholder with respect to such
Parent Stock as fully as if it were the Stockholder signatory thereto.
Dated: ___________________
_______________________________________
By:
___________________________________
Name:
Title:
