-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BshIkffH89OnWa8pbe6zF15LVD4KmFg2tw7AnYr9VYI36KWN5x7C/F0j1YztoOq9 Cibwx6ffSaxKJZM+4j+SxQ== 0000950117-97-001263.txt : 19970806 0000950117-97-001263.hdr.sgml : 19970806 ACCESSION NUMBER: 0000950117-97-001263 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 REFERENCES 429: 033-50237 REFERENCES 429: 333-17171 FILED AS OF DATE: 19970804 SROS: AMEX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER INC/ CENTRAL INDEX KEY: 0001021387 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 133527249 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-32813 FILM NUMBER: 97651186 BUSINESS ADDRESS: STREET 1: TIME & LIFE BLDG ROCKFELLER CENTER STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124848000 MAIL ADDRESS: STREET 1: TW INC STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: TW INC DATE OF NAME CHANGE: 19960822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER COMPANIES INC CENTRAL INDEX KEY: 0000736157 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 131388520 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-32813-01 FILM NUMBER: 97651187 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 WARNER INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: TIME INC /DE/ DATE OF NAME CHANGE: 19890801 S-3 1 TIME WARNER INC. S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 1997 REGISTRATION NO. 333- ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ TIME WARNER INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-3527249 (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
------------------------ ALSO CONSTITUTES A POST-EFFECTIVE AMENDMENT TO FORM S-3 REGISTRATION STATEMENT OF TIME WARNER COMPANIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-1388520 (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
75 ROCKEFELLER PLAZA NEW YORK, N.Y. 10019 (212) 484-8000 (ADDRESS, INCLUDING EACH ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ PETER R. HAJE EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL TIME WARNER INC. 75 ROCKEFELLER PLAZA, NEW YORK, N.Y. 10019 (212) 484-8000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: WILLIAM P. ROGERS, JR. FAITH D. GROSSNICKLE CRAVATH, SWAINE & MOORE SHEARMAN & STERLING WORLDWIDE PLAZA 599 LEXINGTON AVENUE 825 EIGHTH AVENUE, NEW YORK, N.Y. 10019-7415 NEW YORK, N.Y. 10022 (212) 474-1270 (212) 848-8015
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement, as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box: [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES AGGREGATE AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE(2) Debt Securities................................. $449,418,500(3) 100% $449,418,500(3) Guarantee of Debt Securities(4)................. $449,418,500 N/A N/A TITLE OF EACH CLASS OF SECURITIES AMOUNT OF TO BE REGISTERED REGISTRATION FEE Debt Securities................................. $136,188 Guarantee of Debt Securities(4)................. N/A(5)
(1) United States dollars or the equivalent thereof in one or more foreign currencies, foreign currency units or composite currencies. (2) Estimated solely for purposes of calculating the registration fee. (3) If any Debt Securities are issued at an original issue discount, then plus such greater principal amount as shall result in an aggregate initial offering price of $449,418,500. (4) Time Warner Inc. will irrevocably and unconditionally guarantee on an unsecured senior basis Debt Securities of Time Warner Companies, Inc. (5) Pursuant to Rule 457(n), no separate fee is required to be paid in respect of guarantees of the Debt Securities which are being registered concurrently. ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED PROSPECTUS WHICH ALSO RELATES TO REGISTRATION STATEMENTS NOS. 33-50237 AND 333-17171, PREVIOUSLY FILED BY TIME WARNER COMPANIES, INC. AND TIME WARNER INC. ON FORM S-3. THIS REGISTRATION STATEMENT ALSO CONSTITUTES A POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENTS NOS. 33-50237 AND 333-17171, AND SUCH POST-EFFECTIVE AMENDMENT SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY WITH THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT IN ACCORDANCE WITH SECTION 8(c) OF THE SECURITIES ACT OF 1933. ________________________________________________________________________________ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE. SUBJECT TO COMPLETION, DATED AUGUST 4, 1997 PROSPECTUS TIME WARNER COMPANIES, INC. DEBT SECURITIES UNCONDITIONALLY GUARANTEED BY TIME WARNER INC. Time Warner Companies, Inc. (the 'Issuer') may offer from time to time, together or separately, unsecured notes, debentures or other evidences of indebtedness ('Debt Securities'), having an aggregate initial public offering price not to exceed $1,000,000,000 (including the U.S. dollar equivalent of securities for which the initial public offering price is denominated in one or more foreign currencies or composite currencies). The Debt Securities may be offered in one or more series, in amounts, at prices and on terms determined at the time of sale and set forth in a supplement to this Prospectus (a 'Prospectus Supplement'). The Debt Securities will be irrevocably, fully and unconditionally guaranteed (the 'Guarantee') on an unsecured basis by Time Warner Inc. (the 'Guarantor'). The Issuer is a wholly owned subsidiary of the Guarantor. The Guarantor is a holding company that derives its operating income and cash flow from the Issuer and Turner Broadcasting System, Inc. ('TBS'), a wholly owned subsidiary of the Guarantor. The assets of the Guarantor consist primarily of its investments in the Issuer and TBS, and the assets of the Issuer consist primarily of its investments in its consolidated and unconsolidated subsidiaries. The Guarantor and its consolidated and unconsolidated subsidiaries are collectively referred to as the 'Company'. Unless otherwise specified in an accompanying Prospectus Supplement, the Debt Securities and the Guarantee will be senior securities of the Issuer and the Guarantor, respectively, ranking equally with all other unsubordinated and unsecured indebtedness and other obligations of the Issuer and the Guarantor, respectively. The specific terms of the Debt Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement, including, where applicable, the specific designation, aggregate principal amount, currency, denomination, maturity (which may be fixed or extendible), priority, interest rate (or manner of calculation thereof), if any, time of payment of interest, if any, terms for any redemption, terms for any repayment at the option of the holder, terms for any sinking fund payments, the initial public offering price, special provisions relating to Debt Securities in bearer form, provisions regarding original issue discount securities, additional covenants and any other specific terms of such Debt Securities. The Prospectus Supplement will also contain information, where applicable, about certain United States Federal income tax considerations relating to, and any listing on a securities exchange of, the Debt Securities covered by the Prospectus Supplement. The Debt Securities may be issued only in registered form, including in the form of one or more global securities ('Global Securities'), unless otherwise set forth in the Prospectus Supplement. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Debt Securities may be offered directly, through agents designated from time to time or through dealers or underwriters. If any agents of the Issuer or the Guarantor or any dealers or underwriters are involved in the offering of the Debt Securities in respect of which this Prospectus is being delivered, the names of such agents, dealers or underwriters and any applicable commissions or discounts will be set forth in the Prospectus Supplement. The net proceeds to the Issuer from such sale will also be set forth in the Prospectus Supplement. ------------------------ The date of this Prospectus is , 1997. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE 'PLAN OF DISTRIBUTION'. ------------------------ AVAILABLE INFORMATION The Guarantor is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the 'Commission'). The Issuer is not required to file periodic reports and other information under the Exchange Act. Instead, information with respect to the Issuer is provided, to the extent required by the Commission, in the required filings made by the Guarantor. Reports, proxy statements and other information filed by the Guarantor with the Commission pursuant to the informational requirements of the Exchange Act may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional offices located at Seven World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661; and copies of such material may be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549, at prescribed rates, or through the World Wide Web (http://www.sec.gov). Such reports, proxy statements and other information may also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York, on which one or more of the Guarantor's securities are listed. This Prospectus constitutes a part of a Registration Statement filed by the Issuer and the Guarantor with the Commission under the Securities Act of 1933, as amended (the 'Securities Act'). This Prospectus omits certain of the information contained in the Registration Statement in accordance with the rules and regulations of the Commission. Reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Issuer, the Guarantor and the Debt Securities. Statements contained herein concerning the provisions of any document are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. INFORMATION INCORPORATED BY REFERENCE The following documents filed with the Commission by the Guarantor (File No. 001-12259) are incorporated by reference in this Prospectus: (a) the Guarantor's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by Forms 10K/A dated March 27, 1997 and June 26, 1997 (as amended, the 'Guarantor's 1996 Form 10-K'); (b) the Guarantor's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and (c) the Guarantor's Current Report on Form 8-K dated March 21, 1997. All documents and reports subsequently filed by the Guarantor pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Debt Securities shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus or any Prospectus Supplement to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes 2 such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or any Prospectus Supplement. The Issuer will furnish without charge to each person, including any beneficial owner, to whom this Prospectus and the accompanying Prospectus Supplement are delivered, upon the written or oral request of such person, a copy of any or all the documents incorporated herein by reference, other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents, and any other documents specifically identified herein as incorporated by reference into the Registration Statement to which this Prospectus relates or into such other documents. Requests should be addressed to: Shareholder Relations Department, Time Warner Inc., 75 Rockefeller Plaza, New York, New York 10019; telephone: (212) 484-6971. THE COMPANY The Company, the world's leading media and entertainment company, has interests in four fundamental areas of business: Entertainment, consisting principally of interests in filmed entertainment, television production, television broadcasting, theme parks, recorded music and music publishing; Cable Networks, consisting principally of interests in cable television programming and sports franchises; Publishing, consisting principally of interests in magazine publishing, book publishing and direct marketing; and Cable, consisting principally of interests in cable television systems. Each of the Issuer and the Guarantor is a holding company that derives its operating income and cash flow from its subsidiaries and investments. The assets of the Guarantor consist primarily of its investments in the Issuer and TBS, and the assets of the Issuer consist primarily of its investments in its consolidated and unconsolidated subsidiaries, including Time Warner Entertainment Company, L.P. ('TWE'). The ability of the Issuer and the Guarantor to service their respective indebtedness and other liabilities, including the Debt Securities, is dependent primarily upon the earnings and cash flow of their respective consolidated and unconsolidated subsidiaries and the distribution or other payment of such earnings and cash flow to the Issuer and the Guarantor. See 'Holding Company Structure'. The Guarantor became the parent of the Issuer and TBS on October 10, 1996 upon the merger of the Issuer and TBS with separate subsidiaries of the Guarantor (the 'TBS Transaction'), as more fully described below. In connection therewith, the Guarantor changed its name to Time Warner Inc. from TW Inc. and the Issuer changed its name from Time Warner Inc. to Time Warner Companies, Inc. TWE was formed as a Delaware limited partnership in 1992 to own and operate substantially all of the business of Warner Bros., Home Box Office and the cable television businesses owned and operated by the Issuer prior to such date. The Issuer and certain of its wholly owned subsidiaries own general and limited partnership interests in 74.49% of the pro rata priority capital ('Series A Capital') and residual equity capital ('Residual Capital') of TWE and 100% of the senior priority capital ('Senior Capital') and junior priority capital ('Series B Capital') of TWE. The remaining 25.51% limited partnership interests in the Series A Capital and Residual Capital of TWE are held by a subsidiary of U S WEST, Inc. The Issuer does not consolidate TWE and certain related companies (the 'Entertainment Group') for financial reporting purposes. The subsidiaries of the Issuer that own general partnership interests in TWE are collectively referred to herein as the 'Time Warner General Partners'. TBS TRANSACTION On October 10, 1996, pursuant to an Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, as amended (the 'Merger Agreement'), among the Issuer, the Guarantor, TBS and certain of their wholly owned subsidiaries, among other things: (a) each of the Issuer and TBS became a wholly owned subsidiary of the Guarantor through a merger with a subsidiary of the Guarantor, (b) each outstanding share of common stock, par value $1.00 per share, of the Issuer, other than shares held directly or indirectly by the Issuer, was converted into one share of common stock of the Guarantor, (c) each outstanding share of preferred stock of the Issuer was converted into one share of a substantially identical series of preferred stock of the Guarantor, (d) each outstanding share of common stock of TBS, other than shares held directly or indirectly by the Issuer or the Guarantor or in the treasury of TBS, was converted into the right to receive 0.75 shares of common stock of the 3 Guarantor and (e) each outstanding share of preferred stock of TBS, other than shares held directly or indirectly by the Issuer or the Guarantor, was converted into the right to receive 4.8 shares of common stock of the Guarantor. Additional information on the TBS Transaction is set forth in Note 2 to the Guarantor's consolidated financial statements included in the Guarantor's 1996 Form 10-K, which is incorporated by reference herein. Immediately following the TBS Transaction, the Guarantor, as primary obligor and not merely as surety, irrevocably and unconditionally guaranteed (a) the full and punctual payment of principal of and interest on all outstanding publicly traded indebtedness ('Outstanding Securities') of each of the Issuer and TBS when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuer and TBS under the Outstanding Securities of the Issuer and TBS and the indentures relating to the Outstanding Securities (including the obligations to the respective trustees) and (b) the full and punctual performance within applicable grace periods of all other obligations of the Issuer and TBS under the Outstanding Securities and the respective indentures. The guarantee of the Outstanding Securities constitutes a guarantee of payment, performance and compliance and not merely of collection. The obligation of the Guarantor to make any payment pursuant to the guarantee may be satisfied by causing the respective issuer to make such payment. Further, the Guarantor agreed to pay any and all costs and expenses (including reasonable attorney's fees) incurred by any trustee or holder of Outstanding Securities in enforcing any of their respective rights under the guarantee of the Outstanding Securities. The Issuer's and the Guarantor's principal executive offices are located at 75 Rockefeller Plaza, New York, New York 10019. RATIO OF EARNINGS TO FIXED CHARGES The historical and pro forma ratios of earnings to fixed charges for the Issuer and the Guarantor are set forth below for the periods indicated. For periods in which earnings before fixed charges were insufficient to cover fixed charges, the dollar amount of coverage deficiency (in millions), instead of the ratio, is disclosed. The ratios of earnings to fixed charges (or coverage deficiencies) for all periods after 1992 reflect the deconsolidation of the Entertainment Group, principally TWE, effective January 1, 1993. The historical ratio of earnings to fixed charges (or coverage deficiency) of the Guarantor for 1996 reflects (a) the TBS Transaction, including the assumption of approximately $2.8 billion of indebtedness, (b) the use of approximately $1.55 billion of net proceeds from the issuance of 1.6 million shares of Series M exchangeable preferred stock, having an aggregate liquidation preference of $1.6 billion to reduce outstanding indebtedness (the 'Preferred Stock Refinancing') and (c) the acquisition of Cablevision Industries Corporation and related companies, including the assumption or incurrence of approximately $2 billion of indebtedness. The historical ratio of earnings to fixed charges for 1995 reflects (a) the acquisition of KBLCOM Incorporated and Summit Communications Group, Inc., including the assumption or incurrence of approximately $1.3 billion of indebtedness and (b) the exchange by Toshiba Corporation and ITOCHU Corporation of their direct and indirect interests in TWE. The historical ratio of earnings to fixed charges for 1993 reflects the issuance of $6.1 billion of long-term debt and the use of $500 million of cash and equivalents for the exchange or redemption of preferred stock having an aggregate liquidation preference of $6.4 billion. The historical ratio of earnings to fixed charges for 1992 reflects the capitalization of TWE on June 30, 1992 and associated refinancings, and the acquisition of the 18.7% minority interest in American Television and Communications Corporation as of June 30, 1992, using the purchase method of accounting for business combinations. The pro forma ratios of earnings to fixed charges for each of the Issuer and the Guarantor for the year ended December 31, 1996 give effect to (a) the Preferred Stock Refinancing and certain other debt refinancings and (b) with respect to the Guarantor only, the TBS Transaction, as if such transactions had occurred at the beginning of 1996. The pro forma information presented below should be read in conjunction with the pro forma consolidated condensed financial statements contained in the 4 Guarantor's Current Report on Form 8-K dated March 21, 1997 and incorporated herein by reference. Such pro forma amounts are presented for informational purposes only and are not necessarily indicative of the actual ratio or coverage deficiency that would have occurred if such transactions had been consummated as of the dates indicated, nor are they necessarily indicative of future results.
THREE MONTHS ENDED YEARS ENDED DECEMBER 31, MARCH 31, ------------------------------------------------- ---------------------------------------- PRO FORMA 1997 1996 1996 1996 1995 1994 1993 1992 ------------------ ------------------ --------- ---- ---- ---- ---- ---- Issuer............................. 1.8x $(76) 1.2x 1.1x 1.1x 1.1x 1.1x 1.4x Guarantor.......................... 1.7x * 1.1x 1.1x * * * *
- ------------ *In connection with the TBS Transaction that occurred on October 10, 1996, the Guarantor, formerly a wholly owned subsidiary of the Issuer, acquired each outstanding share of capital stock of the Issuer (other than shares held directly or indirectly by the Issuer) and became the parent of the Issuer. Accordingly, the historical ratios of earnings to fixed charges (or coverage deficiencies) of the Issuer and the Guarantor are the same for all periods prior to such date because the Issuer is treated for financial reporting purposes as the predecessor of the Guarantor. For purposes of computing the ratio of earnings to fixed charges, earnings were calculated by adding (i) pretax income, (ii) interest expense, including previously capitalized interest amortized to expense and the portion of rents representative of an interest factor for the Guarantor and the Issuer and their respective majority-owned subsidiaries, (iii) the Guarantor's and the Issuer's respective proportionate share of the items included in (ii) above for their 50%-owned companies, (iv) preferred stock dividend requirements of majority-owned subsidiaries, (v) minority interest in the income of majority-owned subsidiaries that have fixed charges and (vi) the amount of undistributed losses of each of the Issuer's and the Guarantor's less than 50%-owned companies. Fixed charges consist of (i) interest expense, including interest capitalized and the portion of rents representative of an interest factor for the Guarantor and the Issuer and their respective majority-owned subsidiaries, (ii) the Guarantor's and the Issuer's respective proportionate share of such items for their 50%-owned companies and (iii) preferred stock dividend requirements of majority-owned subsidiaries. Earnings as defined include significant noncash charges for depreciation and amortization. Historical fixed charges of the Issuer and the Guarantor for the three months ended March 31, 1997 and 1996 and the years ended December 31, 1996, 1995 and 1994 include noncash interest expense of $24 million, $22 million, $91 million, $176 million and $219 million, respectively, principally relating to the Issuer's Liquid Yield Option Notes due 2012 and 2013 and, in 1995 and 1994 only, the Issuer's Redeemable Reset Notes due 2002. Historical fixed charges of the Guarantor for the three months ended March 31, 1997 and the year ended December 31, 1996 include an additional $2 million and $5 million, respectively, in noncash interest expense relating to TBS's zero coupon convertible notes due 2007. Pro forma fixed charges of the Guarantor for the year ended December 31, 1996 similarly include an additional $14 million in noncash interest expense relating to TBS's zero coupon convertible notes due 2007 for the period prior to the consummation of the TBS Transaction. USE OF PROCEEDS Except as otherwise set forth in the Prospectus Supplement, the net proceeds to the Issuer from the sale of Debt Securities will be used to repurchase, redeem or otherwise repay indebtedness of the Company. Additional information on the use of net proceeds from the sale of any particular Debt Securities will be set forth in the Prospectus Supplement relating to such Debt Securities. DESCRIPTION OF THE DEBT SECURITIES AND THE GUARANTEE GENERAL The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of any Debt Securities and the extent, if any, to which such general provisions will not apply to such Debt Securities will be described in the Prospectus Supplement relating to such Debt Securities. The Debt Securities will be issued from time to time in series under an Indenture dated as of January 15, 1993, as supplemented from time to time (such Indenture, as so supplemented being called 5 the 'Indenture'), between the Issuer and The Chase Manhattan Bank (formerly known as Chemical Bank) (the 'Trustee'), as Trustee. The statements set forth below are brief summaries of certain provisions contained in the Indenture, which summaries do not purport to be complete and are qualified in their entirety by reference to the Indenture, a copy of which is an exhibit to the Registration Statement of which this Prospectus is a part. Numerical references in parentheses below are to articles or sections of the Indenture, unless otherwise indicated. Wherever defined terms are used but not defined herein, such terms shall have the meanings assigned to them in the Indenture, it being intended that such referenced articles and sections of the Indenture and such defined terms shall be incorporated herein by reference. The Indenture does not limit the amount of Debt Securities which may be issued thereunder and Debt Securities may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by the Issuer. Any such limit applicable to a particular series will be specified in the Prospectus Supplement relating to that series. Reference is made to the Prospectus Supplement for the following terms of each series of Debt Securities in respect to which this Prospectus is being delivered: (i) the designation, date, aggregate principal amount, currency or currency unit of payment and authorized denominations of such Debt Securities; (ii) the date or dates on which such Debt Securities will mature (which may be fixed or extendible); (iii) the rate or rates (or manner of calculation thereof), if any, per annum at which such Debt Securities will bear interest; (iv) the dates, if any, on which such interest will be payable, (v) the terms of any mandatory or optional redemption (including any sinking, purchase or analogous fund) and any purchase at the option of holders (including whether any such purchase may be paid in cash, common stock or other securities or property); (vi) whether such Debt Securities are to be issued in the form of Global Securities and, if so, the identity of the Depository with respect to such Global Securities; and (vii) any other specific terms. Unless otherwise set forth in the Prospectus Supplement, interest on outstanding Debt Securities will be paid to holders of record on the date which is 15 days prior to the date such interest is to be paid. Unless otherwise specified in the Prospectus Supplement, Debt Securities will be issued in fully registered form only and in denominations of $1,000 and integral multiples thereof. Unless otherwise specified in the Prospectus Supplement, the principal amount of the Debt Securities will be payable at the corporate trust office of the Trustee in New York, New York. The Debt Securities may be presented for transfer or exchange at such office unless otherwise specified in the Prospectus Supplement, subject to the limitations provided in the Indenture, without any service charge, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charges payable in connection therewith. (Section 305) GUARANTEE The Guarantor, as primary obligor and not merely as surety, will irrevocably and unconditionally guarantee (the 'Guarantee'), to each Holder of Debt Securities, and to the Trustee and its successors and assigns, (i) the full and punctual payment of principal of and interest on the Debt Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuer under the Indenture (including obligations to the Trustee) and the Debt Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuer under the Indenture and the Debt Securities. The Guarantee constitutes a guarantee of payment, performance and compliance and not merely of collection. The obligation of the Guarantor to make any payments may be satisfied by causing the Issuer to make such payments. Further, the Guarantor agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder of Debt Securities in enforcing any of their respective rights under the Guarantee. (Section 2 of the Second Supplemental Indenture dated as of October 10, 1996 among the Issuer, the Guarantor and the Trustee). 6 RANKING Unless otherwise specified in a Prospectus Supplement for a particular series of Debt Securities, all series of Debt Securities will be senior indebtedness of the Issuer and will be direct, unsecured obligations of the Issuer, ranking on a parity with all other unsecured and unsubordinated indebtedness of the Issuer, and the Guarantee will be a senior obligation of the Guarantor and will be a direct unsecured obligation of the Guarantor, ranking on a parity with all other unsecured and unsubordinated obligations of the Guarantor. Each of the Issuer and the Guarantor is a holding company and the Debt Securities and the Guarantee will be effectively subordinated to all existing and future liabilities, including indebtedness, of the subsidiaries of the Issuer and the Guarantor, respectively. See 'Holding Company Structure'. CERTAIN COVENANTS Limitation on Liens. The Indenture provides that neither the Issuer nor any Material Subsidiary of the Issuer shall incur, create, issue, assume, guarantee or otherwise become liable for any indebtedness for money borrowed that is secured by a lien on any asset now owned or hereafter acquired by it unless the Issuer makes or causes to be made effective provision whereby the Debt Securities will be secured by such lien equally and ratably with (or prior to) all other indebtedness thereby secured so long as any such indebtedness shall be secured. The foregoing restriction does not apply to the following: (i) liens existing as of the date of the Indenture; (ii) liens created by Subsidiaries of the Issuer to secure indebtedness of such Subsidiaries to the Issuer or to one or more other Subsidiaries of the Issuer; (iii) liens affecting property of a person existing at the time it becomes a Subsidiary of the Issuer or at the time it merges into or consolidates with the Issuer or a Subsidiary of the Issuer or at the time of a sale, lease or other disposition of all or substantially all of the properties of such person to the Issuer or its Subsidiaries; (iv) liens on property existing at the time of the acquisition thereof or incurred to secure payment of all or a part of the purchase price thereof or to secure Indebtedness incurred prior to, at the time of, or within one year after the acquisition thereof for the purpose of financing all or part of the purchase price thereof; (v) liens on any property to secure all or part of the cost of improvements or construction thereon or indebtedness incurred to provide funds for such purpose in a principal amount not exceeding the cost of such improvements or construction; (vi) liens consisting of or relating to the sale, transfer or financing of motion pictures, video and television programs, sound recordings, books or rights with respect thereto or with so-called tax shelter groups or other third-party investors in connection with the financing of such motion pictures, video and television programming, sound recordings or books in the ordinary course of business and the granting to the Issuer or any of its Subsidiaries of rights to distribute such motion pictures, video and television programming, sound recordings or books; provided, however, that no such lien shall attach to any asset or right of the Issuer or its Subsidiaries (other than the motion pictures, video and television programming, sound recordings, books or rights which were sold, transferred to or financed by the tax shelter group or third-party investors in question or the proceeds arising therefrom); (vii) liens on shares of stock, indebtedness or other securities of a Person that is not a Subsidiary; (viii) other liens arising in connection with indebtedness of the Issuer and its Subsidiaries in an aggregate principal amount for the Issuer and its Subsidiaries not exceeding at the time such lien is issued, created or assumed the greater of (A) 10% of the Consolidated Net Worth of the Issuer and (B) $500 million; and (ix) any extensions, renewal or replacement of any lien referred to in the foregoing clauses (i) through (viii) inclusive, or of any indebtedness secured thereby; provided that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured 7 at the time of such extension, renewal or replacement, or at the time the lien was issued, created or assumed or otherwise permitted, and that such extension, renewal or replacement lien shall be limited to all or part of substantially the same property which secured the lien extended, renewed or replaced (plus improvements on such property). (Section 1006) Limitation on Senior Debt. The Indenture provides that the Issuer will not, and will not permit any of its Subsidiaries to, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable for (collectively, 'incur') any Senior Debt, if after giving effect to such incurrence of Senior Debt, determined on a pro forma basis as if such incurrence had occurred on the first day of the Test Period, the Consolidated Cash Flow Coverage Ratio for the Issuer and its Subsidiaries for the Test Period would be less than 1.5 to 1; provided, however, that the foregoing restrictions will not apply to TWE or any of its Subsidiaries to the extent that the application of such restrictions would be prohibited under, or cause a violation of, TWE's bank credit agreement as in effect from time to time or any successor or replacement credit agreement. (Section 1007) Other than the restrictions in the Indenture on liens and incurrence of Senior Debt described above, the Indenture and the Debt Securities do not contain any covenants or other provisions designed to afford Holders of Debt Securities protection in the event of a recapitalization or highly leveraged transaction involving the Issuer. Limitation on Merger, Consolidation and Certain Sales of Assets. The Indenture provides that neither the Issuer nor the Guarantor will merge or consolidate with or into, or convey or transfer its property substantially as an entirety to, any Person unless (a) the successor is organized and existing under the laws of the United States or any State or the District of Columbia, (b) (i) in the case of the Issuer, the successor assumes the Issuer's obligations under the Indenture and the Debt Securities on the same terms and conditions and (ii) in the case of the Guarantor, the successor assumes the Guarantor's obligations under the Indenture and the Guarantee on the same terms and conditions and (c) immediately after giving effect to such transactions, there is no default under the Indenture. (Sections 801 and 802, as amended by the Third Supplemental Indenture dated as of December 31, 1996 (the 'Third Supplemental Indenture'), among the Issuer, the Guarantor and the Trustee.) Any additional covenants of the Issuer or the Guarantor pertaining to a series of Debt Securities will be set forth in a Prospectus Supplement relating to such series of Debt Securities. CERTAIN DEFINITIONS The following are certain of the terms defined in the Indenture: 'Consolidated Cash Flow' means, with respect to the Issuer, for any period, the net income of the Issuer and its Subsidiaries as determined on a consolidated basis in accordance with GAAP consistently applied, plus the sum of depreciation, amortization, other noncash charges which reduce net income, income tax expense and interest expense, in each case to the extent deducted in determining such net income, and excluding extraordinary gains or losses. Notwithstanding the foregoing, for purposes of determining the Consolidated Cash Flow of the Issuer, there shall be included, in respect of each other Person that is accounted for by the Issuer on the equity method (as determined in accordance with GAAP), the Issuer's proportionate amount of such other Person's and its Subsidiaries' consolidated net income, depreciation, amortization, other noncash charges which reduce net income, income tax expense and interest expense, in each case to the extent deducted in determining such other Person's net income, excluding extraordinary gains and losses. 'Consolidated Cash Flow Coverage Ratio' means, for any period, the ratio for such period of Consolidated Cash Flow to Consolidated Interest Expense. In determining the Consolidated Cash Flow Coverage Ratio, effect shall be given to the application of the proceeds of Senior Debt whose incurrence is being tested to the extent such proceeds are to be used to repay or refinance other Senior Debt. 'Consolidated Interest Expense' means, with respect to the Issuer, for any period, cash interest expense of the Issuer and its Subsidiaries on Senior Debt for such period other than the amount amortized during such period in respect of all fees paid in connection with the incurrence 8 of such Senior Debt, such expense to be determined on a consolidated basis in accordance with GAAP consistently applied. Notwithstanding the foregoing, for purposes of determining the Consolidated Interest Expense of the Issuer, there shall be included, in respect of each other Person that is accounted for by the Issuer on the equity method (as determined in accordance with GAAP), the Issuer's proportionate amount of the cash interest expense of such other Person and its Subsidiaries on Senior Debt for the relevant period other than the amount amortized during such period in respect of all fees paid in connection with the incurrence of such Senior Debt, such expense to be determined on a consolidated basis in accordance with GAAP consistently applied. 'Consolidated Net Worth' means, with respect to the Issuer, at the date of any determination, the consolidated stockholders' equity of the Issuer and its Subsidiaries, determined on a consolidated basis in accordance with GAAP consistently applied. 'GAAP' means generally accepted accounting principles as such principles are in effect as of the date of the Indenture. 'Material Subsidiary' means, with respect to the Issuer, any Person that is a Subsidiary if at the end of the most recent fiscal quarter of the Issuer, the aggregate amount, determined in accordance with GAAP consistently applied, of securities of, loans and advances to, and other investments in, such Person held by the Issuer and its other Subsidiaries exceeded 10% of the Issuer's Consolidated Net Worth. 'Person' means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 'Senior Debt' means, with respect to any Person, all indebtedness of such Person in respect of money borrowed, determined in accordance with GAAP consistently applied, other than indebtedness as to which the instrument governing such indebtedness provides that such indebtedness is, or which is in effect, subordinated or junior in right of payment to any other indebtedness of such Person. 'Subsidiary' means, with respect to any Person, any corporation more than 50% of the voting stock of which is owned directly or indirectly by such Person, and any partnership, association, joint venture or other entity in which such Person owns more than 50% of the equity interests or has the power to elect a majority of the board of directors or other governing body. 'Test Period' means, with respect to any date, the period consisting of the most recent four full fiscal quarters for which financial information is generally available. DEFEASANCE The Indenture provides that the Issuer (and to the extent applicable, the Guarantor), at its option, (a) will be Discharged from any and all obligations in respect of any series of Debt Securities (except in each case for certain obligations to register the transfer or exchange of Debt Securities, replace stolen, lost or mutilated Debt Securities, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with the covenants described above under 'Certain Covenants' and any other restrictive covenants described in a Prospectus Supplement relating to such series of Debt Securities, and certain Events of Default (other than those arising out of the failure to pay interest or principal on the Debt Securities of a particular series and certain events of bankruptcy, insolvency and reorganization) will no longer constitute Events of Default with respect to such series of Debt Securities, in each case if the Issuer deposits with the applicable Trustee, in trust, money or the equivalent in securities of the government which issued the currency in which the Debt Securities are denominated or government agencies backed by the full faith and credit of such government, or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, and interest on, such series on the dates such payments are due in accordance with the terms of such series. To exercise any such option, the Issuer is required, among other things, to deliver to the Trustee an opinion of counsel to the effect that (i) the deposit and related defeasance would not cause the Holders of such series to recognize income, gain or loss for Federal 9 income tax purposes and, in the case of a Discharge pursuant to clause (a), accompanied by a ruling to such effect received from or published by the United States Internal Revenue Service and (ii) the creation of the defeasance trust will not violate the Investment Company Act of 1940, as amended. In addition, the Issuer is required to deliver to the Trustee an Officers' Certificate stating that such deposit was not made by the Issuer with the intent of preferring the Holders over other creditors of the Issuer or with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or others. (Article 4, as amended by the Third Supplemental Indenture.) EVENTS OF DEFAULT, NOTICE AND WAIVER The Indenture provides that, if an Event of Default specified therein with respect to any series of Debt Securities issued thereunder shall have happened and be continuing, either the Trustee thereunder or the Holders of 25% in aggregate principal amount of the outstanding Debt Securities of such series (or 25% in aggregate principal amount of all outstanding Debt Securities under the Indenture, in the case of certain Events of Default affecting all series of Debt Securities under the Indenture) may declare the principal of all the Debt Securities of such series to be due and payable. (Section 502) Events of Default in respect of any series are defined in the Indenture as being: (i) default for 30 days in payment of any interest installment with respect to such series; (ii) default in payment of principal of, or premium, if any, on, or any sinking fund or analogous payment with respect to, Debt Securities of such series when due at their stated maturity, by declaration or acceleration, when called for redemption or otherwise; (iii) default for 90 days after notice to the Issuer (or the Guarantor, if applicable) by the Trustee thereunder or by Holders of 25% in aggregate principal amount of the outstanding Debt Securities of such series in the performance of any covenant pertaining to Debt Securities of such series; (iv) failure to pay when due, upon final maturity or upon acceleration, the principal amount of any indebtedness for money borrowed of the Issuer in excess of $50 million, if such indebtedness is not discharged, or such acceleration annulled, within 60 days after written notice; and (v) certain events of bankruptcy, insolvency and reorganization with respect to the Guarantor, the Issuer or any Material Subsidiary of the Issuer which is organized under the laws of the United States or any political sub-division thereof. (Section 501, as amended by the Third Supplemental Indenture, and Form of Security.) Any additions, deletions or other changes to the Events of Default which will be applicable to a series of Debt Securities will be described in the Prospectus Supplement relating to such series of Debt Securities. The Indenture provides that the Trustee thereunder will, within 90 days after the occurrence of a default with respect to the Debt Securities of any series, give to the Holders of the Debt Securities of such series notice of all uncured and unwaived defaults known to it; provided that, except in the case of default in the payment of principal of, premium, if any, or interest, if any, on any of the Debt Securities of such series, the Trustee thereunder will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the Holders of the Debt Securities of such series. The term 'default' for the purpose of this provision means the happening of any of the Events of Default specified above, except that any grace period or notice requirement is eliminated. (Section 602) The Indenture contains provisions entitling the Trustee, subject to the duty of the Trustee during an Event of Default to act with the required standard of care, to be indemnified by the Holders of the Debt Securities before proceeding to exercise any right or power under the Indenture at the request of Holders of the Debt Securities. (Section 603) The Indenture provides that the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of any series may direct the time, method and place of conducting proceedings for remedies available to the Trustee or exercising any trust or power conferred on the Trustee in respect of such series, subject to certain conditions. (Section 512) The Indenture includes a covenant that the Issuer will file annually with the Trustee a certificate of no default or specifying any default that exists. (Section 1004) 10 In certain cases, the Holders of a majority in principal amount of the outstanding Debt Securities of any series may on behalf of the Holders of all Debt Securities of such series waive any past default or Event of Default with respect to the Debt Securities of such series or compliance with certain provisions of the Indenture, except, among other things, a default not theretofore cured in payment of the principal of, or premium, if any, or interest, if any, on any of the Debt Securities of such series. (Sections 513 and 1008) MODIFICATION OF THE INDENTURE The Issuer and the Trustee may, without the consent of the Holders of the Debt Securities, enter into indentures supplemental to the Indenture for, among others, one or more of the following purposes: (i) to evidence the succession of another Person to the Issuer or the Guarantor, and the assumption by such successor of the Issuer's or the Guarantor's obligations under the Indenture and the Debt Securities of any series; (ii) to add covenants of the Issuer and the Guarantor, or surrender any rights of the Issuer or the Guarantor, for the benefit of the Holders of Debt Securities of any or all series; (iii) to cure any ambiguity, or correct any inconsistency in the Indenture; (iv) to evidence and provide for the acceptance of any successor Trustee with respect to one or more series of Debt Securities or to facilitate the administration of the trusts thereunder by one or more trustees in accordance with the Indenture; (v) to establish the form or terms of any series of Debt Securities; and (vi) to provide any additional Events of Default. (Section 901, as amended by the Third Supplemental Indenture.) The Indenture contains provisions permitting the Issuer and the Trustee thereunder, with the consent of the Holders of a majority in principal amount of the outstanding Debt Securities of each series to be affected, to execute supplemental indentures adding any provisions to or changing or eliminating any of the provisions of the Indenture or modifying the rights of the Holders of the Debt Securities of such series to be affected, except that no such supplemental indenture may, without the consent of the Holders of affected Debt Securities, among other things, change the fixed maturity of any Debt Securities, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce the number of shares of any common stock or other securities to be delivered by the Issuer in respect of a conversion of any convertible Debt Securities or reduce the aforesaid percentage of Debt Securities of any series the consent of the Holders of which is required for any such supplemental indenture. (Section 902) THE TRUSTEE The Chase Manhattan Bank, formerly known as Chemical Bank, is the Trustee under the Indenture. The Trustee is a depository for funds and performs other services for, and transacts other banking business with, the Company in the normal course of business. GOVERNING LAW The Indenture will be governed by, and construed in accordance with, the laws of the State of New York. GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in the form of one or more Global Securities that will be deposited with, or on behalf of, a depository (the 'Depository') identified in the Prospectus Supplement relating to such series. Global Securities may be issued only in fully registered form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual Debt Securities represented thereby, a Global Security may not be transferred except as a whole by the Depository for such Global Security to a nominee of such Depository or by a nominee of such Depository to such Depository or another nominee of such Depository or by the Depository or any nominee of such Depository to a successor Depository or any nominee of such successor. 11 The specific terms of the depository arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. Unless otherwise specified in the Prospectus Supplement, the Issuer anticipates that the following provisions will apply to depository arrangements. Upon the issuance of a Global Security, the Depository for such Global Security or its nominee will credit on its book-entry registration and transfer system the respective principal amounts of the individual Debt Securities represented by such Global Security to the accounts of persons that have accounts with such Depository ('Participants'). Such accounts shall be designated by the underwriters, dealers or agents with respect to such Debt Securities or by the Issuer if such Debt Securities are offered and sold directly by the Issuer. Ownership of beneficial interests in a Global Security will be limited to Participants or persons that may hold interests through Participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depository or its nominee (with respect to interests of Participants) and records of Participants (with respect to interests of persons who hold through Participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to own, pledge or transfer beneficial interests in a Global Security. So long as the Depository for a Global Security or its nominee is the registered owner of such Global Security, such Depository or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have any of the individual Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of any such Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture. Accordingly, each person owning a beneficial interest in a Global Security must rely on the procedures of the Depository for such Global Security and, if such person is not a Participant, on the procedures of the Participant through which such person owns its interest, to exercise any rights of a holder under the Indenture. The Issuer understands that under existing industry practices, if the Issuer requests any action of holders or if an owner of a beneficial interest in a Global Security desires to give or take any action which a holder is entitled to give or take under the Indenture, the Depository for such Global Security would authorize the Participants holding the relevant beneficial interests to give or take such action, and such Participants would authorize beneficial owners owning through such Participants to give or take such action or would otherwise act upon the instructions of beneficial owners holding through them. Payments of principal of and any premium and any interest on individual Debt Securities represented by a Global Security registered in the name of a Depository or its nominee will be made to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such Debt Securities. None of the Issuer, the Trustee, any paying agent or the registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Issuer expects that the Depository for a series of Debt Securities or its nominee, upon receipt of any payment of principal, premium or interest in respect of a permanent Global Security representing any of such Debt Securities, immediately will credit Participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security for such Debt Securities as shown on the records of such Depository or its nominee. The Issuer also expects that payments by Participants to owners of beneficial interests in such Global Security held through such Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in 'street name'. Such payments will be the responsibility of such Participants. If a Depository for a series of Debt Securities is at any time unwilling, unable or ineligible to continue as depository and a successor depository is not appointed by the Issuer within 90 days, the 12 Issuer will issue individual Debt Securities of such series in exchange for the Global Security representing such series of Debt Securities. In addition, the Issuer may, at any time and in its sole discretion, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities, determine not to have any Debt Securities of such series represented by one or more Global Securities and, in such event, will issue individual Debt Securities of such series in exchange for the Global Security or Securities representing such series of Debt Securities. Individual Debt Securities of such series so issued will be issued in denominations, unless otherwise specified by the Issuer, of $1,000 and integral multiples thereof. Any Debt Securities issued in definitive form in exchange for a Global Security will be registered in such name or names as the Depository shall instruct the Trustee. It is expected that such instructions will be based upon directions received by the Depository from Participants with respect to ownership of beneficial interests in such Global Security. HOLDING COMPANY STRUCTURE Each of the Issuer and the Guarantor is a holding company, the assets of which consist primarily of investments in its consolidated and unconsolidated subsidiaries. The assets of the Guarantor consist primarily of its investment in the Issuer and TBS, and the assets of the Issuer consist primarily of its investments in its consolidated and unconsolidated subsidiaries, including TWE. A substantial portion of the consolidated liabilities of the Issuer and the Guarantor have been incurred by subsidiaries. TWE, which is not consolidated with either the Issuer or the Guarantor for financial reporting purposes, also has substantial indebtedness and other liabilities. The Issuer's and the Guarantor's rights and the rights of their creditors, including Holders of Debt Securities, to participate in the distribution of assets of any person in which the Issuer or the Guarantor owns an equity interest (including any subsidiary and TWE) upon such person's liquidation or reorganization will be subject to prior claims of such person's creditors, including trade creditors, except to the extent that the Issuer or the Guarantor may be a creditor with recognized claims against such person (in which case the claims of the Issuer and the Guarantor would still be subject to the prior claims of any secured creditor of such person and of any holder of indebtedness of such person that is senior to that held by the Issuer or the Guarantor). Accordingly, the Holders of Debt Securities may be deemed to be effectively subordinated to such claims. Each of the Issuer's and the Guarantor's ability to service its indebtedness and other obligations, including the Debt Securities and the Guarantee, and the ability of the Guarantor to pay dividends on its common and preferred stock is dependent primarily upon the earnings and cash flow of their respective consolidated and unconsolidated subsidiaries and the distribution or other payment of such earnings and cash flow to the Issuer and the Guarantor. The TWE Agreement of Limited Partnership and the respective bank credit facilities of TBS and TWI Cable Inc. ('TWI Cable') (a subsidiary of the Issuer) limit distributions and other transfers of funds to the Issuer and the Guarantor. Generally, distributions by TWE, other than tax distributions, are subject to restricted payments limitations and availability under certain financial ratios applicable to TWE. As a result of the acquisitions by subsidiaries of the Issuer of certain cable systems, certain subsidiaries of the Issuer have outstanding indebtedness and bank credit facilities that contain limitations on the ability of such subsidiaries to make distributions or other payments to the Issuer. Generally, distributions by each of TBS and TWI Cable, other than tax distributions, are subject to restricted payments limitations and availability under certain financial ratios applicable to TBS and TWI Cable under the respective bank credit facilities of which each is a borrower and party thereto. Additional information concerning the indebtedness of the Issuer and the Guarantor and its subsidiaries will be set forth in the Prospectus Supplement. PLAN OF DISTRIBUTION The Issuer may sell the Debt Securities to one or more underwriters or dealers for public offering and sale by them or may sell the Debt Securities to investors directly or through agents. The Prospectus Supplement with respect to the Debt Securities offered thereby describes the terms of the offering of such Debt Securities and the method of distribution of the Debt Securities offered thereby and identifies any firms acting as underwriters, dealers or agents in connection therewith. 13 The Debt Securities may be distributed from time to time in one or more transactions at a fixed price or prices (which may be changed) or at prices determined as specified in the Prospectus Supplement. In connection with the sale of the Debt Securities, underwriters, dealers or agents may be deemed to have received compensation from the Issuer in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the Debt Securities for whom they may act as agent. Underwriters may sell the Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agent. Certain of the underwriters, dealers or agents who participate in the distribution of the Debt Securities may engage in other transactions with, and perform other services for, the Issuer and the Guarantor in the ordinary course of business. Any underwriting compensation paid by the Issuer to underwriters or agents in connection with the offering of the Debt Securities, and any discounts, concessions or commissions allowed by underwriters to dealers, are set forth in the Prospectus Supplement. Underwriters, dealers and agents participating in the distribution of the Debt Securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on the resale of the Debt Securities may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters and their controlling persons, dealers and agents may be entitled, under agreements entered into with the Issuer, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act. LEGAL OPINIONS Certain legal matters in connection with the Debt Securities will be passed upon for the Issuer and the Guarantor by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York and for the Underwriters, if any, named in a Prospectus Supplement, by Shearman & Sterling, 599 Lexington Avenue, New York, New York. EXPERTS The consolidated financial statements and schedules of the Guarantor and TWE appearing in the Guarantor's 1996 Form 10-K and the combined financial statements of the Time Warner Service Partnerships incorporated by reference therein, have been audited by Ernst & Young LLP, Independent Auditors, as set forth in their reports thereon included therein and incorporated herein by reference. Such financial statements and schedules are incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Cablevision Industries Corporation at December 31, 1995, and for the year then ended, incorporated by reference in this Prospectus from the Guarantor's Current Report on Form 8-K dated March 21, 1997, have been audited by Ernst & Young LLP, Independent Auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Cablevision Industries Corporation as of December 31, 1994, and for each of the two years in the period ended December 31, 1994, incorporated by reference in this Prospectus from the Guarantor's Current Report on Form 8-K dated March 21, 1997, have been audited by Arthur Andersen LLP, Independent Public Accountants, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements have been incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The financial statements of Paragon Communications as of December 31, 1993 and 1994, and for each of the three years in the period ended December 31, 1994, incorporated by reference in this Prospectus from the Guarantor's 1996 Form 10-K, and the consolidated financial statements of TBS, as of December 31, 1994 and 1995, and for the three years in the period ended December 31, 1995, incorporated by reference in this Prospectus from the Guarantor's Current Report on Form 8-K dated March 21, 1997, have been audited by Price Waterhouse LLP, Independent Accountants, as set forth in 14 their reports thereon included therein and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. ------------------------ No person is authorized to give any information or to make any representations other than those contained in this Prospectus or any accompanying Prospectus Supplement in connection with the offer made by this Prospectus or any Prospectus Supplement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Issuer, the Guarantor or by any underwriter, dealer or agent. This Prospectus and any Prospectus Supplement do not constitute an offer to sell or a solicitation of an offer to buy any securities other than those to which they relate. Neither the delivery of this Prospectus and any accompanying Prospectus Supplement nor any sale of or offer to sell the Debt Securities offered hereby shall, under any circumstances, create an implication that there has been no change in the affairs of the Issuer or the Guarantor, or that the information herein is correct as of any time after the date hereof. This Prospectus and any accompanying Prospectus Supplement do not constitute an offer to sell or a solicitation of an offer to buy any of the Debt Securities offered hereby in any State to any person to whom it is unlawful to make such offer or solicitation in such State. 15 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following statement sets forth the estimated amounts of expenses, other than underwriting, discounts, to be borne by the registrants in connection with the distribution of the Debt Securities and the Guarantee. Securities and Exchange Commission registration fee........................................ $ 308,345* Trustees' fees............................................................................. 20,000 Printing and engraving expenses............................................................ 200,000 Rating agency fees......................................................................... 100,000 Accounting fees and expenses............................................................... 100,000 Legal fees and expenses.................................................................... 150,000 Miscellaneous expenses..................................................................... 21,655 ------------- Total expenses................................................................... $ 900,000 ------------- -------------
- ------------ * Includes the registration fee for $550,581,500 of Debt Securities and Guarantees of such Debt Securities which was previously paid. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the 'DGCL') provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation -- a 'derivative action' ), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceedings, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Each of the Issuer's and the Guarantor's By-Laws requires indemnification to the fullest extent permitted under Delaware law of any person who is or was a director or officer of the Issuer or the Guarantor who is or was involved or threatened to be made so involved in any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person is or was serving as a director, officer or employee of the Issuer or the Guarantor or any predecessor of the Issuer or the Guarantor or was serving at the request of the Issuer or the Guarantor as a director, officer or employee of any other enterprise. Section 102(b)(7) of the DGCL permits a provision in the certificate of incorporation of each corporation organized thereunder, such as the Issuer and the Guarantor, eliminating or limiting, with certain exceptions, the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Section 1, Article X of each of the Issuer's and the Guarantor's Certificate of Incorporation eliminates the liability of directors to the extent permitted by Section 102(b)(7) of the DGCL. The foregoing statements are subject to the detailed provisions of Sections 145 and 102(b)(7) of the DGCL, each of the Issuer's and the Guarantor's By-laws and Section 1, Article X of each of the Issuer's and the Guarantor's Certificate of Incorporation, as applicable. II-1 The Directors' and Officers' Liability and Reimbursement Insurance Policy of the Guarantor is designed to reimburse each of the registrants for any payments made by each pursuant to the foregoing indemnification. The policy has coverage of $50,000,000. ITEM 16. EXHIBITS (1) -- Proposed form of Underwriting Agreement.** (4.1) -- Indenture dated as of June 15, 1993 between the Issuer and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee (filed as Exhibit 4.1 to the Issuer's Registration Statement on Form S-3 (File No. 33-57030) filed with the Commission on January 14, 1993).* (4.2) -- Form of Senior Security (filed as Exhibit 4.4 to the Issuer's Registration Statement on Form S-3 (File No. 33-53148) filed with the Commission on October 9, 1992).* (4.3) -- Second Supplemental Indenture dated as of October 10, 1996 among the Issuer, the Guarantor and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.1 to the Issuer's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996).* (4.4) -- Third Supplemental Indenture dated as of December 31, 1996 among the Issuer, the Guarantor and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.10 to the Guarantor's Annual Report on Form 10-K for the year ended December 31, 1996).* (5) -- Opinion of Cravath, Swaine & Moore.** (12) -- Statement regarding the computation of the ratio of earnings to fixed charges.** (23.1) -- Consent of Ernst & Young LLP, Independent Auditors.** (23.2) -- Consent of Counsel (included in Exhibit (5)). (23.3) -- Consent of Arthur Andersen LLP, Independent Public Accountants.** (23.4) -- Consent of Price Waterhouse LLP, Independent Accountants.** (23.5) -- Consent of Price Waterhouse LLP, Independent Accountants.** (24.1) -- Power of Attorney of the Issuer (filed as Exhibit 24.1 to the Registration Statement on Form S-3 (File No. 333-17171) filed with the Commission on December 3, 1996).* (24.2) -- Power of Attorney of the Guarantor (filed as Exhibit 24.2 to the Registration Statement on Form S-3 (File No. 333-17171) filed with the Commission on December 3, 1996).* (25) -- Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan Bank with respect to the Issuer and the Guarantor (bound separately).**
- ------------ * Incorporated by reference. ** Filed herewith. ITEM 17. UNDERTAKINGS A. Undertakings Pursuant to Rule 415 The undersigned registrants hereby undertake: (a) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the 'Calculation of Registration Fee' table in the effective registration statement; and II-2 (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrants pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement; (b) that, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (c) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act Documents by Reference The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of any of the registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Undertaking in Respect of Indemnification Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the provisions described in Item 15 above, or otherwise, the registrants have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such officer, director or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether or not such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on August 4, 1997. TIME WARNER COMPANIES, INC. By: /S/ JOHN A. LABARCA ................................... JOHN A. LABARCA SENIOR VICE PRESIDENT AND CONTROLLER Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below on August 4, 1997 by the following persons in the capacities indicated.
SIGNATURES TITLE - ------------------------------------------ --------------------------------------------------------------------- (i) Principal Executive Officer * Chairman and Chief Executive Officer ......................................... GERALD M. LEVIN (ii) Principal Financial Officer * Director, Senior Vice President and ......................................... Chief Financial Officer RICHARD J. BRESSLER (iii) Principal Accounting Officer /S/ JOHN A. LABARCA Senior Vice President and Controller ......................................... JOHN A. LABARCA (iv) Directors * ......................................... PETER R. HAJE * ......................................... RICHARD D. PARSONS *By: /S/ JOHN A. LABARCA ......................................... (ATTORNEY-IN-FACT)
II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on August 4, 1997. TIME WARNER INC. By: /S/ JOHN A. LABARCA ................................... JOHN A. LABARCA SENIOR VICE PRESIDENT AND CONTROLLER Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below on August 4, 1997 by the following persons in the capacities indicated.
SIGNATURES TITLE - ------------------------------------------ --------------------------------------------------------------------- (i) Principal Executive Officer * Director, Chairman of the Board and .......................................... Chief Executive Officer (GERALD M. LEVIN) (ii) Principal Financial Officer * Senior Vice President and Chief Financial Officer .......................................... (RICHARD J. BRESSLER) (iii) Principal Accounting Officer /s/ JOHN A. LABARCA Senior Vice President and Controller .......................................... (JOHN A. LABARCA) (iv) Directors * ......................................... (MERV ADELSON) * ......................................... (J. CARTER BACOT) ......................................... (STEPHEN F. BOLLENBACH) * ......................................... (BEVERLY SILLS GREENOUGH) ......................................... (GERALD GREENWALD) * ......................................... (CARLA A. HILLS) * ......................................... (REUBEN MARK)
II-5
SIGNATURES TITLE - ------------------------------------------ --------------------------------------------------------------------- * ......................................... (MICHAEL A. MILES) * ......................................... (RICHARD D. PARSONS) * ......................................... (DONALD S. PERKINS) * ......................................... (RAYMOND S. TROUBH) * ......................................... (R. E. TURNER) * ......................................... (FRANCIS T. VINCENT, JR.)
*By: /S/ JOHN A. LABARCA ........................ (ATTORNEY-IN-FACT) II-6 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT PAGE - ------- ---------------------------------------------------------------------------------------------------- ---- (1) -- Proposed form of Underwriting Agreement.**....................................................... (4.1) -- Indenture dated as of June 15, 1993 between the Issuer and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee (filed as Exhibit 4.1 to the Issuer's Registration Statement on Form S-3 (File No. 33-57030) filed with the Commission on January 14, 1993)*................... (4.2) -- Form of Senior Security (filed as Exhibit 4.4 to the Issuer's Registration Statement on Form S-3 (File No. 33-53148) filed with the Commission on October 9, 1992)*................................ (4.3) -- Second Supplemental Indenture dated as of October 10, 1996 among the Issuer, the Guarantor and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.1 to the Issuer's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996)*.............................................. (4.4) -- Third Supplemental Indenture dated as of December 31, 1996 among the Issuer, the Guarantor and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.10 to the Guarantor's Annual Report on Form 10-K for the year ended December 31, 1996)*.................................................. (5) -- Opinion of Cravath, Swaine & Moore**............................................................. (12) -- Statement regarding the computation of the ratio of earnings to fixed charges**.................. (23.1) -- Consent of Ernst & Young LLP, Independent Auditors**............................................. (23.2) -- Consent of Counsel (included in Exhibit (5))..................................................... (23.3) -- Consent of Arthur Andersen LLP, Independent Public Accountants**................................. (23.4) -- Consent of Price Waterhouse LLP, Independent Accountants**....................................... (23.5) -- Consent of Price Waterhouse LLP, Independent Accountants**....................................... (24.1) -- Power of Attorney of the Issuer (filed as Exhibit 24.1 to the Registration Statement on Form S-3 (File No. 333-17171) filed with the Commission on December 3, 1996)*.............................. (24.2) -- Power of Attorney of the Guarantor (filed as Exhibit 24.2 to the Registration Statement on Form S-3 (File No. 333-17171) filed with the Commission on December 3, 1996)*.......................... (25) -- Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan Bank with respect to the Issuer and the Guarantor (bound separately)**..............................................
- ------------ * Incorporated by reference. ** Filed herewith. EX-1 2 EXHIBIT 1 TIME WARNER INC. TIME WARNER COMPANIES, INC. Underwriting Agreement [________], 1997 New York, New York To the Representatives named in Schedule I hereto of the Underwriters named in Schedule II hereto Dear Sirs: Time Warner Companies, Inc., a Delaware corporation (the "Company"), proposes to sell to the underwriters named in Schedule II hereto (the "Underwriters"), for whom you (the "Representatives") are acting as representatives, the principal amount of [the securities] identified in Schedule I hereto (the "Debt Securities"), to be issued under an indenture (as supplemented, the "Indenture") dated as of January 15, 1993, between the Company and The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee (the "Trustee"), as supplemented by a Second Supplemental Indenture dated as of October 10, 1996 and a Third Supplemental Indenture dated as of December 31, 1996, among the Company, the Guarantor and the Trustee, providing for the issuance of debt securities in one or more series, all of which will be entitled to the benefit of the Guarantee referred to below. Time Warner Inc., a Delaware corporation (the "Guarantor"), became the parent of the Company and Turner Broadcasting System, Inc., a Georgia corporation ("TBS"), upon the merger of the Company and TBS with separate subsidiaries of the Guarantor. Immediately following such merger, the Guarantor, as primary obligor and not merely as surety, agreed to irrevocably and unconditionally guarantee (the "Guarantee"; and together with the Debt Securities, the "Securities"), to each holder of Debt Securities and to the Trustee, (i) the full and punctual payment of principal of and interest on the Debt Securities when due and all 2 other payment obligations of the Company under the Indenture and the Debt Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture and the Debt Securities. If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms "Underwriters" and "Representatives", as used herein, shall each be deemed to refer to such firm or firms. 1. Representations and Warranties. Each of the Company and the Guarantor represents and warrants to, and agrees with, each Underwriter as set forth below in this Section 1. Certain terms used in this Section 1 are defined in paragraph (q) hereof. (a) If the offering of the Securities is a Delayed Offering (as specified in Schedule I hereto), paragraph (i) below is applicable and, if the offering of the Securities is a Non-Delayed Offering (as so specified), paragraph (ii) below is applicable. (i) The Company and the Guarantor meet the requirements for the use of Form S-3 under the Securities Act of 1933, as amended (the "Act"), and have filed with the Securities and Exchange Commission (the "Commission") a registration statement (the file number of which is set forth in Schedule I hereto) on such Form, including a basic prospectus, for registration under the Act of the offering and sale of the Securities. The Company and the Guarantor may have filed one or more amendments thereto, and may have used a Preliminary Final Prospectus, each of which has previously been furnished to you. Such registration statement, as so amended, has become effective. The offering of the Securities is a Delayed Offering and, although the Basic Prospectus may not include all the information with respect to the Securities and the offering thereof required by the Act and the rules thereunder to be included in the Final Prospectus, the Basic Prospectus includes all such information required by the Act and the rules thereunder to be included therein as of the Effective Date. The Company and the Guarantor will next file with the Commission pursuant to Rules 415 and 424(b)(2) or (5) a final supplement to the form of prospectus included in such registration statement relating to the Securities and the offering thereof. As filed, such final prospectus supplement shall include all required information with respect to the Securities and the offering thereof and, except to the extent the Representatives shall agree in writing to a modification, shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the Basic Prospectus and any Preliminary Final Prospectus) as the Company and 3 the Guarantor have advised you, prior to the Execution Time, will be included or made therein. (ii) The Company and the Guarantor meet the requirements for the use of Form S-3 under the Act and have filed with the Commission a registration statement (the file number of which is set forth in Schedule I hereto) on such Form, including a basic prospectus, for registration under the Act of the offering and sale of the Securities. The Company and the Guarantor may have filed one or more amendments thereto, including a Preliminary Final Prospectus, each of which has previously been furnished to you. The Company and the Guarantor will next file with the Commission either (x) a final prospectus supplement relating to the Securities in accordance with Rules 430A and 424(b)(1) or (4), or (y) prior to the effectiveness of such registration statement, an amendment to such registration statement, including the form of final prospectus supplement. In the case of clause (x), the Company and the Guarantor have included in such registration statement, as amended at the Effective Date, all information (other than Rule 430A Information) required by the Act and the rules thereunder to be included in the Final Prospectus with respect to the Securities and the offering thereof. As filed, such final prospectus supplement or such amendment and form of final prospectus supplement shall contain all Rule 430A Information, together with all other such required information, with respect to the Securities and the offering thereof and, except to the extent the Representatives shall agree in writing to a modification, shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the Basic Prospectus and any Preliminary Final Prospectus) as the Company and the Guarantor have advised you, prior to the Execution Time, will be included or made therein. (b) On the Effective Date, the Registration Statement did or will, and when the Final Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Closing Date, the Final Prospectus (and any supplement thereto) will, comply in all material respects with the applicable requirements of the Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the respective rules thereunder; on the Effective Date, the Registration Statement did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; on the Effective Date and on the Closing Date the Indenture did or will comply in all material respects with the requirements of the Trust Indenture Act and the rules thereunder; and, on the Effective Date, the Final Prospectus, if not filed pursuant to Rule 424(b), did not or 4 will not, and on the date of any filing pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus (together with any supplement thereto) will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and the Guarantor make no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification (Form T-l) under the Trust Indenture Act of the Trustee or (ii) the information contained in or omitted from the Registration Statement or the Final Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company or the Guarantor by or on behalf of any Underwriter through the Representatives specifically for inclusion in the Registration Statement or the Final Prospectus (or any supplement thereto). (c) Each of the Company and the Guarantor is validly existing as a corporation in good standing under the laws of the State of Delaware, with full corporate power and authority under such laws to own its properties and conduct its business as described in the Basic Prospectus, and any amendment or supplement thereto, and to enter into and perform its obligations under this Agreement; and each of the Company and the Guarantor is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise. (d) Each of the Company's and the Guarantor's significant subsidiaries, as such term is defined in Rule 1-02(w) of Regulation S-X under the Act, is validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with full power and authority under such laws to own its properties and conduct its business as described in the Basic Prospectus, and any amendment or supplement thereto, and is duly qualified to transact business as a foreign corporation or partnership and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise. (e) The Guarantor's authorized equity capitalization is as set forth in the Basic Prospectus, and any amendment or supplement thereto. 5 (f) There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or the Guarantor or any of their respective subsidiaries of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Basic Prospectus, and any amendment or supplement thereto, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Basic Prospectus, and any amendment or supplement thereto, or to be filed as an exhibit, which is not described or filed as required. (g) This Agreement has been duly authorized, executed and delivered by each of the Company and the Guarantor. (h) No consent, approval, authorization or order of any court or governmental agency or body is required for the authorization, issuance, sale and delivery of the Securities by the Company and the Guarantor or the consummation of the transactions contemplated by this Agreement or in any Delayed Delivery Contracts, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters and such other approvals as have been obtained. (i) (1) The execution and delivery of this Agreement and the Indenture by the Company, the issuance, sale and delivery of the Debt Securities and the consummation by the Company of the transactions contemplated in this Agreement, the Indenture and the Registration Statement and compliance by the Company with the terms of this Agreement or any Delayed Delivery Contracts do not and will not result in any violation of the Restated Certificate of Incorporation, as amended, or By-laws, as amended, of the Company, and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company under (i) that certain Amended and Restated Credit Agreement (the "TWE Credit Agreement"), dated as of June 30, 1995, among Time Warner Entertainment Company, L.P., a Delaware limited partnership ("TWE"), the Time Warner Entertainment-Advance/Newhouse Partnership, a New York general partnership, TWI Cable Inc., a Delaware corporation and a wholly owned subsidiary of the Company, and The Chase Manhattan Bank (formerly known as Chemical Bank), as Administrative Agent, the Agents and the Banks named therein, that certain Credit Agreement (the "TWC Credit Agreement"), dated as of May 23, 1996, among the Guarantor (as successor and permitted assign of the Company), The Chase Manhattan Bank (formerly known as Chemical Bank), as Administrative Agent, and the lenders named therein, or any indenture, mortgage or loan agreement, or any 6 other agreement or instrument, to which the Company is a party or by which it may be bound or to which any of its properties may be subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise), (ii) any existing applicable law, rule or regulation (except for such conflicts, breaches, liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise, and other than the securities or blue sky laws of various jurisdictions), or (iii) any judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company or any of its properties. (2) The execution and delivery of this Agreement and the Indenture by the Guarantor, the issuance, sale and delivery of the Guarantee and the consummation by the Guarantor of the transactions contemplated in this Agreement, the Indenture and the Registration Statement and compliance by the Guarantor with the terms of this Agreement or any Delayed Delivery Contracts do not and will not result in any violation of the Certificate of Incorporation, as amended, or By-laws, as amended, of the Guarantor, and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Guarantor under (i) the TWC Credit Agreement or any indenture, mortgage or loan agreement, or any other agreement or instrument, to which the Guarantor is a party or by which it may be bound or to which any of its properties may be subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise), (ii) any existing applicable law, rule or regulation (except for such conflicts, breaches, liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise, and other than the securities or blue sky laws of various jurisdictions), or (iii) any judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Guarantor or any of its properties. (j) The documents incorporated by reference in the Basic Prospectus, and any amendment or supplement thereto, as of the dates they were filed with the 7 Commission, complied as to form in all material respects with the requirements of the Exchange Act. (k) The Securities conform in all material respects to the description thereof contained in the Basic Prospectus, and any amendment or supplement thereto; if any of the Securities are to be listed on any stock exchange, authorization therefor has been given, subject to official notice of issuance and evidence of satisfactory distribution, or the Company and the Guarantor have no reason to believe that such Securities will not be authorized for listing, subject to official notice of issuance and evidence of satisfactory distribution. (l) The Indenture has been duly authorized, executed and delivered by the Company, has been duly qualified under the Trust Indenture Act, and, assuming due authorization, execution and delivery by the Trustee, constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether considered in a proceeding in equity or at law); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to this Agreement, in the case of the Underwriters' Securities, or by the purchasers thereof pursuant to Delayed Delivery Contracts, in the case of any Contract Securities, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (m) The Indenture has been duly authorized, executed and delivered by the Guarantor and constitutes a legal, valid and binding instrument enforceable against the Guarantor in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether considered in a proceeding in equity or at law). (n) Each Delayed Delivery Contract that has been executed by the Company and the Guarantor has been duly authorized, executed and delivered by the Company and the Guarantor, respectively, and, assuming the due authorization, execution and delivery by the purchaser thereunder, is a valid and binding obligation 8 of the Company and the Guarantor enforceable against the Company and the Guarantor, respectively, in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (o) Each firm of independent accountants, which is reporting upon certain audited or reviewed financial statements and schedules included or incorporated by reference in the Registration Statement, are independent auditors with respect to the financial statements covered by the audit or review of such firm, in accordance with the provisions of the Exchange Act and the Act and the respective applicable published rules and regulations thereunder. (p) The consolidated financial statements and the related notes of each of the Company, the Guarantor, TWE and any other person included or incorporated by reference in the Registration Statement present fairly in accordance with generally accepted accounting principles the consolidated financial position of each of the Company, the Guarantor, TWE and any such other person as of the dates indicated and the consolidated results of operations and cash flows of each of the Company, the Guarantor, TWE and any such other person for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as otherwise noted therein and subject, in the case of interim statements, to normal year-end audit adjustments. The financial statement schedules included or incorporated by reference in the Registration Statement present fairly in accordance with generally accepted accounting principles the information required to be stated therein. Any pro forma financial statements of the Company or the Guarantor and other pro forma financial information included or incorporated by reference in the Registration Statement present fairly the information shown therein. Such pro forma financial statements and other pro forma financial information, to the extent required, have been prepared in accordance with applicable rules and guidelines of the Commission, if any, with respect thereto, have been properly compiled on the pro forma bases described therein, and, in the opinion of the Company and the Guarantor, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. (q) The terms which follow, when used in this Agreement, shall have the meanings indicated. The term "Effective Date" shall mean each date that the Registration Statement and any post-effective amendment or amendments thereto became or become effective and each date after the date hereof on which a document 9 incorporated by reference in the Registration Statement is filed. "Execution Time" shall mean the date and time that this Agreement is executed and delivered by the parties hereto. "Basic Prospectus" shall mean the prospectus referred to in paragraph (a) above contained in the Registration Statement at the Effective Date including, in the case of a Non-Delayed Offering, any Preliminary Final Prospectus. "Preliminary Final Prospectus" shall mean any preliminary prospectus supplement to the Basic Prospectus which describes the Securities and the offering thereof and is used prior to filing of the Final Prospectus. "Final Prospectus" shall mean the prospectus supplement relating to the Securities that is first filed pursuant to Rule 424(b) after the Execution Time, together with the Basic Prospectus or, if, in the case of a Non-Delayed Offering, no filing pursuant to Rule 424(b) is required, shall mean the form of final prospectus relating to the Securities, including the Basic Prospectus, included in the Registration Statement at the Effective Date. "Registration Statement" shall mean the registration statement referred to in paragraph (a) above, including incorporated documents, exhibits and financial statements, as amended at the Execution Time (or, if not effective at the Execution Time, in the form in which it shall become effective) and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date (as hereinafter defined), shall also mean such registration statement as so amended. Such term shall include any Rule 430A Information deemed to be included therein at the Effective Date as provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules or regulation under the Act. "Rule 430A Information" means information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A. All references in this Agreement to the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be; all references in this Agreement to financial statements and schedules and other information that is "contained", "included" or "stated" in the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that are or are deemed to be incorporated by reference in the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to mean and include the filing of any document under the Exchange Act after the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as 10 the case may be, deemed to be incorporated therein by reference. A "Non-Delayed Offering" shall mean an offering of securities which is intended to commence promptly after the effective date of a registration statement, with the result that, pursuant to Rules 415 and 430A, all information (other than Rule 430A Information) with respect to the securities so offered must be included in such registration statement at the effective date thereof. A "Delayed Offering" shall mean an offering of securities pursuant to Rule 415 which does not commence promptly after the effective date of a registration statement, with the result that only information required pursuant to Rule 415 need be included in such registration statement at the effective date thereof with respect to the securities so offered. Whether the offering of the Securities is a Non-Delayed Offering or a Delayed Offering shall be set forth in Schedule I hereto. (r) Neither the Company nor the Guarantor is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, each of the Company and the Guarantor agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company and the Guarantor, at the purchase price for the Securities set forth in Schedule I hereto, the principal amount of Securities set forth opposite such Underwriter's name in Schedule II hereto, except that, if Schedule I hereto provides for the sale of Securities pursuant to delayed delivery arrangements, the respective principal amounts of Securities to be purchased by the Underwriters shall be as set forth in Schedule II hereto less the respective amounts of Contract Securities determined as provided below. Securities to be purchased by the Underwriters are herein sometimes called the "Underwriters' Securities" and Securities to be purchased pursuant to Delayed Delivery Contracts as hereinafter provided are herein called "Contract Securities". If so provided in Schedule I hereto, the Underwriters are authorized to solicit offers to purchase Securities from the Company and the Guarantor pursuant to delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the form of Schedule III hereto but with such changes therein as the Company or the Guarantor may authorize or approve. The Underwriters will endeavor to make such arrangements and, as compensation therefor, the Company will pay to the Representatives, for the account of the Underwriters, on the Closing Date, the percentage set forth in Schedule I hereto of the principal amount of the Securities for which Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with institutional investors, including commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions. The Company and the Guarantor will enter into Delayed Delivery Contracts in all cases where sales of Contract Securities arranged by the Underwriters have been approved by the 11 Company but, except as the Company may otherwise agree, each such Delayed Delivery Contract must be for not less than the minimum principal amount set forth in Schedule I hereto and the aggregate principal amount of Contract Securities may not exceed the maximum aggregate principal amount set forth in Schedule I hereto. The Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The principal amount of Securities to be purchased by each Underwriter as set forth in Schedule II hereto shall be reduced by an amount which shall bear the same proportion to the total principal amount of Contract Securities as the principal amount of Securities set forth opposite the name of such Underwriter bears to the aggregate principal amount set forth in Schedule II hereto, except to the extent that you determine that such reduction shall be otherwise than in such proportion and so advise the Company and the Guarantor in writing; provided, however, that the total principal amount of Securities to be purchased by all Underwriters shall be the aggregate principal amount set forth in Schedule II hereto less the aggregate principal amount of Contract Securities. 3. Delivery and Payment. Delivery of and payment for the Underwriters' Securities shall be made on the date and at the time specified in Schedule I hereto, which date and time may be postponed to a date not later than five business days after such specified date by agreement between the Representatives, acting jointly and without regard to any agreement among underwriters, and the Company or as provided in Section 8 hereof (such date and time of delivery and payment for the Underwriters' Securities being herein called the "Closing Date"). Delivery of the Underwriters' Securities shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by certified or official bank check or checks drawn on or by a New York Clearing House bank and payable in next day funds (unless another form of payment is specified in Schedule I hereto). Delivery of the Underwriters' Securities shall be made at such location as the Representatives shall reasonably designate on the Closing Date and payment for the Securities shall be made at the office specified in Schedule I hereto. Certificates for the Underwriters' Securities shall be registered in such names and in such denominations as the Representatives may request not less than one full business day in advance of the Closing Date. The Company agrees to have the Underwriters' Securities available for inspection, checking and packaging by the Representatives in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date. 4. Agreements. The Company and the Guarantor agree with the several Underwriters that: (a) Each of the Company and the Guarantor will use its best efforts to cause the Registration Statement, if not effective at the Execution Time, and any 12 amendment thereto, to become effective. Prior to the termination of the offering of the Securities, neither the Company nor the Guarantor will file any amendment to the Registration Statement or supplement (including the Final Prospectus or any Preliminary Final Prospectus) to the Basic Prospectus unless the Company or the Guarantor has furnished you a copy for your review prior to filing and neither will file any such proposed amendment or supplement to which you reasonably object on a timely basis (other than filings of periodic reports pursuant to Section 13(a) under the Exchange Act). Subject to the foregoing sentence, the Company and the Guarantor will cause the Final Prospectus, properly completed, and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Representatives of such timely filing. The Company or the Guarantor will promptly advise the Representatives (i) when the Registration Statement, if not effective at the Execution Time, and any amendment thereto, shall have become effective, (ii) when the Final Prospectus, and any supplement thereto, shall have been filed with the Commission pursuant to Rule 424(b), (iii) when, prior to termination of the offering of each series of Securities, any amendment to the Registration Statement shall have been filed or become effective, (iv) of any request by the Commission for any amendment to the Registration Statement or supplement to the Final Prospectus or for any additional information relating to the offering of the Securities, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (vi) of the receipt by the Company or the Guarantor of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. Each of the Company and the Guarantor will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Final Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary, in the opinion of counsel for you or counsel for the Company and the Guarantor, to amend the Registration Statement or supplement the Final Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company and the Guarantor promptly will prepare and file with the Commission, subject to the second sentence of paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or effect such compliance. (c) As soon as practicable, the Company and the Guarantor will make generally available to their respective security holders and to the Representatives an 13 earnings statement or statements of each of the Company and the Guarantor and their respective subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) If and to the extent specified in Schedule I, each of the Company and the Guarantor will use its best efforts to cause the Securities to be duly authorized for listing on the New York Stock Exchange and to be registered under the Exchange Act. (e) For a period of three years after the Closing Date, the Guarantor will furnish to you and, upon request, to each Underwriter, copies of all annual reports, quarterly reports and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission, and such other documents, reports and information as shall be furnished by the Guarantor to its public stockholders generally. (f) The proceeds of the offering of the Securities will be applied as set forth in the Final Prospectus. (g) The Company or the Guarantor will furnish to the Representatives and counsel for the Underwriters, without charge, copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, as many copies of any Preliminary Final Prospectus and the Final Prospectus and any supplement thereto as the Representatives may reasonably request. (h) The Company and the Guarantor will pay and bear all costs and expenses incident to the performance of their obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits), as originally filed and as amended, any preliminary prospectus supplements and the Basic Prospectus, the Preliminary Final Prospectus and the Final Prospectus and any amendments or supplements thereto, and the cost of furnishing copies thereof to the Underwriters, (ii) the preparation, printing and distribution of this Agreement, the Indenture, the Securities, any Delayed Delivery Contracts, the Blue Sky Survey and the Legal Investment Survey, (iii) the delivery of the Securities to the Underwriters, (iv) the fees and disbursements of the Company's and the Guarantor's counsel and the accountants required hereby to provide "comfort letters", (v) the qualification of the Securities under the applicable securities laws in accordance with Section 4(i) and any filing for review of the offering with the National Association of Securities Dealers, Inc., including filing fees and fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the Blue Sky Survey and the Legal Investment Survey, (vi) 14 any fees charged by rating agencies for rating the Securities, (vii) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee, in connection with the Indenture and the Securities, (viii) any expenses and listing fees in connection with the listing of the Securities, (ix) the cost and charges of any transfer agent or registrar and (x) the costs of qualifying the Securities with The Depositary Trust Company. (i) The Company and the Guarantor will arrange for the qualification of each series of Securities for distribution, offering and sale under the laws of such jurisdictions as the Representatives may designate, will maintain such qualifications in effect so long as required for the distribution of such series of Securities and will arrange for the determination of the legality of the Securities for purchase by institutional investors; provided, however, that neither the Company nor the Guarantor shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(i), (ii) file any general consent to service of process or (iii) subject itself to taxation in any such jurisdiction if it is not so subject. (j) Until the Closing Date or such other date as may be specified in Schedule I, none of the Company or the Guarantor (and if so specified in Schedule I, TBS or TWE) will, without the consent of the managing underwriter specified in Schedule I, offer, sell or contract to sell, or announce the offering of, any debt securities designed or intended to be traded or distributed in the public or private securities markets; provided, however, that the foregoing shall not prohibit (i) the Company, the Guarantor, TBS or TWE from issuing long-term debt as all or part of the consideration in any merger or acquisition and/or in connection with the settlement of any litigation, (ii) the Company, the Guarantor, TBS or TWE from filing with the Commission a "shelf" registration statement for the offering of securities under Rule 415 of the Act (or any similar rule that may be adopted by the Commission) or amending any existing shelf registration statement provided that such securities are not issued until the business day following the Closing Date or such other date as may be specified in Schedule I or (iii) any of the foregoing from issuing commercial paper. 15 5. Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Underwriters' Securities shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company and the Guarantor contained herein as of the Execution Time and the Closing Date, to the accuracy in all material respects of the statements of the Company and the Guarantor made in any certificates pursuant to the provisions hereof, to the performance by each of the Company and the Guarantor of its obligations hereunder, to the due execution and delivery of the Indenture, to the absence of any event or condition which would give you the right to terminate this Agreement and to the following additional conditions: (a) If the Registration Statement has not become effective prior to the Execution Time, unless the Representatives agree in writing to a later time, the Registration Statement will become effective not later than (i) 6:00 PM New York City time, on the date of determination of the public offering price, if such determination occurred at or prior to 3:00 PM New York City time on such date or (ii) 12:00 Noon on the business day following the day on which the public offering price was determined, if such determination occurred after 3:00 PM New York City time on such date; if filing of the Final Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Final Prospectus, and any such supplement, shall have been filed in the manner and within the time period required by Rule 424(b); and at the Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Act or proceedings therefor initiated or threatened by the Commission. (b) At the Closing Date, the Company shall have furnished to you the opinion of Peter R. Haje, General Counsel to the Company and the Guarantor, dated the Closing Date, substantially in the form of Exhibit A hereto. (c) At the Closing Date, the Company shall have furnished to you the opinion and statement of Cravath, Swaine & Moore, counsel to the Company and the Guarantor, each dated the Closing Date, substantially in the form of Exhibit B and Exhibit C hereto, respectively. (d) The Representatives shall have received from Shearman & Sterling, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Securities, the Indenture, any Delayed Delivery Contracts, the Registration Statement, the Final Prospectus (together with any supplement thereto) and other related matters as the Representatives may reasonably require, and the Company and the Guarantor shall have furnished to such counsel 16 such documents as they request for the purpose of enabling them to pass upon such matters. (e) (1) The Company shall have furnished to the Representatives a certificate of the Company, signed by any two officers who are an Executive or Senior Vice President of the Company, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Final Prospectus, any supplement to the Final Prospectus and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Final Prospectus (exclusive of any supplement thereto), there has been no material adverse change in the condition (financial or otherwise), earnings, or business prospects of the Company and its subsidiaries, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto). (2) The Guarantor shall have furnished to the Representatives a certificate of the Guarantor, signed by any two officers who are an Executive or Senior Vice President of the Guarantor, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Final Prospectus, any supplement to the Final Prospectus and this Agreement and that: (i) the representations and warranties of the Guarantor and the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and each of the Guarantor and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; 17 (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Guarantor's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Final Prospectus (exclusive of any supplement thereto), there has been no material adverse change in the condition (financial or otherwise), earnings, or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto). (f) At the Closing Date, and, if specified in Schedule I, at the Execution Time, Ernst & Young LLP shall have furnished to the Representatives a letter or letters, dated respectively as of the Closing Date and the Execution Time, in form and substance satisfactory to the Representatives, confirming that they are independent auditors with respect to the Company, the Guarantor and TWE within the meaning of the Act and the Exchange Act and the respective applicable published rules and regulations thereunder and stating in effect that: (i) in their opinion the audited financial statements and financial statement schedules of the Company, the Guarantor and TWE included or incorporated in the Registration Statement and the Final Prospectus comply in form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations; (ii) on the basis of a reading of the latest unaudited financial statements (including the notes thereto) made available by the Company, the Guarantor and TWE and their respective consolidated subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and executive, finance and audit committees of the Company, the Guarantor and TWE and their respective consolidated subsidiaries; and inquiries of certain officials of the Company, the Guarantor and TWE who have responsibility for financial and accounting matters of the Company, the Guarantor and TWE and their respective consolidated subsidiaries as to transactions and events subsequent to the date of the most recent audited financial statements in or incorporated in the Final Prospectus, and such other inquiries and procedures 18 as may be specified in such letter, nothing came to their attention which caused them to believe that: (1) any of such unaudited financial statements included or incorporated in the Registration Statement and the Final Prospectus do not comply in form in all material respects with applicable accounting requirements of the Act and the Exchange Act and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act; or said unaudited financial statements are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included or incorporated in the Registration Statement and the Final Prospectus; or (2) with respect to the period subsequent to the date of the most recent unaudited financial statements in or incorporated in the Registration Statement and the Final Prospectus, there were any increases, at a specified date not more than five business days prior to the date of the letter, in the long-term debt of the Company, the Guarantor, TWE and certain related unconsolidated subsidiaries (together with TWE, the "Entertainment Group") and their respective consolidated subsidiaries or any decreases in stockholders' equity or the consolidated capital stock of the Company, the Guarantor, TWE and the Entertainment Group as compared with the amounts shown on the most recent consolidated balance sheet included or incorporated in the Registration Statement and the Final Prospectus for such entities, or for the period from the date of the most recent unaudited financial statements included or incorporated in the Registration Statement and the Final Prospectus for such entities to such specified date there were any decreases, as compared with the corresponding period in the preceding year, in revenues, income before income taxes (or any increase in the loss before income taxes) or net income (or any increase in net loss), except in all instances for decreases or increases disclosed in the Final Prospectus; (iii) they are unable to and do not express any opinion on the pro forma adjustments to the financial statements included or incorporated by reference in the Registration Statement and the Final Prospectus or on the pro forma adjustments applied to the historical amounts included or incorporated by reference in the Registration Statement and the Final Prospectus; however, for purposes of such letter they have: 19 (1) read the pro forma adjustments to such financial statements; (2) made inquiries of certain officials of the Company and the Guarantor who have responsibility for financial and accounting matters about the basis for their determination of the pro forma adjustments to such financial statements and whether such pro forma adjustments comply as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; and (3) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts included or incorporated by reference in the Registration Statement and the Final Prospectus; and on the basis of such procedures, and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that the pro forma adjustments to the financial statements included or incorporated by reference in the Registration Statement and the Final Prospectus do not comply as to form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X and that such pro forma adjustments have not been properly applied to the historical amounts in the compilation of such financial statements; and (iv) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company and its subsidiaries) set forth in the Registration Statement and the Final Prospectus and in Exhibit 12 to the Registration Statement agrees with the accounting records of the Company and its subsidiaries or the Guarantor and its subsidiaries, as the case may be, excluding any questions of legal interpretation. (g) At the Closing Date and, if and to the extent specified in Schedule I, at the Execution Time, each other firm of independent accountants who audited or reviewed financial statements included or incorporated by reference in the Registration Statement shall have furnished to the Representatives a letter or letters, dated respectively as of the Closing Date and the Execution Time, in form and substance satisfactory to the Representatives, confirming that they are independent auditors with respect to the financial statements audited or reviewed by them within the meaning of 20 the Act and the Exchange Act and the respective applicable published rules and regulations thereunder and to the same effect as the letter or letters of Ernst & Young LLP as described in Section 5(f)(i) and 5(f)(ii)(1) hereto. (h) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Final Prospectus (exclusive of any supplement thereto), there shall not have been (i) any decrease or increase specified in the letter or letters referred to in paragraph (f) of this Section 5 or (ii) any change, or any development involving a prospective change, in or affecting the business (including the results of operations or management) or properties of the Guarantor and its subsidiaries or the Company and its subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, is, in the reasonable judgment of the Representatives, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of any series of Securities as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Final Prospectus (exclusive of any supplement thereto). (i) Subsequent to the Execution Time, (i) there shall not have been any downgrade in the credit ratings of any of the Company's or the Guarantor's debt securities by Moody's Investor Service, Inc. or Standard & Poor's Ratings Group, and (ii) neither the Company nor the Guarantor shall have been placed under special surveillance, with negative implications, by Moody's Investor Service, Inc. or Standard & Poor's Ratings Group. (j) Prior to the Closing Date, the Company and the Guarantor shall have furnished to the Representatives such further information, certificates and documents as the Representatives may reasonably request. (k) The Company shall have accepted the Delayed Delivery Contracts in any case where sales of Contract Securities arranged by the Underwriters have been approved by the Company. If any of the conditions specified in this Section 5 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives and such cancellation shall be without liability of any party to any other party, except to the extent provided in Sections 4 and 6. Notice of such cancellation shall be given to the Company or the Guarantor in writing or by telephone or telegraph confirmed in writing. 21 6. Reimbursement of Underwriters' Expenses. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 5 hereof is not satisfied or because of any refusal, inability or failure on the part of the Company or the Guarantor to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Underwriters, the Company and the Guarantor will reimburse the Underwriters severally upon demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. 7. Indemnification and Contribution. (a) Each of the Company and the Guarantor agrees to indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person who controls any Underwriter within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the Securities as originally filed or in any amendment thereof, or in the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that neither the Company nor the Guarantor will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company or the Guarantor by or on behalf of any Underwriter through the Representatives specifically for inclusion therein or (ii) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the Trustee. This indemnity agreement will be in addition to any liability which the Company or the Guarantor may otherwise have. (b) Each Underwriter severally agrees to indemnify and hold harmless each of the Company and the Guarantor, each of their respective directors, each of their respective officers who signs the Registration Statement, and each person who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Guarantor to each Underwriter, but only with reference to written information relating to such Underwriter furnished to the 22 Company or the Guarantor by or on behalf of such Underwriter through the Representatives specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. Each of the Company and the Guarantor acknowledges that the statements set forth in the last paragraph of the cover page, the first and third paragraphs under the heading "Underwriters" and, if Schedule I hereto provides for sales of Securities pursuant to delayed delivery arrangements, in the last sentence under the heading "Delayed Delivery Arrangements" in any Preliminary Final Prospectus or the Final Prospectus constitute the only information furnished in writing by or on behalf of the several Underwriters for inclusion in the documents referred to in the foregoing indemnity, and you, as the Representatives, confirm that such statements are correct. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party (it being understood, however, that in connection with such action, the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, representing the indemnified parties who are parties to such action or actions), (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a 23 reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company, the Guarantor and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Company, the Guarantor and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor, on one hand, and by the Underwriters, on the other hand, from the offering of the Securities; provided, however, that in no case shall any Underwriter (except as may be provided in any agreement among underwriters relating to the offering of the Securities) be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such Underwriter hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company, the Guarantor and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantor and of the Underwriters in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company and the Guarantor shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses), and benefits received by the Underwriters shall be deemed to be equal to the total underwriting discounts and commissions, in each case as set forth on the cover page of the Final Prospectus. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or the Guarantor or the Underwriters. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls an Underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as such Underwriter, and each person 24 who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, each officer of the Company or the Guarantor who shall have signed the Registration Statement and each director of the Company or the Guarantor shall have the same rights to contribution as the Company and the Guarantor, subject in each case to the applicable terms and conditions of this paragraph (d). 8. Default by an Underwriter. If any one or more Underwriters shall fail on the Closing Date to purchase and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions for each of the Debt Securities which such Underwriter failed to purchase which the amount of the Debt Securities set forth opposite their names in Schedule II hereto bears to the aggregate amount of such Debt Securities set forth opposite the names of all the remaining Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities set forth in Schedule II hereto, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting Underwriters do not purchase all of the Securities, this Agreement will terminate without liability to any nondefaulting Underwriter or the Company and the Guarantor. In the event of a default by any Underwriter as set forth in this Section 8, the Closing Date shall be postponed for such period, not exceeding seven days, as the Representatives shall determine in order that the required changes in the Registration Statement and the Final Prospectus or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Company, the Guarantor and any nondefaulting Underwriter for damages occasioned by its default hereunder. 9. Termination. This Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Company or the Guarantor prior to delivery of and payment for the Securities, if prior to such time (i) trading in the Guarantor's common stock or any of the Company's or the Guarantor's debt securities shall have been suspended by the Commission or the New York Stock Exchange or the Pacific Stock Exchange or trading in securities generally on either of such Exchanges shall have been suspended or limited or minimum or maximum prices shall have been established on either of such Exchanges, or maximum ranges for prices for securities have been required, by such Exchanges or by order of the Commission or any other governmental authority, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any new outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets of the United States is such as to make it, in the 25 judgment of the Representatives, impracticable or inadvisable to proceed with the offering or delivery of a series of Securities as contemplated by the Final Prospectus (exclusive of any supplement thereto). If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party, except to the extent provided in Sections 4 and 6. 10. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or the Guarantor, or any of their respective officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or the Guarantor or any of the officers, directors or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 6 and 7 hereof shall survive the termination or cancellation of this Agreement. 11. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Representatives, will be mailed, delivered or telegraphed and confirmed to them, at the address specified in Schedule I hereto; or, if sent to the Company or the Guarantor, will be mailed, delivered or telegraphed and confirmed to it care of the Guarantor at 75 Rockefeller Plaza, New York, New York 10019, attention of General Counsel. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. 13. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York. 14. Business Day. For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange is open for trading. 15. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the several Underwriters. Very truly yours, TIME WARNER INC. By__________________________ Name: Title: TIME WARNER COMPANIES, INC. By__________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date specified in Schedule I hereto. [_________] By: [________] By______________________________ Name: Title: For themselves and the other several Underwriters, if any, named in Schedule II to the foregoing Agreement. SCHEDULE I Underwriting Agreement: Registration Statement: Representatives: Title, Purchase Price and Description of Securities: 1. _______________________: Title: Principal amount: Interest rate: Interest payment dates: Date of maturity: Purchase price (include accrued interest or amortization, if any): Initial public offering price: Sinking fund provisions: Redemption provisions: Other provisions: Closing Date, Time and Location: Type of funds payable at Closing: Immediately available funds Type of Offering: Delayed Offering Delayed Delivery Arrangements: Not Applicable Listing requirements: Comfort letter at Execution Time: SCHEDULE II [Name of Securities]: Principal Amount to Underwriters be Purchased Total...................................... EXHIBIT A FORM OF OPINION OF PETER R. HAJE, ESQ. (i) each of the Company and the Guarantor is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority under such laws to own its properties and conduct its business as described in the Final Prospectus and each of the Company and the Guarantor is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise; (ii) each of the Company's and the Guarantor's significant subsidiaries, as such term is defined in Rule 1-02(w) of Regulation S-X under the Act, is validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with full power and authority under such laws to own its properties and conduct its business as described in the Basic Prospectus, and any amendment or supplement thereto, and to enter into and perform its obligations under this Agreement; and each of the Company and the Guarantor is duly qualified to transact business as a foreign corporation or partnership and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise; (iii) each of the Company's and the Guarantor's authorized equity capitalization is as set forth in the Final Prospectus; (iv) to the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving either the Company or the Guarantor or any of their respective subsidiaries of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Final Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit, which is not described or filed as required; A-2 (v) no authorization, approval, consent, order or license of any government, governmental instrumentality, agency or body or court (other than under the Act and the securities or blue sky laws of various jurisdictions) is required for the authorization, issuance, sale and delivery of the Securities by the Company and the Guarantor, and the consummation by the Company and the Guarantor of the transactions contemplated by the Underwriting Agreement; (vi) the Indenture and the Underwriting Agreement have been duly authorized, executed and delivered by each of the Company and the Guarantor; (vii) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by the Underwriting Agreement, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters and such other approvals (specified in such opinion) as have been obtained; (viii) the execution and delivery of the Underwriting Agreement and the Indenture by the Company, the issuance, sale and delivery of the Debt Securities and the consummation by the Company of the transactions contemplated in the Underwriting Agreement, the Indenture and the Registration Statement and compliance by the Company with the terms of the Underwriting Agreement do not and will not result in any violation of the Restated Certificate of Incorporation, as amended, or By-laws, as amended, of the Company, and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company under (i) the TWE Credit Agreement or any indenture, mortgage or loan agreement, or any other agreement or instrument known to such counsel, to which the Company is a party or by which it may be bound or to which any of its properties may be subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise), (ii) any existing applicable law, rule or regulation (except for such conflicts, breaches, liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise, and other than the securities or blue sky laws of various jurisdictions), or (iii) any judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company or any of its properties; and A-3 (ix) the execution and delivery of the Underwriting Agreement and the Indenture by the Guarantor, the issuance, sale and delivery of the Guarantee and the consummation by the Guarantor of the transactions contemplated in the Underwriting Agreement, the Indenture and the Registration Statement and compliance by the Guarantor with the terms of the Underwriting Agreement or any Delayed Delivery Contracts do not and will not result in any violation of the Certificate of Incorporation, as amended, or By-laws, as amended, of the Guarantor, and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Guarantor under (i) the TWC Credit Agreement or any indenture, mortgage or loan agreement, or any other agreement or instrument, to which the Guarantor is a party or by which it may be bound or to which any of its properties may be subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise), (ii) any existing applicable law, rule or regulation (except for such conflicts, breaches, liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of either the Company and its subsidiaries or the Guarantor and its subsidiaries, in each case considered as one enterprise, and other than the securities or blue sky laws of various jurisdictions), or (iii) any judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Guarantor or any of its properties. (x) the documents incorporated by reference in the Final Prospectus (except for the financial statements and other financial or statistical data included therein or omitted therefrom, as to which such counsel need express no opinion), as of the dates they were filed with the Commission, complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended. In addition, such counsel shall also state as follows: As General Counsel, I have reviewed and participated in the preparation of the Registration Statement and the Final Prospectus, including the documents incorporated by reference therein. In examining the Registration Statement and Final Prospectus, I have necessarily assumed the correctness and completeness of the statements made or included therein by the Company and the Guarantor and take no responsibility therefor. However, in the course of the preparation by the Company and the Guarantor of the Registration Statement and the Final Prospectus, I have participated in conferences with certain officers of, and accountants for, the Company and the Guarantor with respect thereto, and my examination of the Registration Statement and Final Prospectus and my discussions in the above-mentioned conferences did not disclose any A-4 information which gave me reason to believe that the Registration Statement (except for the financial statements and other financial or statistical data included therein or omitted therefrom, as to which I express no opinion) at the time it became effective included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, not misleading or that the Final Prospectus (except as aforesaid), at its issue date or on the date of this opinion, included or includes any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the United States, the State of New York and the General Corporation Law of the State of Delaware, to the extent such counsel deems proper and specified in such opinion, upon the opinion of other counsel of good standing whom such counsel believes to be reliable and who are satisfactory to counsel for the Underwriters; and (B) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company or the Guarantor and public officials. EXHIBIT B FORM OF OPINION OF CRAVATH, SWAINE & MOORE (i) each of the Company and the Guarantor is validly existing as a corporation in good standing under the laws of the State of Delaware, with full corporate power and authority under such laws to own its properties and conduct its business as described in the Final Prospectus; (ii) the Securities conform in all material respects to the description thereof contained in the Prospectus; (iii) the Indenture has been duly authorized, executed and delivered by the Company, has been duly qualified under the Trust Indenture Act, and, assuming due authorization, execution and delivery by the Trustee, constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); and the Debt Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; (iv) the Indenture has been duly authorized, executed and delivered by the Guarantor and constitutes a legal, valid and binding instrument enforceable against the Guarantor in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and subject as to enforceability to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); (v) the Registration Statement has become effective under the Act; any required filing of the Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened; B-2 (vi) the Underwriting Agreement has been duly authorized, executed and delivered by the Company and the Guarantor; (vii) the statements made in the Prospectus under "Description of the Debt Securities and the Guarantee", to the extent that they constitute matters of law or legal conclusions, have been reviewed by us and fairly present the information discussed therein in all material respects. We are attorneys admitted to practice only in the State of New York and, accordingly, do not express any opinion as to any laws other than the laws of the State of New York, the Federal laws of the United States and the General Corporation Law of the State of Delaware. EXHIBIT C FORM OF SIDE LETTER OF CRAVATH, SWAINE & MOORE Although we have made certain inquiries and investigations in connection with the preparation of the Registration Statement and the Prospectus, the limitations inherent in the role of outside counsel are such that we cannot and do not assume responsibility for the accuracy or completeness of the statements made in the Registration Statement and Prospectus, except insofar as such statements relate to us and except to the extent set forth in paragraph (vii) and in the first sentence of paragraph (ii) of our opinion to you dated the date hereof. Subject to the foregoing, we hereby advise you that our work in connection with this matter did not disclose any information that gave us reason to believe that the Registration Statement and the Prospectus (except the financial statements and other information of an accounting, statistical or financial nature included therein, and the Statement of Eligibility (Form T-1) included as an exhibit to the Registration Statement, as to which we do not express any view) were not appropriately responsive in all material respects to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Furthermore, subject to the foregoing, we hereby advise you that our work in connection with this matter did not disclose any information that gave us reason to believe that the Registration Statement, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at its issue date and at the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to made the statements therein, in the light of the circumstances under which they were made, not misleading (in each case except for the financial statements and other information of an accounting, statistical or financial nature included therein, as to which we do not express any view). EX-5 3 EXHIBIT 5 EXHIBIT 5 [Letterhead of] CRAVATH, SWAINE & MOORE August 4, 1997 Time Warner Inc. Time Warner Companies, Inc. Ladies and Gentlemen: We have acted as counsel for Time Warner Companies, Inc., a Delaware corporation (the "Issuer"), and Time Warner Inc., a Delaware corporation (the "Guarantor"), in connection with the Registration Statement on Form S-3 (the "Registration Statement") being filed by the Issuer and the Guarantor with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to (i) the debt securities of the Issuer (the "Debt Securities") and (ii) the guarantee of the Debt Securities by the Guarantor (the "Guarantee"). This Registration Statement also constitutes a Post-Effective Amendment to the Issuer's Registration Statements No. 33-50237 filed with the Commission on June 5, 1995 and No. 333-17171 filed with the Commission on December 3, 1996. The Debt Securities will be issued under an Indenture dated as of January 15, 1993, as amended by one or more supplements thereto (such Indenture, as so supplemented being called the "Indenture"), between the Issuer and The Chase Manhattan Bank (formerly known as Chemical Bank) (the "Trustee"), as Trustee, filed as Exhibit 4.1 to the Issuer's Registration Statement No. 33-57030 with the Commission on January 14, 1993 and incorporated by reference in the Registration Statement. In connection with the foregoing, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion, including (a) the Restated 2 Certificate of Incorporation, as amended, of each of the Issuer and the Guarantor, (b) the By-laws, as amended, of each of the Issuer and the Guarantor, (c) the Indenture, (d) the Second Supplemental Indenture dated as of October 10, 1996, among the Issuer, the Guarantor and the Trustee (the "Second Supplemental Indenture"), filed as Exhibit 4.1 to the Issuer's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated by reference in the Registration Statement, (e) the Third Supplemental Indenture dated as of December 31, 1996, among the Issuer, the Guarantor and the Trustee, filed as Exhibit 4.10 to the Guarantor's Annual Report on Form 10-K for the year ended December 31, 1996, (f) the form of the Debt Securities, (g) the resolutions of the Board of Directors of each of the Issuer and the Guarantor authorizing the registration of the Debt Securities and the Guarantee and (h) certain resolutions adopted by the Board of Directors of each of the Issuer and the Guarantor. Based upon the foregoing and subject to the qualifications hereinafter set forth, we are of opinion that: 1. The Issuer is a corporation validly existing and in good standing under the laws of the State of Delaware. 2. The Guarantor is a corporation validly existing and in good standing under the laws of the State of Delaware. 3. The Second Supplemental Indenture containing the Guarantee has been duly authorized, executed, authenticated or countersigned and delivered in accordance with the provisions of the Indenture and constitutes legal, valid and binding obligation of the Guarantor, entitled to the benefits of the Indenture and enforceable against the the Guarantor in accordance with its terms. The opinion set forth above in paragraph 3 is qualified to the extent we have assumed the due execution and delivery of the Indenture and the Second Supplemental Indenture by the Trustee and by the Issuer and the Guarantor (pursuant, in the case of the Trustee, to appropriate corporate authority). Our opinion set forth above in paragraph 3 is subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect. The enforceability of the Issuer's and the Guarantor's obligations is also subject to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether such enforceability is considered in a proceeding in equity or at law. We are aware that we are referred to under the heading "Legal Opinions" in the prospectus forming a part of the Registration Statement, and we hereby consent to such use of our name therein and the filing of this opinion as 3 Exhibit 5 to the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder. Very truly yours, /s/ Cravath, Swaine & Moore Time Warner Inc. Time Warner Companies, Inc. 75 Rockefeller Plaza New York, NY 10019 349A EX-12 4 EXHIBIT 12 EXHIBIT 12 TIME WARNER RATIO OF EARNINGS TO FIXED CHARGES (IN MILLIONS, EXCEPT RATIOS)
HISTORICAL (B) ------------------ PRO FORMA (A) ----------------------------- THREE MONTHS ENDED YEAR ENDED MARCH 31, DECEMBER 31, 1996 ------------------ ----------------------------- 1997 GUARANTOR ------------------ --------- ISSUER ------------------ ISSUER ----------------- Earnings: Net income (loss) before income taxes and extraordinary items..... $ 23 $ (142) $228 Interest expense.......... 870 1,079 237 Amortization of capitalized interest.... 2 19 -- Portion of rents representative of an interest factor......... 55 86 14 Preferred stock dividend requirements of majority-owned subsidiaries............ 72 72 18 Adjustment for partially owned subsidiaries and 50% owned companies..... 801 801 255 Undistributed losses of less than 50% owned companies............... 50 46 5 ------ --------- ----- Total earnings........ $ 1,873 $ 1,961 $757 ------ --------- ----- ------ --------- ----- Fixed Charges: Interest expense.......... $ 870 $ 1,079 $237 Capitalized interest...... 1 23 -- Portion of rents representative of an interest factor......... 55 86 14 Preferred stock dividend requirements of majority-owned subsidiaries............ 72 72 18 Adjustment for partially owned subsidiaries and 50% owned companies..... 607 607 150 ------ --------- ----- Total fixed charges... $ 1,605 $ 1,867 $419 ------ --------- ----- ------ --------- ----- Ratio of earnings to fixed charges (deficiency in the coverage of fixed charges by earnings before fixed charges).................... 1.2x 1.1x 1.8x ------ --------- ----- ------ --------- ----- YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1996 1995 1994 1993 1992 1996 ------------------ ------ ------ ------ ------ ------ GUARANTOR ISSUER GUARANTOR ISSUER ISSUER ISSUER ISSUER ------ ISSUER ------ --------- ------ ------ ------ ------ ------ Earnings: Net income (loss) before income taxes and extraordinary items.....$199 $(88) $ (15) $ 4 $ 2 $ 89 $ 81 $ 320 Interest expense.......... 278 247 908 968 877 769 698 729 Amortization of capitalized interest.... 5 -- 2 6 2 2 -- 19 Portion of rents representative of an interest factor......... 21 14 55 63 57 52 54 85 Preferred stock dividend requirements of majority-owned subsidiaries............ 18 18 72 72 11 -- -- -- Adjustment for partially owned subsidiaries and 50% owned companies..... 255 148 801 801 691 665 663 97 Undistributed losses of less than 50% owned companies............... 7 18 50 52 117 82 47 56 ------ ------ ------ --------- ------ ------ ------ ------ Total earnings........$783 $357 $1,873 $ 1,966 $1,757 $1,659 $1,543 $1,306 ------ ------ ------ --------- ------ ------ ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ Fixed Charges: Interest expense..........$278 $247 $ 908 $ 968 $ 877 $ 769 $ 698 $ 729 Capitalized interest...... 6 1 1 7 4 2 -- 15 Portion of rents representative of an interest factor......... 21 14 55 63 57 52 54 85 Preferred stock dividend requirements of majority-owned subsidiaries............ 18 18 72 72 11 -- -- -- Adjustment for partially owned subsidiaries and 50% owned companies..... 150 153 607 607 697 668 664 81 ------ ------ ------ --------- ------ ------ ------ ------ Total fixed charges...$473 $433 $1,643 $ 1,717 $1,646 $1,491 $1,416 $ 910 ------ ------ ------ --------- ------ ------ ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ Ratio of earnings to fixed charges (deficiency in the coverage of fixed charges by earnings before fixed charges).................... 1.7 x $(76) 1.1x 1.1x 1.1x 1.1x 1.1x 1.4x ------ ------ ------ --------- ------ ------ ------ ------ ------ ------ ------ --------- ------ ------ ------ ------
- ------------ (a) The pro forma ratio of earnings to fixed charges for each of the Issuer and the Guarantor for the year ended December 31, 1996 give effect to (i) the Preferred Stock Refinancing, as defined elsewhere herein, and certain other debt refinancings and (ii) with respect to the Guarantor only, the TBS Transaction, as if such transactions had occurred at the beginning of 1996. (b) In connection with the TBS Transaction that occurred on October 10, 1996, the Guarantor, formerly a wholly owned subsidiary of the Issuer, acquired each outstanding share of capital stock of the Issuer (other than shares held directly or indirectly by the Issuer) and became the parent of the Issuer. Accordingly, the historical ratios of earnings to fixed charges (or coverage deficiencies) of the Issuer and the Guarantor are the same for all periods prior to such date because the Issuer is treated for financial reporting purposes as the predecessor of the Guarantor. EX-23 5 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the references to our firm under the caption 'Experts' in the Registration Statement on Form S-3 and related Prospectus of Time Warner Inc. (the 'Guarantor') and Time Warner Companies, Inc. (the 'Issuer') for the registration of $449,418,500 of Debt Securities of the Issuer unconditionally guaranteed by the Guarantor, and to the incorporation by reference therein of (i) our reports dated February 11, 1997, with respect to the consolidated financial statements and schedules of the Guarantor and Time Warner Entertainment Company, L.P., and our report dated March 3, 1995 with respect to the combined financial statements of the Time Warner Service Partnerships, incorporated by reference from the Guarantor's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by the Guarantor's Forms 10-K/A, dated March 27, 1997 and June 26, 1997, and (ii) our report dated March 8, 1996, with respect to the consolidated financial statements and schedule of Cablevision Industries Corporation and Subsidiaries, from the Guarantor's Current Report on Form 8-K dated March 21, 1997, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP New York, New York August 4, 1997 EX-23 6 EXHIBIT 23.3 EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports and to all references to our Firm included in or made a part of this Registration Statement on Form S-3 for the registration under the Securities Act of 1933, as amended, of Debt Securities of Time Warner Companies, Inc. unconditionally guaranteed by Time Warner Inc. ARTHUR ANDERSEN LLP Stamford, Connecticut August 4, 1997 EX-23 7 EXHIBIT 23.4 EXHIBIT 23.4 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of Time Warner Inc. and Time Warner Companies, Inc. related to the registration of Debt Securities of Time Warner Companies, Inc. unconditionally guaranteed by Time Warner Inc. of our report on the Paragon Communications financial statements and schedule dated January 19, 1995, except as to Note 6, which is as of January 27, 1995, which is incorporated by reference in the Time Warner Inc. Annual Report on Form 10-K for the year ended December 31, 1996. We also consent to the reference to us under the heading 'Experts' in such Registration Statement. PRICE WATERHOUSE LLP Denver, Colorado August 4, 1997 EX-23 8 EXHIBIT 23.5 EXHIBIT 23.5 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of Time Warner Inc. and Time Warner Companies, Inc. of our report dated February 5, 1996, which appears on page 53 of Turner Broadcasting System, Inc.'s Annual Report to Shareholders, which is incorporated by reference in Turner Broadcasting System, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, which is incorporated by reference from Time Warner Inc.'s Current Report on Form 8-K dated March 21, 1997. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 43 of such Annual Report on Form 10-K. We also consent to the reference to us under the heading 'Experts' in such Prospectus. PRICE WATERHOUSE LLP Atlanta, Georgia August 4, 1997 EX-25 9 EXHIBIT 25 ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------- TIME WARNER COMPANIES, INC. (Exact name of obligor as specified in its charter) DELAWARE 13-1388520 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 75 ROCKEFELLER PLAZA NEW YORK, NEW YORK 10019 (Address of principal executive offices) (Zip Code) TIME WARNER INC. (Exact name of obligor as specified in its charter) DELAWARE 13-3527249 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 75 ROCKEFELLER PLAZA NEW YORK, NEW YORK 10019 (Address of principal executive offices) (Zip Code) ------------------------------------------- DEBT SECURITIES AND GUARANTEES OF DEBT SECURITIES (Title of the indenture securities) ----------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. (On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 1st day of AUGUST, 1997. THE CHASE MANHATTAN BANK By /s/ R. Lorenzen ______________________________________ R. Lorenzen Senior Trust Officer - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1997, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................................................ $ 11,721 Interest-bearing balances ........................................ 3,473 Securities: Held to maturity securities .......................................... 2,965 Available for sale securities ........................................ 35,903 Federal Funds sold and securities purchased under agreements to resell ............................................. 24,025 Loans and lease financing receivables: Loans and leases, net of unearned income $123,957 Less: Allowance for loan and lease losses 2,853 Less: Allocated transfer risk reserve ... 13 -------- Loans and leases, net of unearned income, allowance, and reserve ........................................... 121,091 Trading Assets ....................................................... 54,340 Premises and fixed assets (including capitalized leases) .......................................................... 2,875 Other real estate owned .............................................. 302 Investments in unconsolidated subsidiaries and associated companies ............................................. 139 Customers' liability to this bank on acceptances outstanding ...................................................... 2,270 Intangible assets .................................................... 1,535 Other assets ......................................................... 10,283 ------ TOTAL ASSETS ......................................................... $270,922 ========
- 4 - LIABILITIES Deposits In domestic offices .............................................. $ 84,776 Noninterest-bearing ...................................... $32,492 Interest-bearing .......................................... 52,284 ------ In foreign offices, Edge and Agreement subsidiaries, and IBF's ........................................................ 69,171 Noninterest-bearing ........................................... $4,181 Interest-bearing ...........................................64,990 Federal funds purchased and securities sold under agree- ments to repurchase .................................................. 32,885 Demand notes issued to the U.S. Treasury ............................. 1,000 Trading liabilities .................................................. 42,538 Other Borrowed money (includes mortgage indebtedness and obligations under calitalized leases): With a remaining maturity of one year or less .................... 4,431 With a remaining maturity of more than one year .................. 466 Bank's liability on acceptances executed and outstanding ............. 2,270 Subordinated notes and debentures .................................... 5,911 Other liabilities .................................................... 11,575 TOTAL LIABILITIES .................................................... 255,023 ------- EQUITY CAPITAL Perpetual Preferred stock and related surplus 0 Common stock ......................................................... 1,211 Surplus (exclude all surplus related to preferred stock) ............ 10,283 Undivided profits and capital reserves ............................... 4,941 Net unrealized holding gains (Losses) on available-for-sale securities ..................................... (552) Cumulative foreign currency translation adjustments .................. 16 TOTAL EQUITY CAPITAL ................................................. 15,899 ------- TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL ......................................... $270,922 ========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE )DIRECTORS WILLIAM B. HARRISON, JR.) - 5 - -----END PRIVACY-ENHANCED MESSAGE-----