-----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, Mc3RTHoL/2azx9zkao9x5dj0Tj57RwMWC2LpmqGOu1wI3aPMtJDNNtVbztBQCNg8 sgXoBZvByJP4D+HTiceY3g== 0000890566-95-000430.txt : 199507180000890566-95-000430.hdr.sgml : 19950718 ACCESSION NUMBER: 0000890566-95-000430 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19950717 SROS: CSE SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER INC CENTRAL INDEX KEY: 0000736157 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 131388520 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-19351 FILM NUMBER: 95554369 BUSINESS ADDRESS: STREET 1: TIME & LIFE BLDG ROCKFELLER CENTER STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124848000 FORMER COMPANY: FORMER CONFORMED NAME: TIME INC /DE/ DATE OF NAME CHANGE: 19890801 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HOUSTON INDUSTRIES INC CENTRAL INDEX KEY: 0000202131 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 741885573 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 4400 POST OAK PKWY STREET 2: 5 POST OAK PK CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7136293000 MAIL ADDRESS: STREET 1: P O BOX 4567 CITY: HOUSTON STATE: TX ZIP: 77210 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934* Time Warner Inc. (Name of Issuer) Common Stock (Title of Class of Securities) 887315 10 9 (CUSIP Number) Stephen W. Naeve Vice President - Strategic Planning & Administration Houston Industries Incorporated 5 Post Oak Park 4400 Post Oak Park Parkway Houston, Texas (713) 629-3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 6, 1995 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with this statement [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of less than five percent of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page should be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 6 CUSIP No. 887315 10 9 - ------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above Persons Houston Industries Incorporated, I.R.S. Identification No. 74-1885573 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds 00 - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Texas - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power 23,909,040 shares Shares Bene- ----------------------------------------------------------- ficially (8) Shared Voting Power Owned by ----------------------------------------------------------- Each Report- (9) Sole Dispositive Power 23,909,040 shares ing Person ----------------------------------------------------------- With (10) Shared Dispositive Power - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 23,909,040 shares - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 5.899% (based on information contained in documents filed by Time Warner Inc. with the Securities and Exchange Commission) (14) Type of Reporting Person CO Page 2 of 6 ITEM 1. SECURITY AND ISSUER The class of securities to which this statement relates is common stock, par value $1.00 per share (the "TW Common Stock"), of Time Warner Inc., a Delaware corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 75 Rockefeller Plaza, New York, New York 10019. ITEM 2. IDENTITY AND BACKGROUND This statement is filed by Houston Industries Incorporated, a Texas corporation ("Houston Industries"). Houston Industries is a holding company and conducts its business through subsidiaries involved in the electric utility business in the United States and in foreign markets. The address of the principal business office of Houston Industries is 5 Post Oak Park, 4400 Post Oak Parkway, Houston, Texas 77027. During the last five years, no executive officer or director of Houston Industries has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION On July 6, 1995, TWI Cable Inc., a Delaware corporation (formerly known as TW KBLCOM Acquisition Corp.) ("Sub") and a wholly owned subsidiary of the Issuer, merged with and into KBLCOM Incorporated, a Delaware corporation ("KBLCOM") and a wholly owned subsidiary of Houston Industries (the "Merger"), pursuant to the Agreement and Plan of Merger dated as of January 26, 1995 (the "Merger Agreement"), among KBLCOM, Houston Industries, the Issuer and Sub. As a result of the Merger, the separate corporate existence of Sub ceased, KBLCOM continued as the surviving corporation and as a wholly owned subsidiary of the Issuer, and KBLCOM changed its name to TWI Cable Inc. In connection with the Merger, on July 6, 1995, Parent issued to Houston Industries (i) 1,000,000 fully paid and nonassessable shares of TW Common Stock and (ii) 11,000,000 fully paid and nonassessable shares of Series D Convertible Preferred Stock of the Issuer, par value $1.00 per share (the "Series D Preferred"). The Series D Preferred currently may be converted into 22.9 million shares of common stock of the Issuer and, until the earlier of conversion or July 6, 1999, is expected to pay an annual dividend of $3.75 per share. After four years, the Issuer will have the right to exchange the Series D Preferred for TW Common Stock at a stated conversion rate of 2.08264 shares of TW Common Stock per share of Series D Preferred, subject to adjustment. Page 3 of 6 The foregoing is a summary description of certain terms of the Merger Agreement and is qualified in its entirety by reference to the Merger Agreement, which is incorporated into this Schedule 13D by reference as Exhibit 1. The foregoing description of certain terms of the Series D Preferred is qualified in its entirety by reference to the Certificate of the Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Special Rights, and Qualifications, Limitations or Restriction Thereof, of Series D Convertible Preferred Stock of Time Warner Inc., which is attached hereto as Exhibit 4. ITEM 4. PURPOSE OF TRANSACTION Houston Industries has acquired the TW Common Stock and Series D Preferred beneficially owned by it in connection with the Merger and for investment purposes. Except as described in this statement or in the documents referred to herein, Houston Industries has no present plans which would relate to or result in the events described in paragraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Houston Industries beneficially owns an aggregate of 1,000,000 shares of TW Common Stock and 11,000,000 shares of Series D Preferred, which is convertible into TW Common Stock at any time at a conversion rate of 2.08264 shares of TW Common Stock per share of Series D Preferred, subject to adjustment. Assuming full conversion of the Series D Preferred as of the date hereof, and based on information contained in documents filed by the Issuer with the Securities and Exchange Commission, Houston Industries currently beneficially owns 5.899% of the outstanding TW Common Stock. Houston Industries possesses sole voting and dispositive power with respect to all of such shares, which were acquired on July 6, 1995 pursuant to the Merger. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Except as described in this statement or in the documents referred to herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 of this statement or between such persons and any other person with respect to any securities of the Issuer. The information set forth in Item 3 with respect to the Merger Agreement and the Series D Preferred is incorporated herein by reference. In addition, the Merger Agreement provides that, in the event that amounts related to indemnity obligations are payable by the Issuer to Houston Industries, the Issuer may elect to pay such amounts in shares of TW Common Stock, and, if reasonably required by Houston Industries, such payments by the Issuer shall be made in shares of TW Common Stock, in each case pursuant to a valuation mechanism set forth in the Merger Agreement. Page 4 of 6 In conjunction with the Merger, Houston Industries and the Issuer entered into a Stockholder's Agreement and a Registration Rights Agreement, each dated as of July 6, 1995. The Stockholder's Agreement, with limited exceptions, prohibits Houston Industries, its affiliates and associates, from acquiring securities of the Issuer and from taking certain actions in relation to the Issuer or its assets. The Stockholder's Agreement also contains certain restrictions on the ability of Houston Industries to transfer the shares of TW Common Stock or Series D Preferred. The Registration Rights Agreement covers the shares of TW Common Stock issued at the time of the Merger as well as shares of TW Common Stock into which the Series D Preferred is converted, any shares of TW Common Stock issued in connection with indemnification under the Merger Agreement and any shares received by way of dividends or distributions. Houston Industries may make four demands for registration during the term of the Registration Rights Agreement, one of which may be a shelf registration statement. The Issuer may delay filing a registration statement or suspend its use under certain circumstances. Houston Industries will also have the right to "piggy-back" onto other registration statements of the Issuer under certain circumstances. The foregoing descriptions of the Stockholder's Agreement and the Registration Rights Agreement are summaries only and are qualified in their entirety by reference to the applicable agreements, which are attached hereto as Exhibits 2 and 3. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 -- Agreement and Plan of Merger dated as of January 26, 1995 among KBLCOM Incorporated, Houston Industries Incorporated, Time Warner Inc. and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), including certain exhibits and a list of schedules and exhibits thereto, incorporated by reference to Exhibit 2(a) in Houston Industries' Form 8-K, dated January 26, 1995 (File No. 1-7629). Exhibit 2 -- Stockholder's Agreement dated as of July 6, 1995, between Houston Industries Incorporated and Time Warner Inc. Exhibit 3 -- Registration Rights Agreement dated as of July 6, 1995, between Houston Industries Incorporated and Time Warner Inc. Exhibit 4 -- Certificate of the Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Special Rights, and Qualifications, Limitations or Restrictions Thereof, of Series D Convertible Preferred Stock of Time Warner Inc. Page 5 of 6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: July 17, 1995. HOUSTON INDUSTRIES INCORPORATED By: /s/ MARY P. RICCIARDELLO Mary P. Ricciardello COMPTROLLER Page 6 of 6 EX-2 2 STOCKHOLDER'S AGREEMENT Exhibit 2 STOCKHOLDER'S AGREEMENT dated as of July 6, 1995 by and between TIME WARNER INC., a Delaware corporation ("Parent"), and HOUSTON INDUSTRIES INCORPORATED, a Texas corporation (the "Stockholder"). This Agreement is made pursuant to Sections 7.01(f) and 7.02(g) of the Agreement and Plan of Merger dated as of January 26, 1995 (as such agreement may be amended from time to time, the "Merger Agreement") among KBLCOM Incorporated, a Delaware corporation (the "Company"), the Stockholder, Parent and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"). Pursuant to the Merger Agreement, Sub will be merged with and into the Company (the "Merger"), whereby all of the shares of Common Stock, par value $1.00 per share, of the Company ("Company Common Stock") issued and outstanding immediately prior to the Effective Time of the Merger will be converted into the right to receive (i) 1,000,000 (as such number may be adjusted pursuant to Section 3.01(c) of the Merger Agreement) fully paid and nonassessable shares of Common Stock, par value $1.00 per share, of Parent ("Parent Common Stock") and (ii) 11,000,000 fully paid and nonassessable shares of Series D Preferred Stock, par value $1.00 per share, of Parent ("Parent Preferred Stock" and, together with the Parent Common Stock, the "Parent Stock"), each of which is convertible into shares of Parent Common Stock. As a condition to their willingness to enter into the Merger Agreement, Parent and Sub have required that the Stockholder enter into, and the Stockholder has agreed to enter into, this Agreement. Accordingly, it is hereby agreed as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Merger Agreement. For purposes of this 1 Agreement, the following terms shall have the indicated meanings: "AFFILIATE" and "ASSOCIATE", when used with reference to any Person, shall have the respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act, as in effect on the date of this Agreement. The Stockholder shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL OWNERSHIP" of: (i) any securities which the Stockholder or any of its Affiliates or Associates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of this Agreement; and (ii) any securities (the "underlying securities") which the Stockholder or any of its Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise (it being understood that the Stockholder shall also be deemed to be the Beneficial Owner of the securities convertible into or exchangeable for the underlying securities). Any Person other than the Stockholder shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL OWNERSHIP" of any securities which such Person or any of such Person's Affiliates or Associates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of this Agreement. "CHANGE OF CONTROL" shall mean the occurrence of one or more of the following events: (a) individuals who would constitute a majority of the members of Parent's board of directors elected at any meeting of stockholders or by written consent (without regard to any members of Parent's board of directors elected pursuant to the terms of any series of preferred stock of Parent) shall be elected to Parent's board of directors and the election or the nomination for election by Parent's stockholders of such directors was not approved by a vote of at least a majority 2 of the directors in office immediately prior to such election, (b) a Person or group of Persons acting in concert as a partnership, limited partnership, syndicate or other group (within the meaning of Rule 13d-3 under the Exchange Act) shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases, share repurchases, or redemptions or otherwise, have become the Beneficial Owner of 40% or more of the outstanding shares of Parent Common Stock or (c) a merger, consolidation or reclassification of the capital stock of Parent such that the holders of capital stock of Parent immediately prior to such transaction fail to hold, immediately after such transaction, a majority of the aggregate Voting Power represented by all outstanding capital stock of Parent (or the survivor or successor corporation, in the case of a merger or consolidation). "RELEASE EVENT" shall mean the occurrence of any of the following events: (i) a Change of Control; PROVIDED, HOWEVER, that the Stockholder shall at the time be in compliance in all material respects with its obligations under Section 2.01 hereof and the Change of Control shall not have involved any violation of such section by the Stockholder; (ii) Parent defaults in the timely payment of dividends on the Parent Preferred Stock; or (iii) on or after the fifth anniversary of the Closing, the Stockholder no longer beneficially owns a number of shares of Parent Common Stock and Parent Preferred Stock which represents (in the case of the Parent Preferred Stock, on an as-converted basis) at least 50% of the total number of shares of Parent Common Stock represented by the Merger Consideration (treating the Parent Preferred Stock on an as-converted basis), after giving retroactive effect to any stock splits, stock dividends, combinations or other similar changes in Parent Common Stock or Parent Preferred Stock occurring subsequent to the date hereof; PROVIDED, HOWEVER, that the Stockholder shall at the time be in compliance in all material respects with its obligations under Section 2.02 hereof and no disposition by the Stockholder of shares of Parent Stock shall have involved any violation of such section by the Stockholder. 3 "VOTING POWER", when used with reference to any class or series of securities of Parent, or any classes or series of securities of Parent entitled to vote together as a single class or series, shall mean the power of such class or series (or such classes or series) to vote for the election of directors. For purposes of determining the percentage of Voting Power of any class or series (or classes or series) beneficially owned by any Person, any securities not outstanding which are subject to conversion rights, exchange rights, rights, warrants, options or similar securities held by the Stockholder, or in the case of any Person other than the Stockholder, any such securities which are exercisable, exchangeable or convertible within sixty days, shall be deemed to be outstanding, but shall not be deemed to be outstanding for the purpose of computing the percentage of the class or series (or classes or series) beneficially owned by any other Person. "VOTING SECURITIES", when used with reference to any Person, shall mean any securities of such Person having Voting Power or any securities convertible into or exchangeable for any securities having Voting Power. ARTICLE II STANDSTILL AGREEMENT AND TRANSFER RESTRICTIONS SECTION 2.01. STANDSTILL RESTRICTIONS. The Stockholder agrees that it shall not (and shall use commercially reasonable efforts to cause its Affiliates and Associates not to), without the prior written consent of the board of directors of Parent, (i) in any manner acquire, agree to acquire or make any proposal to acquire, directly or indirectly, any securities of Parent, or any rights or options to acquire any such securities, if after giving effect to such acquisition, the Stockholder would beneficially own more than five percent of the Voting Securities of any class or series of Parent, (ii) propose to enter into, directly or indirectly, any merger or other business combination involving Parent or propose to purchase, directly or indirectly, a material portion of the assets of Parent, (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" (as such terms are used in Regulation 14A promulgated under the Exchange Act) to vote or consent, or knowingly advise or influence any Person with respect to the voting of, or granting of a consent with respect to, any Voting Securities 4 of Parent in opposition to the recommendation of the majority of Parent's board of directors, (iv) form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities of Parent, (v) otherwise act, alone or in concert with others, to seek to control or influence the management or policies of Parent, (vi) disclose any intention, plan or arrangement inconsistent with the foregoing or (vii) advise, assist (including by knowingly providing or arranging financing for that purpose) or knowingly encourage any other Person in connection with any of the foregoing; PROVIDED, HOWEVER, that clause (v) shall not prohibit actions by the Stockholder (A) through its representative on the TWE Partners Operating Committee with respect to matters before such committee or (B) alone, and not in concert with others, to express its views privately to Parent concerning the management or polices of Parent and its subsidiaries. Notwithstanding anything to the contrary in this Section 2.01, the Stockholder may continue to beneficially own directly or indirectly (i) the Merger Consideration, (ii) any Parent Common Stock into which the Parent Preferred Stock issued in the Merger may be converted or for which it is exchanged pursuant to the terms thereof, including any shares of Parent Common Stock issued to the Stockholder pursuant to Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and unpaid dividends on the Parent Preferred Stock, (iii) any shares of Parent Common Stock issued to the Stockholder pursuant to Section 8.01(g)(ii) of the Merger Agreement, (iv) any shares of Parent Common Stock held by one or more employee benefit plans (or trusts for such plans) of the Stockholder and its Subsidiaries, PROVIDED that all decisions whether to purchase or sell such shares are made by Persons independent of the Stockholder and its Affiliates, (v) any shares of capital stock of Parent issued pursuant to Section 3.03(b) of the Merger Agreement, (vi) any shares of capital stock distributed by Parent to the Stockholder, including pursuant to Section 2.3 or 3.7 of the Certificate of Designations and, in addition to the foregoing, (vii) any shares of Parent Common Stock representing in the aggregate not more than two-tenths of one percent (.2%) of the outstanding shares of Parent Common Stock (calculated on the basis of the number of such shares reported in Parent's most recent annual report on Form 10-K or quarterly report on Form 10-Q, as applicable), which shares are held directly or indirectly by individuals that are Affiliates and Associates of the Stockholder. 5 SECTION 2.02. RESTRICTIONS ON TRANSFER. The Stockholder agrees that it shall not (and shall use commercially reasonable efforts to cause its Affiliates and Associates not to), without the prior written consent of the board of directors of Parent, sell, transfer, pledge, encumber or otherwise dispose of, or agree to sell, transfer, pledge, encumber or otherwise dispose of, any securities of Parent, or any rights or options to acquire such securities, except that such consent shall not be necessary if any such disposition is (i) to the underwriters in connection with an underwritten public offering of shares of such securities on a firm commitment basis registered under the Securities Act, pursuant to which the sale of such securities is in a manner that will effect a broad distribution, (ii) to a third party in a transaction that complies with the volume and manner of sale provisions contained in Rule 144(e) and (f) as in effect on the date hereof under the Securities Act, (iii) to a third party in a transaction or series of related transactions whenever occurring (provided that this clause (iii) will be unavailable where the senior executives of the Stockholder know or, after reasonable inquiry should have known, that such third party directly or indirectly beneficially owns or, after giving effect to such sale will beneficially own, more than five percent of the aggregate Voting Power of any class or series of Voting Securities of Parent or, if such class or series votes together with any other classes or series as a single class or series, more than five percent of the aggregate Voting Power of such classes or series), (iv) to holders of the Stockholder's outstanding equity securities in a spin-off or exchange transaction, PROVIDED that such spin-off or exchange is intended in good faith by the Stockholder to be reasonably available to all holders of the Stockholder's outstanding equity securities, (v) to a financial institution as a bona fide pledge as security for money borrowed, (vi) pursuant to the terms of any tender or exchange offer for Voting Securities of Parent approved by the board of directors of Parent and (vii) to an Affiliate of the Stockholder; PROVIDED, HOWEVER, that the restrictions set forth in this Section 2.02 shall not apply to (A) the transfer of any Voting Securities of Parent to Parent, (B) Voting Securities of Parent held by one or more employee benefit plans (or trusts for such plans) of the Stockholder and its Subsidiaries, provided that all decisions whether to purchase or sell such shares are made by Persons independent of the Stockholder and its Affiliates, (C) shares of Parent Common Stock held by individuals that are Affiliates and Associates of the Stockholder within the limits set forth in clause (vii) of the last sentence of Section 2.01, (D) any 6 shares of Parent Common Stock issued to the Stockholder pursuant to Section 8.01(g)(ii) of the Merger Agreement and (E) any shares of Parent Common Stock issued to the Stockholder pursuant to Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and unpaid dividends on the Parent Preferred Stock. Notwithstanding anything in the first sentence of this Section 2.02 to the contrary, any transfer pursuant to clause (v) or (vii) of this Section 2.02, and any transfer or series of related transfers to any Person pursuant to clause (iii) of this Section 2.02 of Voting Securities representing (on an as-converted basis) one percent (1%) or more of the outstanding shares of Parent Common Stock (determined on the basis of the most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable), shall include the written agreement of the transferee in a form reasonably satisfactory to Parent to be bound by the terms of this Section 2.02. Except as set forth in the immediately preceding sentence, no transferee will be required to be bound by this Section 2.02. SECTION 2.03. RESTRICTIONS ON CERTAIN ACTIONS. The Stockholder agrees not to (and to use commercially reasonable efforts to cause its Affiliates and Associates not to) (i) request Parent or any of its agents, directly or indirectly, to amend or waive any provision of Section 2.01 or this Section 2.03 or (ii) take any action which might require Parent to make a public announcement regarding the possibility of a transaction with the Stockholder; PROVIDED, HOWEVER, that this Section 2.03 shall not be deemed to prohibit the Stockholder from communicating with the board of directors of Parent, so long as such communication is not intended to elicit a public response by such board of directors. ARTICLE III TRANSFERS OF PARENT STOCK; APPOINTMENT OF COMMITTEE MEMBER SECTION 3.01. TRANSFERS OF PARENT STOCK; LEGENDS ON CERTIFICATES FOR PARENT STOCK. (a) The Stockholder agrees that it will not offer, sell, assign, pledge, encumber, transfer, or otherwise dispose of any shares of Parent Stock acquired pursuant to the Merger Agreement, or any interest therein, except pursuant to a registration of such securities under the Securities Act and applicable state securities laws or in a transaction that, in the 7 opinion of counsel reasonably satisfactory to Parent, is exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws. (b) The Stockholder agrees that each certificate for shares of Parent Stock issued pursuant to the Merger Agreement (and shares of Parent Common Stock issued upon conversion or exchange of Parent Preferred Stock) shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT. (c) The Stockholder agrees that each certificate for shares of Parent Stock (other than shares of Parent Common Stock issued to the Stockholder pursuant to (i) Section 8.01(g)(ii) of the Merger Agreement or (ii) Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and unpaid dividends on the Parent Preferred Stock) issued to or held (directly or indirectly, including through a nominee) by a Person that is subject to the provisions of this Agreement shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER'S AGREEMENT DATED AS OF July 6, 1995 (THE "STOCKHOLDER'S AGREEMENT"), BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE STOCKHOLDER'S AGREEMENT MAY BE OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE STOCKHOLDER'S AGREEMENT. (d) Parent shall deliver new certificates for the shares of Parent Preferred Stock and Parent Common Stock issued pursuant to the Merger Agreement and the Certificate of Designations, without the legends specified in 8 paragraphs (b) and (c) of this Section 3.01, (w) in connection with any underwritten public offering as referred to in Section 2.02(i), (x) upon any sale meeting the requirements of Rule 144(e) and (f) under the Securities Act, (y) in connection with any transaction referred to in Section 2.02(iii), the securities of which are registered under the Securities Act and represent (on an as-converted basis) less than one percent of the outstanding shares of Parent Common Stock (determined on the basis of the most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable) and (z) in connection with any transaction referred to in Section 2.02(iv), in exchange for (i) in the case of clause (w), (x), (y) or (z), surrender of existing certificates representing such shares and (ii) in the case of clause (x) evidence reasonably satisfactory to Parent (consisting of an officer's certificate or an opinion of counsel, as reasonably determined by Parent) that the applicable requirements of Rule 144 (e) and (f) under the Securities Act have been satisfied. (e) Parent shall deliver new certificates for the shares of Parent Preferred Stock and Parent Common Stock issued pursuant to the Merger Agreement and the Certificate of Designations, without the legend specified in paragraph (b) of this Section 3.01, (x) in connection with any transaction referred to in Section 2.02(iii), the securities of which are registered under the Securities Act and represent (on an as-converted basis) one percent or more of the outstanding shares of Parent Common Stock (determined on the basis of the most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable), (y) after the expiration of three years from the Closing Date and (z) in connection with the registration under the Securities Act of (i) any shares of Parent Common Stock issued to the Stockholder pursuant to Section 8.01(g)(ii) of the Merger Agreement or (ii) any shares of Parent Common Stock issued to the Stockholder pursuant to Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and unpaid dividends on the Parent Preferred Stock pursuant to Section 4(c) of the Registration Rights Agreement, in exchange for (A) in the case of clause (x), (y) and (z), surrender of existing certificates representing such shares and (B) in the case of clause (y) evidence reasonably satisfactory to Parent (consisting of an officer's certificate or an opinion of counsel, as reasonably determined by Parent) that the requirements of Rule 144(k) under the Securities Act have been satisfied. 9 (f) Parent shall deliver new certificates for the Parent Preferred Stock and shares of Parent Common Stock without the legend specified by paragraph (c) of this Section 3.01, (x) after the termination of this Agreement (other than the covenants and agreements of this Article III), (y) in connection with any transaction referred to in Section 2.02(vi) and (z) in connection with any transaction referred to in Section 2.02(iii), the securities of which are not registered under the Securities Act and represent (on an as-converted basis) less than one percent of the outstanding shares of Parent Common Stock (determined on the basis of the most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable), in each case in exchange for surrender of existing certificates representing such shares. SECTION 3.02. APPOINTMENT OF COMMITTEE MEMBER. Promptly following the Effective Time, Parent agrees to cause a senior executive of the Stockholder to be appointed a member of the TWE Partners Operating Committee for a term of three years, which period shall be subject to early termination at any time for cause. ARTICLE IV MISCELLANEOUS SECTION 4.01. TERMINATION. The covenants and agreements contained herein shall terminate on the first to occur of (i) the tenth anniversary of the Closing Date and (ii) the first to occur of any of the Release Events; PROVIDED, HOWEVER, that the provisions of Article III shall survive any termination of this Agreement. SECTION 4.02. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and the Registration Rights Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. SECTION 4.03. AMENDMENTS. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. 10 SECTION 4.04. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Stockholder to: Houston Industries Incorporated Five Post Oak Park 4400 Post Oak Parkway Houston, TX 77027 Facsimile: (713) 629-3065 Attention: Mr. Stephen W. Naeve with a copy (which shall not constitute notice) to: Houston Industries Incorporated 611 Walker, 25th Floor Houston, TX 77002 Facsimile: (713) 220-5503 Attention: Hugh Rice Kelly, Esq. with a copy (which shall not constitute notice) to: Baker & Botts, L.L.P. One Shell Plaza 910 Louisiana Street Houston, TX 77002 Facsimile: (713) 229-1522 Attention: Margo S. Scholin, Esq. If to Parent to: Time Warner Inc. 75 Rockefeller Plaza New York, NY 10019 Facsimile: (212) 333-3987 Attention: Peter R. Haje, Esq. 11 with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Facsimile: (212) 474-3700 Attention: William P. Rogers, Jr., Esq. SECTION 4.05. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. SECTION 4.06. SPECIFIC PERFORMANCE. The Stockholder recognizes and acknowledges that a breach by it of Article II hereto will cause Parent to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore the Stockholder agrees that in the event of any such breach Parent shall be entitled to the remedy of specific performance of such Article II and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. SECTION 4.07. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. SECTION 4.08. DESCRIPTIVE HEADINGS. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. SECTION 4.09. SEVERABILITY. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this 12 Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. SECTION 4.10. OTHER PROVISIONS. (a) ATTORNEYS' FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which he or it may be entitled. (b) WAIVER. The waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach thereof. IN WITNESS WHEREOF, Parent and the Stockholder have caused this Agreement to be duly executed as of the day and year first above written. TIME WARNER INC., by /s/ SPENCER B. HAYS Name: Spencer B. Hays Title: Vice President HOUSTON INDUSTRIES INCORPORATED, by /s/ STEPHEN W. NAEVE Name: Stephen W. Naeve Title: Vice President - Strategic Planning and Administration 13 EX-3 3 REGISTRATION RIGHTS AGREEMENT Exhibit 3 REGISTRATION RIGHTS AGREEMENT dated as of July 6, 1995, between TIME WARNER INC., a Delaware corporation (the "Company"), and HOUSTON INDUSTRIES INCORPORATED, a Texas corporation (the "Stockholder"). This Agreement is made pursuant to Sections 7.01(f) and 7.02(g) of the Agreement and Plan of Merger dated as of January 26, 1995 (as such agreement may be amended from time to time, the "Merger Agreement"), among KBLCOM Incorporated, a Delaware corporation ("KBLCOM"), the Stockholder, the Company and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), a Delaware corporation and a wholly owned subsidiary of the Company. In order to induce the Stockholder to consummate the transactions contemplated by the Merger Agreement, and in further consideration therefor, the Company has agreed to execute and deliver this Agreement and provide the registration rights set forth in this Agreement. Accordingly, it is hereby agreed as follows: 1. DEFINITIONS. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Merger Agreement. For purposes of this Agreement, the following terms shall have the following meanings: "BLACKOUT PERIOD" means any Section 6(a) Period and any Section 6(b) Period. "COUNSEL TO THE HOLDERS" means the single law firm from time to time representing the Holders, as appointed by the Holders of a majority in number of the Registrable Securities. "DESIGNATED SHELF REGISTRATION" has the meaning specified in Section 4(b). "EFFECTIVE PERIOD" means a period commencing on the date of this Agreement and ending on the earliest of (i) the first date as of which all Registrable Securities cease to be Registrable Securities and no Holder holds any shares of Parent Preferred Stock, (ii) the tenth anniversary of the Closing Date (subject to extension as provided in Section 4(b), 6 or 7 hereof) and (iii) the later of (A) the date on which the Stockholder's Agreement shall terminate 1 and (B) the third anniversary of the date of the last issuance of Registrable Securities, other than the issuance of shares of Parent Common Stock upon conversion or exchange of Parent Preferred Stock; PROVIDED, HOWEVER, that the Effective Period shall not terminate pursuant to clause (i) or (iii) so long as the Company may in the future issue Registrable Securities pursuant to the Merger Agreement. "HOLDER" means (i) the Stockholder or any Affiliate of the Stockholder that is a holder of Registrable Securities or Parent Preferred Stock and (ii) each Person that is a registered holder of Registrable Securities or Parent Preferred Stock that (A) acquired such Registrable Securities or Parent Preferred Stock in accordance with Section 2.02 of the Stockholder's Agreement and (B) received or will receive certificates for Registrable Securities bearing a legend pursuant to Section 3.01(b) of the Stockholder's Agreement; PROVIDED, HOWEVER, that, if such Person is not the Stockholder, such Person has agreed in writing to become a Holder hereunder and to be bound by the terms and conditions of this Agreement. "NASD" means the National Association of Securities Dealers, Inc. "PROSPECTUS" means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by any Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. "REGISTRABLE SECURITIES" means, collectively, (i) the shares of Parent Common Stock issued pursuant to the Merger, (ii) the shares of Parent Common Stock or other securities of Parent issued pursuant to the conversion or exchange provisions of the Parent Preferred Stock issued pursuant to the Merger, (iii) any shares of Parent Common Stock issued pursuant to Section 8.01(g)(ii) of the Merger Agreement (the securities referred to in (i), (ii) and (iii) are, collectively, the "Shares") and (iv) any securities paid, issued or distributed in respect of any Shares by way of stock dividend or distribution or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. Securities will cease to be Registrable Securities in accordance with Section 2 hereof. 2 "REGISTRATION EXPENSES" means any and all expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC, NASD and securities exchange registration and filing fees, (ii) all fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel for any underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 7(h), (v) the fees and disbursements of counsel for the Company and of its independent public accountants, (vi) the reasonable fees and expenses of any special experts retained in connection with the requested registration and (vii) the reasonable fees and expenses of Counsel to the Holders, but excluding (x) underwriting discounts and commissions and transfer taxes, if any, and (y) any fees or disbursements of counsel to the Holders or any Holder (other than Counsel to the Holders). "REGISTRATION STATEMENT" means any registration statement (including a Shelf Registration) of the Company referred to in Section 3 or 4, including any Prospectus, amendments and supplements to any such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in any such registration statement. "RELATED SECURITIES" means any securities of the Company similar or identical to any of the Registrable Securities, including, without limitation, Parent Common Stock and all options, warrants, rights and other securities convertible into, or exchangeable or exercisable for, Parent Common Stock. "SALE PERIOD" has the meaning specified in Section 4(b). "SECTION 6(A) PERIOD" has the meaning specified in Section 6(a). "SECTION 6(B) PERIOD" has the meaning specified in Section 6(b). "SHELF REGISTRATION" means a "shelf" registration statement on an appropriate form pursuant to Rule 415 under 3 the Securities Act (or any successor rule that may be adopted by the SEC). "UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean an underwritten offering in which securities of the Company are sold to an underwriter for reoffering to the public. 2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities entitled to the benefits of this Agreement are the Registrable Securities. For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities when and to the extent that (i) a Registration Statement covering Registrable Securities has been declared effective under the Securities Act and Registerable Securities have been disposed of pursuant to such effective Registration Statement, (ii) Registrable Securities are distributed to the public pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, (iii) Registrable Securities have been otherwise transferred to a party that is not an Affiliate of the Stockholder and new certificates for such Registrable Securities not bearing the legend specified in Section 3.01(b) of the Stockholder's Agreement shall have been delivered by the Company, (iv) the Effective Period ends or (v) Registrable Securities have ceased to be outstanding. 3. PIGGY-BACK REGISTRATION RIGHTS. (a) Whenever during the Effective Period the Company shall propose to file a registration statement under the Securities Act relating to the public offering of Parent Common Stock for cash pursuant to a firm commitment underwritten offering (other than pursuant to a registration statement on Form S-4 or Form S-8 or any successor forms, or filed in connection with an exchange offer or an offering of securities solely to existing stockholders or employees of the Company), for sale for its own account, the Company shall (i) give written notice at least seven Business Days prior to the filing thereof to each Holder of Registrable Securities then outstanding, specifying the approximate date on which the Company proposes to file such registration statement and advising such Holder of his right to have any or all of the Registrable Securities then held by such Holder included among the securities to be covered thereby and (ii) at the written request of any such Holder given to the Company at least two Business Days prior to the proposed filing date, include among the securities covered by such registration statement the number of Registrable Securities which such 4 Holder shall have requested be so included (subject, however, to reduction in accordance with paragraph (b) of this Section). The Company shall use its commercially reasonable efforts to cause the managing underwriter of the proposed underwritten offering to permit the Holders of Registrable Securities requested to be included in the Registration Statement for such offering to include such securities in such offering on the same terms and conditions as any similar securities of the Company included therein. (b) Each Holder of Registrable Securities desiring to participate in an offering pursuant to Section 3(a) may include shares of Parent Common Stock in any Registration Statement relating to such offering to the extent that the inclusion of such shares of Parent Common Stock shall not reduce the number of shares of Parent Common Stock to be offered and sold by the Company pursuant thereto. If the lead managing underwriter selected by the Company for an underwritten offering pursuant to Section 3(a) determines that marketing factors require a limitation on the number of shares of Parent Common Stock to be offered and sold by the stockholders of the Company in such offering, there shall be included in the offering only that number of shares of Parent Common Stock, if any, that such lead managing underwriter reasonably and in good faith believes will not jeopardize the success of the offering of all the shares of Parent Common Stock that the Company desires to sell for its own account. In such event and provided the managing underwriter has so notified the Company in writing, the number of shares of Parent Common Stock to be offered and sold by stockholders of the Company, including Holders of Registrable Securities, desiring to participate in such offering shall be allocated among such stockholders of the Company on a pro rata basis based on their holdings of Parent Common Stock (subject to any written agreements requiring a different priority). (c) Nothing in this Section 3 shall create any liability on the part of the Company to the Holders of Registrable Securities if the Company for any reason should decide not to file a registration statement proposed to be filed under Section 3(a) or to withdraw such registration statement subsequent to its filing, regardless of any action whatsoever that a Holder may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise. (d) A request by Holders to include Registrable Securities in a proposed underwritten offering pursuant to 5 Section 3(a) shall not be deemed to be a request for a demand registration pursuant to Section 4. 4. DEMAND REGISTRATION RIGHT. (a) Upon the written request of Holders of at least 25% of the Registrable Securities that the Company effect the registration with the SEC under and in accordance with the provisions of the Securities Act of all or part of such Holder's or Holders' Registrable Securities and specifying the aggregate number of shares of Registrable Securities requested to be registered and the name or names of the proposed managing underwriter or underwriters (or in the case of a Designated Shelf Registration or a transaction covered by Section 2.02(iv) of the Stockholder's Agreement, the intended method of distribution and the name or names of any managing underwriters or agents), the Company will use all commercially reasonable efforts to file a Registration Statement covering such Holder's or Holders' Registrable Securities requested to be registered within 20 Business Days after receipt of such request for disposition pursuant to an underwritten offering (or, in the case of a Designated Shelf Registration or a transaction covered by Section 2.02(iv) of the Stockholder's Agreement, the intended method of distribution) (the terms of such underwritten offering or other distribution to be determined by the Holders of a majority of the Registrable Securities so requested to be registered); PROVIDED, HOWEVER, that, subject to Section 4(c), the Company shall not be required to take any action pursuant to this Section 4: (1) if prior to the date of such request the Company shall have effected four (4) registrations pursuant to this Section 4; (2) if the Company has effected a registration (other than a Designated Shelf Registration) pursuant to this Section 4 within the 120-day period next preceding such request which permitted Holders of Registrable Securities to register Registrable Securities; (3) if the Company shall at the time have effective a Shelf Registration pursuant to which the Holder or Holders that requested registration could effect the disposition of such Holder's or Holders' Registrable Securities in the manner requested; (4) if the Registrable Securities which the Company shall have been requested to register shall 6 have a then current market value of less than $50,000,000, unless such registration request is for all remaining Registrable Securities; PROVIDED, HOWEVER, that this restriction shall not apply to the 1,000,000 (as such number may be adjusted pursuant to Section 3.01(c) of the Merger Agreement) shares of Parent Common Stock issued at the Effective Time so long as the request to register such shares covers all of such shares; (5) during the pendency of any Blackout Period; or (6) if the intended method of distribution is not permitted under Section 2.02(i) or 2.02(iv) of the Stockholder's Agreement or, in the case of a Designated Shelf Registration, Section 2.02(ii) or (iii) of the Stockholder's Agreement; PROVIDED FURTHER, HOWEVER, that the Company shall be permitted to satisfy its obligations under this Section 4(a) by amending (to the extent permitted by applicable law) any registration statement (including any Shelf Registration) previously filed by the Company under the Securities Act so that such registration statement (as amended) shall permit the disposition (in accordance with the intended methods of disposition specified as aforesaid) of all of the Registrable Securities for which a demand for registration has been made under this Section 4(a). If the Company shall so amend a previously filed registration statement, it shall be deemed to have effected a registration for purposes of this Section 4. (b) The holders of a majority in number of the Registrable Securities shall be entitled to specify in a request that one registration that is effected pursuant to this Section 4 shall be for a Shelf Registration (a "Designated Shelf Registration"). Subject to any Blackout Period, a Designated Shelf Registration shall be available for transactions described in Section 2.02(ii) or (iii) of the Stockholder's Agreement during the 15 Business Day period beginning on the third Business Day after the Company's public announcement of its quarterly or year-end financial results (each a "Sale Period"); PROVIDED, HOWEVER, that dispositions pursuant to this Section 4(b), together with all other sales pursuant to Section 2.02(ii) of the Stockholder's Agreement within the same three month period, shall not exceed 1% of the outstanding shares of Parent Common Stock as reported on the Company's most recent 7 Form 10-K or 10-Q, as applicable. Notwithstanding the foregoing, if a Blackout Period or a suspension by the Company of the use by the Holders of the Designated Shelf Registration or any related Prospectus pursuant to Section 7(e), eliminates more than seven Business Days in any Sale Period, then (i) the length of the next Sale Period shall be thirty Business Days and (ii) the volume restriction specified in the preceding sentence shall be 2% of the outstanding shares of Parent Common Stock for the three month period which includes such extended Sale Period. Notwithstanding the provisions of Section 7(b), the Company shall be required to maintain the effectiveness of the Designated Shelf Registration for at least 36 calendar months (which period shall be extended if necessary to cover any and all extended Sale Periods provided for under the immediately preceding sentence), or, if earlier, until all Registrable Securities covered thereby have ceased to be Registrable Securities. (c) Upon the written request of a Holder that the Company effect the registration with the SEC under and in accordance with the provisions of the Securities Act of all of the then outstanding (x) shares of Parent Common Stock issued pursuant to Section 8.01(g)(ii) of the Merger Agreement or (y) shares of Parent Common Stock issued pursuant to Section 3.1 or 4.1 of the Certificate of Designations in payment of accrued and unpaid dividends on the Parent Preferred Stock and specifying the aggregate number of shares of Registrable Securities requested to be registered and the intended method of distribution and the name or names of any managing underwriters or agents, the Company will use commercially reasonable efforts to file a Registration Statement covering such Holder's Registrable Securities requested to be registered within 20 Business Days after receipt of such request. Notwithstanding anything to the contrary in Section 4(a) or 6(b), (A) the registration of Registrable Securities pursuant to this Section 4(c) shall not be subject to the provisions of Section 4(a) or 6(b) and (B) the number of registration requests pursuant to this Section 4(c) shall be unlimited. (d) A registration requested pursuant to this Section 4 shall not be deemed to be effected for purposes of this Section 4 if it has not been declared effective by the SEC or become effective in accordance with the Securities Act and the rules and regulations thereunder. (e) Holders of a majority in number of the Registrable Securities to be included in a Registration 8 Statement pursuant to this Section 4 may, at any time prior to the effective date of the Registration Statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request. The Holders of Registrable Securities who revoke such request shall reimburse the Company for all its out-of-pocket expenses incurred in the preparation, filing and processing of the Registration Statement; PROVIDED, HOWEVER, that, if such revocation was based on (x) the Company's failure to comply in all material respects with its obligations hereunder or (y) the occurrence of a Blackout Period, such reimbursement shall not be required and the remaining provisions of this Section 4(d) shall not apply. If such reimbursement is made within 10 Business Days following a request therefor, such registration shall not be deemed to have been effected for purposes of this Section 4. If such reimbursement is not so received within such time (i) such registration shall be deemed to have been effected for purposes of this Section 4 and (ii) the Company shall have no further obligations to such Holders with respect to piggy-back registrations pursuant to Section 3 or demand registrations pursuant to this Section 4 until such reimbursement is made. (f) The Company will not include any securities which are not Registrable Securities in any Registration Statement filed pursuant to a demand made under this Section 4 without the prior written consent of the Holders of a majority in number of the Registrable Securities covered by such Registration Statement. 5. SELECTION OF UNDERWRITERS. In connection with any underwritten offering pursuant to a Registration Statement filed pursuant to a demand made pursuant to Section 4, Holders of a majority in number of the Registrable Securities to be included in the Registration Statement shall have the right to select a managing underwriter or underwriters to administer the offering, so long as such managing underwriter or underwriters shall be reasonably satisfactory to the Company; PROVIDED, HOWEVER, that the Company shall have the right to select one co-managing underwriter, so long as such co-managing underwriter shall be reasonably satisfactory to the Holders of a majority in number of the Registrable Securities to be included in such offering. The managing underwriter or underwriters selected by the Holders of a majority in number of the Registrable Securities to be registered shall be deemed satisfactory to the Company unless the Company sends a written notice of objection to the Holders of a majority 9 in number of such Registrable Securities within 10 days of receipt of notice from such Holders of the appointment of a managing underwriter or underwriters and the co-managing underwriter selected by the Company shall be deemed to be satisfactory to such Holders unless such Holders send a written notice of objection to the Company within 10 days of receipt of notice from the Company of the appointment of a co-managing underwriter. 6. BLACKOUT PERIODS FOR HOLDERS. (a) Subject to Section 4(c), if the Company determines in good faith that the registration and distribution of Registrable Securities (or the use of the Registration Statement or related Prospectus) would interfere with any pending financing, acquisition, corporate reorganization or any other corporate development involving the Company or any of its subsidiaries or would require premature disclosure thereof and promptly gives the Holders of Registrable Securities written notice of such determination, the Company shall be entitled to (i) postpone the filing of the Registration Statement otherwise required to be prepared and filed by the Company pursuant to Section 3 or 4 or (ii) elect that the Registration Statement not be used, in either case, for a reasonable period of time, but not to exceed 90 days (a "Section 6(a) Period"). Any such written notice shall be signed by an officer of the Company and contain a general statement of the reasons for such postponement or restriction on use and an estimate of the anticipated delay. The Company shall promptly notify each Holder of the expiration or earlier termination of a Section 6(a) Period. (b) Subject to Section 4(c), if (i) during the Effective Period, the Company shall file a registration statement (other than in connection with the registration of securities issuable pursuant to a continuous "at the market offering" pursuant to Rule 415(a)(4) under the Securities Act, an employee stock option, stock purchase, dividend reinvestment plan or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) with respect to any Related Securities and (ii) with reasonable prior notice, (A) the Company (in the case of a non-underwritten offering pursuant to such registration statement) advises the Holders in writing that a sale or distribution of Registrable Securities would adversely affect such offering or (B) the managing underwriter or underwriters (in the case of an underwritten offering) advise the Company in writing (in which case the Company shall notify the Holders), that a 10 sale or distribution of Registrable Securities would adversely affect such offering, then each Holder of Registrable Securities shall, to the extent not inconsistent with applicable law, refrain from effecting any sale or distribution of Registrable Securities, including sales pursuant to Rule 144 under the Securities Act, during the 10-day period prior to, and during (x) the 60-day period, in the case of sales or distributions pursuant to a Designated Shelf Registration or pursuant to Rule 144 under the Securities Act, and (y) the 90-day period, in all other cases, in each case beginning on the effective date of such registration statement (a "Section 6(b) Period"). (c) The Effective Period and (in the case where the use of an effective Registration Statement (other than a Designated Shelf Registration) is prohibited under Section 6(a)) the period for which a Registration Statement shall be kept effective pursuant to Section 7(b), as the case may be, shall be extended by a number of days equal to the number of days of any Blackout Period occurring during such period (except that, in the case of the occurrence of a Blackout Period during the effectiveness of a Designated Shelf Registration, the Effective Period will only be extended to the extent, if any, necessary to comply with Section 4(b)). Except as provided below, the beginning of any Blackout Period shall be at least 120 days after the end of the prior Blackout Period and the aggregate number of days included in all Blackout Periods during any consecutive 12 month period during the Effective Period shall not exceed 180 days; PROVIDED, HOWEVER, that once during any consecutive 12 month period during the Effective Period a Section 6(b) Period may begin on or within five days of the last day of a Section 6(a) Period. (d) Without limiting the rights of the Company under Section 6(a), unless the Company shall exercise its right to declare a Section 6(b) Period prior to the 10th day preceding the effectiveness of a Registration Statement effected pursuant to Section 4 (other than a Designated Shelf Registration), it shall not, during the period beginning on such 10th day and continuing during the period of the offering covered by such Registration Statement (other than a Designated Shelf Registration) file or effect a registration statement of the type for which it would be entitled to declare a Section 6(b) Period. 7. REGISTRATION PROCEDURES. If and whenever the Company is required to use commercially reasonable efforts to effect or cause the registration of any Registrable 11 Securities under the Securities Act as provided in this Agreement, the Company will, as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its best efforts to cause such Registration Statement to become and remain effective; (b) prepare and file with the SEC amendments and post-effective amendments to such Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration or as may be required by the rules, regulations or instructions applicable to the registration form utilized by the Company or by the Securities Act or rules and regulations thereunder for shelf registration or otherwise necessary to keep such Registration Statement effective for up to 90 days (except to the extent otherwise provided in Section 4(b) with respect to a Designated Shelf Registration) and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until the earlier of (x) such 90th day (except to the extent otherwise provided in Section 4(b) with respect to a Designated Shelf Registration) and (y) such time as all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities (it being understood that the Company at its option may determine to maintain such effectiveness for a longer period, whether pursuant to a Shelf Registration or otherwise); PROVIDED that a reasonable time before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder), the Company will furnish to the Holders, the managing underwriter and their respective counsel for review and comment, copies of all documents proposed to be filed and will not file any such documents (other than as aforesaid) 12 to which any of them reasonably object prior to the filing thereof; (c) furnish to each Holder of such Registrable Securities such number of copies of such Registration Statement and of each amendment and post-effective amendment thereto (in each case including all exhibits), any Prospectus or Prospectus supplement and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder (the Company hereby consenting to the use (subject to the limitations set forth in the last paragraph of this Section 7) of the Prospectus or any amendment or supplement thereto in connection with such disposition); (d) use its best efforts to register or qualify such Registrable Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as each Holder shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 7(d), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (e) notify each Holder of any such Registrable Securities covered by such Registration Statement, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in Section 7(b), of the Company's becoming aware that the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and at the request of any such Holder, prepare and furnish to such Holder a reasonable number of copies of an amendment or supplement to such Registration Statement or related Prospectus as may be necessary so 13 that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include 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 in light of the circumstances then existing; (f) notify each Holder of Registrable Securities covered by such Registration Statement at any time, (1) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (2) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information; (3) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any order preventing the use of a related Prospectus, or the initiation or any overt threats of any proceedings for such purposes; (4) of the receipt by the Company of any written notification of the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or any overt threats of any proceeding for that purpose; and (5) if at any time the representations and warranties of the Company contemplated by paragraph (i)(1) below cease to be true and correct; (g) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this paragraph if it has complied with Rule 158 under the Securities Act; 14 (h) use commercially reasonable efforts to cause all such Registrable Securities to be listed on any securities exchange on which the Parent Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities covered by such Registration Statement no later than the effective date of such Registration Statement; (i) enter into agreements (including underwriting agreements) and take all other appropriate and all commercially reasonable actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration: (1) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in firm commitment underwritten offerings; (2) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the Holders of a majority in number of the Registrable Securities being sold) addressed to such Holders and the underwriters covering the matters customarily covered in opinions requested in firm commitment underwritten offerings and such other matters as may be reasonably requested by the Holders of a majority in number of the Registrable Securities being sold and the managing underwriter, if any; (3) obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the selling Holders of Registrable Securities and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by independent accountants in connection with firm commitment underwritten offerings on such date or 15 dates as may be reasonably requested by the Holders of a majority in number of the Registrable Securities being sold and the managing underwriter, if any; (4) if requested, provide indemnification in accordance with the provisions and procedures of Section 10 hereof to all parties to be indemnified pursuant to said Section; and (5) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in number of the Registrable Securities being sold and the managing underwriters, if any, to evidence compliance with clause (f) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The matters set forth in this Section 7(i) shall be effected at each closing under any underwriting or similar agreement as and to the extent required thereunder. (j) cooperate with the Holders of Registrable Securities covered by such Registration Statement and the managing underwriter or underwriters or agents, if any, to facilitate, to the extent commercially reasonable under the circumstances, the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the securities to be sold under such Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters or agents, if any, or such Holders may request; (k) if reasonably requested by the managing underwriter or underwriters or a Holder of Registrable Securities being sold in connection with an underwritten offering, incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the Holders of a majority in number of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the principal amount of Registrable Securities being sold to such underwriters, the 16 purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering and make all required filings of such Prospectus supplement or post-effective amendment promptly upon being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (l) make available for inspection by any Holder of Registrable Securities included in such Registration Statement, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the "Inspectors"), reasonable access to appropriate officers of the Company and the Company's subsidiaries to ask questions and to obtain information reasonably requested by any such Inspector and all financial and other records and other information, pertinent corporate documents and properties of any of the Company and its subsidiaries and affiliates (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility; PROVIDED, HOWEVER, that the Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement reasonably satisfactory to the Company or either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission of a material fact in such Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; PROVIDED FURTHER, HOWEVER, that any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors. Each Holder of Registrable Securities agrees that it will, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of such Records; and (m) in the event of the issuance of any stop order suspending the effectiveness of the Registration 17 Statement or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in the Registration Statement for sale in any jurisdiction, the Company will use all commercially reasonable efforts promptly to obtain its withdrawal. The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request in writing. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7(e), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus or Registration Statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7(e), and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the Effective Period and (in the case where the use of an effective Registration Statement (other than a Designated Shelf Registration) or any related Prospectus is prohibited under Section 7(e)) the period mentioned in Section 7(b), as the case may be, shall be extended by the number of days during the period from the date of the giving of such notice pursuant to Section 7(e) and through the date when each seller of Registrable Securities covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 7(e) (except that, in the case of such a prohibition during the effectiveness of a Designated Shelf Registration, the Effective Period will only be extended to the extent necessary to comply with Section 4(b)). 8. REGISTRATION EXPENSES. The Company will pay all Registration Expenses in connection with all registrations of Registrable Securities pursuant to Sections 3 and 4 upon the written request of any of the Holders, and each Holder shall pay (x) any fees or 18 disbursements of counsel to such Holder (other than Counsel to the Holders) and (y) all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Registration Statement. 9. REPORTS UNDER THE EXCHANGE ACT. The Company agrees to: (a) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (b) furnish to any Holder, during the Effective Period, forthwith upon request (A) a written statement by the Company that it has complied with the current public information and reporting requirements of Rule 144 under the Securities Act and the Exchange Act and (B) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company. 10. INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers and directors and each Person who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and any agent or investment adviser thereof against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and expenses) incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (i) any untrue or alleged untrue statement of material fact contained in the Registration Statement, any Prospectus or preliminary Prospectus, or any amendment or supplement to any of the foregoing or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or a preliminary Prospectus, in light of the circumstances then existing) not misleading, except in each case insofar as the same arise out of or are based upon any such untrue statement or omission made in reliance on and in conformity with information with respect to such indemnified party furnished in writing to the Company by such indemnified party or its counsel expressly for use therein. In connection with an underwritten offering, the Company will indemnify the underwriters thereof, their officers, directors and agents and each 19 Person who controls such underwriters (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities. Notwithstanding the foregoing provisions of this Section 10(a), the Company will not be liable to any Holder of Registrable Securities, any Person who participates as an underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such Holder or underwriter (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), under the indemnity agreement in this Section 10(a) for any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense that arises out of such Holder's or other Person's failure to send or deliver a copy of the final Prospectus to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of the Registrable Securities to such Person if such statement or omission was corrected in such final Prospectus and the Company has previously furnished copies thereof to such Holder or other Person in accordance with this Agreement. (b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In connection with the Registration Statement, each Holder will furnish to the Company in writing such information, including the name, address and the amount of Registrable Securities held by such Holder, as the Company reasonably requests for use in such Registration Statement or the related Prospectus and agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 10(a)) the Company, all other Holders or any underwriter, as the case may be, and any of their respective affiliates, directors, officers and controlling Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of a material fact contained in, or any omission or alleged omission of a material fact required to be stated in, such Registration Statement or Prospectus or any amendment or supplement to either of them or necessary to make the statements therein (in the case of a Prospectus, in the light of the circumstances then existing) not misleading, but only to the extent that any such untrue statement or omission is made in reliance on and in conformity with information with respect to such Holder furnished in writing to the Company by such Holder or its counsel specifically for inclusion therein. 20 (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Section 10 (provided that failure to give such notification shall not affect the obligations of the indemnifying party pursuant to this Section 10 except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure). In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under these indemnification provisions for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation, unless in the reasonable judgment of any indemnified party a conflict of interest is likely to exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels. No indemnifying party, in defense of any such action, suit, proceeding or investigation, shall, except with the consent of each indemnified party, consent to the entry of any judgment or entry into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such action, suit, proceeding or investigation to the extent the same is covered by the indemnity obligation set forth in this Section 10. No indemnified party shall consent to entry of any judgment or enter into any settlement without the consent of each indemnifying party. (d) CONTRIBUTION. If the indemnification from the indemnifying party provided for in this Section 10 is 21 unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 10(c), any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 10(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 10(d), no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable 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 been required to pay by reason of such 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 Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each Holder's obligation to contribute is several in the proportion that the proceeds of the offering received by such Holder bears to the total proceeds of the offering, and not joint. 22 If indemnification is available under this Section 10, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 10(a) or (b), as the case may be, without regard to the relative fault of said indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 10(d). (e) LIMITATION ON LIABILITY AND CONTRIBUTION OF A HOLDER. In no event shall any Holder of Registrable Securities be liable or required to contribute any amount under this Section 10 or otherwise in respect of any untrue or alleged untrue statement or omission or alleged omission for amounts in excess of the amount by which the total price at which the Registrable Securities of such Holder were offered to the public exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue statement or omission. (f) The provisions of this Section 10 shall be in addition to any liability which any indemnifying party may have to any indemnified party and shall survive the termination of this Agreement. 11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Holder of Registrable Securities may participate in any underwritten offering hereunder unless such Holder (a) agrees to sell such Holder's securities on the basis provided in any underwriting arrangements approved by the Company in its reasonable discretion and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 12. MISCELLANEOUS. (a) REMEDIES. Each Holder of Registrable Securities in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a majority in number of the Registrable Securities then outstanding. 23 (c) NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for any party as shall be specified by like notice). (i)(A) if to the Stockholder to: Houston Industries Incorporated Five Post Oak Park 4400 Post Oak Parkway Houston, TX 77027 Facsimile: (713) 629-3065 Attention: Mr. Stephen W. Naeve with a copy (which shall not constitute notice) to: Houston Industries Incorporated 611 Walker, 25th Floor Houston, TX 77002 Facsimile: (713) 220-5503 Attention: Hugh Rice Kelly, Esq. with a copy (which shall not constitute notice) to: Baker & Botts, L.L.P. One Shell Plaza 910 Louisiana Houston, TX 77002 Facsimile: (713) 229-1522 Attention: Margo S. Scholin, Esq. (B) if to a Holder of Registrable Securities, other than the Stockholder, at the address of such Holder as such Holder may designate to the Company in writing; and 24 (ii) if to the Company to: Time Warner Inc. 75 Rockefeller Plaza New York, NY 10019 Facsimile: (212) 333-3987 Attention: Peter R. Haje, Esq. with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Facsimile: (212) 474-3700 Attention: William P. Rogers, Jr., Esq. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the parties hereto, any Holder other than the Stockholder and any successors thereof; PROVIDED, HOWEVER, that (i) any Holder (other than the Stockholder) shall have agreed in writing to become a Holder under this Agreement and to be bound by the terms and conditions hereof and (ii) subject to clause (i), this Agreement and the provisions of this Agreement that are for the benefit of the Holders shall not be assignable by any Holder to any Person that is not so permitted to be a Holder, and any such purported assignment shall be null and void. (e) COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. (f) DESCRIPTIVE HEADINGS. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (g) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. 25 (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby and that all remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the Stockholder shall be enforceable to the fullest extent permitted by law. (i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression and a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof. There are no restrictions, promises, warranties or undertakings with respect to the subject matter hereof, other than those set forth or referred to herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. TIME WARNER INC., by /s/ SPENCER B. HAYS Name: Spencer B. Hays Title: Vice President HOUSTON INDUSTRIES INCORPORATED, by /s/ STEPHEN W. NAEVE Name: Stephen W. Naeve Title: Vice President - Strategic Planning and Administration 26 EX-4 4 SPECIFICATIONS OF SERIES D CONV PREFERRED STOCK Exhibit 4 I. CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF SERIES D CONVERTIBLE PREFERRED STOCK OF TIME WARNER INC. ____________________ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ____________________ TIME WARNER INC., a corporation organized and existing by virtue of the General Corporation Law of the State of Delaware (as defined below, the "Corporation"), does hereby certify that the following resolution was duly adopted by action of the Board of Directors of the Corporation at a meeting duly held on the 16th day of March, 1995. RESOLVED that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by the provisions of Section 2 of Article IV of the Restated Certificate of Incorporation of the Corporation, as amended from time to time (the "Certificate of Incorporation"), and Section 151(g) of the General Corporation Law of the State of Delaware, such Board of Directors hereby creates, from the authorized shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock"), of the Corporation authorized to be issued pursuant to the Certificate of Incorporation, a series of Preferred Stock, and hereby fixes the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such series as follows: The series of Preferred Stock hereby established shall consist of 11,000,000 shares designated as Series D Convertible Preferred Stock. The rights, preferences and limitations of such series shall be as follows: 1 1. DEFINITIONS. As used herein, the following terms shall have the indicated meanings: 1.1 "Accrued Dividend Amount" shall mean the aggregate amount of accrued and unpaid dividends on a share of Series D Stock to and including the Conversion Date, except that if the Conversion Date shall occur after a Record Date and prior to a related Dividend Payment Date, the Accrued Dividend Amount shall not include any accrued and unpaid dividends for the period from and after the most recent Dividend Payment Date. 1.2 "Board of Directors" shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action. 1.3 "Capital Stock" shall mean any and all shares of corporate stock of a Person (however designated and whether representing rights to vote, rights to participate in dividends or distributions upon liquidation or otherwise with respect to such Person, or any division or subsidiary thereof, or any joint venture, partnership, corporation or other entity). 1.4 "Certificate" shall mean the certificate of the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of Series D Convertible Preferred Stock filed with respect to this resolution with the Secretary of State of the State of Delaware pursuant to Section 151 of the General Corporation Law of the State of Delaware. 1.5 "Change of Control" and "Change of Control Date" shall have the following meanings: "Change of Control" shall mean the occurrence of one or both of the following events: (a) individuals who would constitute a majority of the members of the Board of Directors elected at any meeting of stockholders or by written consent (without regard to any members of the Board of Directors elected pursuant to the terms of any series of Preferred Stock) shall be elected to the Board of Directors and the election or the nomination for election by the Corporation's stockholders of such directors was not approved by a vote of at least a majority of the directors in office immediately prior to such election (in which event "Change of Control 2 Date" shall mean the date of such election) or (b) a Person or group of Persons acting in concert as a partnership, limited partnership, syndicate or other group within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring Person") shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases, share repurchases or redemptions or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the outstanding shares of Common Stock (in which event "Change of Control Date" shall mean the date of the event resulting in such 40% ownership). 1.6 "Closing Price" of the Common Stock shall mean the last reported sale price of the Common Stock (regular way) as shown on the Composite Tape of the NYSE, or, in case no such sale takes place on such day, the average of the closing bid and asked prices on the NYSE, or, if the Common Stock is not listed or admitted to trading on the NYSE, on the principal national securities exchange on which such stock is listed or admitted to trading, or, if it is not listed or admitted to trading on any national securities exchange, the last reported sale price of the Common Stock, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported by NASDAQ. 1.7 "Common Dividend Deficiency" shall be applicable in the event that a Conversion Date shall fall after a record date and prior to the related payment date for a regularly scheduled cash dividend on the Common Stock (the "Common Dividend Payment Date"), and in such event shall mean the product of (i) the Conversion Rate, (ii) the amount per share of Common Stock of the regularly scheduled cash dividend for which the record date has been set but a payment date has not yet occurred and (ii) a fraction (A) the numerator of which is the number of calendar days from and excluding the Conversion Date (or in the event the Conversion Date falls after a Record Date and on or prior to a related Dividend Payment Date, from and excluding the Dividend Payment Date) to and including the Common Dividend Payment Date and (B) the denominator of which is 91 (provided that such fraction shall not be greater than one (1)). 1.8 "Common Dividend Excess" shall be applicable in all circumstances where a Common Dividend Deficiency is not applicable, and in such event shall mean the product of (i) the Conversion Rate, (ii) the regular 3 quarterly cash dividend per share, if any, paid by the Corporation on the Common Stock (the "Historical Dividend") on the most recent dividend payment date for the Common Stock (the "Prior Dividend Payment Date") occurring during the four months immediately preceding the Conversion Date and (iii) a fraction (A) the numerator of which is the number of calendar days from and excluding (1) the Prior Dividend Payment Date to and including (2) the Conversion Date (or in the event the Conversion Date falls after a Record Date and on or prior to a related Dividend Payment Date, to and including the Dividend Payment Date) and (B) the denominator of which is 91 days (provided that in no event shall the fraction be greater than one (1)). 1.9 "Common Stock" shall mean the class of Common Stock, par value $1.00 per share, of the Corporation authorized at the date of the Certificate, or any other class of stock resulting from (x) successive changes or reclassifications of such Common Stock consisting of changes in par value, or from par value to no par value, (y) a subdivision or combination or (z) any other changes for which an adjustment is made under Section 3.6(a), and in any such case including any shares thereof authorized after the date of the Certificate, together with any associated rights to purchase other securities of the Corporation which are at the time represented by the certificates representing such shares of Common Stock. 1.10 "Conversion Date" shall have the meaning set forth in Section 3.5 hereof. 1.11 "Conversion Price" at any time shall mean the Liquidation Value per share divided by the Conversion Rate in effect at such time (rounded to the nearest one hundredth of a cent). 1.12 "Conversion Rate" shall have the meaning set forth in Section 3.1 hereof. 1.13 "Converting Holder" shall have the meaning set forth in Section 3.5 hereof. 1.14 "Corporation" shall mean Time Warner Inc., a Delaware corporation, and any of its successors by operation of law, including by merger, consolidation or sale or conveyance of all or substantially all of its property and assets. 4 1.15 "Current Market Price" of the Common Stock on any date shall mean the average of the daily Closing Prices per share of the Common Stock for the five (5) consecutive Trading Days ending on the Trading Day immediately preceding the applicable record date, conversion date, redemption date or exchange date referred to in Section 3 or Section 4. 1.16 "Dividend Payment Date" shall have the meaning set forth in Section 2.1 hereof. 1.17 "Effective Time" shall mean the time of filing (or if later the time of effectiveness specified therein) of a certificate of merger with the Secretary of State of the State of Delaware pursuant to Section 1.03 of the Agreement and Plan of Merger dated as of January 26, 1995, among KBLCOM Incorporated, Houston Industries Incorporated, the Corporation and TWI Cable Inc. (formerly known as TW KBLCOM Acquisition Corp.), as the same may be amended from time to time. 1.18 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.19 "Exchange Price" shall have the meaning set forth in Section 4.1 hereof. 1.20 "Junior Stock" shall mean the Common Stock, the Series A Stock and the shares of any other class or series of Capital Stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall be junior to the Series D Stock in respect of the right to receive dividends or to participate in any distribution of assets other than by way of dividends. 1.21 "Liquidation Value" shall have the meaning set forth in Section 7.1 hereof. 1.22 "NASDAQ" shall mean the National Association of Securities Dealers Automated Quotation System. 1.23 "Net Dividend Amount" shall have the meaning set forth in Section 3.1 hereof. 5 1.24 "NYSE" shall mean the New York Stock Exchange, Inc. 1.25 "Parity Stock" shall mean the Series B Stock and the shares of any other class or series of Capital Stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall, in the event that the stated dividends thereon are not paid in full, be entitled to share ratably with the Series D Stock in the payment of dividends, including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, or shall, in the event that the amounts payable thereon on liquidation are not paid in full, be entitled to share ratably with the Series D Stock in any distribution of assets other than by way of dividends in accordance with the sums which would be payable in such distribution if all sums payable were discharged in full; PROVIDED, HOWEVER, that the term "Parity Stock" shall be deemed to refer (i) in Section 2.2 hereof, to any stock which is Parity Stock in respect of dividend rights; (ii) in Section 7 hereof, to any stock which is Parity Stock in respect of the distribution of assets; and (iii) in Sections 6.2 and 6.3 hereof, to any stock which is Parity Stock in respect of either dividend rights or the distribution of assets and which, pursuant to the Certificate of Incorporation or any instrument in which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall so designate, is entitled to vote with the holders of Series D Stock. 1.26 "Person" shall mean an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. 1.27 "Preferred Stock" shall mean the class of Preferred Stock, par value $1.00 per share, of the Corporation authorized at the date of the Certificate, including any shares thereof authorized after the date of the Certificate. 1.28 "Pro Rata Portion" shall have the meaning set forth in Section 5.6 hereof. 1.29 "Pro Rata Repurchase" shall mean the purchase of shares of Common Stock by the Corporation or by 6 any of its subsidiaries, whether for cash or other property or securities of the Corporation, which purchase is subject to Section 13(e) of the Exchange Act or is made pursuant to an offer made available to all holders of Common Stock, but excluding any purchase made in open market transactions that satisfies the conditions of clause (b) of Rule 10b-18 under the Exchange Act or has been designed (as reasonably determined by the Board of Directors or a committee thereof) to prevent such purchase from having a material effect on the trading market of the Common Stock. The "Effective Date" of a Pro Rata Repurchase shall mean the applicable expiration date (including all extensions thereof) of any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro Rata Repurchase which is not a tender or exchange offer. 1.30 "Record Date" shall have the meaning set forth in Section 2.1 hereof. 1.31 "Redemption Price" shall have the meaning set forth in Section 4.1 hereof. 1.32 "Redemption Rescission Event" shall mean the occurrence of (a) any general suspension of trading in, or limitation on prices for, securities on the principal national securities exchange on which shares of Common Stock are registered and listed for trading (or, if shares of Common Stock are not registered and listed for trading on any such exchange, in the over-the-counter market) for more than six-and-one-half (6-1/2) consecutive trading hours, (b) any decline in either the Dow Jones Industrial Average or the Standard & Poor's Index of 400 Industrial Companies (or any successor index published by Dow Jones & Company, Inc. or Standard & Poor's Corporation) by either (i) an amount in excess of 10%, measured from the close of business on any Trading Day to the close of business on the next succeeding Trading Day during the period commencing on the Trading Day preceding the day notice of any redemption of shares of this Series is given (or, if such notice is given after the close of business on a Trading Day, commencing on such Trading Day) and ending at the earlier of (x) the time and date fixed for redemption in such notice and (y) the time and date at which the Corporation shall have irrevocably deposited funds with a designated bank or trust company pursuant to Section 4.4 or (ii) an amount in excess of 15% (or, if the time and date fixed for redemption is more than 15 days following the date on which notice of redemption is given, 20%), measured from the close of 7 business on the Trading Day preceding the day notice of such redemption is given (or, if such notice is given after the close of business on a Trading Day, from such Trading Day) to the close of business on any Trading Day on or prior to the earlier of the dates specified in clauses (x) and (y) above, (c) a declaration of a banking moratorium or any suspension of payments in respect of banks by Federal or state authorities in the United States or (d) the commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which in the reasonable judgment of the Corporation could have a material adverse effect on the market for the Common Stock. 1.33 "Rescission Date" shall have the meaning set forth in Section 4.5 hereof. 1.34 "Senior Stock" shall mean the shares of any class or series of Capital Stock of the Corporation which, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall be senior to the Series D Stock in respect of the right to receive dividends or to participate in any distribution of assets other than by way of dividends. 1.35 "Series A Stock" shall mean the series of Preferred Stock authorized and designated as Series A Participating Preferred Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.36 "Series B Stock" shall mean the series of Preferred Stock authorized and designated as Series B 6.40% Preferred Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.37 "Series D Stock" and "this Series" shall mean the series of Preferred Stock authorized and designated as the Series D Convertible Preferred Stock, including any shares thereof authorized and designated after the date of the Certificate. 1.38 "Surrendered Shares" shall have the meaning set forth in Section 3.5 hereof. 8 1.39 "Trading Day" shall mean, so long as the Common Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, or, if the Common Stock is not listed or admitted to trading on the NYSE, a day on which the principal national securities exchange on which the Common Stock is listed is open for the transaction of business, or, if the Common Stock is not so listed or admitted for trading on any national securities exchange, a day on which the National Market System of NASDAQ is open for the transaction of business. 2. CASH DIVIDENDS. 2.1 The holders of the outstanding Series D Stock shall be entitled to receive quarter-annual dividends, as and when declared by the Board of Directors out of funds legally available therefor. Each quarter-annual dividend shall be an amount per share equal to (i) in the case of each Dividend Payment Date (as defined below) occurring after the Effective Time through the Dividend Payment Date coinciding with the fourth anniversary of the Effective Time, the greater of (A) $.9375 per $100 of Liquidation Value of Series D Stock (which is equivalent to $3.75 per annum), and (B) an amount per $100 of Liquidation Value of Series D Stock equal to the product of (1) the Conversion Rate and (2) the aggregate per share amount of regularly scheduled dividends paid in cash on the Common Stock during the period from but excluding the immediately preceding Dividend Payment Date to and including such Dividend Payment Date and (ii) in the case of each Dividend Payment Date occurring thereafter, an amount per $100 of Liquidation Value of Series D Stock equal to the product of (1) the Conversion Rate and (2) the aggregate per share amount of regularly scheduled dividends paid in cash on the Common Stock during the period from but excluding the immediately preceding Dividend Payment Date to and including such Dividend Payment Date. All dividends shall be payable in cash on or about the first day of January, April, July and October in each year, beginning on the first such date that is more than 15 days after the Effective Time, as fixed by the Board of Directors, or such other dates as are fixed by the Board of Directors (provided that the fourth 9 anniversary of the Effective Time shall be a Dividend Payment Date) (each a "Dividend Payment Date"), to the holders of record of Series D Stock at the close of business on or about the Trading Day next preceding such first day of January, April, July or October (or fourth anniversary of the Effective Time) as the case may be, as fixed by the Board of Directors, or such other dates as are fixed by the Board of Directors (each a "Record Date"). In the case of dividends payable in respect of periods prior to the fourth anniversary of the Effective Time, (i) such dividends shall accrue on each share on a daily basis, whether or not there are unrestricted funds legally available for the payment of such dividends and whether or not earned or declared, from and after the day immediately succeeding the Effective Time and (ii) any such dividends that become payable for any partial dividend period shall be computed on the basis of the actual days elapsed in such period. From and after the fourth anniversary of the Effective Time, dividends on the Series D Stock (determined as to amount as provided herein) shall accrue to the extent, but only to the extent, that regularly scheduled cash dividends are declared by the Board of Directors on the Common Stock with a payment date after the fourth anniversary of the Effective Time (or, in the case of Series D Stock originally issued after the fourth anniversary of the Effective Time, after the Dividend Payment Date next preceding such date of original issuance). All dividends that accrue in accordance with the foregoing provisions shall be cumulative from and after the day immediately succeeding the Effective Time (or such date of issuance). The amount payable to each holder of record on any Dividend Payment Date shall be rounded to the nearest cent. 2.2 Except as hereinafter provided in this Section 2.2, unless all dividends on the outstanding shares of Series D Stock and any Parity Stock that shall have accrued and become payable as of any date shall have been paid, or declared and funds set apart for payment thereof, no dividend or other distribution (payable other than in shares of Junior Stock) shall be paid to the holders of Junior Stock or Parity Stock, and no shares of Series D Stock, Parity Stock or Junior Stock shall be purchased, redeemed or otherwise acquired by the Corporation or any of its subsidiaries (except by conversion into or exchange for Junior Stock), nor shall any monies be paid or made available for a purchase, redemption or sinking fund for the purchase or redemption of any Series D Stock, Junior Stock or Parity Stock. When dividends are not paid in full upon 10 the shares of this Series and any Parity Stock, all dividends declared upon shares of this Series and all Parity Stock shall be declared pro rata so that the amount of dividends declared per share on this Series and all such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of this Series and all such Parity Stock bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on this Series which may be in arrears. 2.3 In case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation) to the holders of its shares of Common Stock any assets or property, including debt or equity securities of the Corporation (other than Common Stock subject to a distribution or reclassification covered by Section 3.6(a)) or of any other Person (including common stock of such Person) or cash (but excluding regularly scheduled cash dividends payable on shares of Common Stock), or in case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation) to such holders rights, options or warrants to subscribe for or purchase shares of Common Stock (including shares held in the treasury of the Corporation), or rights, options or warrants to subscribe for or purchase any other security or rights, options or warrants to subscribe for or purchase any assets or property (in each case, whether of the Corporation or otherwise, but other than any distribution of rights to purchase securities of the Corporation if the holder of shares of this Series would otherwise be entitled to receive such rights upon conversion of shares of this Series for Common Stock; PROVIDED, HOWEVER, that if such rights are subsequently redeemed by the Corporation, such redemption shall be treated for purposes of this Section 2.3 as a cash dividend (but not a regularly scheduled cash dividend) on the Common Stock), the Corporation shall simultaneously distribute such assets, property, securities, rights, options or warrants pro rata to the holders of Series D Stock on the record date fixed for determining holders of Common Stock entitled to participate in such distribution (or, if no such record date shall be established, the effective time thereof) in an amount equal to the amount that such holders of Series D Stock would have been entitled to receive had their shares of Series D Stock been converted into Common Stock immediately prior to such record date (or effective time). In the event of a distribution to holders of Series D Stock 11 pursuant to this Section 2.3, such holders shall be entitled to receive fractional shares or interests only to the extent that holders of Common Stock are entitled to receive the same. The holders of Series D Stock on the applicable record date (or effective time) shall be entitled to receive in lieu of such fractional shares or interests the same consideration as is payable to holders of Common Stock with respect thereto. If there are no fractional shares or interests payable to holders of Common Stock, the holders of Series D Stock on the applicable record date (or effective time) shall receive in lieu of such fractional shares or interests the fair value thereof as determined by the Board of Directors. 2.4 If a distribution is made in accordance with the provisions of Section 2.3, anything in Section 3 to the contrary notwithstanding, no adjustment pursuant to Section 3 shall be effected by reason of the distribution of such assets, property, securities, rights, options or warrants or the subsequent modification, exercise, expiration or termination of such securities, rights, options or warrants. 2.5 In the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities or other property receivable by them in any distribution that is subject to Section 2.3, the kind and amount of securities or other property that shall be distributable to the holders of the Series D Stock shall be based on (i) the election, if any, made by the record holder (as of the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of Series D Stock in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable by holders of the Series D Stock shall be based on the kind or amount of securities or other property receivable by a plurality of shares held by the nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section, the Corporation shall mail a copy thereof to the record holders of the Series D Stock as of the date used for determining 12 the holders of record of Common Stock entitled to such mailing. 3. CONVERSION RIGHTS. 3.1 Each holder of a share of this Series shall have the right at any time or as to any share of this Series called for redemption or exchange, at any time prior to the close of business on the date fixed for redemption or exchange (unless the Corporation defaults in the payment of the Redemption Price or fails to exchange the shares of this Series for the applicable number of shares of Common Stock and any cash portion of the Exchange Price or exercises its right to rescind such redemption pursuant to Section 4.5, in which case such right shall not terminate at the close of business on such date), to convert such share into (i) a number of shares of Common Stock equal to 2.08264 shares of Common Stock for each share of this Series, subject to adjustment as provided in this Section 3 (such rate, as so adjusted from time to time, is herein called the "Conversion Rate") plus (ii) a number of shares of Common Stock equal to (A)(1) the Accrued Dividend Amount MINUS (2) the Common Dividend Excess, if applicable, or PLUS (3) the Common Dividend Deficiency, if applicable (the "Net Dividend Amount"), DIVIDED BY (B) the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date; PROVIDED, HOWEVER, that in the event that the Net Dividend Amount is a negative number, the number of shares deliverable upon conversion of a share of Series D Stock shall be equal to (I) the number of shares determined pursuant to clause (i) MINUS (II) a number of shares equal to (x) the absolute value of the Net Dividend Amount DIVIDED BY (y) the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date; AND PROVIDED FURTHER THAT, in the event that the Net Dividend Amount is a positive number, the Corporation shall have the right to deliver cash equal to the Net Dividend Amount or any portion thereof, in which case its obligation to deliver shares of Common Stock pursuant to clause (ii) 13 shall be reduced by a number of shares equal to (x) the aggregate amount of cash so delivered DIVIDED BY (y) the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date, unless the Corporation shall deliver cash equal to the entire Net Dividend Amount, in which case its entire obligation under clause (ii) shall be discharged. The obligations of the Corporation to issue the Common Stock or make the cash payments provided by this Section 3.1 shall be absolute whether or not any accrued dividend by which such issuance or payment is measured has been declared by the Board of Directors and whether or not the Corporation would have adequate surplus or net profits to pay such dividend if declared or is otherwise restricted from making such dividend. 3.2 Except as provided in this Section 3, no adjustments in respect of payments of dividends on shares surrendered for conversion or any dividend on the Common Stock issued upon conversion shall be made upon the conversion of any shares of this Series (it being understood that if the Conversion Date for shares of Series D Stock occurs after a Record Date and on or prior to a Dividend Payment Date, the holder of record on such Record Date shall be entitled to receive the dividend payable with respect to such shares on the related Dividend Payment Date pursuant to Section 2.1 hereof). 3.3 The Corporation may, but shall not be required to, in connection with any conversion of shares of this Series, issue a fraction of a share of Common Stock, and if the Corporation shall determine not to issue any such fraction, the Corporation shall, subject to Section 3.6(c), make a cash payment (rounded to the nearest cent) equal to such fraction multiplied by the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date. 3.4 Any holder of shares of this Series electing to convert such shares into Common Stock shall surrender the certificate or certificates for such shares at the office of the transfer agent or agents therefor (or at such other place as the Corporation may designate by notice to the holders of shares of this Series) during regular business hours, duly endorsed to the Corporation or in blank, or accompanied by instruments of transfer to the Corporation or in blank, or in form satisfactory to the Corporation, and shall give written notice to the Corporation at such office that such holder elects to convert such shares of this Series. The Corporation shall, as soon as 14 practicable (subject to Section 3.6(d)) after such deposit of certificates for shares of this Series, accompanied by the written notice above prescribed, issue and deliver at such office to the holder for whose account such shares were surrendered, or to his nominee, certificates representing the number of shares of Common Stock and the cash, if any, to which such holder is entitled upon such conversion. 3.5 Conversion shall be deemed to have been made as of the date (the "Conversion Date") that certificates for the shares of this Series to be converted, and the written notice prescribed in Section 3.4 are received by the transfer agent or agents for this Series; and the Person entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such Common Stock on such date. Notwithstanding anything to the contrary contained herein, in the event the Corporation shall have rescinded a redemption of shares of this Series pursuant to Section 4.5, any holder of shares of this Series that shall have surrendered shares of this Series for conversion following the day on which notice of the subsequently rescinded redemption shall have been given but prior to the close of business on the later of (a) the Trading Day next succeeding the date on which public announcement of the rescission of such redemption shall have been made and (b) the Trading Day on which the notice of rescission required by Section 4.5 is deemed given pursuant to Section 8.2 (a "Converting Holder"), may rescind the conversion of such shares surrendered for conversion by (i) properly completing a form prescribed by the Corporation and mailed to holders of shares of this Series (including Converting Holders) with the Corporation's notice of rescission, which form shall provide for the certification by any Converting Holder rescinding a conversion on behalf of any beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of shares of this Series that the beneficial ownership (within the meaning of such Rule) of such shares shall not have changed from the date on which such shares were surrendered for conversion to the date of such certification and (ii) delivering such form to the Corporation no later than the close of business on that date which is ten (10) Trading Days following the date on which the Corporation's notice of rescission is deemed given pursuant to Section 8.2. The delivery of such form by a Converting Holder shall be accompanied by (x) any certificates representing shares of Common Stock issued to such Converting Holder upon a conversion of shares of this Series that shall be rescinded 15 by the proper delivery of such form (the "Surrendered Shares"), (y) any securities, evidences of indebtedness or assets (other than cash) distributed by the Corporation to such Converting Holder by reason of such Converting Holder's being a record holder of Surrendered Shares and (z) payment in New York Clearing House funds or other funds acceptable to the Corporation of an amount equal to the sum of (I) any cash such Converting Holder may have received in lieu of the issuance of fractional shares upon conversion and (II) any cash paid or payable by the Corporation to such Converting Holder by reason of such Converting Holder being a record holder of Surrendered Shares. Upon receipt by the Corporation of any such form properly completed by a Converting Holder and any certificates, securities, evidences of indebtedness, assets or cash payments required to be returned or made by such Converting Holder to the Corporation as set forth above, the Corporation shall instruct the transfer agent or agents for shares of Common Stock and shares of this Series to cancel any certificates representing Surrendered Shares (which Surrendered Shares shall be deposited in the treasury of the Corporation) and reissue certificates representing shares of this Series to such Converting Holder (which shares of this Series shall be deemed to have been outstanding at all times during the period following their surrender for conversion). The Corporation shall, as promptly as practicable, and in no event more than five (5) Trading Days, following the receipt of any such properly completed form and any such certificates, securities, evidences of indebtedness, assets or cash payments required to be so returned or made, pay to the Converting Holder or as otherwise directed by such Converting Holder any dividend or other payment made on such shares during the period from the time such shares shall have been surrendered for conversion to the rescission of such conversion. All questions as to the validity, form, eligibility (including time or receipt) and acceptance of any form submitted to the Corporation to rescind the conversion of shares of this Series, including questions as to the proper completion or execution of any such form or any certification contained therein, shall be resolved by the Corporation, whose determination shall be final and binding. The Corporation shall not be required to deliver certificates for shares of Common Stock while the stock transfer books for such stock or for this Series are duly closed for any purpose or during any period commencing at a Redemption Rescission Event and ending at either (i) the time and date at which the Corporation's right of rescission shall expire pursuant to Section 4.5 if the Corporation 16 shall not have exercised such right or (ii) the close of business on that day which is ten (10) Trading Days following the date on which notice of rescission pursuant to Section 4.4 is deemed given pursuant to Section 8.2 if the Corporation shall have exercised such right of rescission, but certificates for shares of Common Stock shall be delivered as soon as practicable after the opening of such books or the expiration of such period. 3.6 The Conversion Rate shall be adjusted from time to time as follows for events occurring after January 26, 1995: (a) In case the Corporation shall, at any time or from time to time while any of the Series D Stock is outstanding, (i) pay a dividend in shares of its Common Stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock or (iv) reclassify (other than by way of a merger that is subject to Section 3.7) its shares of Common Stock, then the Conversion Rate in effect immediately before such action shall be adjusted so that immediately following such event the holders of the Series D Stock shall be entitled to receive upon conversion or exchange thereof the kind and amount of shares of Capital Stock of the Corporation which they would have owned or been entitled to receive upon or by reason of such event if such shares of Series D Stock had been converted or exchanged immediately before the record date (or, if no record date, the effective date) for such event (it being understood that any distribution of cash or of Capital Stock (other than Common Stock), including any distribution of Capital Stock that shall accompany a reclassification of the Common Stock, shall be subject to Section 2.3 rather than this Section 3.6(a)). An adjustment made pursuant to this Section 3.6(a) shall become effective retroactively immediately after the record date in the case of a dividend or distribution and shall become effective retroactively immediately after the effective date in the case of a subdivision, combination or reclassification. For the purposes of this Section 3.6(a), in the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities receivable by them in any transaction that is subject to this Section 3.6(a) (including any election that would result in all or a 17 portion of the transaction becoming subject to Section 2.3), the kind and amount of securities that shall be distributable to the holders of the Series D Stock shall be based on (i) the election, if any, made by the record holder (as of the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of Series D Stock in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities is not the same for each nonelecting holder, then the kind and amount of securities receivable shall be based on the kind or amount of securities receivable by a plurality of nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section, the Corporation shall mail a copy thereof to the record holders of the Series D Stock as of the date used for determining the holders of record of Common Stock entitled to such mailing. (b) In case a Change of Control shall occur, the Conversion Rate in effect immediately prior to the Change of Control Date shall be increased (but not decreased) by multiplying such rate by a fraction as follows: (i) in the case of a Change of Control specified in Section 1.5(a), a fraction in which the numerator is the Conversion Price prior to adjustment pursuant hereto and the denominator is the Current Market Price of the Common Stock at the Change of Control Date, (ii) in the case of a Change of Control specified in Section 1.5(b), the greater of the following fractions: (x) a fraction the numerator of which is the highest price per share of Common Stock paid by the Acquiring Person in connection with the transaction giving rise to the Change of Control or in any transaction within six months prior to or after the Change of Control Date (the "Highest Price"), and the denominator of which is the Current Market Price of the Common Stock as of the date (but not earlier than six months prior to the Change of Control Date) on which the first public announcement is made by the Acquiring Person that it intends to acquire or that it has acquired 40% or more of the outstanding shares of 18 Common Stock (the "Announcement Date") or (y) a fraction the numerator of which is the Conversion Price prior to adjustment pursuant hereto and the denominator of which is the Current Market Price of the Common Stock on the Announcement Date and (iii) in the case where there co-exists a Change of Control specified in both Section 1.5(a) and Section 1.5(b), the greatest of the fractions determined pursuant to clauses (i) and (ii). Such adjustment shall become effective immediately after the Change of Control Date and shall be made, in the case of clauses (ii) and (iii) above, successively for six months thereafter in the event and at the time of any increase in the Highest Price after the Change of Control Date; PROVIDED, HOWEVER, that no such successive adjustment shall be made with respect to the Conversion Rate of the shares of this Series in respect of any event occurring after the Conversion Date. (c) The Corporation shall be entitled to make such additional adjustments in the Conversion Rate, in addition to those required by subsections 3.6(a) and 3.6(b), as shall be necessary in order that any dividend or distribution in Common Stock or any subdivision, reclassification or combination of shares of Common Stock referred to above, shall not be taxable to the holders of Common Stock for United States Federal income tax purposes so long as such additional adjustments pursuant to this Section 3.6(c) do not decrease the Conversion Rate. (d) In any case in which this Section 3.6 shall require that any adjustment be made effective as of or retroactively immediately following a record date, the Corporation may elect to defer (but only for five (5) Trading Days following the occurrence of the event which necessitates the filing of the statement referred to in Section 3.6(f)) issuing to the holder of any shares of this Series converted after such record date (i) the shares of Common Stock and other Capital Stock of the Corporation issuable upon such conversion over and above (ii) the shares of Common Stock and other Capital Stock of the Corporation issuable upon such conversion on the basis of the Conversion Rate prior to adjustment; PROVIDED, HOWEVER, that the Corporation shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's 19 right to receive such additional shares upon the occurrence of the event requiring such adjustment. (e) All calculations under this Section 3 shall be made to the nearest cent, one-hundredth of a share or, in the case of the Conversion Rate, one hundred-thousandth. Notwithstanding any other provision of this Section 3, the Corporation shall not be required to make any adjustment of the Conversion Rate unless such adjustment would require an increase or decrease of at least 1.00000% of such Conversion Rate. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 1.00000% in such rate. Any adjustments under this Section 3 shall be made successively whenever an event requiring such an adjustment occurs. (f) Whenever an adjustment in the Conversion Rate is required, the Corporation shall forthwith place on file with its transfer agent or agents for this Series a statement signed by a duly authorized officer of the Corporation, stating the adjusted Conversion Rate determined as provided herein. Such statements shall set forth in reasonable detail such facts as shall be necessary to show the reason for and the manner of computing such adjustment. Promptly after the adjustment of the Conversion Rate, the Corporation shall mail a notice thereof to each holder of shares of this Series. (g) In the event that at any time as a result of an adjustment made pursuant to this Section 3, the holder of any share of this Series thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock of the Corporation other than shares of Common Stock, the conversion rate of such other shares so receivable upon conversion of any such share of this Series shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in subparagraphs (a) through (f) and (h) of this Section 3.6, and the provisions of Section 3.1 through 3.5 and 3.7 through 3.10 shall apply on like or similar terms to any such other shares and the determination of 20 the Board of Directors as to any such adjustment shall be conclusive. (h) No adjustment shall be made pursuant to this Section 3.6 (i) if the effect thereof would be to reduce the Conversion Price below the par value of the Common Stock or (ii) subject to Section 3.6(c) hereof, with respect to any share of Series D Stock that is converted, prior to the time such adjustment otherwise would be made. 3.7 In case after January 26, 1995 (a) any consolidation or merger to which the Corporation is a party, other than a merger or consolidation in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification of, or change (other than a change in par value or from par value to no par value or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (b) any sale or conveyance of all or substantially all of the property and assets of the Corporation, then lawful provision shall be made as part of the terms of such transaction whereby the holder of each share of Series D Stock shall have the right thereafter, during the period such share shall be convertible or exchangeable, to convert such share into or have such share exchanged for the kind and amount of shares of stock or other securities and property receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock into which such shares of this Series could have been converted or exchanged immediately prior to such consolidation, merger, sale or conveyance, subject to adjustment which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3 (based on (i) the election, if any, made in writing to the Corporation by the record holder (as of the date used for determining holders of Common Stock entitled to make such election) of the largest number of shares of Series D Stock on or prior to the last date on which a holder of Common Stock may make an election regarding the kind or amount of securities or other property receivable by such holder in such transaction or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable shall be based upon the kind and amount of securities or other property 21 receivable by a plurality of the nonelecting holders of Common Stock)). In the event that any of the transactions referred to in clauses (a) or (b) involves the distribution of cash (or property other than equity securities) to a holder of Common Stock, lawful provision shall be made as part of the terms of the transaction whereby the holder of each share of Series D Stock on the record date fixed for determining holders of Common Stock entitled to receive such cash or property (or if no such record date is established, the effective date of such transaction) shall be entitled to receive the amount of cash or property that such holder would have been entitled to receive had such holder converted his shares of Series D Stock into Common Stock immediately prior to such record date (or effective date) (based on the election or nonelection made by the record holder of the largest number of shares of Series D Stock, as provided above). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election regarding the kind or amount of securities or other property that will be receivable by such holder in any transaction described in clause (a) or (b) of the first sentence of this Section 3.7, the Corporation shall mail a copy thereof to the holders of the Series D Stock as of the date used for determining the holders of record of Common Stock entitled to such mailing. The Corporation shall not enter into any of the transactions referred to in clauses (a) or (b) of the preceding sentence unless effective provision shall be made in the certificate or articles of incorporation or other constituent documents of the Corporation or the entity surviving the consolidation or merger, if other than the Corporation, or the entity acquiring the Corporation's assets, as the case may be, so as to give effect to the provisions set forth in this Section 3.7. The provisions of this Section 3.7 shall apply similarly to successive consolidations, mergers, sales or conveyances. For purposes of this Section 3.7 the term "Corporation" shall refer to the Corporation (as defined in Section 1.14) as constituted immediately prior to the merger, consolidation or other transaction referred to in this Section. 3.8 The Corporation shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of this Series, such number of its duly authorized shares of Common Stock (or, if applicable, any other shares of Capital Stock of the Corporation) as shall from time to time be sufficient to 22 effect the conversion of all outstanding shares of this Series into such Common Stock (or such other shares of Capital Stock) at any time (assuming that, at the time of the computation of such number of shares, all such Common Stock (or such other shares of Capital Stock) would be held by a single holder); PROVIDED, HOWEVER, that nothing contained herein shall preclude the Corporation from satisfying its obligations in respect of the conversion of the shares by delivery of purchased shares of Common Stock (or such other shares of Capital Stock) that are held in the treasury of the Corporation. All shares of Common Stock (or such other shares of Capital Stock of the Corporation) which shall be deliverable upon conversion of the shares of this Series shall be duly and validly issued, fully paid and nonassessable. For purposes of this Section 3, any shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. 3.9 If any shares of Common Stock or other shares of Capital Stock of the Corporation which would be issuable upon conversion of shares of this Series hereunder require registration with or approval of any governmental authority before such shares may be issued upon conversion, the Corporation will in good faith and as expeditiously as possible cause such shares to be duly registered or approved, as the case may be. The Corporation will use commercially reasonable efforts to list the shares of (or depositary shares representing fractional interests in) Common Stock or other shares of Capital Stock of the Corporation required to be delivered upon conversion of shares of this Series prior to such delivery upon the principal national securities exchange upon which the outstanding Common Stock or such other shares of Capital Stock is listed at the time of such delivery. 3.10 The Corporation shall pay any and all issue or other taxes that may be payable in respect of any issue or delivery of shares of Common Stock or other shares of Capital Stock of the Corporation on conversion of shares of this Series pursuant hereto. The Corporation shall not, however, be required to pay any tax which is payable in respect of any transfer involved in the issue or delivery of Common Stock or such other shares of Capital Stock in a name other than that in which the shares of this Series so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Corporation the amount of such tax, or 23 has established, to the satisfaction of the Corporation, that such tax has been paid. 3.11 In case of (i) the voluntary or involuntary dissolution, liquidation or winding up of the Corporation, (ii) any Pro Rata Repurchase or (iii) any action triggering an adjustment to the Conversion Rate pursuant to this Section 3, then, in each case, the Corporation shall cause to be filed with the transfer agent or agents for the Series D Stock, and shall cause to be mailed, first-class postage prepaid, to the holders of record of the outstanding shares of Series D Stock, at least fifteen (15) days prior to the applicable record date for any such transaction (or if no record date will be established, the effective date thereof), a notice stating (x) the date, if any, on which a record is to be taken for the purpose of any such transaction (or, if no record date will be established, the date as of which holders of record of Common Stock entitled to participate in such transaction are determined), and (y) the expected effective date thereof. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 3.11. 4. REDEMPTION OR EXCHANGE. 4.1 (a) The Corporation may, at its sole option, subject to Section 2.2 hereof, from time to time on and after the fifth anniversary of the Effective Time in the case of clause (i) or (iii) of Section 4.1(b), and on and after the fourth anniversary, in the case of clause (ii) of Section 4.1(b), redeem, out of funds legally available therefor, or, as provided below, exchange shares of Common Stock for, all (or in the case of Section 4.1(b)(i), any part) of the outstanding shares of this Series. The redemption price for each share of this Series called for redemption pursuant to clause (i) of Section 4.1(b) shall be the Liquidation Value together with an amount equal to the accrued and unpaid dividends to the date fixed for redemption (hereinafter collectively referred to as the "Redemption Price"). The exchange price for each share of this Series called for exchange pursuant to clause (ii) of Section 4.1(b) shall be a number of shares of Common Stock equal to the Conversion Rate, together with, at the option of the Corporation, either (x) cash or (y) a number of shares of Common Stock, valued at the Closing Price on the Trading Day immediately preceding the date fixed for exchange, equal, in either case, to the aggregate amount of 24 accrued and unpaid dividends on the Series D Stock to the date fixed for exchange (provided that any dividends which are in arrears must be paid in cash) (hereinafter collectively referred to as the "Exchange Price"). (b) On the date fixed for redemption or exchange the Corporation shall, at its option, effect either (i) a redemption of the shares of this Series to be redeemed by way of payment, out of funds legally available therefor, of cash equal to the aggregate Redemption Price for the shares of this Series then being redeemed; (ii) an exchange of the shares of this Series for the Exchange Price in shares of Common Stock (PROVIDED that the Corporation (A) shall be entitled to deliver cash (1) in lieu of any fractional share of Common Stock (determined in a manner consistent with Section 3.3) and (2) equal to accrued and unpaid dividends to the date fixed for exchange in lieu of shares of Common Stock and (B) shall be required to deliver cash in respect of any dividends that are in arrears); or (iii) any combination thereof with respect to each share of this Series called for redemption or exchange. (c) Notwithstanding clauses (ii) and (iii) of Section 4.1(b), the Corporation shall be entitled to effect an exchange of shares of Series D Stock for Common Stock or other shares of Capital Stock of the Corporation only to the extent that duly and validly issued, fully paid and nonassessable shares of Common Stock (or such other shares of Capital Stock) shall be available for issuance (including delivery of previously issued shares of Common Stock held in the Corporation's treasury on the date fixed for exchange). The Corporation shall comply with Section 3.9 and 3.10 with respect to shares of Common Stock or other shares of Capital Stock of the Corporation which would be issuable upon exchange of shares of this Series. Certificates for shares of Common Stock issued in exchange for surrendered shares of this Series pursuant to this Section 4.1 shall be made available by the Corporation not later than the fifth Trading Day following the date for exchange. 25 4.2 In the event that fewer than all the outstanding shares of this Series are to be redeemed pursuant to Section 4.1(b)(i), the number of shares to be redeemed from each holder of shares of this Series shall be determined by the Corporation by lot or pro rata or by any other method as may be determined by the Board of Directors in its sole discretion to be equitable, and the certificate of the Corporation's Secretary or an Assistant Secretary filed with the transfer agent or transfer agents for this Series in respect of such determination by the Board of Directors shall be conclusive. 4.3 In the event the Corporation shall redeem or exchange shares of this Series pursuant to Section 4.1, notice of such redemption or exchange shall be given by first class mail, postage prepaid, mailed not less than fifteen (15) nor more than sixty (60) days prior to the date fixed for redemption or exchange, as the case may be, to each record holder of the shares to be redeemed or exchanged, at such holder's address as the same appears on the books of the Corporation. Each such notice shall state: (i) whether the shares of this Series are to be redeemed or exchanged; (ii) the time and date as of which the redemption or exchange shall occur; (iii) the total number of shares of this Series to be redeemed or exchanged and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iv) the Redemption Price or the Exchange Price, as the case may be; (v) that shares of this Series called for redemption or exchange may be converted at any time prior to the time and date fixed for redemption or exchange (unless the Corporation shall, in the case of a redemption, default in payment of the Redemption Price or, in the case of an exchange, fail to exchange the shares of this Series for the applicable number of shares of Common Stock and any cash portion of the Exchange Price or shall exercise its right to rescind such redemption pursuant to Section 4.5, in which case such right of conversion shall not terminate at such time and date); (vi) the applicable Conversion Price and Conversion Rate; (vii) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price, in the case of redemption, or for delivery of certificates representing the shares of Common Stock and the payment of any cash portion of the Exchange Price, in the case of exchange; and (viii) that dividends on the shares of this Series to be redeemed or exchanged will cease to accrue on such redemption or exchange date. 26 4.4 If notice of redemption or exchange shall have been given by the Corporation as provided in Section 4.3, dividends on the shares of this Series so called for redemption or exchange shall cease to accrue, such shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Corporation with respect to shares so called for redemption or exchange (except (i) in the case of redemption, the right to receive from the Corporation the Redemption Price without interest and in the case of exchange, the right to receive from the Corporation the Exchange Price without interest and (ii) the right to convert such shares in accordance with Section 3) shall cease (including any right to receive dividends otherwise payable on any Dividend Payment Date that would have occurred after the time and date of redemption or exchange) either (i) in the case of a redemption or exchange pursuant to Section 4.1, from and after the time and date fixed in the notice of redemption or exchange as the time and date of redemption or exchange (unless the Corporation shall (x) in the case of a redemption, default in the payment of the Redemption Price, (y) in the case of an exchange, fail to exchange the applicable number of shares of Common Stock and any cash portion of the Exchange Price or (z) exercise its right to rescind such redemption pursuant to Section 4.5, in which case such rights shall not terminate at such time and date) or (ii) if the Corporation shall so elect and state in the notice of redemption or exchange, from and after the time and date (which date shall be the date fixed for redemption or exchange or an earlier date not less than fifteen (15) days after the date of mailing of the redemption or exchange notice) on which the Corporation shall irrevocably deposit with a designated bank or trust company doing business in the Borough of Manhattan, City and State of New York, as paying agent, money sufficient to pay at the office of such paying agent, on the redemption date, the Redemption Price, in the case of redemption, or certificates representing the shares of Common Stock to be so exchanged and any cash portion of the Exchange Price, in the case of an exchange. Any money or certificates so deposited with any such paying agent which shall not be required for such redemption or exchange because of the exercise of any right of conversion or otherwise shall be returned to the Corporation forthwith. Upon surrender (in accordance with the notice of redemption or exchange) of the certificate or certificates for any shares of this Series to be so redeemed or exchanged (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice of redemption or 27 exchange shall so state), such shares shall be redeemed or exchanged by the Corporation at the Redemption Price or the Exchange Price, as applicable, as set forth in Section 4.1 (unless the Corporation shall have exercised its right to rescind such redemption pursuant to Section 4.5). In case fewer than all the shares represented by any such certificate are to be redeemed, a new certificate shall be issued representing the unredeemed shares (or fractions thereof as provided in Section 8.4), without cost to the holder thereof, together with the amount of cash, if any, in lieu of fractional shares other than those issuable in accordance with Section 8.4. Subject to applicable escheat laws, any moneys so set aside by the Corporation in the case of redemption and unclaimed at the end of one year from the redemption date shall revert to the general funds of the Corporation, after which reversion the holders of such shares so called for redemption or exchange shall look only to the general funds of the Corporation for the payment of the Redemption Price or the Exchange Price, as applicable, without interest. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time. 4.5 In the event that a Redemption Rescission Event shall occur following any day on which a notice of redemption shall have been given pursuant to Section 4.3 but at or prior to the earlier of (a) the time and date fixed for redemption as set forth in such notice of redemption and (b) the time and date at which the Corporation shall have irrevocably deposited funds or certificates with a designated bank or trust company pursuant to Section 4.4, the Corporation may, at its sole option, at any time prior to the earliest of (i) the close of business on that day which is two (2) Trading Days following such Redemption Rescission Event, (ii) the time and date fixed for redemption as set forth in such notice and (iii) the time and date on which the Corporation shall have irrevocably deposited such funds with a designated bank or trust company, rescind the redemption under Section 4.1(b)(i) to which such notice of redemption shall have related by making a public announcement of such rescission (the date on which such public announcement shall have been made being hereinafter referred to as the "Rescission Date"). The Corporation shall be deemed to have made such announcement if it shall issue a release to the Dow Jones News Service, Reuters Information Services or any successor news wire service. From and after the making of such announcement, the Corporation shall have no obligation 28 to redeem shares of this Series called for redemption pursuant to such notice of redemption or to pay the redemption price therefor and all rights of holders of shares of this Series shall be restored as if such notice of redemption had not been given. The Corporation shall give notice of any such rescission by one of the means specified in Section 8.2 as promptly as practicable, but in no event later than the close of business on that date which is five (5) Trading Days following the Rescission Date to each record holder of shares of this Series at the close of business on the Rescission Date and to any other Person or entity that was a record holder of shares of this Series and that shall have surrendered shares of this Series for conversion following the giving of notice of the subsequently rescinded redemption. Each notice of rescission shall (w) state that the redemption described in the notice of redemption has been rescinded, (x) state that any Converting Holder shall be entitled to rescind the conversion of shares of this Series surrendered for conversion following the day on which notice of redemption was given but prior to the close of business on the later of (1) the Trading Day next succeeding the date on which public announcement of the rescission of such redemption shall have been made and (2) the Trading Day on which the Corporation's notice of rescission is deemed given pursuant to Section 8.2, (y) be accompanied by a form prescribed by the Corporation to be used by any Converting Holder rescinding the conversion of shares so surrendered for conversion (and instructions for the completion and delivery of such form, including instructions with respect to payments that may be required to accompany such delivery shall be in accordance with Section 3.5) and (z) state that such form must be properly completed and received by the Corporation no later than the close of business on a date that shall be ten (10) Trading Days following the date of the mailing of such notice of rescission is deemed given pursuant to Section 8.2. 4.6 The shares of this Series shall not be subject to the provisions of Section 5 of Article IV of the Certificate of Incorporation. 5. PRO RATA REPURCHASE. 5.1 Upon a Pro Rata Repurchase, each holder of shares of this Series shall have the right to require that the Corporation repurchase, out of funds legally available therefor, a Pro Rata Portion (as defined below) of 29 the shares of such holder, or any lesser number requested by the holder, at a price per share equal to the highest price per share of Common Stock paid in the Pro Rata Repurchase multiplied by the Conversion Rate then in effect plus an amount equal to the accrued but unpaid dividends on such shares to the date of repurchase. 5.2 At any time prior to or within thirty (30) days following any Pro Rata Repurchase, the Corporation shall mail a notice to each holder of shares of this Series stating: (a) that a Pro Rata Repurchase will occur or has occurred and that such holder will have (upon such Pro Rata Repurchase) or has the right to require the Corporation to repurchase such holder's shares in an amount not in excess of the Pro Rata Portion at a repurchase price in cash determined as set forth above plus an amount equal to accrued and unpaid dividends, if any, to the date of repurchase; (b) the repurchase date for the Series D Stock (which shall be no earlier than fifteen (15) days nor later than sixty (60) days from the date such notice is mailed); and (c) the instructions determined by the Corporation, consistent with this Section, that a holder must follow in order to have its shares repurchased. 5.3 Holders electing to have any shares repurchased will be required to surrender such shares, with an appropriate form duly completed, to the Corporation at the address specified in the notice at least five (5) days prior to the repurchase date. Holders will be entitled to withdraw their election if the Corporation receives, not later than three (3) days prior to the repurchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the certificate numbers of the shares delivered for purchase by the holder and a statement that such holder is withdrawing his election to have such shares repurchased. Holders will have such additional withdrawal and other rights as may be required pursuant to applicable law. 5.4 On the repurchase date, the Corporation shall (i) pay the repurchase price plus an amount equal to 30 accrued and unpaid dividends as provided in Section 5.1, if any, to the holders entitled thereto and (ii) issue to such holders any equity securities of the Corporation (other than Common Stock) that would at the time be issuable upon conversion of the shares of Series D Stock which are then being repurchased pursuant hereto. 5.5 The Board of Directors will not approve any tender or exchange offer by the Corporation or a third party for shares of Common Stock or recommend that the holders of Common Stock accept any offer or tender their shares into any offer unless a Pro Rata Portion of the shares of this Series of all holders are entitled to be tendered into such offer at a price not less than the price per share for shares of Common Stock pursuant to such offer multiplied by the Conversion Rate then in effect plus an amount equal to accrued but unpaid dividends on such shares to the date of payment for such shares in such tender or exchange offer. 5.6 For purposes hereof, "Pro Rata Portion" with respect to the shares of this Series held by any holder shall mean all the shares of this Series then owned by such holder times a fraction, the numerator of which is the number of outstanding shares of Common Stock (a) purchased in the applicable Pro Rata Repurchase or (b) for which a tender or exchange offer referred to in Section 5.5 is made, as the case may be, and the denominator of which is the number of outstanding shares of Common Stock immediately prior to such Pro Rata Repurchase or the commencement of such tender or exchange offer, as the case may be. 6. VOTING. The shares of this Series shall have no voting rights except as required by law or as set forth below. 6.1 Each share of this Series shall be entitled to vote together with holders of the shares of Common Stock (and any other class or series which may similarly be entitled to vote with the shares of Common Stock) as a single class upon all matters upon which holders of Common Stock are entitled to vote. In any such vote, the holders of this Series shall be entitled to two (2) votes per $100 of Liquidation Value of Series D Stock, subject to adjustment at the same time and in the same manner as each adjustment of the Conversion Rate pursuant to Section 3, so that the holders of this Series shall be entitled following such adjustment to the number of votes equal to the number 31 of votes such holders were entitled to under this Section 6.1 immediately prior to such adjustment multiplied by a fraction (x) the numerator of which is the Conversion Rate as adjusted pursuant to Section 3 and (y) the denominator of which is the Conversion Rate immediately prior to such adjustment. 6.2(a) So long as any shares of this Series remain outstanding, unless a greater percentage shall then be required by law, the Corporation shall not, without the affirmative vote at a meeting or the written consent with or without a meeting of the holders of shares of this Series representing at least 66-2/3% of the aggregate voting power of shares of this Series then outstanding (i) authorize any Senior Stock or reclassify (by merger, consolidation or otherwise) any Junior Stock or Parity Stock as Senior Stock, (ii) merge into or consolidate with any Person where the surviving or continuing corporation will have any authorized Senior Stock (other than capital stock corresponding to shares of Senior Stock of the Corporation existing immediately before such merger or consolidation) or (iii) amend, alter or repeal (by operation of law or otherwise) any of the provisions of the Certificate or the Certificate of Incorporation, so as in any such case to adversely affect the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of the shares of this Series. (b) No consent of holders of shares of this Series shall be required for (i) the creation of any indebtedness of any kind of the Corporation, (ii) the authorization or issuance of any class of Junior Stock or Parity Stock, (iii) the authorization, designation or issuance of additional shares of Series D Stock or (iv) subject to Section 6.2(a), the authorization or issuance of any other shares of Preferred Stock. 6.3(a) If and whenever at any time or times dividends payable on shares of this Series shall have been in arrears and unpaid in an aggregate amount equal to or exceeding the amount of dividends payable thereon for six quarterly dividend periods, then the number of directors constituting the Board of Directors shall be increased by two and the holders of shares of this Series, together with the holders of any shares of any Parity Stock as to which in each case dividends are in arrears and unpaid in an aggregate amount equal to or exceeding the amount of 32 dividends payable thereon for six quarterly dividend periods, shall have the exclusive right, voting separately as a class with such other series, to elect two directors of the Corporation. (b) Such voting right may be exercised initially either by written consent or at a special meeting of the holders of the Preferred Stock having such voting right, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at each such annual meeting until such time as all dividends in arrears on the shares of this Series shall have been paid in full and all dividends payable on the shares of this Series on four subsequent consecutive Dividend Payment Dates shall have been paid in full on such dates or funds shall have been set aside for the payment thereof, at which time such voting right and the term of the directors elected pursuant to Section 6.3(a) shall terminate. (c) At any time when such voting right shall have vested in holders of shares of such series of Preferred Stock described in Section 6.3(a), and if such right shall not already have been exercised by written consent, a proper officer of the Corporation may call, and, upon the written request, addressed to the Secretary of the Corporation, of the record holders of shares representing ten percent (10%) of the voting power of the shares then outstanding of such Preferred Stock having such voting right, shall call, a special meeting of the holders of such Preferred Stock having such voting right. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation, or, if none, at a place designated by the Board of Directors. Notwithstanding the provisions of this Section 6.3(c), no such special meeting shall be called during a period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. (d) At any meeting held for the purpose of electing directors at which the holders of such Preferred Stock shall have the right to elect directors as provided herein, the presence in Person or by proxy of the holders of shares representing more than fifty percent (50%) in voting power of the then outstanding shares of such Preferred Stock having such right shall be required and shall be sufficient 33 to constitute a quorum of such class for the election of directors by such class. (e) Any director elected by holders of Preferred Stock pursuant to the voting right created under this Section 6.3 shall hold office until the next annual meeting of stockholders (unless such term has previously terminated pursuant to Section 6.3(b)) and any vacancy in respect of any such director shall be filled only by vote of the remaining director so elected, or if there be no such remaining director, by the holders of such Preferred Stock entitled to elect such director or directors by written consent or at a special meeting called in accordance with the procedures set forth in Section 6.3(c), or, if no special meeting is called or written consent executed, at the next annual meeting of stockholders. Upon any termination of such voting right, subject to applicable law, the term of office of all directors elected by holders of such Preferred Stock voting separately as a class pursuant to this Section 6.3 shall terminate. (f) In exercising the voting rights set forth in this Section 6.3, each share of this Series shall have a number of votes equal to its Liquidation Value. 7. LIQUIDATION RIGHTS. 7.1 Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, the holders of the shares of this Series shall be entitled to receive out of the assets of the Corporation available for distribution to stockholders, in preference to the holders of, and before any payment or distribution shall be made on, Junior Stock, the amount of $100 per share (the "Liquidation Value"), plus an amount equal to all accrued and unpaid dividends to the date of final distribution. 7.2 Neither the sale, exchange or other conveyance (for cash, shares of stock, securities or other consideration) of all or substantially all the property and assets of the Corporation nor the merger or consolidation of the Corporation into or with any other corporation, or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 7. 34 7.3 After the payment to the holders of the shares of this Series of full preferential amounts provided for in this Section 7, the holders of this Series as such shall have no right or claim to any of the remaining assets of the Corporation. 7.4 In the event the assets of the Corporation available for distribution to the holders of shares of this Series upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to Section 7.1, no such distribution shall be made on account of any shares of any Parity Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series, ratably, in proportion to the full distributable amounts for which holders of all Parity Stock are entitled upon such dissolution, liquidation or winding up. 8. OTHER PROVISIONS. 8.1 All notices from the Corporation to the holders shall be given by one of the methods specified in Section 8.2. With respect to any notice to a holder of shares of this Series required to be provided hereunder, neither failure to give such notice, nor any defect therein or in the transmission thereof, to any particular holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other holders or affect the legality or validity of any distribution, right, warrant, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up, or the vote upon any such action. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. 8.2 All notices and other communications hereunder shall be deemed given (i) on the first Trading Day following the date received, if delivered personally, (ii) on the Trading Day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and (iii) on the first Trading Day that is at least five days following deposit in the mails, if sent by first class mail to (x) a holder at its last address as it appears on the transfer records or registry for the Series D Stock and (y) the Corporation at 35 the following address (or at such other address as the Corporation shall specify in a notice pursuant to this Section): Time Warner Inc., 75 Rockefeller Plaza, New York, New York 10019, Attention: General Counsel. 8.3 Any shares of this Series which have been converted, redeemed, exchanged or otherwise acquired by the Corporation shall, after such conversion, redemption, exchange or acquisition, as the case may be, be retired and promptly cancelled and the Corporation shall take all appropriate action to cause such shares to obtain the status of authorized but unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series by the Board of Directors. The Corporation may cause a certificate setting forth a resolution adopted by the Board of Directors that none of the authorized shares of this Series are outstanding to be filed with the Secretary of State of the State of Delaware. When such certificate becomes effective, all references to Series D Stock shall be eliminated from the Certificate of Incorporation and the shares of Preferred Stock designated hereby as Series D Stock shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as part of any new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors. 8.4 The shares of this Series shall be issuable in whole shares or, if authorized by the Board of Directors (or any authorized committee thereof), in any fraction of a whole share so authorized or any integral multiple of such fraction. 8.5 The Corporation shall be entitled to recognize the exclusive right of a Person registered on its records as the holder of shares of this Series, and such record holder shall be deemed the holder of such shares for all purposes. 8.6 All notice periods referred to in the Certificate shall commence on the date of the mailing of the applicable notice. 36 8.7 Certificates for shares of this Series shall bear such legends as the Corporation shall from time to time deem appropriate. IN WITNESS WHEREOF, Time Warner Inc. has caused this certificate to be signed and attested this 6th day of July, 1995. TIME WARNER INC., by /s/ SPENCER B. HAYS Name: Spencer B. Hays Title: Vice President Attest: /s/ ELI T. BRUNO Name: Eli T. Bruno Title: Assistant Secretary 37 -----END PRIVACY-ENHANCED MESSAGE-----