-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tzPdlKXYT52BKKK9HdDppGhGoTgEnoKKEpoR5A5CeynOomLqEmR0EvlOpvOIxAnk HfCg0SGgDPICTDaoQluZtQ== 0000950144-94-000177.txt : 19940203 0000950144-94-000177.hdr.sgml : 19940203 ACCESSION NUMBER: 0000950144-94-000177 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940127 ITEM INFORMATION: 7 FILED AS OF DATE: 19940202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TURNER BROADCASTING SYSTEM INC CENTRAL INDEX KEY: 0000100240 STANDARD INDUSTRIAL CLASSIFICATION: 4833 IRS NUMBER: 580950695 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 34 SEC FILE NUMBER: 001-08911 FILM NUMBER: 94504285 BUSINESS ADDRESS: STREET 1: ONE CNN CENTER STREET 2: 100 INTERNATIONAL BLVD CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4048271700 MAIL ADDRESS: STREET 1: P O BOX 105366 CITY: ATLANTA STATE: GA ZIP: 30348-5366 FORMER COMPANY: FORMER CONFORMED NAME: TURNER COMMUNICATIONS CORP DATE OF NAME CHANGE: 19791016 FORMER COMPANY: FORMER CONFORMED NAME: RICE BROADCASTING CO INC DATE OF NAME CHANGE: 19700909 8-K 1 TURNER BROADCASTING SYSTEM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) January 27, 1994 TURNER BROADCASTING SYSTEM, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Georgia --------------------------------------- (State of incorporation or organization) 0-9334 58-0950695 - ---------------------------------------- ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) One CNN Center, Atlanta, Georgia 30303 - ---------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (404) 827-1700 --------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 2 ITEM 7. EXHIBITS (c) Exhibits 1(c) - Terms Agreement dated January 27, 1994 among Turner Broadcasting System, Inc. (the "Company") and Goldman, Sachs & Co., CS First Boston Corporation and Merrill Lynch & Co., and the Underwriting Agreement Basic Provisions dated June 30, 1993 incorporated by reference therein 4(f) - Form of Officers' Certificate establishing the terms of the Company's 7.40% Senior Notes due February 1, 2004 with Form of Note attached 4(g) - Form of Officers' Certificate establishing the terms of the Company's 8.40% Senior Debentures due February 1, 2024 with form of Debenture attached -2- 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. TURNER BROADCASTING SYSTEM, INC. (Registrant) Date: February 2, 1994 By: /s/ William S. Ghegan ----------------------------------- Name: William S. Ghegan Title: Vice President and Controller and Chief Accounting Officer -3- 4 EXHIBIT INDEX
Exhibits Page - -------- ---- 1(c) - Terms Agreement dated January 27, 1994 among Turner Broadcasting System, Inc. and Goldman, Sachs & Co., CS First Boston Corporation and Merrill Lynch & Co., and the Underwriting Agreement Basic Provisions dated June 30, 1993 incorporated by reference therein 4(f) - Form of Officers' Certificate establishing the terms of the Company's 7.40% Senior Notes due February 1, 2004 with form of Note attached. 4(g) - Form of Officers' Certificate establishing the terms of the Company's 8.40% Senior Debentures due February 1, 2024 with form of Debenture attached.
EX-1.(C) 2 TERMS AGREEMENT & UNDERWRITING AGREEMENT 1 Exhibit 1(c) TERMS AGREEMENT January 27, 1994 GOLDMAN, SACHS & CO. CS FIRST BOSTON CORPORATION MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED Dear Sirs: Turner Broadcasting System, Inc., a Georgia corporation ("TBS"), confirms its agreement with each of the Underwriters listed below (the "Underwriters," which term shall also include any underwriter substituted as provided in Section 2(c) of the Basic Provisions (defined below)). TBS hereby agrees to sell and the Underwriters, acting severally and not jointly, agree to purchase, the respective principal amounts of 7.40% Senior Notes due 2004 (the "Notes") and 8.40% Senior Debentures due 2024 (the "Debentures" and, together with the Notes, the "Underwritten Securities") set forth opposite their respective names below at 98.595 % of the principal amount of the Notes and 98.422 % of the principal amount of the Debentures, in each case plus interest accrued from February 1, 1994. Capitalized terms used herein and not otherwise defined have the meanings given to such term in the Basic Provisions.
Underwriter Principal Amount ----------- ---------------- Notes Debentures ----- ---------- Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . $ 83,334,000 $66,668,000 CS First Boston Corporation . . . . . . . . . . . . . . . 83,333,000 66,666,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . . 83,333,000 66,666,000 ------------- ------------ Total . . . . . . . . . . . . . . . . . . . . . $ 250,000,000 $200,000,000 ============ ============ The Notes shall have the following terms: Principal Amount . . . . . . . . . . . . . . . . $250,000,000 Date of maturity . . . . . . . . . . . . . . . . February 1, 2004 Interest rate or rates (as method of determination) . . . . . . . . . . . 7.40% per annum Initial public offering price (as a percentage of the Principal Amount of the Notes) . . . . 99.845%
2 Interest payment dates . . . . . . . . . . . . . February 1 and August 1, commencing August 1, 1994 Redemption provisions . . . . . . . . . . . . . The Notes are not redeemable at the option of TBS. The Notes are redeemable at the option of the Holders upon a Change of Control, certain mergers, sales or transfers of assets and certain Restricted Payments, all as described in the Preliminary Prospectus Supplement, dated January 24, 1994, and as described more fully in the Indenture, dated as of May 15, 1993, as modified in the Officer's Certificate to be issued with respect to the Underwritten Securities (together, the "Indenture") Additional Covenants . . . . . . . . . . . . . . Additional covenants include, without limitation, a limitation on the incurrence of Funded Debt and certain Liens, as described in the Preliminary Prospectus Supplement, dated January 24, 1994, and as described more fully in the Indenture Form and denomination . . . . . . . . . . . . . Certificated, in denominations of $1,000 and integral multiples thereof Specified funds for payment of purchase price . . . . . . . . . . . . . . Certified or official bank check or checks payable in New York Clearing House funds The Debentures shall have the following terms: Principal Amount . . . . . . . . . . . . . . . . $200,000,000 Date of maturity . . . . . . . . . . . . . . . . February 1, 2024 Interest rate or rates (or method of determination) . . . . . . . . . . . 8.40% per annum Initial public offering price (as a percentage of the Principal Amount of the Debentures) . 99.922% Interest payment dates . . . . . . . . . . . . . February 1 and August 1, commencing August 1, 1994
2 3 Redemption provisions . . . . . . . . . . . . . The Debentures will be subject to redemption at any time on or after February 1, 2004, at the option of TBS, in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of the Principal Amount of the Debentures) set forth below, in each case together with accrued and unpaid interest, if any, to but excluding the date of redemption, if redeemed during the 12-month period beginning February 1 of the year indicated below: Redemption Year Price ---- ---------------- 2004 104.161% 2005 103.745 2006 103.329 2007 102.913 2008 102.497 2009 102.081 2010 101.664 2011 101.248 2012 100.832 2013 100.416 2014 and 100.000% thereafter The Debentures are redeemable at the option of the Holders upon a Change of Control, certain mergers, sales or transfers of assets and certain Restricted Payments, all as described in the Preliminary Prospectus Supplement, dated January 24, 1994, and as described more fully in the Indenture Additional Covenants . . . . . . . . . . . . . . Additional covenants include, without limitation, a limitation on the incurrence of Funded Debt and certain Liens, as described in the Preliminary Prospectus Supplement, dated January 24, 1994, and as described more fully in the Indenture Form and denomination . . . . . . . . . . . . . Certificated, in denominations of $1,000 and integral multiples thereof
3 4 Specified funds for payment of purchase price . . . . . . . . . . . . . . Certified or official bank check or checks payable in New York Clearing House funds
The specified address for notices, delivery date and place of closing for purposes of the Underwritten Securities as set forth in the Basic Provisions shall be as set forth below: Specified address for notices . . . . . . . . . . Goldman, Sachs & Co. 85 Broad Street 21st Floor New York, New York 10004 Attn: Registration Department CS First Boston Corporation 55 East 52nd Street New York, New York 10055 Attn: Joseph D. Fashano New Issue Processing Merrill Lynch & Co. 10900 Wilshire Boulevard Los Angeles, California 90024 Attn: Scott A. Ryles Delivery Date . . . . . . . . . . . . . . 9:00 a.m., Atlanta time, on February 3, 1994 Place of Closing . . . . . . . . . . . . . Atlanta, Georgia
All of the provisions contained in the document entitled "Turner Broadcasting System, Inc. -- Debt Securities -- Underwriting Agreement Basic Provisions" and dated June 30, 1993 (the "Basic Provisions"), a copy of which you have previously received, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein; provided, however, that solely with respect to the offering of the Underwritten Securities covered by this Terms Agreement the Basic Provisions are modified as follows: 1. Section 1(a)(x) of the Basic Provisions is hereby amended to read as follows: (x) The only subsidiaries of TBS are Cable News Network, Inc., SuperStation, Inc., Turner Entertainment Co., Turner Network Television, Inc., Castle Rock Entertainment ("CRE") and New Line Cinema Corporation ("New Line") and HB Holding Co. (collectively, the "Significant Subsidiaries"), other than corporate consolidated subsidiaries none of which would constitute a "significant subsidiary" of TBS under Regulation S-X of the rules and regulations of the Commission nor is material to the business of TBS and its subsidiaries, taken as a whole. 2. Section 1(a)(xi) of the Basic Provisions is hereby amended to read as follows: 4 5 (xi) (A) Each of Cable News Network, Inc., SuperStation, Inc., Turner Entertainment Co., Turner Network Television, Inc., New Line and HB Holding Co. (collectively, the "Corporate Significant Subsidiaries") has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization, has corporate power and authority to own, lease and operate its properties and to conduct the businesses in which it is engaged and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise; all of the issued and outstanding capital stock of each such Corporate Significant Subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned beneficially by TBS free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity other than (a) restrictions arising under or by virtue of the Federal Communications Act of 1934, as amended ("Communications Act Restrictions"), and (b) restrictions arising under Article V, Section 4(g) of the Restated Articles of Incorporation of TBS ("Class C Restrictions"). (B) CRE is a California general partnership duly formed and validly existing as a general partnership under the laws of the State of California, has partnership power and authority to own, lease and operate its properties and to conduct the businesses in which it is engaged; all of the general partnership interests in CRE are owned beneficially by TBS free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity other than (a) the Communications Act Restrictions and (b) the Class C Restrictions. 3. The first clause of Section 1(a)(xii) of the Basic Provisions is hereby amended to read as follows: "Neither TBS nor any of its Significant Subsidiaries is in violation of its charter, bylaws or other corresponding organizational documents". 4. For purposes of the opinion required by Section 5(b)(1) of the Basic Provisions, the term "Significant Subsidiaries" shall not include CRE or New Line. 5. For purposes of the opinion required by Section 5(b)(1) of the Basic Provisions, the opinion of Troutman Sanders need not address matters relating to CRE or New Line or the acquisitions thereof by TBS insofar as such matters are being opined on by Steven W. Korn, Esq., General Counsel of the Company, pursuant to the opinion delivered pursuant to Section 5(b)(2)(iv) or (v) of the Basic Provisions, as amended hereby (except with respect to the Amended 1993 Credit Agreement (as defined in the Prospectus)). 6. For purposes of Section 5(b)(5) of the Basic Provisions, Troutman Sanders need not express any opinion or belief with respect to information included or incorporated by reference in the Registration Statement or the Prospectus, or omitted therefrom, insofar as such information relates to New Line or CRE or to the acquisition of New Line or CRE by TBS (other than information relating to the Amended 1993 Credit Agreement (as defined in the Prospectus)). 7. In addition to the matters set forth in Section 5(b)(2) of the Basic Provisions, the opinion of Steven W. Korn, Esq., General Counsel of TBS shall include the following: 5 6 (iii) CRE is a duly formed and validly existing general partnership under the laws of the State of California, has partnership power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; all of the general partnership interests in CRE are beneficially owned by TBS free and clear of any material security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than (a) the Communications Act Restrictions and (b) the Class C Restrictions; New Line has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to be so qualified would not have a material adverse effect on TBS and its subsidiaries, considered as one enterprise; all of the issued and outstanding capital stock of New Line has been duly authorized and validly issued, is fully paid and nonassessable and is beneficially owned by TBS, free and clear of any material security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than (a) the Communications Act Restrictions and (b) the Class C Restrictions. (iv) To the best of such counsel's knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments entered into, acquired or assumed in connection with the CRE or New Line acquisitions required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described, referred to therein or filed as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. (v) The issuance and delivery of the Underwritten Securities, the execution and delivery of this Agreement and the Indenture, and the consummation of the transactions contemplated herein and therein, will not (i) conflict with or constitute a breach of, or default under, (ii) result in the creation or imposition of any material lien, charge or encumbrance upon any property or assets of TBS, CRE or New Line pursuant to, or (iii) result in any obligation to redeem or repurchase any securities or indebtedness of TBS or its subsidiaries or affiliates under, any agreement, indenture or instrument known to such counsel and to which CRE or New Line is a party or by which either of them may be bound or which TBS entered into, assumed or acquired in connection with the acquisition of CRE or New Line, or to which any of the property or assets of CRE or New Line is subject except for such conflicts, breaches, defaults, liens, charges, encumbrances or violations which, singly or in the aggregate, would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise. This Terms Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such State. 6 7 If the foregoing is in accordance with your understanding of our agreement, please sign and return to TBS a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and TBS in accordance with its terms. Very truly yours, TURNER BROADCASTING SYSTEM, INC. By: /s/ CHRISTIAN L. BECKEN --------------------------------------------- Name: Christian L. Becken Title: Vice President and Treasurer Confirmed and accepted as of the date first above written: /s/ GOLDMAN, SACHS & CO. - -------------------------------------- (GOLDMAN, SACHS & CO.) CS FIRST BOSTON CORPORATION By: /s/ JOSEPH D. FASHANO ------------------------------- Name: Joseph D. Fashano Title: Vice President MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ MATTHEW PENDO -------------------------- Name: Matthew Pendo Title: Vice President
7 8 TURNER BROADCASTING SYSTEM, INC. DEBT SECURITIES UNDERWRITING AGREEMENT BASIC PROVISIONS June 30, 1993 The basic provisions set forth herein are intended to be incorporated by reference in a terms agreement (a "Terms Agreement") of the type referred to in Section 2(a) hereof. With respect to any particular Terms Agreement, the Terms Agreement, together with the provisions hereof incorporated therein by reference, is herein referred to as this "Agreement". Terms defined in the Terms Agreement are used herein as therein defined. Turner Broadcasting System, Inc. ("TBS") may issue and sell from time to time debt securities registered under the registration statement referred to in the following paragraph (the "Securities"). The Securities may have varying designations, denominations, interest rates and payment dates, maturities, redemption provisions and selling prices, with all such terms for any particular Securities (together with any other terms relating to such securities) to be determined and set forth in the Terms Agreement relating to such securities. As used herein, the term "Underwritten Securities" shall mean the Securities that the underwriter or underwriters party to the Terms Agreement have agreed to purchase pursuant to such Terms Agreement. Unless otherwise defined in a Terms Agreement, the term "Representatives" shall refer to the Underwriters, as defined in the applicable Terms Agreement. TBS has filed with the Securities and Exchange Commission (the "Commission) a registration statement on Form S-3 (No. 33-66218) for the registration of debt securities, including the Underwritten Securities, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission and the Indenture pursuant to which the Underwritten Securities will be issued (the "Indenture") has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). As used in this Agreement, (i) "Registration Statement" means such registration statement when it became effective under the Act, and as from time to time amended or supplemented thereafter at the time of effectiveness of such amendment or filing of such supplement with the Commission (including all documents incorporated or deemed to be incorporated therein by reference); (ii) "Basic Prospectus" means the prospectus (including all documents incorporated or deemed to be incorporated therein by reference) included in the Registration Statement; and (iii) "Prospectus" means the Basic Prospectus, together with any preliminary prospectus supplement and any prospectus supplement, as filed with, or transmitted by a means reasonably calculated to result in filing with, the Commission pursuant to paragraph (b) of Rule 424 of the 1933 Act Regulations, specifically relating to the Underwritten Securities (including in each case all documents incorporated or deemed to be incorporated therein by reference), except that, if any revised prospectus should be provided to the Underwriters by TBS for use in connection with the offering of the Underwritten Securities that is not required to be filed by TBS pursuant to Rule 424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Underwriters for such use. Notwithstanding the foregoing, for purposes of this Agreement, any prospectus supplement prepared or filed with respect to an offering pursuant to the Registration Statement of a series of debt securities other than the Underwritten Securities shall not be deemed to have supplemented the Prospectus. TBS understands that the Underwriters propose to make a public offering of the Underwritten Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered. 9 SECTION 1. Representations and Warranties of TBS. (a) TBS represents, warrants and agrees to each of the Underwriters that: (i) The Registration Statement is effective under the 1933 Act and, to the best of TBS's knowledge and information, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission and no order directed to any document incorporated by reference in the Prospectus has been issued. (ii) The Registration Statement, at the time it became effective and at the Representation Date (as hereinafter defined), and the Prospectus at the Representation Date and at the Delivery Date (as hereinafter defined), contained, and will contain, all statements which are required by the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Trust Indenture Act and the rules and regulations of the Commission with respect to such Acts; the Indenture, including any amendments and supplements thereto, conforms and will conform with the requirements of the Trust Indenture Act, and the rules and regulations of the Commission thereunder; the Registration Statement, at the time it became effective, at the Representation Date, at the Delivery Date and at each filing of TBS's most recent annual report pursuant to Section 13(a) or 15(d) of the 1934 Act, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus, at the time the Registration Statement became effective, at the Representation Date and at the Delivery Date did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to TBS in writing through the Representatives by or on behalf of any Underwriter specifically for use in the Registration Statement or the Prospectus, or to any statements in or omissions from the Statement of Eligibility on Form T-1 of the Trustee under the Trust Indenture Act (the "Form T-1"). (iii) The documents incorporated by reference into the Registration Statement or the Prospectus, when they were filed or became effective with the Commission (or if any such document was amended, at the time such document was last amended) complied and any documents subsequently incorporated by reference will comply, as of the applicable filing date or effective date, in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together and with the other information in the Prospectus, at the time the Registration Statement became effective, at the Representation Date and at the Delivery Date, do not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading; and any documents deemed to be incorporated by reference in the Prospectus will, if and at the time they are filed with the Commission, comply in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (iv) TBS, at the effective date of the Registration Statement, the Representation Date and the Delivery Date, met and will meet the conditions for use of Form S-3 under the 1933 Act and the 1933 Act Regulations. (v) To the best of TBS's knowledge, the accountants who have audited and reported upon the consolidated financial statements filed with the Commission as part of the Registration Statement and the Prospectus are independent public accountants with respect to TBS and its subsidiaries as required by the 1933 Act and the 1933 Act Regulations. (vi) The financial statements filed as part of the Registration Statement or included or incorporated in the Prospectus, as of their date, the Representation Date and the Delivery Date, present and will present fairly the financial position of TBS and its consolidated subsidiaries as of the dates indicated and 2 10 the results of their operations for the periods specified; and said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis. (vii) Since the date of the most recent consolidated financial statements included or incorporated by reference in the Registration Statement and the Prospectus, and except as otherwise stated in the Registration Statement or the Prospectus, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business and (B) there have been no transactions entered into by TBS or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to TBS and its subsidiaries, considered as one enterprise. (viii) (A) The Indenture has been duly executed and delivered and validly authorized by TBS and (assuming due authorization, execution and delivery thereof by the Trustee) constitutes the legal, valid and binding obligation of TBS enforceable against TBS in accordance with its terms (except to the extent enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally or general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), (B) the Underwritten Securities have been validly authorized for issuance and sale pursuant to this Agreement and, when executed, authenticated and delivered as provided in the Indenture and paid for in accordance with this Agreement, will be validly issued and outstanding, and will constitute legal, valid and binding obligations of TBS enforceable against TBS in accordance with their terms and entitled to the benefits of the Indenture (subject to the exceptions set forth in clause (A) of this paragraph (vii)), and (C) the Underwritten Securities and the Indenture conform in all material respects to the description thereof contained in the Prospectus. (ix) TBS has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Georgia with corporate power and authority to own, lease and operate its properties and to conduct the businesses as described in the Prospectus; and TBS is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise. (x) The only subsidiaries of TBS are Cable News Network, Inc., SuperStation, Inc., Turner Entertainment Co. and Turner Network Television, Inc. (collectively, the "Significant Subsidiaries"), other than corporate consolidated subsidiaries none of which would constitute a "significant subsidiary" of TBS under Regulation S-X of the rules and regulations of the Commission nor is material to the business of TBS and its subsidiaries, taken as a whole. (xi) Each Significant Subsidiary of TBS has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization, has corporate power and authority to own, lease and operate its properties and to conduct the businesses in which it is engaged and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise; all of the issued and outstanding capital stock of each such Significant Subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned beneficially by TBS free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity other than (a) restrictions arising under or by virtue of the Federal Communications Act of 1934, as amended ("Communications Act Restrictions"), and (b) restrictions arising under Article V, Section 4(g) of the Restated Articles of Incorporation of TBS ("Class C Restrictions"). 3 11 (xii) Neither TBS nor any of its Significant Subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any agreement, indenture, or instrument to which TBS or any of its Significant Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of TBS or any of its Significant Subsidiaries is subject, or any applicable law, administrative regulation or administrative or court order or decree, which default or violation would have a material adverse effect on TBS and its subsidiaries, considered as one enterprise; and the execution, delivery and performance by TBS of this Agreement and the Indenture and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary corporate action and will not (i) conflict with or constitute a breach of, or default under, (ii) result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of TBS or any of its Significant Subsidiaries pursuant to, or (iii) except as described in the Prospectus, result in any obligation to redeem or repurchase any securities or indebtedness of TBS or its subsidiaries or affiliates under, any agreement, indenture or instrument to which TBS or any of its Significant Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of TBS or any of its Significant Subsidiaries is subject, except for such conflicts, breaches, defaults, liens, charges or encumbrances which, singly or in the aggregate, would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise, nor will such action result in (i) any violation of the provisions of the charter, by-laws or other corresponding organizational documents of TBS or any of its Significant Subsidiaries, or (ii) any violation of any applicable law, administrative regulation or administrative or court decree, except for such violations which, singly or in the aggregate, would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise and, except as required by the 1933 Act, the 1934 Act, the Trust Indenture Act and applicable state securities laws, no consent, authorization or order of, or filing or registration with, any court or governmental agency is required for the execution, delivery and performance of this Agreement or the Indenture. (xiii) Except as described in the Prospectus, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of TBS, threatened, against or affecting TBS or any of its Significant Subsidiaries, which is required to be disclosed in the Registration Statement or the Prospectus; all pending legal or governmental proceedings to which TBS or any of its Significant Subsidiaries is a party or of which any of their respective properties or assets is the subject which are not described in the Registration Statement or the Prospectus, including ordinary routine litigation incidental to the business, are, in the opinion of TBS, considered in the aggregate, not material; and there are no contracts or documents of TBS or any of its subsidiaries which are required to be filed as exhibits to the Registration Statement, or to any documents incorporated by reference therein, by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations, which have not been so filed. (xiv) No authorization, consent or approval of, or other order by, any United States court or administrative or governmental authority or agency is required in connection with the sale of the Underwritten Securities under this Agreement to the Underwriters, except such as may be required under state securities laws or except as may have been obtained. (xv) Each of TBS and its Significant Subsidiaries owns, or is licensed under or otherwise has sufficient right to use, all material licenses, copyrights, trademarks, and trade names (collectively, "Intellectual Property") used in, or necessary for the conduct of, its respective businesses as described in the Prospectus. Other than as described in the Prospectus, no claims have been asserted by any person to the use of any such Intellectual Property or challenging or questioning the validity or effectiveness of any such Intellectual Property or any license or agreement related thereto, which claim, if determined adversely to TBS or any of its subsidiaries, would materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise. The use of such Intellectual Property in connection with the business and operations of TBS and its subsidiaries does not, to TBS's knowledge, infringe on the rights of any person. 4 12 (xvi) TBS and its Significant Subsidiaries possess such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, except where failure to possess such certificates, authorities or permits would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise, and neither TBS nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise. (xvii) TBS has complied with and will be in compliance with the provisions of that certain Florida act relating to disclosure of doing business with Cuba, codified as Section 517.075 of the Florida statutes, and the rules and regulations promulgated thereunder or is exempt therefrom. (xviii) This Agreement has been duly authorized and validly executed and delivered by TBS and (assuming due authorization, execution and delivery hereof by the Underwriters) it constitutes the legal, valid and binding agreement of TBS, enforceable against TBS in accordance with its terms (except as to the extent enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)). (b) Any certificate signed by any officer of TBS and delivered to the Representatives or to counsel for the Underwriters in connection with the transaction contemplated hereby shall be deemed a representation and warranty by TBS to each Underwriter as to the matters covered thereby. SECTION 2. Sale and Delivery to the Underwriters; Closing. (a) The obligation of the Underwriters to purchase, and TBS to sell, the Underwritten Securities is evidenced by a Terms Agreement delivered at the time TBS determines to sell the Underwritten Securities (the date of delivery of a Terms Agreement being hereinafter referred to as the "Representation Date"). The Terms Agreement specifies the firm or firms which will be Underwriters and Representatives, the principal amount of the Underwritten Securities to be purchased by each Underwriter, the purchase price to be paid by the Underwriters for the Underwritten Securities, the public offering price, if any, of the Underwritten Securities, certain terms thereof and the Underwriters' compensation therefor and any of the terms of the Underwritten Securities not already specified in the Indenture including, but not limited to, designations, denominations, interest rate or rates (and method of determining such rate or rates), redemption provisions and sinking fund requirements. The Terms Agreement also specifies any details of the terms of the offering which should be reflected in a post-effective amendment to the Registration Statement or the prospectus supplement relating to the offering of the Underwritten Securities. (b) TBS shall not be obligated to deliver any Underwritten Securities except upon payment for all the Underwritten Securities as provided in Section 2(d) hereof. (c) If one or more of the Underwriters shall fail at the Delivery Date to purchase the Underwritten Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth. If, however, the Representatives shall not have completed such arrangements within such 24-hour period, then; (i) If the principal amount of the Defaulted Securities does not exceed 10% of the Underwritten Securities, the non-defaulting Underwriters shall be obligated to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (ii) If the principal amount of the Defaulted Securities exceeds 10% of the Underwritten Securities, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. 5 13 No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, each of the Representatives and TBS shall have the right to postpone the Delivery Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. (d) Delivery of and payment for the Underwritten Securities shall be made at the office of the Representatives at such address and time as may be specified in the Terms Agreement. This date and time are sometimes referred to as the "Delivery Date." On the Delivery Date TBS shall deliver the Underwritten Securities to the Representatives for the account of each Underwriter against payment to or upon the order of TBS of the purchase price by (i) certified or official bank check or checks payable in New York Clearing House funds or (ii) wire transfer of immediately available funds, as shall be specified in the Terms Agreement. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. Upon delivery, unless the Terms Agreement relating thereto otherwise provides, the Underwritten Securities shall be in definitive fully registered form and in such denominations and registered in such names as the Representatives shall request in writing not less than two full business days prior to the Delivery Date. For the purpose of expediting the checking and packaging of the Underwritten Securities, TBS shall make the Underwritten Securities available for inspection by the Representatives in New York, New York (or such other place as may be specified by the Representatives) not later than 10:00 P.M., New York City time, on the last business day prior to the Delivery Date. SECTION 3. Covenants of TBS. TBS covenants and agrees with each of the Underwriters as follows: (a) TBS will notify the Representatives immediately (i) of the effectiveness of any post-effective amendment to the Registration Statement, (ii) of any request or proposed request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or to any documents incorporated by reference into the foregoing or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any order directed to the Prospectus or any document incorporated therein by reference or the initiation or threat of any stop order proceeding or of any challenge to the accuracy or adequacy of the Registration Statement, the Prospectus or any document incorporated by reference in the Prospectus and (iv) of the receipt by TBS of any notification with respect to the suspension of the qualification of the Underwritten Securities for sale in any jurisdiction or initiation or threat of any proceedings for that purpose. TBS will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible time. (b) TBS will deliver to the Representatives and to their counsel one signed and as many conformed copies of the Registration Statement (as originally filed) and each amendment thereto relating to the Underwritten Securities (including exhibits filed therewith or incorporated by reference therein) as the Underwriters may reasonably request, and a copy of each Prospectus filed with the Commission, including all supplements thereto and all documents incorporated therein by reference and all consent and exhibits filed therewith. TBS will deliver to each of the Underwriters as many copies of the Prospectus (as amended or supplemented) as the Underwriters shall reasonably request so long as the Underwriters are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Underwritten Securities. (c) If during any period in which, in the opinion of counsel for the Representatives, a prospectus relating to the Underwritten Securities is required to be delivered under the Act, any event shall occur as a result of which the Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend the Prospectus to comply with the 1933 Act, TBS will notify the Representatives and will promptly prepare and file (subject to clause (g) below) an amendment or supplement which will effect such compliance. 6 14 (d) TBS will endeavor, in cooperation with the Representatives, to qualify the Underwritten Securities for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Representatives may reasonably designate; provided, however, that TBS shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Underwritten Securities have been so qualified, TBS will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for so long as may be required to complete the distribution of the Underwritten Securities. (e) TBS will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered, a consolidated earnings statement (which need not be audited) (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering the 12-month period beginning not later than the first day of TBS's fiscal quarter next following each date which is an "effective date" of the Registration Statement (as defined in said Rule 158). (f) During the period in which, in the opinion of counsel for the Representatives, any Prospectus is required by law to be delivered in connection with sales of Securities, TBS will file promptly all documents required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. (g) Prior to filing with the Commission any (i) amendment or supplement to the Registration Statement or (ii) Prospectus or any amendment or supplement thereto, TBS will furnish a copy thereto to the Representatives and their counsel and to provide the Representatives an opportunity to comment thereon and shall not file any such amendment or supplement to which the Representative shall reasonably object. (h) For one year after the Delivery Date, TBS will furnish to the Representatives, promptly after the time TBS makes the same available to others, copies of all reports and financial statements furnished by TBS to any securities exchange pursuant to the requirements of or agreements with such exchange or to the Commission pursuant to the 1934 Act or the 1934 Act regulations. (i) During the period beginning on the Representation Date and continuing to the Delivery Date, TBS will not, without the Representatives' prior written consent, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, or enter into any agreement to sell, any debt securities of TBS other than borrowings obtained through the commercial banking market, including, without limitation, under TBS's revolving credit agreements and lines of credit and the issuance, in the ordinary course of business, of TBS's commercial paper. Except as provided in Section 4 hereof, the Underwriters shall pay their own costs and expenses, including the fees and expenses of counsel, any transfer taxes on the Underwritten Securities which they may sell and the expenses of advertising any offering of the Underwritten Securities made by the Underwriters. (j) TBS will use the net proceeds received by it from the sale of the Underwritten Securities in the manner specified in the Prospectus under "Use of Proceeds." (k) During the period of nine months from the Closing Date, the Company will file such amendments to the Registration Statement or amendments or supplements to the Prospectus as the Underwriters may reasonably request in connection with the distribution and sale of the Securities, and will furnish to the Underwriters, at the Company's expense, as many copies of the Registration Statement or the Prospectus, or so amended or supplemented, as the Underwriters may reasonably request. SECTION 4. Payment of Expenses. TBS will pay all expenses incident to the performance of its obligations under this Agreement, including expenses related to the following, if incurred: (i) the preparation, filing, printing and delivery to the Underwriters of the Registration Statement as originally filed and any amendments, supplements or exhibits thereto; (ii) the preparation, printing and filing of any document and any amendments or exhibits thereto required to be filed by TBS under the 1934 Act; (iii) distributing the Registration Statement, as originally filed, and each amendment and post-effective amendment thereto (including exhibits), any Prospectus, any supplement or amendment to the Prospectus and any documents incorporated by reference in any of the foregoing documents; (iv) distributing the terms of the agreement 7 15 relating to the organization of the underwriting syndicate to the Underwriters by mail, telex or other means of communication; (v) the preparation, printing or typing of this Agreement; (vi) the preparation, issuance and delivery of the certificates for the Underwritten Securities to the Underwriters, including capital duties, stamp duties and stock transfer taxes, if any, payable upon issuance of any of the Underwritten Securities and the sale pursuant to this Agreement of the Underwritten Securities to the Underwriters; (vii) the fees and disbursements of TBS's counsel and accountants; (viii) the qualification of the Underwritten Securities under securities laws in accordance with the provisions of Section 3(e), including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Memorandum and a memorandum concerning the legality of the Securities, including the Underwritten Securities as an investment; (ix) the printing and delivery to the Underwriters of copies of the Blue Sky Memorandum and a memorandum concerning the legality of the Securities, including the Underwritten Securities, as an investment; (x) the fees payable in connection with any filings with the National Association of Securities Dealers, Inc., including the reasonable fees and disbursements of counsel for the Underwriters in connection therewith; (xi) the fee of the Commission; and (xii) the fees and expenses incurred in connection with the listing of the Underwritten Securities on any securities exchange. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5, TBS shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. SECTION 5. Conditions of the Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy in all material respects, on the Representation Date and on the Delivery Date, of the representations and warranties of TBS contained herein, to the performance by TBS of its obligations hereunder, and to each of the following additional terms and conditions applicable to the Underwritten Securities: (a) At or before the Delivery Date no stop order suspending the effectiveness of the Registration Statement shall have been issued or proceedings therefor initiated or threatened by the Commission nor shall any order directed to any document incorporated by reference in the Prospectus have been initiated or threatened by the Commission. (b) At the Delivery Date, the Representatives shall have received: (1) The favorable opinion, dated as of the Delivery Date, of Troutman Sanders, counsel for TBS in form and substance satisfactory to counsel for the Underwriters, with respect to the matters set forth below. In rendering such opinion, Troutman Sanders may, as to matters of New York law, rely upon the opinion of counsel to the Underwriters. (i) TBS has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Georgia. (ii) TBS has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. (iii) TBS is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to be so qualified would not have a material adverse effect on TBS and its subsidiaries, considered as one enterprise. (iv) Each Significant Subsidiary of TBS has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to be so qualified would not have a material adverse effect on TBS and its subsidiaries, considered as one enterprise; all of the issued and outstanding capital stock of each such Significant Subsidiary has been duly authorized and validly issued, is fully paid and 8 16 nonassessable and is beneficially owned by TBS, free and clear of any material security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than (a) the Communications Act Restrictions and (b) the Class C Restrictions. (v) The issuance and sale of the Underwritten Securities have been duly authorized by TBS and, when executed and authenticated as specified in the Indenture and delivered against payment of the purchase price therefor in accordance with this Agreement, the Underwritten Securities will be legal, valid and binding obligations of TBS, enforceable against TBS in accordance with their terms, except to the extent enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to or affecting creditors rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). (vi) This Agreement has been duly authorized, executed and delivered by TBS. (vii) The Indenture has been duly authorized, executed and delivered by TBS, and (assuming due authorization, execution and delivery thereof by the Trustee) is a legal, valid and binding obligation of TBS enforceable against TBS in accordance with its terms, except to the extent enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). (viii) The Underwritten Securities and Indenture conform in all material respects to the statements relating thereto contained in the Prospectus and the Registration Statement. (ix) The Indenture has been qualified under and complies as to form with the Trust Indenture Act. (x) The Registration Statement is effective under the 1933 Act and, to the best of such counsel's knowledge and information, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission and no order directed to any document incorporated by reference in the Prospectus has been issued. (xi) Each of the Registration Statement, as of the time it became effective, at the Representation Date and at the Delivery Date and the Prospectus, at the Representation Date and at the Delivery Date (other than the financial statements, supporting schedules, and other financial data included or incorporated by reference therein, and the Form T-1, as to which no opinion need be rendered) appeared on its face to be appropriately responsive in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and the Trust Indenture Act. (xii) Each document filed pursuant to the 1934 Act and incorporated by reference in the Prospectus (other than financial statements, supporting schedules and other financial data included or incorporated by reference therein, and the Form T-1 as to which no opinion need be rendered) appeared on its face as of its date of filing to be appropriately responsive in all material respects to the requirements of the 1934 Act and the 1934 Act Regulations. (xiii) To the best of such counsel's knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described, referred to therein or filed as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. (xiv) The issuance and delivery of the Underwritten Securities, the execution and delivery of this Agreement and the Indenture, and the consummation of the transactions contemplated herein and therein, will not (i) conflict with or constitute a breach of, or default under, 9 17 (ii) result in the creation or imposition of any material lien, charge or encumbrance upon any property or assets of TBS or any of its Significant Subsidiaries pursuant to, or (iii) except as contemplated in the Prospectus, result in any obligation to redeem or repurchase any securities or indebtedness of TBS or its subsidiaries or affiliates under, any agreement, indenture or instrument known to such counsel and to which TBS or any of its Significant Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of TBS or any of its Significant Subsidiaries is subject, nor will such action result in any violation of the provisions of the charter or by-laws of TBS, or any material applicable law, administrative regulation or administrative or court decree except for such conflicts, breaches, defaults, liens, charges, encumbrances or violations which, singly or in the aggregate, would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise. (xv) No authorization, consent or approval of, or other order by, any United States court or administrative or governmental authority or agency is required in connection with the sale of the Underwritten Securities under this Agreement to the Underwriters, except such as may be required under state securities laws or except as may have been obtained. (2) The favorable opinion, dated as of the Delivery Date, of Steven W. Korn, Esq., General Counsel of TBS, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) Except as disclosed in the Prospectus, each of TBS and its subsidiaries owns, or is licensed under, or otherwise has sufficient rights to use, all material licenses, trademarks, tradenames and copyrights (collectively "Intellectual Property") used in, or necessary for the conduct of, its respective business as set forth in the Prospectus. To the best of such counsel's knowledge, no claims have been asserted against TBS or its subsidiaries by any person with respect to the use of any such Intellectual Property or challenging or questioning the validity or effectiveness of any such Intellectual Property or any license or agreement related thereto which, if finally determined adversely to TBS or any of its subsidiaries, would, singly or in the aggregate, have a material adverse effect on TBS and its subsidiaries, considered as one enterprise. Except as disclosed in the Prospectus, the use of such Intellectual Property in connection with the business and operations of TBS and of its subsidiaries does not, to the best of such counsel's knowledge, materially infringe on the rights of any person. (ii) There is no action, suit, proceeding or investigation pending or, to the best of such counsel's knowledge after due inquiry, threatened, against or affecting TBS or any of its subsidiaries in any court or before any governmental authority or arbitration board or tribunal, which seeks to restrain, enjoin, prevent consummation of or otherwise challenge any of the transactions contemplated hereby (including the authorization, issuance, sale and delivery of the Underwritten Securities). To the best of such counsel's knowledge, except as disclosed in the Prospectus, there is no action, suit, proceeding or investigation pending to which TBS or any of its subsidiaries is a party or of which the business or property of TBS or any of its subsidiaries is the subject, the outcome of which would have a material adverse effect, financial or otherwise, upon TBS and its subsidiaries, considered as one enterprise, nor is there any active threat of any such action, suit, proceeding or investigation as to which such counsel has knowledge. (3) The favorable opinion, dated as of the Delivery Date, of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., special counsel to TBS, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) The information in the Registration Statement and the Prospectus or, as applicable, in TBS's Annual Report on Form 10-K for the year ended December 31, 1992 or TBS's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 under the captions "Business," "Regulation" or "Recent Developments" insofar as such statements constitute a summary of 10 18 federal communications law and copyright law and the rules, regulations and administrative orders promulgated or proposed for promulgation under each thereof and decisions or orders of any court or administrative agency or authority relating to each thereof relevant to the operations of TBS and its Significant Subsidiaries as currently conducted and as described in the Prospectus, or insofar as such statements constitute a summary of the status of administrative, judicial or legislative proceedings, represents an accurate and fair summary of such laws, rules, regulations, orders and proceedings. (ii) No approvals are required under federal communications law and copyright law and the rules, regulations and administrative orders promulgated under each thereof and decisions or orders of any court or administrative agency or authority relating to each thereof in connection with the consummation by TBS of the transactions contemplated by this Agreement and the Indenture and the fulfillment of the obligations hereunder and thereunder. (iii) Except as set forth in the Prospectus, neither TBS nor any of its Significant Subsidiaries is in violation of any federal communications law or copyright law or the rules, regulations and administrative orders promulgated under each thereof or any order of any court or administrative agency or authority relating to each thereof which violation would have a material adverse effect on TBS and its subsidiaries, considered as one enterprise. (4) The favorable opinion, dated as of the Delivery Date, of Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters, with respect to the matters set forth in (v) through (xi), inclusive (but not with respect to any documents incorporated by reference), of subsection (b)(1) of this Section. In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom may, as to matters of Georgia law, rely upon the opinion of Troutman Sanders. (5) In giving their opinions required by subsections (b)(1), (b)(2) and (b)(4), respectively, of this Section, Troutman Sanders, Steven W. Korn, Esq. and Skadden, Arps, Slate, Meagher & Flom shall each state that they have participated in conferences with officers and other representatives of TBS, outside counsel for TBS, representatives of the independent public accountants for TBS, Representatives and counsel for the Underwriters, at which conferences the contents of the Registration Statement and the Prospectus and related matters were discussed and, although they are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus and have not made any independent check or verification thereof, on the basis of the foregoing, nothing has come to such counsel's attention that lead them to believe that either the Registration Statement (except for (i) financial statements and other financial data included or incorporated by reference therein, (ii) in the case of Skadden, Arps, Slate, Meagher & Flom only, any of the documents incorporated or deemed to be incorporated by reference therein and (iii) with respect to the opinions being rendered by Troutman Sanders and Skadden, Arps, Slate, Meagher & Flom, respectively, matters affecting TBS or any of its subsidiaries insofar as such matters are being opined on by Steven W. Korn, General Counsel of TBS, pursuant to Section 5(b)(2) hereof or by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. pursuant to Section 5 (b)(3) hereof), at the time it became effective or at the Representation Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (except for (i) financial statements and other financial data included or incorporated by reference therein, (ii) in the case of Skadden, Arps, Slate, Meagher & Flom only, any of the documents incorporated or deemed to be incorporated by reference therein and (iii) with respect to the opinions being rendered by Troutman Sanders and Skadden, Arps, Slate, Meagher & Flom, respectively, matters affecting TBS or any of its subsidiaries insofar as such matters are being opined on by Steven W. Korn, General Counsel of TBS, pursuant to Section 5(b)(2) hereof or by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. pursuant to Section 5(b)(3) hereof), at the Representation Date or at the Delivery Date, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstance under which they were made, not misleading. 11 19 (c) Except as contemplated in the Prospectus or reflected therein by the filing of any amendment or supplement thereto or any document incorporated or deemed to be incorporated therein by reference, at the Delivery Date, there shall not have been, since the date of the most recent consolidated financial statements included or incorporated by reference in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of TBS and its subsidiaries, considered as one enterprise, whether or not in the ordinary course of business. The Representatives shall have received a certificate signed by (A) the President, Vice President-Finance, Vice President-Treasurer or Vice President-Controller of TBS and (B) another Vice President, dated as of the Delivery Date, to the effect (i) that there has been no such material adverse change, (ii) that the representations and warranties in Section 1 are true and correct with the same force and effect as though expressly made at and as of the Delivery Date, (iii) that TBS has complied with all agreements and satisfied all conditions required by this Agreement or the Indenture on its part required to be performed or satisfied at or prior to the Delivery Date, and (iv) that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (d) The Representatives shall have received from the Company's independent public accountants a letter, dated as of the Representation Date, in form and substance satisfactory to the Representatives, to the effect that: (i) they are independent public accountants with respect to TBS and its subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the financial statements and supporting schedules of the Company and its subsidiaries incorporated by reference in the Registration Statement and covered by their opinions therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1934 Act and the published rules and regulations thereunder with respect to registration statements on Form S-3; (iii) based upon limited procedures set forth in such letter, nothing has come to their attention which causes them to believe that (A) the unaudited financial information of TBS and its subsidiaries included or incorporated by reference in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations as they apply to Form 10-Q or any material modifications should be made to the unaudited financial statements for them to be in conformity with generally accepted accounting principles in the United States applied on a basis substantially consistent with that of the audited financial statements incorporated by reference therein, or (B) at a specified date not more than five days prior to the Representation Date, there was any change in the capital stock of TBS (except for subsequent issuances, if any, pursuant to the reservations, commitments, employee benefit plans, agreements or convertible securities referred to in the Registration Statement or the Prospectus) or any increase in the consolidated long-term debt of TBS and its subsidiaries as compared with the amounts shown in the most recent consolidated balance sheets incorporated by reference in the Registration Statement and Prospectus, except in each such case as set forth in or contemplated by the Registration Statement and Prospectus or except for such exceptions enumerated in such letter as shall have been agreed to by the Representatives and TBS; (iv) in addition to the examination referred to in their opinions and the limited procedures referred to in clause (iii) above, they have carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages, ratios and financial information which is included or incorporated by reference in the Registration Statement and the Prospectus and which are specified by the Representatives, and have found such amounts, percentages, ratios and financial information to be in agreement with, or calculated from, the relevant accounting records of TBS and its subsidiaries identified in such letter. (e) At the Delivery Date, the Representatives shall have received from the Company's independent public accountants a letter, dated as of the Delivery Date, to the effect that they reaffirm the statements 12 20 made in the letter furnished pursuant to subsection (d) of this Section, except that the specified date referred to shall be a date not more than five days prior to the Delivery Date. (f) At the Delivery Date, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Underwritten Securities as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties or the fulfillment of any of the conditions herein contained; and all proceedings taken by TBS in connection with the issuance and sale of the Underwritten Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to TBS at any time at or prior to the Delivery Date, and such termination shall be without liability of any party to any other party except as provided in Section 4. SECTION 6. Indemnification. (a) TBS agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, joint or several, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of TBS; and (iii) against any and all expense whatsoever, as incurred (including, subject to Section 6(c) hereof, the reasonable fees and disbursements of counsel chosen by the Underwriters), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that (A) the foregoing indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to TBS by or on behalf of the Underwriters expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto); (B) the foregoing indemnity with respect to any untrue statement contained in or omission from a Prospectus shall not inure to the benefit of any Underwriter, or any person controlling such Underwriter from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Underwritten Securities which are the subject thereof if (i) such person was not sent or given a copy of the Prospectus (or the Prospectus as amended or supplemented) (in each case exclusive of the documents from which information is incorporated by reference) at or prior to the written confirmation of the sale of such Underwritten Securities to such person, (ii) TBS shall have delivered the Prospectus (as amended or supplemented) to the Underwriters on a reasonably timely basis and in requisite quantity to permit the Underwriters to send or deliver such amended or supplemented Prospectus to such person at or prior to the written confirmation of the sale of such Underwritten Securities and (iii) the untrue statement contained in or omission from such Prospectus was corrected in such amendment or supplement to the Prospectus; and (C) the foregoing indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of or based upon any untrue statement or omission or alleged untrue statement or omission made in reliance upon the Form T-1. 13 21 (b) Each Underwriter severally agrees to indemnify and hold harmless TBS, its directors, each of its officers who signed the Registration Statement and each person, if any, who controls TBS within the meaning of Section 15 of the 1933 Act against any and all loss, liability, joint or several claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement or Prospectus in reliance upon and in conformity with written information furnished to TBS by such Underwriter expressly for use in the Registration Statement or the Prospectus. (c) Promptly after receipt by an indemnified party under this Section of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, any indemnified party shall have the right to employ separate counsel in any such claim or action and to participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized by the indemnifying party in writing, (ii) such indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel or (iii) the indemnifying party has failed to assume the defense of such claim or action and employ counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim or action on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or action in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties, which firm shall be designated in writing by the Representatives, if the indemnified parties under this Section consist of any Underwriter or any of their respective controlling persons, or by TBS, if the indemnified parties under this Section consist of TBS or any of its directors, officers or controlling persons. Each indemnified party, as a condition of the indemnity agreements contained in Section 6(a) and 6(b) hereof, shall use its best efforts to cooperate with the indemnifying party in the defense of any such claim or action. The indemnifying party shall not be liable for any settlement of any such claim or action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment in favor of the plaintiff in any such claim or action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason unavailable to an indemnified party although applicable in accordance with its terms, then each indemnifying party shall, in lieu of indemnifying the indemnified party, contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by TBS on the one hand and the Underwriters and the Participants on the other from the offering of the Underwritten Securities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits 14 22 referred to in clause (i) above but also the relative fault of TBS on the one hand and the Underwriters and the Participants on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by TBS on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Underwritten Securities (before deducting expenses) received by TBS bear to the total underwriting discounts and commissions received by the Underwriters with respect to such offering in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by TBS or the Underwriters, the intent of the parties and the opportunity to correct or prevent such statement or omission. TBS and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section were to be determined by pro rata allocation or by any other method of allocation (even if the Underwriters were treated as one entity for such purpose) which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Underwritten Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of TBS, each officer of TBS who signed the Registration Statement and each person, if any, who controls TBS within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as TBS. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or contained in certificates of officers of TBS submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of TBS, and shall survive delivery of the Underwritten Securities to the Underwriters. SECTION 9. Termination of Agreement. (a) The obligations of the Underwriters under this Agreement may be terminated by the Representatives, in their absolute discretion, by notice to and received by TBS, prior to the delivery of and payments for the Underwritten Securities, if during the period beginning on the date of the Terms Agreement to and including the Delivery Date (i) there has occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other calamity or crisis, the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Underwritten Securities or to enforce contracts for the sale of the Underwritten Securities, or (ii) if trading in securities of TBS has been suspended by any official act, or if trading generally on either the American Stock Exchange or the New York Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said Exchanges or by order of the Commission or any other governmental authority, or (iii) if a banking moratorium has been declared by either federal, New York or Georgia authorities or (iv) the rating of any of TBS's debt securities shall have been lowered by any nationally recognized statistical rating organization ("NRSO") or any such NRSO shall have placed such debt securities on "creditwatch" or any similar listing with negative implications, or (v) there has occurred any material and adverse change, or any development involving a prospective material and adverse change, in or affecting the business or properties of TBS and its subsidiaries, considered as one enterprise which, in the judgment of a majority in interest of the Underwriters materially impairs the investment quality of the Notes. 15 23 (b) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4. SECTION 10. Notices. TBS shall be entitled to act and rely upon any request, consent, notice or agreement on behalf of the Representatives. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Representatives shall be directed as specified in the Terms Agreement with a copy to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071, attention of Thomas C. Janson, Jr.; notices to TBS shall be directed to it at One CNN Center, Atlanta, Georgia 30303, attention of Christian L. Becken, Vice President and Treasurer, with a copy to Troutman Sanders, NationsBank Plaza, Suite 5200, 600 Peachtree Street, N.E., Atlanta, Georgia 30308, attention of Terry C. Bridges. SECTION 11. Parties. This Agreement shall inure to the benefit of and be binding upon the Underwriters and TBS and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, or corporation, other than the Underwriters and TBS and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein or therein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and TBS and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from the Underwriters shall be deemed to be a successor by reason merely of such purchase. SECTION 12. Governing Law and Time. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said State. Unless otherwise set forth herein, specified times of day refer to New York City time. SECTION 13. Terms Agreement. The Terms Agreement may be executed in one or more counterparts and if executed in more than one counterpart, the executed counterparts shall together constitute a single instrument. 16 EX-4.(F) 3 OFFICERS' CERTIFICATE 1 EXHIBIT 4(F) TURNER BROADCASTING SYSTEM, INC. OFFICERS' CERTIFICATE Pursuant to Sections 201 and 301 of the Indenture, dated as of May 15, 1993, relating to senior debt securities (including the Turner Broadcasting System, Inc. Standard Multiple-Series Indenture Provisions dated May 15, 1993 incorporated therein by reference, as amended or supplemented from time to time, and including, with respect to a particular series of securities, the terms of such securities established as contemplated by Section 301, whether established in or pursuant to a supplemental indenture, a Board Resolution or an Officers' Certificate, the "Indenture"), between Turner Broadcasting System, Inc., a Georgia corporation (the "Company"), and The First National Bank of Boston, as trustee (the "Trustee"), the undersigned, Wayne H. Pace, Vice President-Finance and Chief Financial Officer of the Company, and Steven W. Korn, Vice President, Secretary and General Counsel of the Company, hereby certify on behalf of the Company as follows: (1) Authorization. The establishment of a series of Securities of the Company has been approved and authorized in accordance with the provisions of the Indenture and in accordance with resolutions adopted by unanimous written consent of the Board of Directors of the Company on April 24, 1993 and resolutions adopted by unanimous written consent of the Finance Committee of the Board of Directors of the Company on January 18, 1994. (2) Compliance with Covenants and Conditions Precedent. All covenants and conditions precedent provided for in the Indenture relating to the establishment of the form and terms of the Notes (as defined below) as a series of Securities have been complied with. (3) Terms. The terms of the series of the Securities established pursuant to this Officers' Certificate shall be as follows: (a) Title. The title of the series of Securities is the "7.40% Senior Notes due 2004" (the "Notes"). (b) Aggregate Principal Amount. The aggregate principal amount of the Notes which may be authenticated and delivered pursuant to the Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306 and 906 of the Indenture) is $250,000,000. (c) Persons to Whom Interest Payable. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date (whether or not a Business Day) for such interest set forth in Section 3(e), except that defaulted interest shall be payable to the persons provided in Section 307 of the Indenture. (d) Stated Maturity. The outstanding principal amount of the Notes will be payable on February 1, 2004. (e) Rate of Interest; Interest Payment Date; Regular Record Date; Accrual of Interest. The Notes will bear interest at a rate of 7.40% per annum. Interest on the Notes will be paid semi-annually in arrears on February 1 and August 1 of each year (each of which is an Interest Payment Date with respect to the Notes), commencing on August 1, 1994, and at maturity. The Regular Record Date for interest payable on each February 1 will be the immediately preceding January 15, and the Regular Record Date for interest payable on each August 1 will be the immediately preceding July 15 (in each case whether or not a Business Day). 2 The Notes will bear interest from February 1, 1994 or from the most recent date to which interest has been paid or duly provided for until the principal thereof is paid or made available for payment. Interest payments shall be the amount of interest accrued from and including the most recent date in respect of which interest has been paid or duly provided for (or from and including February 1, 1994 if no interest has been paid or duly provided for with respect to such Note), to but excluding the next succeeding Interest Payment Date (or, if applicable, Redemption Date or other payment date). Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Notes shall be issuable as fully registered senior notes, without coupons in denominations of $1,000 and any integral multiple thereof. (f) Place of Payment; Registration of Transfer and Exchange; Notices to Company. Payment of the principal of and interest on the Notes will be made at the Corporate Trust Office of the Trustee, or at any other office or agency designated by the Company for such purpose; provided, however, that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register. The Notes may be presented for registration of transfer or exchange at the Corporate Trust Office of the Trustee or at any other office or agency hereafter designated by the Company for such purpose. Notices and demands to or upon the Company in respect of the Notes and the Indenture may be served at the Corporate Trust Office of the Trustee or at Turner Broadcasting System, Inc., One CNN Center, Atlanta, Georgia 30303, Attention: Secretary, or at such other address as the Company may designate by notice to holders. (g) Redemption at the Option of the Holder. (i) Upon the occurrence of a Triggering Event (as defined in Section 3(h)), subject to the conditions of this clause (g), each Holder of Notes shall have the option to require the Company to redeem all, but not less than all, of the Notes owned by such Holder (the "Redemption Right") at a redemption price, payable in cash, equal to 101% of the principal amount, plus accrued and unpaid interest to the date fixed for redemption. (ii) If a Triggering Event occurs with respect to the Company, then, as soon as practicable and in any event within 30 days after the occurrence of such Triggering Event, the Company shall mail to each Holder and the Trustee a notice which shall disclose the occurrence of the Triggering Event and the right of the Holder to require the Company to redeem all, but not less than all, of such Holder's Notes pursuant to this clause (g) and shall state the Redemption Date (as defined below), the redemption price, the name and address of the Paying Agent, and that the Notes to be redeemed must be surrendered to the Paying Agent in order for the Holder of the Notes to collect the redemption price. Such notice shall be accompanied by a form of written demand to be used by the Holder to exercise his Redemption Right (a "Demand Form"). (iii) In the event of any Triggering Event each Holder shall have the Redemption Right for a period of 45 days after the date that notice of such Triggering Event is mailed to Holders of the Notes and the Trustee pursuant to clause (g)(ii); provided, that the failure of the Company to mail such notice shall not affect the right of the Holders to require the Company to repurchase such Holders' Notes, in which event the Redemption Date shall be the 45th day following the last day on which the Company was permitted to mail such notice pursuant to clause (g)(ii). A Holder may exercise such Redemption Right at any time within the 45-day period after the mailing of such notice by the Company by submitting to the Trustee not later than the close of business on the Redemption Date a completed Demand Form relating to the Notes to be redeemed. Unless sooner exercised, the Redemption Right will expire with respect to such Triggering Event at the close of business on the last day of such 45-day period (the "Redemption Date"). Exercise of such Redemption Right will be irrevocable and interest on the Notes tendered for redemption will cease to accrue from and after the Redemption Date. 2 3 (iv) Within 30 days after the occurrence of a Triggering Event (but in any event not later than the date notice of such Triggering Event is mailed to the Holders and the Trustee), the Company shall deposit with the Trustee or one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 1003) immediately available funds in an amount sufficient to redeem on the Redemption Date all of the Notes outstanding on the date of the delivery of such notice. Following payment of the Redemption Price of all Notes required to be redeemed pursuant to this clause (g), all funds remaining from the amounts previously deposited with the Trustee or other Paying Agent or set aside by the Company, and all interest earned thereon, shall belong and be immediately released to the Company as part of its general funds (or assets). (v) The provisions of this clause 3(g) shall supersede the redemption provisions in Article XI of the Indenture for purposes of the Notes. (vi) The Company will comply with all applicable tender offer rules under the Securities Exchange Act of 1934, as amended, including, but not limited to, Rule 14e-1 thereunder, as then in effect, with respect to any offer by the Company to redeem the Notes upon a Triggering Event. (h) Triggering Events. Each of the following events set forth in clauses (i), (ii) or (iii) below shall be a "Triggering Event" as used herein. (i) Restricted Payments. It shall be a Triggering Event if the Company or any of its Subsidiaries declares or makes any Restricted Payment if, at the time of such Restricted Payment, (x) an Event of Default shall have occurred and be continuing or would result therefrom or (y) after giving effect to such Restricted Payment, the Consolidated Interest Coverage Ratio of the Company would be less than 1.50 to 1. Notwithstanding the foregoing, the following actions shall not be a Triggering Event: A. the payment of any dividend within 60 days after the date of its declaration if the dividend would have been permitted on the date of declaration; B. the issuance of Capital Stock (other than Disqualified Capital Stock) of the Company upon conversion of the Company's Class C Convertible Preferred Stock, par value $.125 per share; C. the issuance of Capital Stock (other than Disqualified Capital Stock) of the Company upon the conversion of, or in exchange for, Capital Stock of the Company; D. the declaration or payment by the Company or any Subsidiary in Capital Stock (other than Disqualified Capital Stock) of any dividend on, or the making by the Company or any Subsidiary of any distribution of Capital Stock (other than Disqualified Capital Stock) in respect of, the Capital Stock of the Company; E. the declaration or payment of any dividend or the making of any distribution in respect of the Capital Stock of any Subsidiary of the Company to the Company or another Subsidiary of the Company or the redemption, purchase, retirement or other acquisition for value by a Subsidiary of shares of such Subsidiary from the Company or another Subsidiary; F. the declaration or payment to any Person other than the Company or a Subsidiary of the Company (each such Person other than the Company or a Subsidiary of the Company being referred to as an "Equity Holder") of any dividend, the making of any distribution in respect of the Capital Stock of a Subsidiary of the Company held by any Equity Holder or the redemption, purchase, retirement or other acquisition for value by a Subsidiary of the Company of Capital Stock of such 3 4 Subsidiary held by any Equity Holder, provided that the amounts declared or paid in respect thereof subsequent to the Issue Date shall not exceed the sum of: 1. the aggregate proceeds received by such Subsidiary from purchases of equity interests in such Subsidiary by the Equity Holders or other capital contributions made by the Equity Holders to such Subsidiary subsequent to the Issue Date and 2. the Equity Holders' pro rata share of the aggregate Consolidated Operating Cash Flow of such Subsidiary (or if such aggregate Consolidated Operating Cash Flow is a deficit, minus 100% of such deficit) earned subsequent to June 30, 1993 through the end of the most recent fiscal quarter for which financial information in respect thereof is available preceding the fiscal quarter in which such declaration or payment occurs, less all other declarations or payments to Equity Holders subsequent to the Issue Date and prior to such declaration or payment; or G. the acquisition by the Company of its Capital Stock (or, in the case of clause (4), below, warrants, rights or options to purchase or acquire shares of its Capital Stock) (1) to eliminate fractional shares, (2) to collect or compromise in good faith a debt, claim or controversy with any shareholder at a price not in excess of the fair market value thereof, (3) from any shareholder who, by reason of dissent from any corporate action, is entitled under applicable laws to be paid the fair market value of his shares, (4) from a director or an employee who has purchased or otherwise acquired the shares, warrants, rights or options from the Company or a Subsidiary under an agreement permitting or obligating the Company or a Subsidiary to repurchase the shares, warrants, rights or options, but in no event for a price greater than the higher of the fair market value thereof or the price at which they were sold by the Company, or (5) pursuant to a court order; provided, that the aggregate amount paid by the Company subsequent to the Issue Date pursuant to subclauses (1), (2), (3), (4) and (5) shall not exceed $100,000,000. (ii) Change of Control. It shall be a Triggering Event if there shall be a Change of Control with respect to the Company. (iii) Amendments to Section 801. Section 801 of the Indenture is amended, but only insofar as it relates to the Notes, to read in its entirety as follows: "Section 801. Company May Consolidate, Etc., Only on Certain Terms. It shall be a Triggering Event if A. the Company consolidates with, or merges into, any other Person, B. the Company conveys or transfers (by sale, lease, assignment or otherwise), directly or indirectly, in a single transaction or a series of related transactions, its properties and assets as an entirety or substantially as an entirety to a Person or group of related Persons; or C. the Company or any Subsidiary conveys or transfers (by sale, lease, assignment or otherwise), directly or indirectly, in a single transaction or a series of related transactions not in the ordinary course of the business of the Company or such Subsidiary, as the case may be, to any Person or group of related Persons (other than the Company or another Subsidiary) its properties or assets (including Capital Stock representing a majority of the Voting Power of Subsidiaries that owned such properties or assets) if either (i) such properties or assets produced more than 25% of the Company's Consolidated Operating Cash Flow for the four fiscal quarters ending immediately prior to such conveyance or transfer for which financial information in respect thereof is available, or (ii) the 4 5 book value of such property or assets equals or exceeds 25% of the consolidated assets of the Company and its Subsidiaries at the end of the most recent fiscal quarter for which financial information in respect thereof is available, unless the following conditions are met: (1) either the Company shall be the surviving Person or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or to which the properties and assets of the Company as an entirety or substantially as an entirety are conveyed or transferred shall be organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest, if any, on all outstanding Notes and the performance of every covenant of the Indenture and provisions of the Notes on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; (3) if a supplemental indenture is required in connection with such transaction, the Company shall have delivered to the Trustee an Officers' Certificate stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with and, upon closing of the consolidation, merger, conveyance or transfer, an Opinion of Counsel stating that the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company as an entirety or substantially as an entirety is organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and has assumed, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest, if any, on all outstanding Notes and the performance of every covenant of the Indenture and provisions of the Notes on the part of the Company to be performed or observed; and (4) immediately after giving effect to such transaction on a pro forma basis the Consolidated Interest Coverage Ratio of the Company (if the Company is the surviving Person or in the event of a conveyance or transfer described in Section 801.C) or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or to which the properties and assets of the Company as an entirety or substantially as an entirety are conveyed or transferred is at least equal to 1.50 to 1." (i) Redemption of the Option of the Company. The Notes are not redeemable at the Company's option. (j) Additional Covenants. (i) Incurrence of Certain Liens. The Company shall not, and shall not permit any Subsidiary to, subject to any Lien, or suffer to exist any Lien on, the whole or any part of any Property now owned or hereafter acquired by it, except as hereinafter provided in 5 6 clause 3(d)(ii), unless the Company secures the Notes, and any other securities which may then be outstanding and entitled to the benefit of a covenant similar in effect to this covenant, equally and ratably with the indebtedness or obligations secured by such Lien, so long as any such indebtedness or obligations shall be so secured. (ii) Permitted Liens. The provisions of clause 3(j)(i) shall not be applicable to the following: A. Liens imposed by any governmental authority for taxes, assessments or charges not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or any of its Subsidiaries, as the case may be, in accordance with generally accepted accounting principles; B. pledges or deposits securing non-delinquent obligations under worker's compensation, unemployment insurance and other social security legislation; C. easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, leases, subleases, licenses, sublicenses, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; D. Liens on Property of Persons which become Subsidiaries of the Company after the Issue Date securing Debt described in clause 3(j)(iii)D hereof, provided that: 1. such Liens were in existence at the time the respective Persons became Subsidiaries of the Company and were not created in anticipation thereof; and 2. such Liens do not extend to Property other than the Property of such Subsidiary that secured such Debt; E. Liens on Works which either: 1. existed in such Works before the time of their acquisition and were not created in anticipation thereof, or 2. were created solely for the purpose of securing obligations to financiers, producers, distributors, exhibitors, completion guarantors, inventors, copyright holders, financial institutions or other participants incurred in the ordinary course of business in connection with the acquisition, financing, production, completion, distribution or exhibition of Works; F. Liens upon Property acquired after the Issue Date (by purchase, production, construction or otherwise) by the Company or any of its Subsidiaries, each of which either: 1. existed on such Property before the time of its acquisition and was not created in anticipation thereof, or 2. was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including cost of construction, production, development or acquisition) of the respective Property or of the Capital Stock or other ownership interest in the entity which owns the Property at the time of acquisition; provided that no such Lien shall extend to or cover any Property of the Company or such Subsidiary other than the respective Property so acquired (including Property so acquired indirectly as a result of the acquisition by the Company or any Subsidiary 6 7 through the acquisition of such Capital Stock or ownership interest), improvements thereon, products and proceeds thereof and revenues therefrom; G. Any Lien on the office building and hotel complex located in Atlanta, Georgia known as the CNN Center Complex, including the parking decks for such complex (to the extent such parking decks are owned or leased by the Company or its Subsidiaries), or any portion thereof and all property rights therein and the products, revenues and proceeds therefrom created as part of any mortgage financing or sale-leaseback of the CNN Center Complex; H. Liens on satellite transponders and all property rights therein and the products, revenues and proceeds therefrom which secure obligations incurred in connection with the acquisition, utilization or operation of such satellite transponders or the refinancing of any such obligations; I. additional Liens created after the Issue Date on Property, provided that the aggregate Debt secured thereby and incurred on and after the Issue Date shall not exceed on the date that any such Lien is granted, the greater of $100,000,000 and five percent (5%) of the book value, net of depreciation and amortization, of the total assets of the Company, on a consolidated basis, shown on the consolidated financial statements of the Company as of the last day of the month preceding the creation of such Lien; J. Liens existing on the Issue Date; K. Liens resulting from progress payments or partial payments under United States government contracts or subcontracts; L. Liens arising from legal proceedings, so long as such proceedings are being contested in good faith by appropriate proceedings diligently conducted and so long as execution is stayed on all judgments resulting from any such proceedings; M. restrictions arising under the Federal Communications Act of 1934, as amended, and similar statutes in effect in jurisdictions outside the United States of America; N. restrictions on the Atlanta National League Baseball Club, Inc. and Atlanta Hawks, L.P. and their respective assets imposed by Major League Baseball or the Commissioner of Baseball, and the National Basketball Association, respectively, including, without limitation, restrictions on the transferability of the Company's or any of its Subsidiary's interests therein; O. Liens imposed under capital leases entered into after the Issue Date provided that such Liens extend only to the property or assets that are the subject of such capital leases; P. Liens on Capital Stock of or other ownership interest in any Person not a Subsidiary of the Company securing Debt of such Person; Q. Liens arising in the ordinary course of business that do not secure the repayment of Debt, including, without limitation, the following Liens: 1. Liens on film or television production in favor of the Screen Actors Guild or other similar trade groups or guilds securing rights to residual payments owing to the Screen Actors Guild, such other trade group or their respective members in respect of such film or television production; 2. Liens to secure the performance of bids, trade contracts (other than for borrowed money), statutory obligations, surety and appeal bonds, leases (other than capital leases), performance bonds and other obligations of a like nature; 3. Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; 7 8 4. restrictions (other than security interests) on the transferability of investments in favor of co-investors or the issuers of such investments or imposed by law; 5. Liens on works arising out of the sale, license, syndication, transfer or other disposition of such works made in accordance with the customary practices in the film, publishing, video and television industries, of rights or interests in works, so long as such Lien attaches only to works of the Company or its Subsidiaries being so sold, licensed, syndicated, transferred or disposed of; and 6. Liens to secure the performance of operating leases provided that such Liens extend only to the property or assets that are the subject of such operating leases; R. carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens (whether or not statutory) arising in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith and by appropriate proceedings, for which a reserve or other appropriate provision, if any, as shall be required by generally accepted accounting principles shall have been made; and S. any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Property (other than a substitution of like Property). (iii) Incurrence of Senior Funded Debt. Except as hereinafter described, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, issue, incur, assume, guarantee or otherwise become liable, contingently or otherwise, with respect to, extend the maturity of or otherwise become responsible for the payment of (collectively "incur"), any Funded Debt, unless, after giving effect to (A) the issuance of such Funded Debt and (if applicable) the application of the net proceeds thereof to refinance other Funded Debt as if such Funded Debt was issued and the application of the proceeds occurred at the beginning of the period and (B) the issuance and retirement of any other Funded Debt since the first day of the period as if such Funded Debt was issued or retired at the beginning of the period, the Consolidated Interest Coverage Ratio is at least 1.50 to 1. Notwithstanding the foregoing, the Company and its Subsidiaries may incur each and all of the following: A. Debt outstanding on the Issue Date and any extension, renewal, replacement or refinancing thereof; B. Debt of Subsidiaries of the Company to the Company or to other Subsidiaries of the Company; C. up to $200,000,000 in aggregate principal amount at any one time outstanding of Debt of Subsidiaries of the Company incurred in the ordinary course of business the proceeds of which are used to finance the production, completion, distribution or exhibition of Works; D. Debt of Persons which become Subsidiaries of the Company after the Issue Date, provided that such Debt is in existence at the time the respective Persons become Subsidiaries of the Company and was not incurred or created in anticipation thereof; E. Debt of the Company to Subsidiaries of the Company; F. Debt of the Company which is subordinated in right of payment to the Notes; and G. up to $200,000,000 in aggregate principal amount of Funded Debt of the Company and its Subsidiaries outstanding at any time. For the purposes of this clause 3(j)(iii), if the Company or any of its Subsidiaries has incurred Funded Debt to any other Subsidiary of the Company and such other Subsidiary 8 9 thereafter ceases to be a Subsidiary of the Company, the Company and its Subsidiaries shall be deemed to have incurred such Funded Debt immediately after such Subsidiary ceases to be a Subsidiary of the Company. In the event that an item of Funded Debt meets the criteria of more than one type of Funded Debt described in the above paragraph, the Company shall have the right to determine in its sole discretion the category to which such Funded Debt applies and shall not be required to include the amount and type of such Funded Debt in more than one of such categories. (iv) Limitation on Subsidiary Funded Debt Notwithstanding the provisions of clause 3(j)(iii), Subsidiaries shall not incur Funded Debt if at the time of incurrence and after giving effect thereto the aggregate of the outstanding Funded Debt of Subsidiaries exceeds the greater of (x) 15% of consolidated Funded Debt of the Company and its Subsidiaries (without including Debt specified in clauses (A) through (C) of the following sentence) and (y) the sum of (i) 10% of consolidated borrowing capacity then available to the Company under the Consolidated Interest Coverage Ratio test set forth in clause 3(j)(iii) hereof plus (ii) $20,000,000. The foregoing limitation on Funded Debt of Subsidiaries shall not apply to: A. Debt of Subsidiaries of the Company incurred in the ordinary course of business the proceeds of which are used to finance the production, completion, distribution or exhibition of Works, B. Debt of Subsidiaries outstanding on the Issue Date and any extensions, renewals, replacements or refinancings thereof and C. any Debt of Subsidiaries of the nature described in clauses 3(j)(iii)B and 3(j)(iii) D hereof. (k) Satisfaction and Discharge. The indebtedness represented by the Notes may be satisfied and discharged by the Company at any time upon compliance with the provisions of Section 403 of the Indenture as amended pursuant to clause 3(o) hereof. (l) Register of Securities; Registrar and Paying Agent. The Company hereby appoints the Trustee as the initial Paying Agent with respect to the Notes. The Trustee is hereby appointed agent of the Company for the registration of transfer and exchange of the Notes. (m) Form. The Notes will be in substantially the form set forth in Exhibit A hereto and may have such other terms as are provided in such form, and said terms are incorporated herein and in the Indenture by reference. (n) Certain Definitions. The following definitions are applicable to the Notes and, in the case of any term which is defined below and which is also defined in the Indenture, such term, as used in the Indenture (but only insofar as it relates to the Notes), this Officers' Certificate and the Notes, shall have the meaning set forth below: "Change of Control" is deemed to occur on the first date on which (i) the Permitted Turner Holders and the Permitted Other Holders (individually, collectively or in the aggregate) cease to beneficially own and have the power to vote at least a majority of the aggregate voting power of the Voting Stock of the Company and (ii) within 120 days of the occurrence of the event specified in clause (i), the Notes are downgraded to (A) lower than BB+ by Standard and Poor's Corporation or any successor rating agency thereto and (B) lower than Ba2 by Moody's Investors Service or any successor rating agency thereto. As used herein, a person shall be deemed to have "beneficial ownership" with respect to, and shall be deemed to "beneficially own," any securities of the Company in accordance with the definitions of such terms in Section 13 of the Securities Exchange Act of 1934, as amended, and the rules and regulations (including Rule 13d-3, Rule 13d-5, and any successor rules) promulgated by the Securities and 9 10 Exchange Commission thereunder; provided, however, that a person shall be deemed to have beneficial ownership of all securities that any such person has a right to acquire whether such right is exercisable immediately or only after the passage of time and without regard to the 60-day limitation referred to in Rule 13d-3. "Consolidated Interest Coverage Ratio" means, for any Person, as of any date of determination, the ratio of (i) the aggregate amount of Consolidated Operating Cash Flow of such Person for the four fiscal quarters for which financial information in respect thereof is available ending immediately prior to the date of the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio (the "Transaction Date") to (ii) the aggregate Consolidated Interest Expense of such Person for the four fiscal quarters for which financial information in respect thereof is available ending immediately prior to the Transaction Date, assuming for purposes of this calculation that base interest rates in respect of floating interest obligations being incurred are equal to base interest rates on such obligations in effect as of the Transaction Date. In addition to the foregoing, for purposes of this definition "Consolidated Operating Cash Flow" and "Consolidated Interest Expense" shall be calculated after giving effect, on a pro forma basis for such four-quarter period, to (i) the acquisition of the assets, Property or business of another Person during the period commencing on the first day of such period to and including the Transaction Date (the "Reference Period") if during the Reference Period such Person becomes (or such assets, Property or business, as acquired, become all or substantially all the assets or business of) a consolidated Subsidiary of the Company and (ii) each sale, transfer, lease, mortgage or other disposition (including, without limitation, a sale-leaseback transaction or a merger or consolidation) of assets, Property or business ("disposition") or series of related dispositions during the Reference Period by the Company or any Subsidiary (other than to the Company or a Subsidiary) which disposition or series of related dispositions is not in the ordinary course of business of the Company or the Subsidiary making such disposition. "Consolidated Interest Expense" means, for any Person, for any period, the aggregate amount, determined on a consolidated basis in accordance with GAAP, of interest, whether expensed or capitalized, paid or accrued during such period, in respect of all Funded Debt of such Person and its consolidated subsidiaries. "Consolidated Operating Cash Flow" means for any Person, for any period, net income from continuing operations for such Person and its consolidated subsidiaries for such period taken as a single accounting period determined on a consolidated basis in accordance with GAAP, excluding the effect of (i) Consolidated Interest Expense; (ii) provision for income taxes; (iii) depreciation of property, plant and equipment; (iv) amortization expense (excluding amortization of licensed rights); (v) extraordinary items; (vi) the cumulative effect of a change in accounting principle; and (vii) gains or losses on the sale of assets to the extent such gains or losses are included in the calculation of net income from continuing operations, all as determined in accordance with GAAP. "Disqualified Capital Stock" means, (i) with respect to any Person, any Capital Stock of such Person that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased by such Person or its subsidiaries, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or the passage of time would have, a redemption or similar payment due, on or prior to the earlier of the Stated Maturity of the Notes or the first date on which none of the Notes are outstanding and (ii) with respect to any Subsidiary of the Company, any Capital Stock of such Subsidiary that has a preference, conditionally or otherwise, as to the declaration, payment or accrual of dividends, the distribution of assets upon liquidation, dissolution or winding up, or both, over any other Capital Stock of such Subsidiary. 10 11 "Funded Debt" means, with respect to any Person at any date, without duplication (a) indebtedness created, issued or incurred by such Person for borrowed money (whether by loan or the issuance and sale of debt securities); (b) obligations of such Person (contingent or otherwise) in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person (other than trade letters of credit or letters of credit securing performance of bids, trade contracts, statutory obligations (including obligations in respect of taxes and tax refunds), surety and appeal bonds, leases, performance bonds and similar obligations), (c) Capitalized Lease Obligations of such Person and (d) Funded Debt of others Guaranteed by such Person. For purposes of calculating the amount of any Funded Debt hereunder: (i) there shall be no double-counting of direct obligations, Guarantees and reimbursement obligations for letters of credit, (ii) the principal amount of any Funded Debt of any Person arising by reason of such Person having granted a Lien on its Property to secured Funded Debt of others, when such Funded Debt has not been assumed by such Person, shall be the lower of the principal amount of such Funded Debt or the fair market value of such Property at the time the Lien is granted by such Person and (iii) the principal amount of any Funded Debt of any Person arising by reason of such Person having Guaranteed Funded Debt of others where the amount of such Guarantee is limited to an amount less than the principal amount of the Funded Debt Guaranteed, shall be the amount as so limited. "GAAP" means generally accepted accounting principles as in effect on the date hereof. "Issue Date" means February 3, 1994. "Permitted Other Holders" means (a) each Person that, on the date hereof, was either (i) the beneficial holder (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect on the Issue Date) of shares of the Class C Convertible Preferred Stock, par value $.125 per share, of the Company or (ii) an Affiliate of a Person specified in clause (i) above and (b) each Person at least 51% of the voting power of the Voting Stock of which is beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect on the Issue Date) by one or more of the Persons specified in clause (a) above. "Permitted Turner Holders" means R.E. Turner and his estate, heirs and legatees, and the legal representatives of any of the foregoing, including, without limitation, the Turner Foundation, Inc., Turner Charitable Remainder Unitrust or the trustee of any trust of which one or more of the foregoing are the sole beneficiaries. "Property" means with respect to any Person, any and all tangible or intangible property, assets, revenues, rights (including, without limitation with respect to the Company, rights of the Company and/or any of its Subsidiaries to use (whether by ownership, license or otherwise) copyrighted programs, programming, films and similar assets) or business of such Person, owned by leasehold or in fee, by license, sublicense or outright, whether now owned or hereafter acquired by such Person. "Restricted Payment" means (a) the declaration or payment by the Company or any Subsidiary, either in cash or in property, of any dividend on, or the making by the Company or any Subsidiary of any other distribution in respect of, the Capital Stock of the Company or any Subsidiary, or (b) the redemption, repurchase, retirement or other acquisition for value (whether in cash, property or otherwise) by the Company or any Subsidiary, directly or indirectly, of any Capital Stock of the Company. "Works" means motion pictures, video, television, interactive or multi-media programming, audio-visual works, sound recordings, books and other literary or written material, any software, copyright or other intellectual property related thereto, acquired directly or indirectly after the date hereof by purchase, business combination, production, creation or otherwise, any 11 12 component of the foregoing or rights with respect thereto, and all improvements thereon, products and proceeds thereof and revenues derived therefrom. "works" means Works without reference to when acquired. (o) Amendments to Section 403. Section 403 of the Indenture is amended, but only insofar as it relates to the Notes, to read in its entirety as follows: "Section 403. Satisfaction, Discharge and Defeasance of the Notes. The Company will be deemed to have been Discharged (as defined below) from its obligations with respect to the Notes when (1) with respect to all Outstanding Notes, the Company has deposited or caused to be deposited with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes, (i) money in an amount as will or (ii) U.S. Government Obligations (as defined below), as will, together with the predetermined and certain income to accrue thereon, without consideration of any reinvestment thereof, or (iii) a combination of (i) and (ii) as will (in a written opinion with respect to (ii) or (iii) of independent public accountants delivered to the Trustee), be sufficient to pay and discharge the entire principal of and interest, if any, to Stated Maturity on the Outstanding Notes at the time such payments become due; (2) the Company has paid or caused to be paid all other sums payable with respect to the Notes; (3) no default or Event of Default shall have occurred and be continuing and no Triggering Event shall have occurred as to which the Company has not fully satisfied the Redemption Rights of all Holders electing to have their Notes redeemed; and (4) the Company has delivered to the Trustee an Officers' Certificate stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the entire indebtedness on all Outstanding Notes have been complied with and an Opinion of Counsel to the effect that no other action under the Indenture is required as a precondition to the discharge of the Company's obligations. Any deposits with the Trustee referred to in Section 403(1) above shall be irrevocable and shall be made under the terms of an escrow trust agreement in form and substance satisfactory to the Trustee." (4) Defined Terms. Terms (whether or not capitalized) used herein and not otherwise defined shall have the meanings specified in the Indenture. Each of the undersigned, for himself, states that he has read and is familiar with the provisions of Articles II and III of the Indenture relating to the establishment of the form of security representing a series of Securities thereunder and the establishment of the terms of a series of Securities thereunder and, in each case, the definitions therein relating thereto; that he is generally familiar with the other provisions of the Indenture and with the affairs of the Company and its acts and proceedings and that the statements and opinions made by him in this Officers' Certificate are based upon such familiarity; and that, in his opinion, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not the covenants or conditions referred to above have been complied with, and that in his opinion such covenants and conditions have been complied with. [Remainder of page intentionally left blank] 12 13 IN WITNESS WHEREOF, the undersigned have hereunto signed this Certificate on behalf of the Company as of this 3rd day of February, 1994. TURNER BROADCASTING SYSTEM, INC. By Wayne H. Pace Vice President-Finance and Chief Financial Officer By: Steven W. Korn Vice President, Secretary and General Counsel 13 14 EXHIBIT A [FORM OF FACE OF NOTE] REGISTERED NUMBER: PRINCIPAL AMOUNT: CUSIP: TURNER BROADCASTING SYSTEM, INC. 7.40% SENIOR NOTE DUE 2004 Turner Broadcasting System, Inc., a Georgia corporation (herein called the "Company", which term shall refer to such Company until a successor corporation shall have become such pursuant to the provisions of the Indenture referred to on the reverse hereof and thereafter "Company" shall mean such successor corporation), for value received, hereby promises to pay to , or registered assigns, the principal sum of $ on February 1, 2004, and to pay interest thereon from February 1, 1994 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semiannually on February 1 and August 1 of each year, commencing February 1, 1994, at the rate of seven and four-tenths percent (7.40%) per annum until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest, which shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any interest not punctually paid or provided for shall forthwith cease to be paid to the holder on such Regular Record Date and may either be paid to the Persons in whose names this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date established for the payment of such defaulted interest fixed by the Trustee, notice whereof shall be given to the Holders of Notes of the series not less than fifteen (15) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of this Note will be made at the office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts upon surrender of this Note, and any interest on this Note will be paid at the by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. A-1 15 Unless the Certificate of Authentication has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. TURNER BROADCASTING SYSTEM, INC. By: -------------------------------- Title: --------------------------- Attest: ---------------------------- Title: --------------------------- (CORPORATE SEAL) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series designated herein issued under the within mentioned Indenture. Dated: -------------- THE FIRST NATIONAL BANK OF BOSTON, as Trustee By: ---------------------------------- Authorized Signatory A-2 16 [FORM OF REVERSE OF NOTE] TURNER BROADCASTING SYSTEM, INC. 7.40% SENIOR NOTE DUE 2004 This Note is one of a duly authorized issue of Securities of the Company (which series is herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of May 15, 1993, (as amended or supplemented from time to time, and including, with respect to a particular series of securities, the terms of such securities established as contemplated by Section 301, whether established in or pursuant to a supplemental indenture, a Board Resolution or an Officers' Certificate, the "Indenture") between the Company and The First National Bank of Boston, as Trustee (herein called the "Trustee," which term includes any successor trustee or trustees under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are and are to be authenticated and delivered. This Note is one of the series designated on the face hereof, limited in the aggregate principal amount to $250,000,000 issued pursuant to the Indenture. This Note is not redeemable at the option of the Company prior to its Stated Maturity. Each Holder shall have the option to require the Company to redeem all, but not less than all, of the Notes owned by such Holder at a redemption price, payable in cash, equal to 101% of the principal amount, plus accrued and unpaid interest to the date fixed for redemption upon the occurrence of certain Triggering Events, such as certain payments in respect of Capital Stock, a Change in Control or certain mergers, consolidations or sales of assets and properties. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Securities at that time outstanding of all series to be affected (acting as one class). The Indenture also provides that, regarding the Notes, the Holders of not less than a majority in principal amount of the Notes at the time outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Notes. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future holders of this Note and of any Note issued upon the register of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon the Note. As provided in the Indenture, the Company shall be discharged from its obligations with respect to the Notes when (1) with respect to all Outstanding Notes, the Company has deposited or caused to be deposited with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes (i) money in an amount as will or (ii) U.S. Government Obligations, as will, together with the predetermined and certain income to accrue thereon without consideration of any reinvestment thereof, or (iii) a combination of (i) and (ii) as will (in a written opinion with respect to (ii) or (iii) of independent public accountants delivered to the Trustee) be sufficient to pay and discharge the entire indebtedness on all outstanding Notes of such series for principal, premium, if any and interest, if any, to the Stated Maturity or any Redemption Date, as the case may be, (2) the Company has paid or caused to be paid all other sums payable with respect to the Notes, (3) no default or Event of Default shall have occurred and be continuing and no Triggering Event shall have occurred as to which the Company has not fully satisfied the Redemption Rights of all Holders electing to have their Notes redeemed and (4) the Company has delivered to the Trustee an Officers' Certificate stating that all such conditions precedent have been complied with and an Opinion of Counsel to the effect that no other action under the Indenture is required as a precondition to the discharge of the Company's obligations. Upon and following the deposit of such funds or U.S. Government Obligations and satisfaction of such other conditions the Holders shall only be entitled to receive payment of A-3 17 the principal of (and premium, if any) and interest, if any, on the Notes from deposited funds and the Company shall have no further obligations with respect thereto except for certain obligations with respect to transfer and exchange of the Notes. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest, if any, on the Notes at the times, place and rate, and in the coin or currency herein and in the Indenture provided; subject, however, to the provisions for the discharge of the Company from its obligations under the Notes upon satisfaction of the conditions set forth in the preceding paragraph or in the Indenture. As provided in the Indenture, upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Company as an entirety or substantially as an entirety in accordance with the provisions of the Indenture, the successor corporation formed by such consolidation or into which the predecessor corporation is merged or to which such conveyance, transfer or lease is made shall be substituted for the predecessor corporation with the same effect as if such successor corporation had been named as the Company. Thereafter the predecessor corporation shall be relieved of the performance and observance of all obligations and covenants of the Indenture and the Notes, including but not limited to the obligation to make payment of the principal of and interest, if any, on all the Notes then outstanding, and, in the event of any such conveyance, transfer or lease, may be liquidated and dissolved. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and Security Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more Notes of authorized denominations and for like aggregate principal amount and tenor will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any larger amount that is an integral multiple of $1,000. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like principal amount and tenor of Notes of a different authorized denomination, upon surrender of the Notes to be exchanged at the office or agency of the Company maintained for such purpose. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to the due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name the Note is registered as the owner hereof for all purposes, whether or not the Notes shall be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agents will pay the money back to the Company at its request. After that, all liability of the Trustee and such Paying Agents with respect to such money shall cease. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries, among other things, to incur senior Funded Debt and create Liens. The Indenture also imposes additional limitations on the ability of Subsidiaries of the Company to incur Funded Debt. These limitations are subject to important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. As provided in the Indenture, no recourse shall be had for the payment of the principal of, premium, if any, or the interest, if any, on this Note or any part hereof or for any claim based hereon or otherwise in respect hereof, or of the indebtedness represented hereby, or upon any obligation, covenant or agreement of A-4 18 the Company in the Indenture against any incorporator, direct or indirect stockholder, officer, director, as such, past, present or future, of the Company, or of any successor corporation, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all liability, if any, of that character against every such incorporator, stockholder, officer and director, being by the acceptance hereof, and as a condition of and as a part of the consideration for the issue hereof, expressly waived and released. THE INDENTURE AND NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Note shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties with right of survivorship and not as tenants in common JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT ACT -- (cust) custodian (minor) under Uniform Gift to Minors Act (state)
Additional abbreviations may also be used that are not in the above list. --------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) to the within Note of Turner Broadcasting System, Inc. and irrevocably constitutes and appoints attorney to transfer such Note on the books of the within named Company, with full power of substitution in the premises. Dated: --------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement, or any change whatsoever. The signature should be guaranteed by a commercial bank or trust company, or by a New York, American, Boston, Midwest, Philadelphia or Pacific stock exchange member, a member of the National Association of Securities Dealers, Inc., or firm whose signature is known to the registrar. A-5 EX-4.(G) 4 OFFICERS' CERTIFICATE 1 EXHIBIT 4(G) TURNER BROADCASTING SYSTEM, INC. OFFICERS' CERTIFICATE Pursuant to Sections 201 and 301 of the Indenture, dated as of May 15, 1993, relating to senior debt securities (including the Turner Broadcasting System, Inc. Standard Multiple-Series Indenture Provisions dated May 15, 1993 incorporated therein by reference, as amended or supplemented from time to time, and including, with respect to a particular series of securities, the terms of such securities established as contemplated by Section 301, whether established in or pursuant to a supplemental indenture, a Board Resolution or an Officers' Certificate, the "Indenture"), between Turner Broadcasting System, Inc., a Georgia corporation (the "Company"), and The First National Bank of Boston, as trustee (the "Trustee"), the undersigned, Wayne H. Pace, Vice President-Finance and Chief Financial Officer of the Company, and Steven W. Korn, Vice President, Secretary and General Counsel of the Company, hereby certify on behalf of the Company as follows: (1) Authorization. The establishment of a series of Securities of the Company has been approved and authorized in accordance with the provisions of the Indenture and in accordance with resolutions adopted by unanimous written consent of the Board of Directors of the Company on April 24, 1993 and resolutions adopted by unanimous written consent of the Finance Committee of the Board of Directors of the Company on January 18, 1994. (2) Compliance with Covenants and Conditions Precedent. All covenants and conditions precedent provided for in the Indenture relating to the establishment of the form and terms of the Debentures (as defined below) as a series of Securities have been complied with. (3) Terms. The terms of the series of the Securities established pursuant to this Officers' Certificate shall be as follows: (a) Title. The title of the series of Securities is the "8.40% Senior Debentures due 2024" (the "Debentures"). (b) Aggregate Principal Amount. The aggregate principal amount of the Debentures which may be authenticated and delivered pursuant to the Indenture (except for Debentures authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debentures pursuant to Sections 304, 305, 306 and 906 of the Indenture) is $200,000,000. (c) Persons to Whom Interest Payable. Interest on any Debenture which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date (whether or not a Business Day) for such interest set forth in Section 3(e), except that defaulted interest shall be payable to the persons provided in Section 307 of the Indenture. (d) Stated Maturity. The outstanding principal amount of the Debentures will be payable on February 1, 2024. (e) Rate of Interest; Interest Payment Date; Regular Record Date; Accrual of Interest. The Debentures will bear interest at a rate of 8.40% per annum. Interest on the Debentures will be paid semi-annually in arrears on February 1 and August 1 of each year (each of which is an Interest Payment Date with respect to the Debentures), commencing on August 1, 1994, and at maturity. The Regular Record Date for interest payable on each February 1 will be the immediately preceding January 15, and the Regular Record Date for interest payable on each August 1 will be the immediately preceding July 15 (in each case whether or not a Business Day). 2 The Debentures will bear interest from February 1, 1994 or from the most recent date to which interest has been paid or duly provided for until the principal thereof is paid or made available for payment. Interest payments shall be the amount of interest accrued from and including the most recent date in respect of which interest has been paid or duly provided for (or from and including February 1, 1994 if no interest has been paid or duly provided for with respect to such Debenture), to but excluding the next succeeding Interest Payment Date (or, if applicable, Redemption Date or other payment date). Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Debentures shall be issuable as fully registered senior debentures, without coupons in denominations of $1,000 and any integral multiple thereof. (f) Place of Payment; Registration of Transfer and Exchange; Notices to Company. Payment of the principal of and interest on the Debentures will be made at the Corporate Trust Office of the Trustee, or at any other office or agency designated by the Company for such purpose; provided, however, that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register. The Debentures may be presented for registration of transfer or exchange at the Corporate Trust Office of the Trustee or at any other office or agency hereafter designated by the Company for such purpose. Notices and demands to or upon the Company in respect of the Debentures and the Indenture may be served at the Corporate Trust Office of the Trustee or at Turner Broadcasting System, Inc., One CNN Center, Atlanta, Georgia 30303, Attention: Secretary, or at such other address as the Company may designate by notice to holders. (g) Redemption at the Option of the Holder. (i) Upon the occurrence of a Triggering Event (as defined in Section 3(h)), subject to the conditions of this clause (g), each Holder of Debentures shall have the option to require the Company to redeem all, but not less than all, of the Debentures owned by such Holder (the "Redemption Right") at a redemption price, payable in cash, equal to 101% of the principal amount, plus accrued and unpaid interest to the date fixed for redemption. (ii) If a Triggering Event occurs with respect to the Company, then, as soon as practicable and in any event within 30 days after the occurrence of such Triggering Event, the Company shall mail to each Holder and the Trustee a notice which shall disclose the occurrence of the Triggering Event and the right of the Holder to require the Company to redeem all, but not less than all, of such Holder's Debentures pursuant to this clause (g) and shall state the Redemption Date (as defined below), the redemption price, the name and address of the Paying Agent, and that the Debentures to be redeemed must be surrendered to the Paying Agent in order for the Holder of the Debentures to collect the redemption price. Such notice shall be accompanied by a form of written demand to be used by the Holder to exercise his Redemption Right (a "Demand Form"). (iii) In the event of any Triggering Event each Holder shall have the Redemption Right for a period of 45 days after the date that notice of such Triggering Event is mailed to Holders of the Debentures and the Trustee pursuant to clause (g)(ii); provided, that the failure of the Company to mail such notice shall not affect the right of the Holders to require the Company to repurchase such Holders' Debentures, in which event the Redemption Date shall be the 45th day following the last day on which the Company was permitted to mail such notice pursuant to clause (g)(ii). A Holder may exercise such Redemption Right at any time within the 45-day period after the mailing of such notice by the Company by submitting to the Trustee not later than the close of business on the Redemption Date a completed Demand Form relating to the Debentures to be redeemed. Unless sooner exercised, the Redemption Right will expire with respect to such Triggering Event at the close of business on the last day of such 45-day period (the "Redemption Date"). Exercise of such Redemption Right will be irrevocable and interest on the Debentures tendered for redemption will cease to accrue from and after the Redemption Date. 2 3 (iv) Within 30 days after the occurrence of a Triggering Event (but in any event not later than the date notice of such Triggering Event is mailed to the Holders and the Trustee), the Company shall deposit with the Trustee or one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 1003) immediately available funds in an amount sufficient to redeem on the Redemption Date all of the Debentures outstanding on the date of the delivery of such notice. Following payment of the Redemption Price of all Debentures required to be redeemed pursuant to this clause (g), all funds remaining from the amounts previously deposited with the Trustee or other Paying Agent or set aside by the Company, and all interest earned thereon, shall belong and be immediately released to the Company as part of its general funds (or assets). (v) The provisions of this clause 3(g) shall supersede the redemption provisions in Article XI of the Indenture for purposes of any redemption at the option of the Holders of the Debentures. (vi) The Company will comply with all applicable tender offer rules under the Securities Exchange Act of 1934, as amended, including, but not limited to, Rule 14e-1 thereunder, as then in effect, with respect to any offer by the Company to redeem the Debentures upon a Triggering Event. (h) Triggering Events. Each of the following events set forth in clauses (i), (ii) or (iii) below shall be a "Triggering Event" as used herein. (i) Restricted Payments. It shall be a Triggering Event if the Company or any of its Subsidiaries declares or makes any Restricted Payment if, at the time of such Restricted Payment, (x) an Event of Default shall have occurred and be continuing or would result therefrom or (y) after giving effect to such Restricted Payment, the Consolidated Interest Coverage Ratio of the Company would be less than 1.50 to 1. Notwithstanding the foregoing, the following actions shall not be a Triggering Event: A. the payment of any dividend within 60 days after the date of its declaration if the dividend would have been permitted on the date of declaration; B. the issuance of Capital Stock (other than Disqualified Capital Stock) of the Company upon conversion of the Company's Class C Convertible Preferred Stock, par value $.125 per share; C. the issuance of Capital Stock (other than Disqualified Capital Stock) of the Company upon the conversion of, or in exchange for, Capital Stock of the Company; D. the declaration or payment by the Company or any Subsidiary in Capital Stock (other than Disqualified Capital Stock) of any dividend on, or the making by the Company or any Subsidiary of any distribution of Capital Stock (other than Disqualified Capital Stock) in respect of, the Capital Stock of the Company; E. the declaration or payment of any dividend or the making of any distribution in respect of the Capital Stock of any Subsidiary of the Company to the Company or another Subsidiary of the Company or the redemption, purchase, retirement or other acquisition for value by a Subsidiary of shares of such Subsidiary from the Company or another Subsidiary; F. the declaration or payment to any Person other than the Company or a Subsidiary of the Company (each such Person other than the Company or a Subsidiary of the Company being referred to as an "Equity Holder") of any dividend, the making of any distribution in respect of the Capital Stock of a Subsidiary of the Company held by any Equity Holder or the redemption, purchase, retirement or other 3 4 acquisition for value by a Subsidiary of the Company of Capital Stock of such Subsidiary held by any Equity Holder, provided that the amounts declared or paid in respect thereof subsequent to the Issue Date shall not exceed the sum of: 1. the aggregate proceeds received by such Subsidiary from purchases of equity interests in such Subsidiary by the Equity Holders or other capital contributions made by the Equity Holders to such Subsidiary subsequent to the Issue Date and 2. the Equity Holders' pro rata share of the aggregate Consolidated Operating Cash Flow of such Subsidiary (or if such aggregate Consolidated Operating Cash Flow is a deficit, minus 100% of such deficit) earned subsequent to June 30, 1993 through the end of the most recent fiscal quarter for which financial information in respect thereof is available preceding the fiscal quarter in which such declaration or payment occurs, less all other declarations or payments to Equity Holders subsequent to the Issue Date and prior to such declaration or payment; or G. the acquisition by the Company of its Capital Stock (or, in the case of clause (4), below, warrants, rights or options to purchase or acquire shares of its Capital Stock) (1) to eliminate fractional shares, (2) to collect or compromise in good faith a debt, claim or controversy with any shareholder at a price not in excess of the fair market value thereof, (3) from any shareholder who, by reason of dissent from any corporate action, is entitled under applicable laws to be paid the fair market value of his shares, (4) from a director or an employee who has purchased or otherwise acquired the shares, warrants, rights or options from the Company or a Subsidiary under an agreement permitting or obligating the Company or a Subsidiary to repurchase the shares, warrants, rights or options, but in no event for a price greater than the higher of the fair market value thereof or the price at which they were sold by the Company, or (5) pursuant to a court order; provided, that the aggregate amount paid by the Company subsequent to the Issue Date pursuant to subclauses (1), (2), (3), (4) and (5) shall not exceed $100,000,000. (ii) Change of Control. It shall be a Triggering Event if there shall be a Change of Control with respect to the Company. (iii) Amendments to Section 801. Section 801 of the Indenture is amended, but only insofar as it relates to the Debentures, to read in its entirety as follows: "Section 801. Company May Consolidate, Etc., Only on Certain Terms. It shall be a Triggering Event if A. the Company consolidates with, or merges into, any other Person, B. the Company conveys or transfers (by sale, lease, assignment or otherwise), directly or indirectly, in a single transaction or a series of related transactions, its properties and assets as an entirety or substantially as an entirety to a Person or group of related Persons; or C. the Company or any Subsidiary conveys or transfers (by sale, lease, assignment or otherwise), directly or indirectly, in a single transaction or a series of related transactions not in the ordinary course of the business of the Company or such Subsidiary, as the case may be, to any Person or group of related Persons (other than the Company or another Subsidiary) its properties or assets (including Capital Stock representing a majority of the Voting Power of Subsidiaries that owned such properties or assets) if either (i) such properties or assets produced more than 25% of the Company's Consolidated Operating Cash Flow for the four fiscal quarters ending immediately prior to such conveyance or 4 5 transfer for which financial information in respect thereof is available, or (ii) the book value of such property or assets equals or exceeds 25% of the consolidated assets of the Company and its Subsidiaries at the end of the most recent fiscal quarter for which financial information in respect thereof is available, unless the following conditions are met: (1) either the Company shall be the surviving Person or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or to which the properties and assets of the Company as an entirety or substantially as an entirety are conveyed or transferred shall be organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest, if any, on all outstanding Debentures and the performance of every covenant of the Indenture and provisions of the Debentures on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; (3) if a supplemental indenture is required in connection with such transaction, the Company shall have delivered to the Trustee an Officers' Certificate stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with and, upon closing of the consolidation, merger, conveyance or transfer, an Opinion of Counsel stating that the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company as an entirety or substantially as an entirety is organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and has assumed, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest, if any, on all outstanding Debentures and the performance of every covenant of the Indenture and provisions of the Debentures on the part of the Company to be performed or observed; and (4) immediately after giving effect to such transaction on a pro forma basis the Consolidated Interest Coverage Ratio of the Company (if the Company is the surviving Person or in the event of a conveyance or transfer described in Section 801.C) or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or to which the properties and assets of the Company as an entirety or substantially as an entirety are conveyed or transferred is at least equal to 1.50 to 1." (i) Redemption at the Option of the Company. The Debentures are redeemable, at the Company's option, in whole or in part, at any time on or after February 1, 2004 and prior to maturity, upon not less than 30 nor more than 60 days' prior notice given in accordance with the provisions of Article XI of the Indenture, at the following Redemption Prices (expressed as a percentage of principal amount), in each case together with accrued and unpaid interest if any, to but excluding 5 6 the Redemption Date, if redeemed during the 12-month period beginning February 1 of the years indicated below:
REDEMPTION YEAR PRICE ----------------------- ---------- 2004................... 104.161% 2005................... 103.745 2006................... 103.329 2007................... 102.913 2008................... 102.497 2009................... 102.081 2010................... 101.664 2011................... 101.248 2012................... 100.832 2013................... 100.416 2014 and thereafter.... 100.000%
If less than all of the Debentures are to be redeemed, the Trustee shall select the Debentures or the portion thereof to be redeemed pro rata, by lot or by any other method the Trustee shall deem fair and reasonable. To the extent not addressed in this clause 3(i), any such redemption will comply with the provisions of Article XI of the Indenture. (j) Additional Covenants. (i) Incurrence of Certain Liens. The Company shall not, and shall not permit any Subsidiary to, subject to any Lien, or suffer to exist any Lien on, the whole or any part of any Property now owned or hereafter acquired by it, except as hereinafter provided in clause 3(j)(ii), unless the Company secures the Debentures, and any other securities which may then be outstanding and entitled to the benefit of a covenant similar in effect to this covenant, equally and ratably with the indebtedness or obligations secured by such Lien, so long as any such indebtedness or obligations shall be so secured. (ii) Permitted Liens. The provisions of clause 3(j)(i) shall not be applicable to the following: A. Liens imposed by any governmental authority for taxes, assessments or charges not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or any of its Subsidiaries, as the case may be, in accordance with generally accepted accounting principles; B. pledges or deposits securing non-delinquent obligations under worker's compensation, unemployment insurance and other social security legislation; C. easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, leases, subleases, licenses, sublicenses, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; D. Liens on Property of Persons which become Subsidiaries of the Company after the Issue Date securing Debt described in clause 3(j)(iii)D hereof, provided that: 1. such Liens were in existence at the time the respective Persons became Subsidiaries of the Company and were not created in anticipation thereof; and 6 7 2. such Liens do not extend to Property other than the Property of such Subsidiary that secured such Debt; E. Liens on Works which either: 1. existed in such Works before the time of their acquisition and were not created in anticipation thereof, or 2. were created solely for the purpose of securing obligations to financiers, producers, distributors, exhibitors, completion guarantors, inventors, copyright holders, financial institutions or other participants incurred in the ordinary course of business in connection with the acquisition, financing, production, completion, distribution or exhibition of Works; F. Liens upon Property acquired after the Issue Date (by purchase, production, construction or otherwise) by the Company or any of its Subsidiaries, each of which either: 1. existed on such Property before the time of its acquisition and was not created in anticipation thereof, or 2. was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including cost of construction, production, development or acquisition) of the respective Property or of the Capital Stock or other ownership interest in the entity which owns the Property at the time of acquisition; provided that no such Lien shall extend to or cover any Property of the Company or such Subsidiary other than the respective Property so acquired (including Property so acquired indirectly as a result of the acquisition by the Company or any Subsidiary through the acquisition of such Capital Stock or ownership interest), improvements thereon, products and proceeds thereof and revenues therefrom; G. Any Lien on the office building and hotel complex located in Atlanta, Georgia known as the CNN Center Complex, including the parking decks for such complex (to the extent such parking decks are owned or leased by the Company or its Subsidiaries), or any portion thereof and all property rights therein and the products, revenues and proceeds therefrom created as part of any mortgage financing or sale-leaseback of the CNN Center Complex; H. Liens on satellite transponders and all property rights therein and the products, revenues and proceeds therefrom which secure obligations incurred in connection with the acquisition, utilization or operation of such satellite transponders or the refinancing of any such obligations; I. additional Liens created after the Issue Date on Property, provided that the aggregate Debt secured thereby and incurred on and after the Issue Date shall not exceed on the date that any such Lien is granted, the greater of $100,000,000 and five percent (5%) of the book value, net of depreciation and amortization, of the total assets of the Company, on a consolidated basis, shown on the consolidated financial statements of the Company as of the last day of the month preceding the creation of such Lien; J. Liens existing on the Issue Date; K. Liens resulting from progress payments or partial payments under United States government contracts or subcontracts; L. Liens arising from legal proceedings, so long as such proceedings are being contested in good faith by appropriate proceedings diligently conducted and so long as execution is stayed on all judgments resulting from any such proceedings; 7 8 M. restrictions arising under the Federal Communications Act of 1934, as amended, and similar statutes in effect in jurisdictions outside the United States of America; N. restrictions on the Atlanta National League Baseball Club, Inc. and Atlanta Hawks, Ltd. and their respective assets imposed by Major League Baseball or the Commissioner of Baseball, and the National Basketball Association, respectively, including, without limitation, restrictions on the transferability of the Company's or any of its Subsidiary's interests therein; O. Liens imposed under capital leases entered into after the Issue Date provided that such Liens extend only to the property or assets that are the subject of such capital leases; P. Liens on Capital Stock of or other ownership interest in any Person not a Subsidiary of the Company securing Debt of such Person; Q. Liens arising in the ordinary course of business that do not secure the repayment of Debt, including, without limitation, the following Liens: 1. Liens on film or television production in favor of the Screen Actors Guild or other similar trade groups or guilds securing rights to residual payments owing to the Screen Actors Guild, such other trade group or their respective members in respect of such film or television production; 2. Liens to secure the performance of bids, trade contracts (other than for borrowed money), statutory obligations, surety and appeal bonds, leases (other than capital leases), performance bonds and other obligations of a like nature; 3. Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; 4. restrictions (other than security interests) on the transferability of investments in favor of co-investors or the issuers of such investments or imposed by law; 5. Liens on works arising out of the sale, license, syndication, transfer or other disposition of such works made in accordance with the customary practices in the film, publishing, video and television industries, of rights or interests in works, so long as such Lien attaches only to works of the Company or its Subsidiaries being so sold, licensed, syndicated, transferred or disposed of; and 6. Liens to secure the performance of operating leases provided that such Liens extend only to the property or assets that are the subject of such operating leases; R. carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens (whether or not statutory) arising in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith and by appropriate proceedings, for which a reserve or other appropriate provision, if any, as shall be required by generally accepted accounting principles shall have been made; and S. any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Property (other than a substitution of like Property). (iii) Incurrence of Senior Funded Debt. Except as hereinafter described, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, issue, incur, assume, guarantee or otherwise become liable, contingently or otherwise, with respect to, extend the maturity of or otherwise become responsible for the payment of (collectively "incur"), any Funded Debt, unless, after giving effect to (A) the issuance of such Funded Debt and (if applicable) the application of the net proceeds thereof to refinance other Funded Debt as if such Funded Debt was issued and the application of the proceeds occurred at the beginning 8 9 of the period and (B) the issuance and retirement of any other Funded Debt since the first day of the period as if such Funded Debt was issued or retired at the beginning of the period, the Consolidated Interest Coverage Ratio is at least 1.50 to 1. Notwithstanding the foregoing, the Company and its Subsidiaries may incur each and all of the following: A. Debt outstanding on the Issue Date and any extension, renewal, replacement or refinancing thereof; B. Debt of Subsidiaries of the Company to the Company or to other Subsidiaries of the Company; C. up to $200,000,000 in aggregate principal amount at any one time outstanding of Debt of Subsidiaries of the Company incurred in the ordinary course of business the proceeds of which are used to finance the production, completion, distribution or exhibition of Works; D. Debt of Persons which become Subsidiaries of the Company after the Issue Date, provided that such Debt is in existence at the time the respective Persons become Subsidiaries of the Company and was not incurred or created in anticipation thereof; E. Debt of the Company to Subsidiaries of the Company; F. Debt of the Company which is subordinated in right of payment to the Debentures; and G. up to $200,000,000 in aggregate principal amount of Funded Debt of the Company and its Subsidiaries outstanding at any time. For the purposes of this clause 3(j)(iii), if the Company or any of its Subsidiaries has incurred Funded Debt to any other Subsidiary of the Company and such other Subsidiary thereafter ceases to be a Subsidiary of the Company, the Company and its Subsidiaries shall be deemed to have incurred such Funded Debt immediately after such Subsidiary ceases to be a Subsidiary of the Company. In the event that an item of Funded Debt meets the criteria of more than one type of Funded Debt described in the above paragraph, the Company shall have the right to determine in its sole discretion the category to which such Funded Debt applies and shall not be required to include the amount and type of such Funded Debt in more than one of such categories. (iv) Limitation on Subsidiary Funded Debt Notwithstanding the provisions of clause 3(j)(iii), Subsidiaries shall not incur Funded Debt if at the time of incurrence and after giving effect thereto the aggregate of the outstanding Funded Debt of Subsidiaries exceeds the greater of (x) 15% of consolidated Funded Debt of the Company and its Subsidiaries (without including Debt specified in clauses (A) through (C) of the following sentence) and (y) the sum of (i) 10% of consolidated borrowing capacity then available to the Company under the Consolidated Interest Coverage Ratio test set forth in clause 3(j)(iii) hereof plus (ii) $20,000,000. The foregoing limitation on Funded Debt of Subsidiaries shall not apply to: A. Debt of Subsidiaries of the Company incurred in the ordinary course of business the proceeds of which are used to finance the production, completion, distribution or exhibition of Works, B. Debt of Subsidiaries outstanding on the Issue Date and any extensions, renewals, replacements or refinancings thereof and 9 10 C. any Debt of Subsidiaries of the nature described in clauses 3(j)(iii)B and 3(j)(iii) D hereof. (k) Satisfaction and Discharge. The indebtedness represented by the Debentures may be satisfied and discharged by the Company at any time upon compliance with the provisions of Section 403 of the Indenture as amended pursuant to clause 3(o) hereof. (l) Register of Securities; Registrar and Paying Agent. The Company hereby appoints the Trustee as the initial Paying Agent with respect to the Debentures. The Trustee is hereby appointed agent of the Company for the registration of transfer and exchange of the Debentures. (m) Form. The Debentures will be in substantially the form set forth in Exhibit A hereto and may have such other terms as are provided in such form, and said terms are incorporated herein and in the Indenture by reference. (n) Certain Definitions. The following definitions are applicable to the Debentures and, in the case of any term which is defined below and which is also defined in the Indenture, such term, as used in the Indenture (but only insofar as it relates to the Debentures), this Officers' Certificate and the Debentures, shall have the meaning set forth below: "Change of Control" is deemed to occur on the first date on which (i) the Permitted Turner Holders and the Permitted Other Holders (individually, collectively or in the aggregate) cease to beneficially own and have the power to vote at least a majority of the aggregate voting power of the Voting Stock of the Company and (ii) within 120 days of the occurrence of the event specified in clause (i), the Debentures are downgraded to (A) lower than BB+ by Standard and Poor's Corporation or any successor rating agency thereto and (B) lower than Ba2 by Moody's Investors Service or any successor rating agency thereto. As used herein, a person shall be deemed to have "beneficial ownership" with respect to, and shall be deemed to "beneficially own," any securities of the Company in accordance with the definitions of such terms in Section 13 of the Securities Exchange Act of 1934, as amended, and the rules and regulations (including Rule 13d-3, Rule 13d-5, and any successor rules) promulgated by the Securities and Exchange Commission thereunder; provided, however, that a person shall be deemed to have beneficial ownership of all securities that any such person has a right to acquire whether such right is exercisable immediately or only after the passage of time and without regard to the 60-day limitation referred to in Rule 13d-3. "Consolidated Interest Coverage Ratio" means, for any Person, as of any date of determination, the ratio of (i) the aggregate amount of Consolidated Operating Cash Flow of such Person for the four fiscal quarters for which financial information in respect thereof is available ending immediately prior to the date of the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio (the "Transaction Date") to (ii) the aggregate Consolidated Interest Expense of such Person for the four fiscal quarters for which financial information in respect thereof is available ending immediately prior to the Transaction Date, assuming for purposes of this calculation that base interest rates in respect of floating interest obligations being incurred are equal to base interest rates on such obligations in effect as of the Transaction Date. In addition to the foregoing, for purposes of this definition "Consolidated Operating Cash Flow" and "Consolidated Interest Expense" shall be calculated after giving effect, on a pro forma basis for such four-quarter period, to (i) the acquisition of the assets, Property or business of another Person during the period commencing on the first day of such period to and including the Transaction Date (the "Reference Period") if during the Reference Period such Person becomes (or such assets, Property or business, as acquired, become all or substantially all the assets or business of) a consolidated Subsidiary of the Company and (ii) each sale, transfer, lease, mortgage or other disposition (including, without limitation, a sale-leaseback transaction or a merger or consolidation) of assets, Property or business ("disposition") or series of related dispositions during the Reference Period by the Company or any Subsidiary (other than to the Company or a Subsidiary) which disposition or 10 11 series of related dispositions is not in the ordinary course of business of the Company or the Subsidiary making such disposition. "Consolidated Interest Expense" means, for any Person, for any period, the aggregate amount, determined on a consolidated basis in accordance with GAAP, of interest, whether expensed or capitalized, paid or accrued during such period, in respect of all Funded Debt of such Person and its consolidated subsidiaries. "Consolidated Operating Cash Flow" means for any Person, for any period, net income from continuing operations for such Person and its consolidated subsidiaries for such period taken as a single accounting period determined on a consolidated basis in accordance with GAAP, excluding the effect of (i) Consolidated Interest Expense; (ii) provision for income taxes; (iii) depreciation of property, plant and equipment; (iv) amortization expense (excluding amortization of licensed rights); (v) extraordinary items; (vi) the cumulative effect of a change in accounting principle; and (vii) gains or losses on the sale of assets to the extent such gains or losses are included in the calculation of net income from continuing operations, all as determined in accordance with GAAP. "Disqualified Capital Stock" means, (i) with respect to any Person, any Capital Stock of such Person that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased by such Person or its subsidiaries, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or the passage of time would have, a redemption or similar payment due, on or prior to the earlier of the Stated Maturity of the Debentures or the first date on which none of the Debentures are outstanding and (ii) with respect to any Subsidiary of the Company, any Capital Stock of such Subsidiary that has a preference, conditionally or otherwise, as to the declaration, payment or accrual of dividends, the distribution of assets upon liquidation, dissolution or winding up, or both, over any other Capital Stock of such Subsidiary. "Funded Debt" means, with respect to any Person at any date, without duplication (a) indebtedness created, issued or incurred by such Person for borrowed money (whether by loan or the issuance and sale of debt securities); (b) obligations of such Person (contingent or otherwise) in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person (other than trade letters of credit or letters of credit securing performance of bids, trade contracts, statutory obligations (including obligations in respect of taxes and tax refunds), surety and appeal bonds, leases, performance bonds and similar obligations), (c) Capitalized Lease Obligations of such Person and (d) Funded Debt of others Guaranteed by such Person. For purposes of calculating the amount of any Funded Debt hereunder: (i) there shall be no double-counting of direct obligations, Guarantees and reimbursement obligations for letters of credit, (ii) the principal amount of any Funded Debt of any Person arising by reason of such Person having granted a Lien on its Property to secured Funded Debt of others, when such Funded Debt has not been assumed by such Person, shall be the lower of the principal amount of such Funded Debt or the fair market value of such Property at the time the Lien is granted by such Person and (iii) the principal amount of any Funded Debt of any Person arising by reason of such Person having Guaranteed Funded Debt of others where the amount of such Guarantee is limited to an amount less than the principal amount of the Funded Debt Guaranteed, shall be the amount as so limited. "GAAP" means generally accepted accounting principles as in effect on the date hereof. "Issue Date" means February 3, 1994. "Permitted Other Holders" means (a) each Person that, on the date hereof, was either (i) the beneficial holder (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect on the Issue Date) of shares of the Class C Convertible 11 12 Preferred Stock, par value $.125 per share, of the Company or (ii) an Affiliate of a Person specified in clause (i) above and (b) each Person at least 51% of the voting power of the Voting Stock of which is beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect on the Issue Date) by one or more of the Persons specified in clause (a) above. "Permitted Turner Holders" means R.E. Turner and his estate, heirs and legatees, and the legal representatives of any of the foregoing, including, without limitation, the Turner Foundation, Inc., Turner Charitable Remainder Unitrust or the trustee of any trust of which one or more of the foregoing are the sole beneficiaries. "Property" means with respect to any Person, any and all tangible or intangible property, assets, revenues, rights (including, without limitation with respect to the Company, rights of the Company and/or any of its Subsidiaries to use (whether by ownership, license or otherwise) copyrighted programs, programming, films and similar assets) or business of such Person, owned by leasehold or in fee, by license, sublicense or outright, whether now owned or hereafter acquired by such Person. "Restricted Payment" means (a) the declaration or payment by the Company or any Subsidiary, either in cash or in property, of any dividend on, or the making by the Company or any Subsidiary of any other distribution in respect of, the Capital Stock of the Company or any Subsidiary, or (b) the redemption, repurchase, retirement or other acquisition for value (whether in cash, property or otherwise) by the Company or any Subsidiary, directly or indirectly, of any Capital Stock of the Company. "Works" means motion pictures, video, television, interactive or multi-media programming, audio-visual works, sound recordings, books and other literary or written material, any software, copyright or other intellectual property related thereto, acquired directly or indirectly after the date hereof by purchase, business combination, production, creation or otherwise, any component of the foregoing or rights with respect thereto, and all improvements thereon, products and proceeds thereof and revenues derived therefrom. "works" means Works without reference to when acquired. (o) Amendments to Section 403. Section 403 of the Indenture is amended, but only insofar as it relates to the Debentures, to read in its entirety as follows: "Section 403. Satisfaction, Discharge and Defeasance of the Debentures. The Company will be deemed to have been Discharged (as defined below) from its obligations with respect to the Debentures when (1) with respect to all Outstanding Debentures, the Company has deposited or caused to be deposited with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Debentures, (i) money in an amount as will or (ii) U.S. Government Obligations (as defined below), as will, together with the predetermined and certain income to accrue thereon, without consideration of any reinvestment thereof, or (iii) a combination of (i) and (ii) as will (in a written opinion with respect to (ii) or (iii) of independent public accountants delivered to the Trustee), be sufficient to pay and discharge the entire principal of and interest, if any, to Stated Maturity on the Outstanding Debentures at the time such payments become due; (2) the Company has paid or caused to be paid all other sums payable with respect to the Debentures; (3) no default or Event of Default shall have occurred and be continuing and no Triggering Event shall have occurred as to which the Company has not fully satisfied the Redemption Rights of all Holders electing to have their Debentures redeemed; and 12 13 (4) the Company has delivered to the Trustee an Officers' Certificate stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the entire indebtedness on all Outstanding Debentures have been complied with and an Opinion of Counsel to the effect that no other action under the Indenture is required as a precondition to the discharge of the Company's obligations. Any deposits with the Trustee referred to in Section 403(1) above shall be irrevocable and shall be made under the terms of an escrow trust agreement in form and substance satisfactory to the Trustee." (4) Defined Terms. Terms (whether or not capitalized) used herein and not otherwise defined shall have the meanings specified in the Indenture. Each of the undersigned, for himself, states that he has read and is familiar with the provisions of Articles II and III of the Indenture relating to the establishment of the form of security representing a series of Securities thereunder and the establishment of the terms of a series of Securities thereunder and, in each case, the definitions therein relating thereto; that he is generally familiar with the other provisions of the Indenture and with the affairs of the Company and its acts and proceedings and that the statements and opinions made by him in this Officers' Certificate are based upon such familiarity; and that, in his opinion, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not the covenants or conditions referred to above have been complied with, and that in his opinion such covenants and conditions have been complied with. [Remainder of page intentionally left blank] 13 14 IN WITNESS WHEREOF, the undersigned have hereunto signed this Certificate on behalf of the Company as of this 3rd day of February, 1994. TURNER BROADCASTING SYSTEM, INC. By: Wayne H. Pace Vice President-Finance and Chief Financial Officer By: Steven W. Korn Vice President, Secretary and General Counsel 14 15 EXHIBIT A [FORM OF FACE OF DEBENTURE] REGISTERED NUMBER: PRINCIPAL AMOUNT: CUSIP: TURNER BROADCASTING SYSTEM, INC. 8.40% SENIOR DEBENTURE DUE 2024 Turner Broadcasting System, Inc., a Georgia corporation (herein called the "Company", which term shall refer to such Company until a successor corporation shall have become such pursuant to the provisions of the Indenture referred to on the reverse hereof and thereafter "Company" shall mean such successor corporation), for value received, hereby promises to pay to , or registered assigns, the principal sum of $ on February 1, 2024, and to pay interest thereon from February 1, 1994 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semiannually on February 1 and August 1 of each year, commencing February 1, 1994, at the rate of eight and four-tenths percent (8.40%) per annum until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Debenture or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest, which shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any interest not punctually paid or provided for shall forthwith cease to be paid to the holder on such Regular Record Date and may either be paid to the Persons in whose names this Debenture (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date established for the payment of such defaulted interest fixed by the Trustee, notice whereof shall be given to the Holders of Debentures of the series not less than fifteen (15) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures of this series may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of this Debenture will be made at the office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts upon surrender of this Debenture, and any interest on this Debenture will be paid at the by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS DEBENTURE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. A-1 16 Unless the Certificate of Authentication has been executed by the Trustee referred to on the reverse hereof by manual signature, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. TURNER BROADCASTING SYSTEM, INC. By: --------------------------------- Title: ------------------------------ Attest: ----------------------------- Title: ------------------------------ (CORPORATE SEAL) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Debentures of the series designated herein issued under the within mentioned Indenture. THE FIRST NATIONAL BANK OF Dated: BOSTON, as Trustee ---------------- By: -------------------------- Authorized Signatory
A-2 17 [FORM OF REVERSE OF DEBENTURE] TURNER BROADCASTING SYSTEM, INC. 8.40% SENIOR DEBENTURE DUE 2024 This Debenture is one of a duly authorized issue of Securities of the Company (which series is herein called the "Debentures"), issued and to be issued in one or more series under an Indenture, dated as of May 15, 1993, (as amended or supplemented from time to time, and including, with respect to a particular series of securities, the terms of such securities established as contemplated by Section 301, whether established in or pursuant to a supplemental indenture, a Board Resolution or an Officers' Certificate, the "Indenture") between the Company and The First National Bank of Boston, as Trustee (herein called the "Trustee," which term includes any successor trustee or trustees under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debentures and of the terms upon which the Debentures are and are to be authenticated and delivered. This Debenture is one of the series designated on the face hereof, limited in the aggregate principal amount to $200,000,000 issued pursuant to the Indenture. The Debentures are redeemable at the option of the Company at any time on or after February 1, 2004, in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as percentages of the principal amount), together with accrued and unpaid interest, if any, to but excluding the date of redemption, if redeemed during the 12-month period beginning February 1 of the years indicated below: 2004....................................................................... 104.161% 2005....................................................................... 103.735 2006....................................................................... 103.329 2007....................................................................... 102.913 2008....................................................................... 102.497 2009....................................................................... 102.081 2010....................................................................... 101.664 2011....................................................................... 101.248 2012....................................................................... 100.832 2013....................................................................... 100.416 2014 and thereafter........................................................ 100.000%
Each Holder shall have the option to require the Company to redeem all, but not less than all, of the Debentures owned by such Holder at a redemption price, payable in cash, equal to 101% of the principal amount, plus accrued and unpaid interest to the date fixed for redemption upon the occurrence of certain Triggering Events, such as certain payments in respect of Capital Stock, a Change in Control or certain mergers, consolidations or sales of assets and properties. If an Event of Default with respect to the Debentures shall occur and be continuing, the principal of the Debentures may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Securities at that time outstanding of all series to be affected (acting as one class). The Indenture also provides that, regarding the Debentures, the Holders of not less than a majority in principal amount of the Debentures at the time outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Debentures. Any such consent or waiver by the Holder of this Debenture shall be conclusive and binding upon such Holder and upon all future holders of this Debenture and of any Debenture issued upon the register of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon the Debenture. A-3 18 As provided in the Indenture, the Company shall be discharged from its obligations with respect to the Debentures when (1) with respect to all Outstanding Debentures, the Company has deposited or caused to be deposited with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Debentures (i) money in an amount as will or (ii) U.S. Government Obligations, as will, together with the predetermined and certain income to accrue thereon without consideration of any reinvestment thereof, or (iii) a combination of (i) and (ii) as will (in a written opinion with respect to (ii) or (iii) of independent public accountants delivered to the Trustee) be sufficient to pay and discharge the entire indebtedness on all outstanding Debentures of such series for principal, premium, if any and interest, if any, to the Stated Maturity or any Redemption Date, as the case may be, (2) the Company has paid or caused to be paid all other sums payable with respect to the Debentures, (3) no default or Event of Default shall have occurred and be continuing and no Triggering Event shall have occurred as to which the Company has not fully satisfied the Redemption Rights of all Holders electing to have their Debentures redeemed and (4) the Company has delivered to the Trustee an Officers' Certificate stating that all such conditions precedent have been complied with and an Opinion of Counsel to the effect that no other action under the Indenture is required as a precondition to the discharge of the Company's obligations. Upon and following the deposit of such funds or U.S. Government Obligations and satisfaction of such other conditions the Holders shall only be entitled to receive payment of the principal of (and premium, if any) and interest, if any, on the Debentures from deposited funds and the Company shall have no further obligations with respect thereto except for certain obligations with respect to transfer and exchange of the Debentures. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest, if any, on the Debentures at the times, place and rate, and in the coin or currency herein and in the Indenture provided; subject, however, to the provisions for the discharge of the Company from its obligations under the Debentures upon satisfaction of the conditions set forth in the preceding paragraph or in the Indenture. As provided in the Indenture, upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Company as an entirety or substantially as an entirety in accordance with the provisions of the Indenture, the successor corporation formed by such consolidation or into which the predecessor corporation is merged or to which such conveyance, transfer or lease is made shall be substituted for the predecessor corporation with the same effect as if such successor corporation had been named as the Company. Thereafter the predecessor corporation shall be relieved of the performance and observance of all obligations and covenants of the Indenture and the Debentures, including but not limited to the obligation to make payment of the principal of and interest, if any, on all the Debentures then outstanding, and, in the event of any such conveyance, transfer or lease, may be liquidated and dissolved. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Debenture is registrable in the Security Register, upon surrender of this Debenture for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and Security Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more Debentures of authorized denominations and for like aggregate principal amount and tenor will be issued to the designated transferee or transferees. The Debentures are issuable only in registered form without coupons in denominations of $1,000 and any larger amount that is an integral multiple of $1,000. As provided in the Indenture and subject to certain limitations therein set forth, Debentures are exchangeable for a like principal amount and tenor of Debentures of a different authorized denomination, upon surrender of the Debentures to be exchanged at the office or agency of the Company maintained for such purpose. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. A-4 19 Prior to the due presentment of this Debenture for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name the Debenture is registered as the owner hereof for all purposes, whether or not the Debentures shall be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agents will pay the money back to the Company at its request. After that, all liability of the Trustee and such Paying Agents with respect to such money shall cease. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries, among other things, to incur senior Funded Debt and create Liens. The Indenture also imposes additional limitations on the ability of Subsidiaries of the Company to incur Funded Debt. These limitations are subject to important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. As provided in the Indenture, no recourse shall be had for the payment of the principal o, premium, if any, or the interest, if any, on this Debenture or any part hereof or for any claim based hereon or otherwise in respect hereof, or of the indebtedness represented hereby, or upon any obligation, covenant or agreement of the Company in the Indenture against any incorporator, direct or indirect stockholder, officer, director, as such, past, present or future, of the Company, or of any successor corporation, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all liability, if any, of that character against every such incorporator, stockholder, officer and director, being by the acceptance hereof, and as a condition of and as a part of the consideration for the issue hereof, expressly waived and released. THE INDENTURE AND DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Debenture shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties with right of survivorship and not as tenants in common JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT ACT -- (cust) custodian (minor) under Uniform Gift to Minors Act (state)
Additional abbreviations may also be used that are not in the above list. --------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) to the within Debenture of Turner Broadcasting System, Inc. and irrevocably constitutes and appoints attorney to transfer such Debenture on the books of the within named Company, with full power of substitution in the premises. Dated: -------------------------- --------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Debenture in every particular without alteration or enlargement, or any change whatsoever. The signature should be guaranteed by a commercial bank or trust company, or by a New York, American, Boston, Midwest, Philadelphia or Pacific stock exchange member, a member of the National Association of Securities Dealers, Inc., or firm whose signature is known to the registrar. A-5 -----END PRIVACY-ENHANCED MESSAGE-----