-----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, UjDp9ELiX9lPTB7YrSQ4K+CSvCMPBySr9Gpm9hFd14RDQ/cfIWn3Ich0zBp4jWHS cESd+g2B2b2uSayGlC6CAQ== 0000950157-96-000242.txt : 19960910 0000950157-96-000242.hdr.sgml : 19960910 ACCESSION NUMBER: 0000950157-96-000242 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19960905 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960906 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08637 FILM NUMBER: 96626353 BUSINESS ADDRESS: STREET 1: TIME & LIFE BLDG ROCKFELLER CENTER STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124848000 FORMER COMPANY: FORMER CONFORMED NAME: TIME INC /DE/ DATE OF NAME CHANGE: 19890801 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 6, 1996 TIME WARNER INC. (Exact name of registrant as specified in its charter) Delaware 1-8637 13-1388520 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 75 Rockefeller Plaza, New York, NY 10019 (Address of principal executive offices) (zip code) (212) 484-8000 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Item 5. Other Events. Amendments to TBS Transaction. As previously reported, Time Warner Inc. ("Time Warner"), TW Inc., a Delaware corporation and currently a wholly owned subsidiary of Time Warner ("New Time Warner"), Time Warner Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of New Time Warner ("Delaware Sub"), TW Acquisition Corp., a Georgia corporation and a wholly owned subsidiary of New Time Warner ("Georgia Sub"), and Turner Broadcasting System, Inc. ("TBS") have entered into an Amended and Restated Agreement and Plan of Merger (the "Merger Agreement") dated as of September 22, 1995, pursuant to which (a) Delaware Sub will be merged (the "Time Warner Merger") into Time Warner, (b) each outstanding share of Common Stock, par value $1.00 per share, of Time Warner, other than shares held directly or indirectly by Time Warner, will be converted into one share of Common Stock, par value $.01 per share, of New Time Warner ("New Time Warner Common Stock"), (c) each outstanding share of each series of preferred stock of Time Warner, other than shares held directly or indirectly by Time Warner and shares with respect to which appraisal rights are properly exercised, will be converted into one share of a substantially identical series of preferred stock of New Time Warner, (d) Georgia Sub will be merged (the "TBS Merger", and together with the Time Warner Merger, the "Holding Company Transaction") into TBS, (e) each outstanding share of Class A Common Stock, par value $.0625 per share, of TBS ("TBS Class A Common Stock") and Class B Common Stock, par value $.0625 per share, of TBS ("TBS Class B Common Stock"), other than shares held directly or indirectly by Time Warner or New Time Warner or in the treasury of TBS and shares with respect to which dissenters' rights are properly exercised, will be converted into 0.75 of a share of New Time Warner Common Stock, (f) each outstanding share of Class C Preferred Stock, par value $.125 per share, of TBS ("TBS Class C Preferred Stock"), other than shares held directly or indirectly by Time Warner or New Time Warner or in the treasury of TBS and shares with respect to which dissenters' rights are properly exercised, will be converted into 4.80 shares of New Time Warner Common Stock, (g) each of Time Warner and TBS will become a wholly owned subsidiary of New Time Warner and (h) New Time Warner will be renamed "Time Warner Inc." A copy of the Merger Agreement is attached as Exhibit 2(a) to Time Warner's Current Report on Form 8-K dated December 1, 1995, and incorporated herein by reference. The Holding Company Transaction was subject to extensive scrutiny by the staff of the Federal Trade Commission (the "FTC") and, in order to eliminate concerns raised by the staff of the FTC regarding possible competitive effects of the Holding Company Transaction, Time Warner, TBS, Tele- Communications, Inc. ("TCI"), and Liberty Media Corporation ("LMC"), a wholly owned subsidiary of TCI, have executed the Agreement Containing Consent Order (together with the Interim Agreement contemplated thereby, the "FTC Consent Decree") dated August 14, 1996, and have submitted the FTC Consent Decree to the commissioners of the FTC. The FTC commissioners have not yet initially accepted the FTC Consent Decree, which requires that certain changes be made to the terms of the Holding Company Transaction and related transactions. The obligations of Time Warner, TBS and TCI to consummate the Holding Company Transaction are conditioned upon such initial acceptance. In response to the FTC Consent Decree, Time Warner, New Time Warner, Delaware Sub, Georgia Sub and TBS have entered into Amendment No. 1, dated as of August 8, 1996, to the Merger Agreement. A copy of such Amendment No. 1 is attached as Exhibit 2(a) hereto and incorporated herein by reference. The Merger Agreement, as amended by such Amendment No. 1, is referred to herein as the "Amended Merger Agreement". A copy of the FTC Consent Decree is attached as Exhibit 2(b) hereto and incorporated herein by reference. Time Warner has entered into a Shareholders' Agreement dated as of September 22, 1995 (the "Shareholders' Agreement"), with R. E. Turner ("Turner") and certain associates and affiliates of Turner (together with Turner, the "Turner Shareholders"), a copy of which is attached as Exhibit 10(a) to Time Warner's Current Report on Form 8-K dated September 22, 1995, and incorporated herein by reference. In August 1996, Time Warner and New Time Warner entered into a Second Amended and Restated LMC Agreement dated as of September 22, 1995, with LMC and certain direct and indirect wholly owned subsidiaries of LMC (the "Second Amended and Restated LMC Agreement"), a copy of which is attached as Exhibit 10(a) hereto and incorporated herein by reference. Pursuant to the Shareholders' Agreement, the Turner Shareholders have agreed to vote all their TBS shares in favor of the approval of the TBS Merger and each of the other transactions contemplated by the Amended Merger Agreement and in favor of the approval and adoption of the Amended Merger Agreement. In addition, pursuant to the Amended Merger Agreement and the Shareholders' Agreement, New Time Warner and the Turner Shareholders have agreed that, upon consummation of the Holding Company Transaction, New Time Warner and the Turner Shareholders will enter into Investors' Agreements and a Registration Rights Agreement (the forms of which are attached as Exhibits C-1 and C-2 and B, respectively, to the Merger Agreement and incorporated herein by reference), pursuant to which (a) Turner will, subject to certain conditions, be entitled to designate two people for election to the Board of Directors of New Time Warner, (b) certain of the Turner Shareholders will be subject to certain restrictions on transfer of New Time Warner Common Stock and certain restrictions on other activities relating to New Time Warner and (c) New Time Warner will grant to the Turner Shareholders rights to require the registration of sales of shares of New Time Warner Common Stock received in the TBS Merger under the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the Second Amended and Restated LMC Agreement, LMC and certain of its subsidiaries have agreed, subject to certain conditions, to vote all their TBS shares in favor of the approval of the TBS Merger and each of the other transactions contemplated by the Amended Merger Agreement and in favor of the approval and adoption of the Amended Merger Agreement. Time Warner has agreed with LMC that Time Warner will terminate the Amended Merger Agreement and abandon the Holding Company Transaction under certain circumstances, including (a) the imposition by any regulatory authority of certain restrictions or burdens on LMC and its affiliates as a condition to approval of the Holding Company Transaction and related transactions (other than the FTC Consent Decree) and (b) if New Time Warner adopts a stockholder rights agreement and such agreement differs from the Time Warner stockholder rights agreement in any material respect except as set forth in Exhibit F to the Second Amended and Restated LMC Agreement, which is incorporated herein by reference. In addition, the Second Amended and Restated LMC Agreement contemplates that substantially all the shares of New Time Warner Common Stock issued in the TBS Merger to LMC and its affiliates will be exchanged for shares of a series of common stock of New Time Warner ("LMCN-V Common Stock") economically equivalent to the New Time Warner Common Stock at a ratio of one share of New Time Warner Common Stock for each share of LMCN-V Common Stock. The terms of the LMCN-V Common Stock are set forth in the form of certificate of designation for such security, which is attached as Exhibit A to the Second Amended and Restated LMC Agreement and incorporated herein by reference. The LMCN-V Common Stock is the economic equivalent of the New Time Warner Common Stock, with identical rights, except it carries only 1/100th of a vote per share with respect to the election of directors, is not entitled to vote with respect to any other matter (with limited exceptions) and may not be redeemed by New Time Warner pursuant to Section 5 of Article IV of the proposed Restated Certificate of Incorporation of New Time Warner (which will be substantially identical to Section 5 of Article IV of the Restated Certificate of Incorporation of Time Warner, as amended to date). Subject to the FTC Consent Decree, the LMCN-V Common Stock is convertible at the option of the holder thereof into New Time Warner Common Stock on a one-for-one basis and is mandatorily convertible upon transfer. Pursuant to the Second Amended and Restated LMC Agreement, if the Holding Company Transaction is consummated, New Time Warner or TBS, on the one hand, and LMC or one of its subsidiaries, on the other hand, will enter into certain other agreements, and additional agreements between TBS and LMC will take effect. These agreements include: (a) a Stockholders' Agreement among New Time Warner, the Turner Shareholders, LMC and certain subsidiaries of LMC, pursuant to which Turner and the Turner-related stockholders, on the one hand, and LMC and the LMC-related stockholders, on the other hand, grant first to the other group and then to New Time Warner a right of first refusal with respect to dispositions of voting securities of New Time Warner (the form of the Stockholders' Agreement is attached as Exhibit B to the Second Amended and Restated LMC Agreement and incorporated herein by reference); (b) an SSSI Agreement, pursuant to which (i) New Time Warner will issue to Southern Satellite Systems, Inc. ("SSSI"), a wholly owned subsidiary of LMC, 4,166,667 shares of LMCN- V Common Stock and SSSI will grant to New Time Warner an option (the "SSSI Option") to cause to become effective a distribution contract (the "Distribution Contract") pursuant to which SSSI will provide uplinking and distribution services for WTBS in the event WTBS acquires national broadcast rights to all of its programming and becomes a copyright-paid cable television programming service, enabling WTBS to charge a subscription fee to cable operators and to sell local advertising time without any obligation on the part of the cable operators to make cable compulsory license payments under the Copyright Act (the "WTBS Conversion"), and (ii) New Time Warner will issue to LMC 833,333 shares of LMCN-V Common Stock and will pay to LMC an additional approximately $67 million (payable, at New Time Warner's option, in cash or additional shares of LMCN-V Common Stock) and LMC will agree not to compete with the business of SSSI (the form of the SSSI Agreement is attached as Exhibit D to the Second Amended and Restated LMC Agreement and incorporated herein by reference); (c) a Program Agreement between TCI and TBS relating to the mandatory carriage after the consummation of the Mergers by TCI-affiliated cable systems of WTBS (after the WTBS Conversion) and Headline News, rebates available to TCI-affiliated cable systems for carriage of TBS programming services (conditional upon TCI remaining one of the two largest domestic distributors of TBS programming services), incentive payments in 1999 and 2003 for TCI to remain one of the two largest domestic distributors of TBS programming services, and other related matters; (d) an LMC Registration Rights Agreement, pursuant to which New Time Warner will grant to LMC rights to require the registration under the Securities Act of sales of New Time Warner Common Stock received in the TBS Merger or pursuant to the SSSI Agreement, or upon conversion of LMCN-V Common Stock so received (the form of the LMC Registration Rights Agreement is attached as Exhibit E to the Second Amended and Restated LMC Agreement and incorporated herein by reference); (e) a SportSouth Stock Purchase Agreement, pursuant to which TBS has agreed to sell its interest in the SportSouth Network, a regional sports cable network, to LMC for an amount currently estimated at approximately $65 million; (f) a Sunshine Option Agreement, pursuant to which Time Warner Entertainment Company, L.P. ("TWE"), will grant to LMC an option to purchase the interests of TWE and certain of its affiliates in the Sunshine Network, a Florida-based sports cable network, for $14 million; and (g) Pay-Per-View Output Agreements between certain TBS subsidiaries, on the one hand, and certain affiliates of TCI, on the other hand, providing for the licensing of all motion pictures theatrically released during the term of the agreement by the TBS motion picture studios for exhibition, on a non-exclusive basis, on pay-per-view services owned by such TCI affiliates. Pursuant to the Second Amended and Restated LMC Agreement, New Time Warner has agreed that, under certain circumstances, if LMC or any of its controlled affiliates (and, for so long as LMC is a controlled affiliate of TCI, TCI and each controlled affiliate of TCI) and certain permitted transferees of the LMCN-V Common Stock issued pursuant to the Second Amended and Restated LMC Agreement is required as a result of certain actions taken by New Time Warner (including certain actions amending any New Time Warner Stockholder Rights Agreement) to dispose of shares of New Time Warner or suffer certain other adverse consequences by reason of continued ownership of shares of New Time Warner, New Time Warner will indemnify such person for certain income tax liabilities incurred in the disposition of shares of New Time Warner. In connection with the execution of Amendment No. 1 to the Merger Agreement and the Second Amended and Restated LMC Agreement, Time Warner, TBS, TCI and LMC agreed to eliminate the following agreements: (a) the Voting Trust, under which New Time Warner Common Stock held by LMC would have been placed in a voting trust and would have been voted by Gerald M. Levin, Chairman and Chief Executive Officer of Time Warner; (b) Time Warner's option to acquire the interest of LMC in TBS prior to the consummation of the Holding Company Transaction; (c) the Option Agreement, pursuant to which New Time Warner would have been granted an option to purchase SSSI; and (d) the Program Services Agreement and the Carriage Agreement, relating to the mandatory carriage by TCI-affiliated cable systems of TBS programming services. The Holding Company Transaction remains subject to the approval of the stockholders of Time Warner, the approval of the shareholders of TBS, initial acceptance of the FTC Consent Decree and all necessary approvals of the Federal Communications Commission. Time Warner currently expects that the Holding Company Transaction will be consummated early in the fourth quarter of 1996. FTC Consent Decree. The material provisions of the FTC Consent Decree are described below. All these provisions will terminate on the tenth anniversary of final acceptance thereof by the FTC and apply only in the United States. TCI/LMC Equity Interest in New Time Warner. TCI and its affiliates will not be permitted to hold voting securities of New Time Warner (other than securities, such as LMCN-V Common Stock, that have limited voting rights). In addition, TCI and its affiliates will not be permitted to hold more than the lesser of (a) 9.2% of the outstanding New Time Warner Common Stock (calculated on a fully diluted basis) and (b) 12.4% of the outstanding common stock of New Time Warner (calculated on an actual oustanding basis), without the prior approval of the FTC. TCI will be required under the FTC Consent Decree to use its best efforts to obtain a ruling (the "Letter Ruling") from the Internal Revenue Service to the effect that a distribution by TCI of all the stock of SSSI, which at the time of such distribution will hold, directly and indirectly, substantially all of TCI's interest in New Time Warner arising out of consummation of the Mergers, to holders of the Liberty Media Group Common Stock issued by TCI would be a non-taxable transaction under Section 355 of the Internal Revenue Code. If the Letter Ruling is obtained, TCI will implement such distribution within 30 days after making regulatory filings. If such distribution takes place, Mr. Robert Magness, Dr. John C. Malone and Kearns-Tribune Corporation (together, the "TCI Control Shareholders") will exchange all of the shares of SSSI they receive in such distribution for a convertible preferred security of SSSI that will have limited voting rights in SSSI. TCI's officers, directors and employees (including the TCI Control Shareholders) will be prohibited from communicating with the management of SSSI, except on those limited matters on which the TCI Control Shareholders are entitled to vote. Following such distribution, SSSI will be prohibited from holding more than 14.99% of the outstanding New Time Warner Common Stock (calculated on a fully diluted basis), and from holding New Time Warner securities with voting rights (other than securities, such as LMCN-V Common Stock, that have limited voting rights). The restrictions described in the immediately preceding sentence will terminate if the TCI Control Shareholders hold no more than 0.1% of the ownership interest and the voting power of SSSI or if the TCI Control Shareholders hold no more than 0.1% of the ownership interest and the voting power of both of TCI and LMC. Following such distribution, TCI will not be permitted to purchase more than the lesser of (a) an additional 1% of the New Time Warner Common Stock (calculated on a fully diluted basis) and (b) 1.35% of the outstanding common stock of New Time Warner (calculated on an actual outstanding basis), without the prior approval of the FTC. Program Carriage Agreements. Prior to six months after the consummation of the Holding Company Transaction, New Time Warner and TCI will not be permitted to enter into any new agreement providing for the mandatory analog carriage by TCI cable systems on their analog tiers of any video programming service offered by TBS (other than WTBS (after the WTBS Conversion) and Headline News), and any such mandatory carriage agreement entered into thereafter will be limited in effective duration to five years. Anti-bundling Provision. New Time Warner will not be permitted to condition the availability or terms of providing its HBO video programming service to any multi-channel video programming distributor ("MVPD") on whether that MVPD or any other MVPD agrees to carry any national video programming service offered by TBS. New Time Warner will not be permitted to condition the availability or terms of providing CNN, TNT or WTBS to any MVPD on whether that MVPD or any other MVPD agrees to carry any national video programming service offered by TWE. Price Discrimination Provision. New Time Warner will be prohibited from discriminating, in certain respects, against MVPDs having geographical overlap with New Time Warner's cable systems in the terms upon which TBS programming services are made available to such MVPDs in the relevant geographical overlap area. Programming Foreclosure Provision. New Time Warner will be prohibited generally from requiring a financial interest in any national video programming service as a condition for carriage or otherwise improperly discriminating against unaffiliated national video programming vendors in the provision of access to New Time Warner's cable systems. New Time Warner will be required to collect, on a quarterly basis, certain information relating to the terms under which New Time Warner cable systems carry national video programming services, including information relating to pricing, commitments, if any, to a roll-out schedule and penetration rates. This information is to be provided to each member of the Management Committee of TWE on a quarterly basis. By February 1, 1997, New Time Warner will be required to enter into a programming service agreement with at least one nationally significant advertising-supported news and informational national video programming service not affiliated with New Time Warner. Under the terms of the FTC Consent Decree, New Time Warner will be required to carry such national video programming service in accordance with a roll-out schedule incorporated in the FTC Consent Decree. To the extent applicable to New Time Warner, the foregoing provisions are generally consistent with existing legal requirements or Time Warner's existing business practices and will not impose undue financial burdens on New Time Warner and, accordingly, Time Warner does not believe that these provisions will have an adverse effect on the businesses of Time Warner and TBS following consummation of the Holding Company Transaction. If the FTC does not initially accept the FTC Consent Decree, the FTC may seek to enjoin the consummation of the Transaction. If the FTC does initially accept the FTC Consent Decree, the FTC will publish the FTC Consent Decree for public comment for a period of 60 days. If the FTC does not finally accept the FTC Consent Decree after the period for public comment, the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking the divestiture of substantial assets of TBS or its subsidiaries or of Time Warner or its subsidiaries. If the FTC does finally accept the FTC Consent Decree, the FTC Consent Decree will terminate on the tenth anniversary of such final acceptance. Item 7. Financial Statements and Exhibits. (c) Exhibits: (i) Exhibit 2(a): Amendment No. 1 dated as of August 8, 1996, to the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp., and Turner Broadcasting System, Inc. (ii) Exhibit 2(b): Agreement Containing Consent Order dated August 14, 1996, among Time Warner Inc., Turner Broadcasting System, Inc., Tele-Communications, Inc., Liberty Media Corporation and the Federal Trade Commission. (iii) Exhibit 10(a): Second Amended and Restated LMC Agreement dated as of September 22, 1995, among Time Warner Inc., TW Inc., Liberty Media Corporation, TCI Turner Preferred, Inc., Communication Capital Corp. and United Cable Turner Investment, Inc. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on September 6, 1996. TIME WARNER INC., By: ------------------------ Name: Peter R. Haje Title: Executive Vice President EXHIBIT INDEX Sequential Exhibit No. Description of Exhibit Page Number 2(a) Amendment No. 1 dated as of August 8, 1996, to the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc. 2(b) Agreement Containing Consent Order dated August 14, 1996, among Time Warner Inc., Turner Broadcasting System, Inc., Tele-Communications, Inc., Liberty Media Corporation and the Federal Trade Commission. 10(a) Second Amended and Restated LMC Agreement dated as of September 22, 1995, among Time Warner Inc., TW Inc., Liberty Media Corporation, TCI Turner Preferred, Inc., Communication Capital Corp. and United Cable Turner Investment, Inc. EX-2 2 EXHIBIT 2A AMENDMENT NO. 1 AMENDMENT No. 1 (this "Amendment") dated as of August 8, 1996, to the AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of September 22, 1995, among TIME WARNER INC., a Delaware corporation ("Parent"), TW INC., a Delaware corporation ("Holdco") and a direct wholly owned subsidiary of Parent, TIME WARNER ACQUISITION CORP., a Delaware corporation ("Delaware Sub") and a direct wholly owned subsidiary of Holdco, TW ACQUISITION CORP., a Georgia corporation ("Georgia Sub") and a direct wholly owned subsidiary of Holdco, and TURNER BROADCASTING SYSTEM, INC., a Georgia corporation (the "Company"). WHEREAS Parent, Holdco, Delaware Sub, Georgia Sub and the Company have agreed to amend the Agreement; and WHEREAS the respective Boards of Directors of Parent, Holdco, Delaware Sub, Georgia Sub and the Company have approved and adopted this Amendment. NOW, THEREFORE, the parties agree as follows: SECTION 1. Amendment of Agreement. (a) Section 2.01 of the Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 2.01. Effect on Parent Capital Stock. As of the Effective Time of the Mergers, by virtue of the TW Merger and without any action on the part of the holder of any shares of Parent Capital Stock (as defined in Section 2.01(a)) or any shares of capital stock of Delaware Sub: (a) Capital Stock of Delaware Sub. Each issued and outstanding share of Common Stock, par value $1.00 per share, of Delaware Sub shall be converted into (i) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Common Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Common Stock, par value $1.00 per share, of Parent ("Parent Common Stock") issued and outstanding immediately prior to the Effective Time of the Mergers, (ii) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series C Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series C Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series C Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (iii) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series D Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series D Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series D Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (iv) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series E Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series E Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series E Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (v) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series F Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series F Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series F Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (vi) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series G Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series G Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series G Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (vii) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series H Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series H Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series H Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (viii) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series I Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series I Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series I Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (ix) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of Series J Convertible Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of Series J Convertible Preferred Stock, par value $1.00 per share, of Parent ("Parent Series J Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (x) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of 10 1/4% Series K Exchangeable Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of 10 1/4% Series K Exchangeable Preferred Stock, par value $1.00 per share, of Parent ("Parent Series K Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers, (xi) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of 10 1/4% Series L Exchangeable Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of 10 1/4% Series L Exchangeable Preferred Stock, par value $1.00 per share, of Parent ("Parent Series L Preferred Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers and (xii) one one-millionth (1/1,000,000th) of a fully paid and nonassessable share of 10 1/4% Series M Exchangeable Preferred Stock, par value $1.00 per share, of the TW Surviving Corporation for each share of 10 1/4% Series M Exchangeable Preferred Stock, par value $1.00 per share, of Parent ("Parent Series M Preferred Stock" and, together with the Parent Common Stock, the Parent Series C Preferred Stock, the Parent Series D Preferred Stock, the Parent Series E Preferred Stock, the Parent Series F Preferred Stock, the Parent Series G Preferred Stock, the Parent Series H Preferred Stock, the Parent Series I Preferred Stock, the Parent Series J Preferred Stock, the Parent Series K Preferred Stock and the Parent Series L Preferred Stock, the "Parent Capital Stock"), if any, issued and outstanding immediately prior to the Effective Time of the Mergers. For the purposes of this Section 2.01(a), shares of Parent Capital Stock, other than Parent Series C Preferred Stock, held by Parent Subsidiaries (as defined in Section 3.02(a)) shall be deemed to be not outstanding. (b) Cancellation of Treasury Stock. Each share of Parent Capital Stock that is owned by Parent shall automatically be canceled and retired and shall cease to exist, and no shares of Common Stock, par value $.01 per share, of Holdco (the "Holdco Common Stock") or other consideration shall be delivered in exchange therefor. (c) Conversion of Parent Capital Stock. Subject to Sections 2.01(d) and 2.03(e), each issued share of Parent Capital Stock (other than shares to be canceled in accordance with Section 2.01(b) and other than shares subject to Section 2.01(f)) shall be converted into fully paid and nonassessable shares of the capital stock of Holdco ("Holdco Capital Stock") in accordance with the following table (it being acknowledged that as of August 8, 1996 (the date of the last amendment of this Section 2.01), (x) no shares of Parent Series J Preferred Stock, Parent Series L Preferred Stock and Parent Series M Preferred Stock are outstanding and (y) it is anticipated that no shares of Parent Series C Preferred Stock, Parent Series L Preferred Stock and either Parent Series K Preferred Stock or Parent Series M Preferred Stock will be outstanding immediately prior to the Effective Time of the Mergers): Each Share of the Number and Class or Series Specified Class or Series of Shares of Holdco Capital of Parent Capital Stock Stock Into Which Converted Parent Common Stock One Share of Holdco Common Stock Parent Series C Preferred 2.08264 shares of Holdco Stock Common Stock Parent Series D Preferred One share of Series D Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series D Preferred Stock") Parent Series E Preferred One share of Series E Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series E Preferred Stock") Parent Series F Preferred One share of Series F Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series F Preferred Stock") Parent Series G Preferred One share of Series G Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series G Preferred Stock") Parent Series H Preferred One share of Series H Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series H Preferred Stock") Parent Series I Preferred One share of Series I Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series I Preferred Stock") Parent Series J Preferred One share of Series J Stock Convertible Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series J Preferred Stock") Parent Series K Preferred One share of 10 1/4% Series M Stock Exchangeable Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series M Preferred Stock") Parent Series L Preferred One share of 10 1/4% Series L Stock Exchangeable Preferred Stock, par value $.10 per share, of Holdco ("Holdco Series L Preferred Stock") Parent Series M Preferred One share of Holdco Series M Stock Preferred Stock As of the Effective Time of the Mergers, all such shares of Parent Capital Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist. Subject to Sections 2.01(d) and 2.03(e), as of the Effective Time of the Mergers (i) each certificate theretofore representing shares of Parent Capital Stock (other than each certificate theretofore representing Parent Series C Preferred Stock or Parent Series K Preferred Stock (the "Changed Parent Stock")), without any action on the part of Holdco, Parent or the holder thereof, shall be deemed to represent an equivalent number of shares of the class or series of Holdco Capital Stock set forth above next to the class or series of Parent Capital Stock formerly represented by such certificate and shall cease to represent any rights in any shares of Parent Capital Stock, and (ii) each holder of a certificate representing any shares of Changed Parent Stock shall cease to have any rights with respect thereto, except the right to receive, upon the surrender of any such certificates, certificates representing the number of shares of the class or series of Holdco Capital Stock, and any cash in lieu of fractional shares of such class or series of Holdco Capital Stock, set forth above next to the series of Changed Parent Stock formerly represented by such certificate to be issued or paid in consideration therefor upon surrender of such certificate in accordance with Section 2.03, without interest. (d) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares ("Appraisal Shares") of Parent Capital Stock (other than Parent Common Stock) that are outstanding immediately prior to the Effective Time of the Mergers and that are held by any stockholder of Parent who is entitled to demand and properly demands appraisal of such Appraisal Shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL ("Section 262") shall not be converted into Holdco Capital Stock as provided in Section 2.01(c), but rather the holders of Appraisal Shares shall be entitled to payment of the fair value of such Appraisal Shares in accordance with the provisions of Section 262; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder of Appraisal Shares to be paid the fair value of such holder's Appraisal Shares shall cease and such Appraisal Shares shall be treated as if they had been converted as of the Effective Time of the Mergers into shares of Holdco Capital Stock as provided in Section 2.01(c). (e) Exchange Ratio for Parent Options and Parent Warrants. (i) As of the Effective Time of the Mergers, each outstanding Parent Option (as defined in Section 3.02(c)) and each outstanding warrant (a "Parent Warrant") to purchase Parent Common Stock, originally issued in connection with the first issuance of Parent Series B Preferred Stock, shall be assumed by Holdco and converted into an option or warrant, as the case may be, to purchase shares of Holdco Common Stock, as provided below. Following the Effective Time of the Mergers, each Parent Option shall continue to have, and shall be subject to, the same terms and conditions set forth in the applicable Parent Stock Plan (as defined in Section 3.02(c)) pursuant to which such Parent Option was granted, and each Parent Warrant shall continue to have, and shall be subject to, the same terms and conditions, in each case as in effect immediately prior to the Effective Time of the Mergers, except that each such Parent Option or Parent Warrant shall be exercisable for the same number of shares of Holdco Common Stock as the number of shares of Parent Common Stock for which such Parent Option or Parent Warrant was exercisable immediately prior to the Effective Time of the Mergers. (ii) As of the Effective Time of the Mergers, Holdco shall enter into an assumption agreement with respect to each Parent Option and each Parent Warrant, which, in the case of any Parent Option, shall provide for Holdco's assumption of the obligations of Parent under the applicable Parent Stock Plan. Prior to the Effective Time of the Mergers, Parent shall make such amendments, if any, to the Parent Stock Plans as shall be necessary to permit such assumption in accordance with this Section 2.01(e). (iii) It is the intention of the parties that, to the extent that any Parent Option constitutes an "incentive stock option" (within the meaning of Section 422 of the Code) immediately prior to the Effective Time of the Mergers, such Parent Option shall continue to qualify as an incentive stock option to the maximum extent permitted by Section 422 of the Code, and that the assumption of the Parent Option provided by this Section 2.01(e) shall satisfy the conditions of Section 424(a) of the Code. (f) Treatment of Parent Capital Stock Held by Parent Subsidiaries. Notwithstanding anything in this Agreement to the contrary, each share of Parent Capital Stock (other than any Parent Series C Preferred Stock) held by any Parent Subsidiary shall be converted into (i) in the case of each share of Parent Common Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Common Stock of the TW Surviving Corporation, (ii) in the case of each share of Parent Series D Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series D Convertible Preferred Stock of the TW Surviving Corporation, (iii) in the case of each share of Parent Series E Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series E Convertible Preferred Stock of the TW Surviving Corporation, (iv) in the case of each share of Parent Series F Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series F Convertible Preferred Stock of the TW Surviving Corporation, (v) in the case of each share of Parent Series G Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series G Convertible Preferred Stock of the TW Surviving Corporation, (vi) in the case of each share of Parent Series H Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series H Convertible Preferred Stock of the TW Surviving Corporation, (vii) in the case of each share of Parent Series I Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of Series I Convertible Preferred Stock of the TW Surviving Corporation, (viii) in the case of each share of Parent Series J Preferred Stock, one one-thousandth (1/1000th) of a fully paid and nonassessable share of Series J Convertible Preferred Stock of the TW Surviving Corporation, (ix) in the case of each share of Parent Series K Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of 10 1/4% Series K Exchangeable Preferred Stock of the TW Surviving Corporation, (x) in the case of each share of Parent Series L Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of 10 1/4% Series L Exchangeable Preferred Stock of the TW Surviving Corporation and (xi) in the case of each share of Parent Series M Preferred Stock, one one-thousandth (1/1,000th) of a fully paid and nonassessable share of 10 1/4% Series M Exchangeable Preferred Stock of the TW Surviving Corporation." (b) Section 2.03(e)(iv) of the Agreement is hereby deleted. (c) The definition of "Material Transaction" in the fifth sentence of Section 5.16 of the Agreement is hereby amended and restated in its entirety as follows: "For purposes of this Agreement, "Material Transaction" means (i) the issuance by Parent of more than 90,000,000 "common stock equivalents" (one common stock equivalent being equal to one share of Parent Common Stock, including any share of Parent Common Stock issuable by Parent upon conversion, exercise or exchange of any other capital stock, warrant or other security or right of Parent, any Parent Subsidiary or any other controlled affiliate of Parent) in any single transaction or in any series of individual transactions (excluding any transaction involving an exchange by Parent on a one-for-one basis of newly issued shares of Parent Series J Preferred Stock for outstanding shares of Parent Series C Preferred Stock) each of which involves the issuance of more than 20,000,000 common stock equivalents, whether or not such individual transactions are related to each other, or (ii) the sale or other disposition in any transaction or series of transactions, whether or not related to each other, by Parent or any Parent Subsidiary of any business or assets with an aggregate fair market value in excess of $3,500,000,000, excluding from such amount (x) sales of inventory in the ordinary course of business consistent with prior practice and (y) the sale or disposition, in a single transaction or series of related transactions, of assets with an aggregate fair market value of $500,000,000 or less." (c) Section 6.01(c) of the Agreement is hereby amended and restated in its entirety to read as follows: "(c) Antitrust. The waiting periods (and any extensions thereof) applicable to the transactions contemplated by this Agreement under the HSR Act shall have been terminated or shall have expired. The Federal Trade Commission (the "FTC") shall have initially accepted the FTC Agreement Containing Consent Order relating to the Mergers and ancillary matters. Any consents, approvals and filings under any foreign antitrust law the absence of which would prohibit the consummation of the Mergers shall have been obtained or made." (d) Section 6.01(h) of the Agreement is hereby deleted. (e) Section 7.01(b)(iii) of the Agreement is hereby amended and restated in its entirety, as follows: "(iii) if the Mergers shall not have been consummated on or before December 31, 1996, unless the failure to consummate the Mergers is the result of a wilful and material breach of this Agreement by the party seeking to terminate this Agreement;". SECTION 2. Miscellaneous. (a) Except as expressly set forth in Section 1, all the provisions of the Agreement are hereby ratified and confirmed by all the parties and shall remain in full force and effect. All references in the Agreement to "this Agreement" shall be read as references to the Agreement, as amended by this Amendment. (b) Each party consents to the execution and delivery by Parent and the Company of the Agreement Containing Consent Order referred to in Section 6.01(c) of the Agreement, as amended by this Amendment. (c) This Amendment may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties. (d) This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. IN WITNESS WHEREOF, Parent, Holdco, Delaware Sub, Georgia Sub and the Company have caused this Amendment to be signed by their respective officers thereunto duly authorized, all as of the date first written above. TIME WARNER INC., by /s/ Peter R. Haje --------------------------- Name: Peter R. Haje Title: Executive Vice President TW INC., by /s/ Thomas W. McEnerney ---------------------------- Name: Thomas W. McEnerney Title: Vice President TIME WARNER ACQUISITION CORP., by /s/ Thomas W. McEnerney --------------------------- Name: Thomas W. McEnerney Title: Vice President TW ACQUISITION CORP., by /s/ Thomas W. McEnerney --------------------------- Name: Thomas W. McEnerney Title: Vice President TURNER BROADCASTING SYSTEM, INC., by /s/ Steven W. Korn --------------------------- Name: Steven W. Korn Title: General Counsel EX-2 3 EXHIBIT 2B AGREEMENT CONTAINING CONSENT ORDER UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION - ----------------------------------- ) In the Matter of ) ) TIME WARNER INC., ) a corporation; ) ) TURNER BROADCASTING ) SYSTEM, INC., ) a corporation; ) ) File No. 961-0004 TELE-COMMUNICATIONS, INC., ) a corporation; and ) ) LIBERTY MEDIA CORPORATION, ) a corporation. ) - ------------------------------------) AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition of Turner Broadcasting System, Inc. ("Turner") by Time Warner Inc. ("Time Warner"), and Tele-Communications, Inc.'s ("TCI") and Liberty Media Corporation's ("LMC") proposed acquisitions of interests in Time Warner, and it now appearing that Time Warner, Turner, TCI, and LMC, hereinafter sometimes referred to as "proposed respondents," are willing to enter into an agreement containing an order to divest certain assets, and providing for other relief: IT IS HEREBY AGREED by and between proposed respondents, by their duly authorized officers and attorneys, and counsel for the Commission that: 1. Proposed respondent Time Warner is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its office and principal place of business located at 75 Rockefeller Plaza, New York, New York 10019. 2. Proposed respondent Turner is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its office and principal place of business located at One CNN Center, Atlanta, Georgia 30303. 3. Proposed respondent TCI is a corporation organized, existing and doing business under and by virtue of the law of the State of Delaware, with its office and principal place of business located at 5619 DTC Parkway, Englewood, Colorado 80111. 4. Proposed respondent LMC is a corporation organized, existing and doing business under and by virtue of the law of the State of Delaware, with its office and principal place of business located at 8101 East Prentice Avenue, Englewood, Colorado 80111. 5. Proposed respondents admit all the jurisdictional facts set forth in the draft of complaint here attached for purposes of this agreement and order only. 6. Proposed respondents waive: (1) any further procedural steps; (2) the requirement that the Commission's decision contain a statement of findings of fact and conclusions of law; (3) all rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pursuant to this agreement; and (4) any claim under the Equal Access to Justice Act. 7. Proposed respondents shall submit (either jointly or individually), within sixty (60) days of the date this agreement is signed by proposed respondents, an initial report or reports, pursuant to Section 2.33 of the Commission's Rules, signed by the proposed respondents and setting forth in detail the manner in which the proposed respondents will comply with Paragraphs VI, VII and VIII of the order, when and if entered. Such report will not become part of the public record unless and until this agreement and order are accepted by the Commission for public comment. 8. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission it, together with a draft of the complaint contemplated hereby, will be placed on the public record for a period of sixty (60) days and information in respect thereto publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify the proposed respondents, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision, in disposition of the proceeding. 9. This agreement is for settlement purposes only and does not constitute an admission by proposed respondents that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true. 10. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to the proposed respondents, (1) issue its complaint corresponding in form and substance with the draft of complaint here attached and its decision containing the following order in disposition of the proceeding, and (2) make information public with respect thereto. When so entered, the order shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Delivery by the U.S. Postal Service of the complaint and decision containing the agreed-to order to proposed respondents' addresses as stated in this agreement shall constitute service. Proposed respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the order, and no agreement, understanding, representation, or interpretation not contained in the order or the agreement may be used to vary or contradict the terms of the order. 11. Proposed respondents have read the proposed complaint and order contemplated hereby. Proposed respondents understand that once the order has been issued, they will be required to file one or more compliance reports showing that they have fully complied with the order. Proposed respondents further understand that they may be liable for civil penalties in the amount provided by law for each violation of the order after it becomes final. 12. Proposed respondents agree to be bound by all of the terms of the Interim Agreement attached to this agreement and made a part hereof as Appendix I, upon acceptance by the Commission of this agreement for public comment. Proposed respondents agree to notify the Commission's Bureau of Competition in writing, within 30 days of the date the Commission accepts this agreement for public comment, of any and all actions taken by the proposed respondents to comply with the Interim Agreement and of any ruling or decision by the Internal Revenue Service ("IRS") concerning the Distribution of The Separate Company stock to the holders of the Liberty Tracking Stock within two (2) business days after service of the IRS Ruling. 13. The order's obligations upon proposed respondents are contingent upon consummation of the Acquisition. ORDER I. As used in this Order, the following definitions shall apply: A) "Acquisition" means Time Warner's acquisition of Turner and TCI's and LMC's acquisition of interest in Time Warner. B) "Affiliated" means having an Attributable Interest in a Person. C) "Agent" or "Representative" means a Person that is acting in a fiduciary capacity on behalf of a principal with respect to the specific conduct or action under review or consideration. D) "Attributable Interest" means an interest as defined in 47 C.F.R. Section 76.501 (and accompanying notes), as that rule read on July 1, 1996. E) "Basic Service Tier" means the Tier of video programming as defined in 47 C.F.R. Section 76.901(a), as that rule read on July 1, 1996. F) "Buying Group" or "Purchasing Agent" means any Person representing the interests of more than one Person distributing multichannel video programming that: (1) agrees to be financially liable for any fees due pursuant to a Programming Service Agreement which it signs as a contracting party as a representative of its members, or each of whose members, as contracting parties, agrees to be liable for its portion of the fees due pursuant to the programming service agreement; (2) agrees to uniform billing and standardized contract provisions for individual members; and (3) agrees either collectively or individually on reasonable technical quality standards for the individual members of the group. G) "Carriage Terms" means all terms and conditions for sale, licensing or delivery to an MVPD for a Video Programming Service and includes, but is not limited to, all discounts (such as for volume, channel position and Penetration Rate), local advertising availabilities, marketing, and promotional support, and other terms and conditions. H) "CATV" means a cable system, or multiple cable systems Controlled by the same Person, located in the United States. I) "Closing Date" means the date of the closing of the Acquisition. J) "CNN" means the Video Programming Service Cable News Network. K) "Commission" means the Federal Trade Commission. L) "Competing MVPD" means an Unaffiliated MVPD whose proposed or actual service area overlaps with the actual service area of an Time Warner CATV. M) "Control," "Controlled" or "Controlled by" has the meaning set forth in 16 C.F.R. Section 801.1 as that regulation read on July 1, 1996, except that Time Warner's 50% interest in Comedy Central (as of the Closing Date) and TCI's 50% interests in Bresnan Communications, Intermedia Partnerships and Lenfest Communications (all as of the Closing Date) shall not be deemed sufficient standing alone to confer Control over that Person. N) "Converted WTBS" means WTBS once converted to a Video Programming Service. O) "Fully Diluted Equity of Time Warner" means all Time Warner common stock actually issued and outstanding plus the aggregate number of shares of Time Warner common stock that would be issued and outstanding assuming the exercise of all outstanding options, warrants and rights (excluding shares that would be issued in the event a poison pill is triggered) and the conversion of all outstanding securities that are convertible into Time Warner common stock. P) "HBO" means the Video Programming Service Home Box Office, including multiplexed versions. Q) "Independent Advertising-Supported News and Information Video Programming Service" means a National Video Programming Service (1) that is not owned, Controlled by, or Affiliated with Time Warner; (2) that is a 24-hour per day service consisting of current national, international, sports, financial and weather news and/or information, and other similar programming; and (3) that has national significance so that, as of February 1, 1997, it has contractual commitments to supply its service to 10 million subscribers on Unaffiliated MVPDs, or, together with the contractual commitments it will obtain from Time Warner, it has total contractual commitments to supply its service to 15 million subscribers. If no such Service has such contractual commitments, then Time Warner may choose from among the two Services with contractual commitments with Unaffiliated MVPDs for the largest number of subscribers. R) "Independent Third Party" means (1) a Person that does not own, Control, and is not Affiliated with or has a share of voting power, or an Ownership Interest in, greater than 1% of any of the following: TCI, LMC, or the Kearns-Tribune Corporation; or (2) a Person which none of TCI, LMC, or the TCI Control Shareholders owns, Controls, is Affiliated with, or in which any of them has a share of voting power, or an Ownership Interest in, greater than 1%. Provided, however, that an Independent Third Party shall not lose such status if, as a result of a transaction between an Independent Third Party and The Separate Company, such Independent Third Party becomes a successor to The Separate Company and the TCI Control Shareholders collectively hold an Ownership Interest of 5% or less and collectively hold a share of voting power of 1% or less in that successor company. S) "LMC" means Liberty Media Corporation, all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of its predecessors, successors, assigns, subsidiaries, and divisions, all of their respective directors, officers, employees, Agents, and Representatives, and the respective successors and assigns of any of the foregoing; and (2) partnerships, joint ventures, and affiliates that Liberty Media Corporation Controls, directly or indirectly. T) "The Liberty Tracking Stock" means Tele-Communications, Inc. Series A Liberty Media Group Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock. U) "Multichannel Video Programming Distributor" or "MVPD" means a Person providing multiple channels of video programming to subscribers in the United States for which a fee is charged, by any of various methods including, but not limited to, cable, satellite master antenna television, multichannel multipoint distribution, direct-to-home satellite (C-band, Ku- band, direct broadcast satellite), ultra high-frequency microwave systems (sometimes called LMDS), open video systems, or the facilities of common carrier telephone companies or their affiliates, as well as Buying Groups or Purchasing Agents of all such Persons. V) "National Video Programming Service" means a Video Programming Service that is intended for distribution in all or substantially all of the United States. W) "Ownership Interest" means any right(s), present or contingent, to hold voting or nonvoting interest(s), equity interest(s), and/or beneficial ownership(s) in the capital stock of a Person. X) "Penetration Rate" means the percentage of Total Subscribers on an MVPD who receives a particular Video Programming Service. Y) "Person" includes any natural person, corporate entity, partnership, association, joint venture, government entity or trust. Z) "Programming Service Agreement" means any agreement between a Video Programming Vendor and an MVPD by which a Video Programming Vendor agrees to permit carriage of a Video Programming Service on that MVPD. AA) "The Separate Company" means a separately incorporated Person, either existing or to be created, to take the actions provided by Paragraph II and includes without limitation all of The Separate Company's subsidiaries, divisions, and affiliates Controlled, directly or indirectly, all of their respective directors, officers, employees, Agents, and Representatives, and the respective successors and assigns of any of the foregoing, other than any Independent Third Party. BB) "Service Area Overlap" means the geographic area in which a Competing MVPD's proposed or actual service area overlaps with the actual service area of a Time Warner CATV. CC) "Similarly Situated MVPDs" means MVPDs with the same or similar number of Total Subscribers as the Competing MVPD has nationally and the same or similar Penetration Rate(s) as the Competing MVPD makes available nationally. DD) "TCI" means Tele-Communications, Inc., all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of its predecessors, successors, assigns, subsidiaries, and divisions, all of their respective directors, officers, employees, Agents, and Representatives, and the respective successors and assigns of any of the foregoing; and (2) partnerships, joint ventures, and affiliates that Tele-Communications, Inc. Controls, directly or indirectly. TCI acknowledges that the obligations of subparagraphs (C)(6), (8)-(9), (D)(1)-(2) of Paragraph II and of Paragraph III of this order extend to actions by Bob Magness and John C. Malone, taken in an individual capacity as well as in a capacity as an officer or director, and agrees to be liable for such actions. EE) "TCI Control Shareholders" means the following Persons, individually as well as collectively: Bob Magness, John C. Malone, and the Kearns-Tribune Corporation, its Agents and Representatives, and the respective successors and assigns of any of the foregoing. FF) "TCI's and LMC's Interest in Time Warner" means all the Ownership Interest in Time Warner to be acquired by TCI and LMC, including the right of first refusal with respect to Time Warner stock to be held by R. E. Turner, III, pursuant to the Shareholders Agreement dated September 22, 1995 with LMC or any successor agreement. GG) "TCI's and LMC's Turner-Related Businesses" means the businesses conducted by Southern Satellite Systems, Inc., a subsidiary of TCI which is principally in the business of distributing WTBS to MVPDs. HH) "Tier" means a grouping of Video Programming Services offered by an MVPD to subscribers for one package price. II) "Time Warner" means Time Warner Inc., all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of its predecessors, successors, assigns, subsidiaries, and divisions, including, but not limited to, Turner after the Closing Date, all of their respective directors, officers, employees, Agents, and Representatives, and the respective successors and assigns of any of the foregoing; and (2) partnerships, joint ventures, and affiliates that Time Warner Inc. Controls, directly or indirectly. Time Warner shall, except for the purposes of definitions OO and PP, include Time Warner Entertainment Company, L.P., so long as it falls within this definition. JJ) "Time Warner CATV" means a CATV which is owned or Controlled by Time Warner. "Non-Time Warner CATV" means a CATV which is not owned or Controlled by Time Warner. Obligations in this order applicable to Time Warner CATVs shall not survive the disposition of Time Warner's Control over them. KK) "Time Warner National Video Programming Vendor" means a Video Programming Vendor providing a National Video Programming Service which is owned or Controlled by Time Warner. Likewise, "Non-Time Warner National Video Programming Vendor" means a Video Programming Vendor providing a National Video Programming Service which is not owned or Controlled by Time Warner. LL) "TNT" means the Video Programming Service Turner Network Television. MM) "Total Subscribers" means the total number of subscribers to an MVPD other than subscribers only to the Basic Service Tier. NN) "Turner" means Turner Broadcasting System, Inc., all of its directors, officers, employees, Agents, and Representatives, and also includes (1) all of its predecessors, successors (except Time Warner), assigns (except Time Warner), subsidiaries, and divisions; and (2) partnerships, joint ventures, and affiliates that Turner Broadcasting System, Inc., Controls, directly or indirectly. OO) "Turner Video Programming Services" means each Video Programming Service owned or Controlled by Turner on the Closing Date, and includes (1) WTBS, (2) any such Video Programming Service and WTBS that is transferred after the Closing Date to another part of Time Warner (including TWE), and (3) any Video Programming Service created after the Closing Date that Time Warner owns or Controls that is not owned or Controlled by TWE, for so long as the Video Programming Service remains owned or Controlled by Time Warner. PP) "Turner-Affiliated Video Programming Services" means each Video Programming Service, whether or not satellite-delivered, that is owned, Controlled by, or Affiliated with Turner on the Closing Date, and includes (1) WTBS, (2) any such Video Programming Service and WTBS that is transferred after the Closing Date to another part of Time Warner (including TWE), and (3) any Video Programming Service created after the Closing Date that Time Warner owns, Controls or is Affiliated with that is not owned, Controlled by, or Affiliated with TWE, for so long as the Video Programming Service remains owned, Controlled by, or affiliated with Time Warner. QQ) "TWE" means Time Warner Entertainment Company, L.P., all of its officers, employees, Agents, Representatives, and also includes (1) all of its predecessors, successors, assigns, subsidiaries, divisions, including, but not limited to, Time Warner Cable, and the respective successors and assigns of any of the foregoing, but excluding Turner; and (2) partnerships, joint ventures, and affiliates that Time Warner Entertainment Company, L.P., Controls, directly or indirectly. RR) "TWE's Management Committee" means the Management Committee established in Section 8 of the Admission Agreement dated May 16, 1993, between TWE and U S West, Inc., and any successor thereof, and includes any management committee in any successor agreement that provides for membership on the management committee for non-Time Warner individuals. SS) "TWE Video Programming Services" means each Video Programming Service owned or Controlled by TWE on the Closing Date, and includes (1) any such Video Programming Service transferred after the Closing Date to another part of Time Warner and (2) any Video Programming Service created after the Closing Date that TWE owns or Controls, for so long as the Video Programming Service remains owned or Controlled by TWE. TT) "TWE-Affiliated Video Programming Services" means each Video Programming Service, whether or not satellite-delivered, that is owned, Controlled by, or Affiliated with TWE, and includes (1) any such Video Programming Service transferred after the Closing Date to another part of Time Warner and (2) any Video Programming Service created after the Closing Date that TWE owns or Controls, or is Affiliated with, for so long as the Video Programming Service remains owned, Controlled by, or Affiliated with TWE. VV) "Unaffiliated MVPD" means an MVPD which is not owned, Controlled by, or Affiliated with Time Warner. WW) "United States" means the fifty states, the District of Columbia, and all territories, dependencies, or possessions of the United States of America. XX) "Video Programming Service" means a satellite-delivered video programming service that is offered, alone or with other services, to MVPDs in the United States. It does not include pay-per-view programming service(s), interactive programming service(s), over-the-air television broadcasting, or satellite broadcast programming as defined in 47 C.F.R. Section 76.1000(f) as that rule read on July 1, 1996. YY) "Video Programming Vendor" means a Person engaged in the production, creation, or wholesale distribution to MVPDs of Video Programming Services for sale in the United States. ZZ) "WTBS" means the television broadcast station popularly known as TBS Superstation, and includes any Video Programming Service that may be a successor to WTBS, including Converted WTBS. II. IT IS ORDERED that: (A) TCI and LMC shall divest TCI's and LMC's Interest in Time Warner and TCI's and LMC's Turner-Related Businesses to The Separate Company by: (1) combining TCI's and LMC's Interest in Time Warner Inc. and TCI's and LMC's Turner-Related Businesses in The Separate Company; (2) distributing The Separate Company stock to the holders of Liberty Tracking Stock ("Distribution"); and (3) using their best efforts to ensure that The Separate Company's stock is registered or listed for trading on the Nasdaq Stock Market or the New York Stock Exchange or the American Stock Exchange. (B) TCI and LMC shall make all regulatory filings, including, but not limited to, filings with the Federal Communications Commission and the Securities and Exchange Commission that are necessary to accomplish the requirements of Paragraph II(A). (C) TCI, LMC, and The Separate Company shall ensure that: (1) The Separate Company's by-laws obligate The Separate Company to be bound by this order and contain provisions ensuring compliance with this order; (2) The Separate Company's board of directors at the time of the Distribution are subject to the prior approval of the Commission; (3) The Separate Company shall, within six (6) months of the Distribution, call a shareholder's meeting for the purpose of electing directors; (4) No member of the board of directors of The Separate Company, both at the time of the Distribution and pursuant to any election now or at any time in the future, shall, at the time of his or her election or while serving as a director of The Separate Company, be an officer, director, or employee of TCI or LMC or shall hold, or have under his or her direction or Control, greater than one-tenth of one percent (0.1%) of the voting power of TCI and one-tenth of one percent (0.1%) of the Ownership Interest in TCI or greater than one-tenth of one percent (0.1%) of the voting power of LMC and one-tenth of one percent (0.1%) of the Ownership Interest in LMC; (5) No officer, director or employee of TCI or LMC shall concurrently serve as an officer or employee of The Separate Company. Provided further, that TCI or LMC employees who are not TCI Control Shareholders or directors or officers of either Tele-Communications, Inc. or Liberty Media Corporation may provide to The Separate Company services contemplated by the attached Transition Services Agreement; (6) The TCI Control Shareholders shall promptly exchange the shares of stock received by them in the Distribution for shares of one or more classes or series of convertible preferred stock of The Separate Company that shall be entitled to vote only on the following issues on which a vote of the shareholders of The Separate Company is required: a proposed merger; consolidation or stock exchange involving The Separate Company; the sale, lease, exchange or other disposition of all or substantially all of The Separate Company's assets; the dissolution or winding up of The Separate Company; proposed amendments to the corporate charter or bylaws of The Separate Company; proposed changes in the terms of such classes or series; or any other matters on which their vote is required as a matter of law (except that, for such other matters, The Separate Company and the TCI Control Shareholders shall ensure that the TCI Control Shareholders' votes are apportioned in the exact ratio as the votes of the rest of the shareholders); (7) No vote on any of the proposals listed in subparagraph (6) shall be successful unless a majority of shareholders other than the TCI Control Shareholders vote in favor of such proposal; (8) After the Distribution, the TCI Control Shareholders shall not seek to influence, or attempt to control by proxy or otherwise, any other Person's vote of The Separate Company stock; (9) After the Distribution, no officer, director or employee of TCI or LMC, or any of the TCI Control Shareholders shall communicate, directly or indirectly, with any officer, director, or employee of The Separate Company. Provided, however, that the TCI Control Shareholders may communicate with an officer, director or employee of The Separate Company when the subject is one of the issues listed in subparagraph 6 on which TCI Control Shareholders are permitted to vote, except that, when a TCI Control Shareholder seeks to initiate action on a subject listed in subparagraph 6 on which the TCI Control Shareholders are permitted to vote, the initial proposal for such action shall be made in writing. Provided further, that this provision does not apply to communications by TCI or LMC employees who are not TCI Control Shareholders or directors or officers of either Tele-Communications, Inc. or Liberty Media Corporation in the context of providing to The Separate Company services contemplated by the attached Transition Services Agreement or to communications relating to the possible purchase of services from TCI's and LMC's Turner-Related Businesses; (10) The Separate Company shall not acquire or hold greater than 14.99% of the Fully Diluted Equity of Time Warner. Provided, however, that, if the TCI Control Shareholders reduce their collective holdings in The Separate Company to no more than one-tenth of one percent (0.1%) of the voting power of The Separate Company and one-tenth of one percent (0.1%) of the Ownership Interest in The Separate Company or reduce their collective holdings in TCI and LMC to no more than one-tenth of one percent (0.1%) of the voting power of TCI and one-tenth of one percent (0.1%) of the Ownership Interest in TCI and one-tenth of one percent (0.1%) of the voting power of LMC and one-tenth of one percent (0.1%) of the Ownership Interest in LMC, then The Separate Company shall not be prohibited by this order from increasing its holding of Time Warner stock beyond that figure; and (11) The Separate Company shall not acquire or hold, directly or indirectly, any Ownership Interest in Time Warner that is entitled to exercise voting power except (a) a vote of one-one hundredth (1/100) of a vote per share owned, voting with the outstanding common stock, with respect to the election of directors and (b) with respect to proposed changes in the charter of Time Warner Inc. or of the instrument creating such securities that would (i) adversely change any of the terms of such securities or (ii) adversely affect the rights, power, or preferences of such securities. Provided, however, that any portion of The Separate Company's stock in Time Warner that is sold to an Independent Third Party may be converted into voting stock of Time Warner. Provided, further, that, if the TCI Control Shareholders reduce their collective holdings in The Separate Company to no more than one-tenth of one percent (0.1%) of the voting power of The Separate Company and one-tenth of one percent (0.1%) of the Ownership Interest in The Separate Company or reduce their collective holdings in both TCI and LMC to no more than one-tenth of one percent (0.1%) of the voting power of TCI and one-tenth of one percent (0.1%) of the Ownership Interest in TCI and one-tenth of one percent (0.1%) of the voting power of LMC and one-tenth of one percent (0.1%) of the Ownership Interest in LMC, The Separate Company's Time Warner stock may be converted into voting stock of Time Warner. (D) TCI and LMC shall use their best efforts to obtain a private letter ruling from the Internal Revenue Service to the effect that the Distribution will be generally tax-free to both the Liberty Tracking Stock holders and to TCI under Section 355 of the Internal Revenue Code of 1986, as amended ("IRS Ruling"). Upon receipt of the IRS Ruling, TCI and LMC shall have thirty (30) days (excluding time needed to comply with the requirements of any federal securities and communications laws and regulations, provided that TCI and LMC shall use their best efforts to comply with all such laws and regulations) to carry out the requirements of Paragraph II(A) and (B). Pending the IRS Ruling, or in the event that TCI and LMC are unable to obtain the IRS Ruling, (1) TCI, LMC, Bob Magness and John C. Malone, collectively or individually, shall not acquire or hold, directly or indirectly, an Ownership Interest that is more than the lesser of 9.2% of the Fully Diluted Equity of Time Warner or 12.4% of the actual issued and outstanding common stock of Time Warner, as determined by generally accepted accounting principles. Provided, however, that day-to-day market price changes that cause any such holding to exceed the latter threshold shall not be deemed to cause the parties to be in violation of this subparagraph; and (2) TCI, LMC and the TCI Control Shareholders shall not acquire or hold any Ownership Interest in Time Warner that is entitled to exercise voting power except (a) a vote of one-one hundredth (1/100) of a vote per share owned, voting with the outstanding common stock, with respect to the election of directors and (b) with respect to proposed changes in the charter of Time Warner Inc. or of the instrument creating such securities that would (i) adversely change any of the terms of such securities or (ii) adversely affect the rights, power, or preferences of such securities. Provided, however, that any portion of TCI's and LMC's Interest in Time Warner that is sold to an Independent Third Party may be converted into voting stock of Time Warner. In the event that TCI and LMC are unable to obtain the IRS Ruling, TCI and LMC shall be relieved of the obligations set forth in subparagraphs (A), (B) and (C). III. IT IS FURTHER ORDERED that After the Distribution, TCI, LMC, Bob Magness and John C. Malone, collectively or individually, shall not acquire or hold, directly or indirectly, any voting power of, or other Ownership Interest in, Time Warner that is more than the less of 1% of the Fully Diluted Equity of Time Warner or 1.35% of actual issued and outstanding common stock of Time Warner, as determined by generally accepted accounting principles (provided, however, that such interest shall not vote except as provided in Paragraph II(D)(2)), without the prior approval of the Commission. Provided, further, that day-to-day market price changes that cause any such holding to exceed the latter threshold shall not be deemed to cause the parties to be in violation of this Paragraph. IV. IT IS FURTHER ORDERED that (A) For six months after the Closing Date, TCI and Time Warner shall not enter into any new Programming Service Agreement that requires carriage of any Turner Video Programming Service on any analog Tier of TCI's CATVs. (B) Any Programming Service Agreement entered into thereafter that requires carriage of any Turner Video Programming Service on TCI's CATVs on an analog Tier shall be limited in effective duration to five (5) years, except that such agreements may give TCI the unilateral right(s) to renew such agreements for one or more five-year periods. (C) Notwithstanding the foregoing, Time Warner, Turner and TCI may enter into, prior to the Closing Date, agreements that require carriage on an analog Tier by TCI for no more than five years for each of WTBS (with the five year period to commence at the time of WTBS' conversion to Converted WTBS) and Headline News, and such agreements may give TCI the unilateral right(s) to renew such agreements for one or more five-year periods. V. IT IS FURTHER ORDERED that Time Warner shall not, expressly or impliedly: (A) refuse to make available or condition the availability of HBO to any MVPD on whether that MVPD or any other MVPD agrees to carry any Turner-Affiliated Video Programming Service; (B) condition any Carriage Terms for HBO to any MVPD on whether that MVPD or any other MVPD agrees to carry any Turner-Affiliated Video Programming Service; (C) refuse to make available or condition the availability of each of CNN, WTBS, or TNT to any MVPD on whether that MVPD or any other MVPD agrees to carry any TWE-Affiliated Video Programming Service; or (D) condition any Carriage Terms for each of CNN, WTBS, or TNT to any MVPD on whether that MVPD or any other MVPD agrees to carry any TWE-Affiliated Video Programming Service. VI. IT IS FURTHER ORDERED that (A) For subscribers that a Competing MVPD services in the Service Area Overlap, Time Warner shall provide, upon request, any Turner Video Programming Service to that Competing MVPD at Carriage Terms no less favorable, relative to the Carriage Terms then offered by Time Warner for that Service to the three MVPDs with the greatest number of subscribers, than the Carriage Terms offered by Turner to Similarly Situated MVPDs relative to the Carriage Terms offered by Turner to the three MVPDs with the greatest number of subscribers for that Service on July 30, 1996. For Turner Video Programming Services not in existence on July 30, 1996, the pre-Closing Date comparison will be to relative Carriage Terms offered with respect to any Turner Video Programming Service existing as of July 30, 1996. (B) Time Warner shall be in violation of this Paragraph if the Carriage Terms it offers to the Competing MVPD for those subscribers outside the Service Area Overlap are set at a higher level compared to Similarly Situated MVPDs so as to avoid the restrictions set forth in subparagraph (A). VII. IT IS FURTHER ORDERED that (A) Time Warner shall not require a financial interest in any National Video Programming Service as a condition for carriage on one or more Time Warner CATVs. (B) Time Warner shall not coerce any National Video Programming Vendor to provide, or retaliate against such a Vendor for failing to provide exclusive rights against any other MVPD as a condition for carriage on one or more Time Warner CATVs. (C) Time Warner shall not engage in conduct the effect of which is to unreasonably restrain the ability of a Non-Time Warner National Video Programming Vendor to compete fairly by discriminating in video programming distribution on the basis of affiliation or nonaffiliation of Vendors in the selection, terms, or conditions for carriage of video programming provided by such Vendors. VIII. IT IS FURTHER ORDERED that (A) Time Warner shall collect the following information, on a quarterly basis: (1) for any and all offers made to Time Warner's corporate office by a Non-Time Warner National Video Programming Vendor to enter into or to modify any Programming Service Agreement for carriage on a Time Warner CATV, in that quarter: a) the identity of the National Video Programming Vendor; b) a description of the type of programming; c) any and all Carriage Terms as finally agreed to or, when there is no final agreement but the Vendor's initial offer is more than three months old, the last offer of each side; d) any and all commitment(s) to a roll-out schedule, if applicable, as finally agreed to or, when there is no final agreement but the Vendor's initial offer is more than three months old, the last offer of each side; e) a copy of any and all Programming Service Agreement(s) as finally agreed to or, when there is no final agreement but the Vendor's initial offer is more than three months old, the last offer of each side; and (2) on an annual basis for each National Video Programming Service on Time Warner CATVs, the actual carriage rates on Time Warner CATVs and (a) the average carriage rates on all Non-Time Warner CATVs for each National Video Programming Service that has publicly-available information from which Penetration Rates can be derived; and (b) the carriage rates on each of the fifty (50) largest (in total number of subscribers) Non-Time Warner CATVs for each National Video Programming Service that has publicly-available information from which Penetration Rates can be derived. (B) The information collected pursuant to subparagraph (A) shall be provided to each member of TWE's Management Committee on the last day of March, June, September and December of each year. Provided, however, that, in the event TWE's Management Committee ceases to exist, the disclosures required in this Paragraph shall be made to any and all partners in TWE; or, if there are no partners in TWE, then the disclosures required in this Paragraph shall be made to the Audit Committee of Time Warner. (C) The General Counsel within TWE who is responsible for CATV shall annually certify to the Commission that it believes that Time Warner is in compliance with Paragraph VII of this order. (D) Time Warner shall retain all of the information collected as required by subparagraph (A), including information on when and to whom such information was communicated as required herein in subparagraph (B), for a period of five (5) years. IX. IT IS FURTHER ORDERED that (A) By February 1, 1997, Time Warner shall execute a Programming Service Agreement with at least one Independent Advertising-Supported News and Information National Video Programming Service, unless the Commission determines, upon a showing by Time Warner, that none of the offers of Carriage Terms are commercially reasonable. (B) If all the requirements of either subparagraph (A) or (C) are met, Time Warner shall carry an Independent Advertising-Supported News and Information Video Programming Service on Time Warner CATVs at Penetration Rates no less than the following: (1) If the Service is carried on Time Warner CATVs as of July 30, 1996, Time Warner must make the Service available: (a) By July 30, 1997, so that it is available to 30% of the Total Subscribers of all Time Warner CATVs at that time; and (b) By July 30, 1999, so that it is available to 50% of the Total Subscribers of all Time Warner CATVs at that time. (2) If the Service is not carried on Time Warner CATVs as of July 30, 1996, Time Warner must make the Service available: (a) By July 30, 1997, so that it is available to 10% of the Total Subscribers of all Time Warner CATVs at that time; (b) By July 30, 1999, so that it is available to 30% of the Total Subscribers of all Time Warner CATVs at that time; and (c) By July 30, 2001, so that it is available to 50% of the Total Subscribers of all Time Warner CATVs at that time. (C) If, for any reason, the Independent Advertising-Supported News and Information National Video Programming Service chosen by Time Warner ceases operating or is in material breach of its Programming Service Agreement with Time Warner at any time before July 30, 2001, Time Warner shall, within six months of the date that such Service ceased operation or the date of termination of the Agreement because of the material breach, enter into a replacement Programming Service Agreement with a replacement Independent Advertising-Supported News and Information National Video Programming Service so that replacement Service is available pursuant to subparagraph (B) within three months of the execution of the replacement Programming Service Agreement, unless the Commission determines, upon a showing by Time Warner, that none of the Carriage Terms offered are commercially reasonable. Such replacement Service shall have, six months after the date the first Service ceased operation or the date of termination of the first Agreement because of the material breach, contractual commitments to supply its Service to at least 10 million subscribers on Unaffiliated MVPDs, or, together with the contractual commitments it will obtain from Time Warner, total contractual commitments to supply its Service to 15 million subscribers; if no such Service has such contractual commitments, then Time Warner may choose from among the two Services with contractual commitments with Unaffiliated MVPDs for the largest number of subscribers. X. IT IS FURTHER ORDERED that: (A) Within sixty (60) days after the date this order becomes final and every sixty (60) days thereafter until respondents have fully complied with the provisions of Paragraphs IV(A) and IX(A) of this order and, with respect to Paragraph II, until the Distribution, respondents shall submit jointly or individually to the Commission a verified written report or reports setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II, IV(A) and IX(A) of this order. (B) One year (1) from the date this order becomes final, annually for the next nine (9) years on the anniversary of the date this order becomes final, and at other times as the Commission may require, respondents shall file jointly or individually a verified written report or reports with the Commission setting forth in detail the manner and form in which they have complied and are complying with each Paragraph of this order. XI. IT IS FURTHER ORDERED that respondents shall notify the Commission at least thirty (30) days prior to any proposed change in respondents (other than this Acquisition) such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of the order. XII. IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this order, and subject to any legally recognized privilege, upon written request, respondents shall permit any duly authorized representative of the Commission: 1. Access, during regular business hours upon reasonable notice and in the presence of counsel for respondents, to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of respondents relating to any matters contained in this order; and 2. Upon five days' notice to respondents and without restraint or interference from it, to interview officers, directors, or employees of respondents, who may have counsel present, regarding such matters. XIII. IT IS FURTHER ORDERED THAT this order shall terminate ten (10) years from the date this order becomes final. Signed this _____ day of _______________, 19____. TIME WARNER INC., A CORPORATION By: _________________________ Gerald M. Levin _________________________ Counsel for Time Warner Inc. TURNER BROADCASTING SYSTEM, INC., A CORPORATION By: ________________________ General Counsel ________________________ Counsel for Turner Broadcasting System, Inc. TELE-COMMUNICATIONS, INC., A CORPORATION By: ________________________ John C. Malone ________________________ Counsel for Tele-Communications, Inc. LIBERTY MEDIA CORPORATION, A CORPORATION By: ________________________ Vice President ________________________ Counsel for Liberty Media Corporation FEDERAL TRADE COMMISSION By: ________________________ James A. Fishkin Attorney Bureau of Competition Approved: ________________________ Robert W. Doyle, Jr. Deputy Assistant Director Bureau of Competition ________________________ George S. Cary Senior Deputy Director Bureau of Competition ________________________ William J. Baer Director Bureau of Competition Appendix I UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION - --------------------------------) ) ) In the Matter of ) ) TIME WARNER INC., ) a corporation; ) ) TURNER BROADCASTING ) SYSTEM, INC., ) a corporation; ) ) File No. 961-0004 TELE-COMMUNICATIONS, INC., ) a corporation; and ) ) LIBERTY MEDIA CORPORATION, ) a corporation. ) ) - --------------------------------) INTERIM AGREEMENT This Interim Agreement is by and between Time Warner Inc. ("Time Warner"), a corporation organized, existing, and doing business under and by virtue of the law of the State of Delaware, with its office and principal place of business at New York, New York; Turner Broadcasting System, Inc. ("Turner"), a corporation organized, existing, and doing business under and by virtue of the law of the State of Georgia with its office and principal place of business at Atlanta, Georgia; Tele-Communications, Inc. ("TCI"), a corporation organized, existing, and doing business under and by virtue of the law of the State of Delaware, with its office and principal place of business located at Englewood, Colorado; Liberty Media Corp. ("LMC"), a corporation organized, existing and doing business under and by virtue of the law of the State of Delaware, with its office and principal place of business located at Englewood, Colorado; and the Federal Trade Commission ("Commission"), an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, 15 U.S.C. ss. 41 et seq. Interim Agreement Page 2 of 5 WHEREAS Time Warner entered into an agreement with Turner for Time Warner to acquire the outstanding voting securities of Turner, and TCI and LMC proposed to acquire stock in Time Warner (hereinafter "the Acquisition"); WHEREAS the Commission is investigating the Acquisition to determine whether it would violate any statute enforced by the Commission; WHEREAS TCI and LMC are willing to enter into an Agreement Containing Consent Order (hereafter "Consent Order") requiring them, inter alia, to divest TCI's and LMC's Interest in Time Warner and TCI's and LMC's Turner-Related Businesses," by contributing those interests to a separate corporation, The Separate Company, the stock of which will be distributed to the holders of Liberty Tracking Stock ("the Distribution"), but, in order to fulfill paragraph II(D) of that Consent Order, TCI and LMC must apply now to receive an Internal Revenue Service ruling as to whether the Distribution will be generally tax-free to both the Liberty Tracking Stock holders and to TCI under Section 355 of the Internal Revenue Code of 1986, as amended ("IRS Ruling"); WHEREAS "TCI's and LMC's Interest in Time Warner" means all of the economic interest in Time Warner to be acquired by TCI and LMC, including the right of first refusal with respect to Time Warner stock to be held by R. E. Turner, III, pursuant to the Shareholders Agreement dated September 22, 1995 with LMC or any successor agreement; WHEREAS "TCI's and LMC's Turner-Related Businesses" means the businesses conducted by Southern Satellite Systems, Inc., a subsidiary of TCI which is principally in the business of distributing WTBS to MVPDs; WHEREAS "Liberty Tracking Stock" means Tele-Communications, Inc. Series A Liberty Media Group Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock; WHEREAS Time Warner, Turner, TCI, and LMC are willing to enter into a Consent Order requiring them, inter alia, to forego entering into certain new programming service agreements for a period of six months from the date that the parties close this Acquisition ("Closing Date"), but, in order to comply more fully with that requirement, they must cancel now the two agreements that were negotiated as part of this Acquisition: namely, (1) the September 15, 1995, program service agreement between TCI's subsidiary, Satellite Services, Inc. ("SSI"), and Turner and (2) the September 14, 1995, cable carriage agreement between SSI and Time Warner for WTBS (hereafter "Two Programming Service Agreements"); WHEREAS if the Commission accepts the attached Consent Order, the Commission is required to place the Consent Order on the public record for a period of at least sixty (60) Interim Agreement Page 3 of 5 days and may subsequently withdraw such acceptance pursuant to the provisions of Rule 2.34 of the Commission's Rules of Practice and Procedure, 16 C.F.R. ss. 2.34; WHEREAS the Commission is concerned that if the parties do not, before this order is made final, apply to the IRS for the IRS Ruling and cancel the Two Programming Service Agreements, compliance with the operative provisions of the Consent Order might not be possible or might produce a less than effective remedy; WHEREAS Time Warner, Turner, TCI, and LMC's entering into this Agreement shall in no way be construed as an admission by them that the Acquisition is illegal; WHEREAS Time Warner, Turner, TCI, and LMC understand that no act or transaction contemplated by this Agreement shall be deemed immune or exempt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement; NOW, THEREFORE, upon understanding that the Commission has not yet determined whether the Acquisition will be challenged, and in consideration of the Commission's agreement that, unless the Commission determines to reject the Consent Order, it will not seek further relief from Time Warner, Turner, TCI, and LMC with respect to the Acquisition, except that the Commission may exercise any and all rights to enforce this Agreement and the Consent Order to which this Agreement is annexed and made a part thereof, the parties agree as follows: 1. Within thirty (30) days of the date the Commission accepts the attached Consent Order for public comment, TCI and LMC shall apply to the IRS for the IRS Ruling. 2. On or before the Closing Date, Time Warner, Turner and TCI shall cancel the Two Programming Service Agreements. 3. This Agreement shall be binding when approved by the Commission. Dated: _____________________ FOR THE FEDERAL TRADE COMMISSION Interim Agreement Page 4 of 5 - ---------------------- - ---------------------- Stephen Calkins General Counsel FOR TIME WARNER INC., A CORPORATION By: ________________________ Gerald A. Levin ________________________ Counsel for Time Warner Inc. FOR TURNER BROADCASTING SYSTEM, INC., A CORPORATION By: ________________________ General Counsel ________________________ Counsel for Turner Broadcasting System, Inc. FOR TELE-COMMUNICATIONS, INC., A CORPORATION By: ________________________ John C. Malone ________________________ Counsel for Tele-Communications, Inc. FOR LIBERTY MEDIA CORPORATION, A CORPORATION By: ________________________ Vice President ________________________ Counsel for Liberty Media Corporation EX-10 4 EXHIBIT 10A SECOND AMENDED AND RESTATED LMC AGMT SECOND AMENDED AND RESTATED LMC AGREEMENT, dated as of September 22, 1995 (this "Agreement"), among TIME WARNER INC., a Delaware corporation, TW INC., a Delaware corporation ("Holdco"), LIBERTY MEDIA CORPORATION, a Delaware corporation ("LMC Parent"), TCI TURNER PREFERRED, INC., a Colorado corporation ("TCITP"), and certain, other subsidiaries of LMC Parent listed with TCITP under "Subsidiaries of LMC Parent" on the signature pages hereto (TCITP and such subsidiaries collectively, the "Shareholders"). Recitals A. This Agreement amends and restates in its entirety the Amended and Restated LMC Agreement, dated as of September 22, 1995 (the "Amended LMC Agreement"), among the parties hereto, which in turn amended and restated the LMC Agreement dated as of September 22, 1995 (the "Original LMC Agreement"), among Old TW, LMC Parent, LMC Sub and the other Shareholders. B. The Original LMC Agreement was entered into concurrently with, and in contemplation of, the Agreement and Plan of Merger dated as of September 22, 1995 (the "Original Merger Agreement"), among Old TW, Time Warner Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Old TW ("Delaware Sub"), and Turner Broadcasting System, Inc., a Georgia corporation (the "Company"), providing for the merger of the Company with and into Delaware Sub. C. The Amended LMC Agreement was entered into concurrently with, and in contemplation of, (1) the Original Merger Agreement being amended and restated (as so amended and restated, and as amended by Amendment No. 1 thereto dated as of August 8, 1996, the "Amended and Restated Merger Agreement") to provide for, among other things, a tax-free incorporation transaction under Section 351 of the Internal Revenue Code of 1986, as amended, as contemplated by Section 1.01 of the Original Merger Agreement, and (2) both Holdco and TW Acquisition Corp., a Georgia corporation and direct wholly owned subsidiary of Holdco ("Georgia Sub"), becoming parties to the Amended and Restated Merger Agreement. Holdco is currently a direct wholly owned subsidiary of Old TW, and Delaware Sub is a direct wholly owned subsidiary of Holdco. The Amended and Restated Merger Agreement provides for the merger of Delaware Sub into Old TW (the "TW Merger") and the simultaneous merger of Georgia Sub into the Company (the "TBS Merger" and, collectively with the TW Merger, the "Mergers"), in a transaction in which the outstanding capital stock of Old TW and the Company, respectively, will be converted into capital stock of Holdco, and each of Old TW and the Company will become a wholly owned subsidiary of Holdco. D. The TBS Merger is subject to certain conditions, including the approval of the TBS Merger and the approval and adoption of the Amended and Restated Merger Agreement: by the holders of a majority of the outstanding shares of Class C Convertible Preferred Stock, par value $.125 per share, of the Company (the "Class C Preferred Stock"), voting as a separate class; by the holders of a majority of the voting power of the outstanding shares of Class A Common Stock, par value $.0625 per share, of the Company (the "Class A Common Stock"), and Class B Common Stock, par value $.0625 per share, of the Company (the "Class B Common Stock"; together with the Class A Common Stock, the "Common Stock"), voting as a single class; and by the holders of a majority of the voting power of the outstanding shares of Common Stock and Class C Preferred Stock, voting as a single class. E. Each Shareholder is the record and beneficial owner of the number of shares of Class A Common Stock, Class B Common Stock and Class C Preferred Stock, set forth opposite such Shareholder's name on Schedule I hereto (such shares of Class A Common Stock, Class B Common Stock and Class C Preferred Stock, together with any shares of capital stock of the Company acquired by such Shareholder after September 22, 1995 and prior to the Effective Time of the Mergers, being collectively referred to herein as the "Shareholder Shares"). F. The TBS Merger is also subject to the condition that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have expired. In connection therewith, Old TW, Tele-Communications, Inc., a Delaware corporation ("TCI"), LMC Parent and the Company have entered into an Agreement Containing Consent Order (the "ACCO") dated as of August , 1996, and an Interim Agreement in the form attached as Appendix I to the ACCO, with the Federal Trade Commission (the "FTC"), which contemplates the issuance of an Order (the ACCO, together with such Order and the Interim Agreement, in each case as the same may be amended or modified from time to time hereafter, the "FTC Consent Decree"). G. Old TW, Holdco, LMC Parent and the Shareholders desire to amend and restate in its entirety the Amended LMC Agreement and the Original LMC Agreement as amended thereby, as provided herein. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. Capitalized terms used but not defined herein and the term "subsidiary" shall have the meanings assigned to such terms in the Amended and Restated Merger Agreement. In this Agreement: "Action" shall mean any of (i) the direct or indirect acquisition (through purchase, exchange, merger or consolidation, exercise of rights or otherwise) by TW Parent or any Controlled Affiliate of TW Parent of any assets, securities or business; (ii) any merger or consolidation of TW Parent with or into any other person; (iii) the commencement by TW Parent or any of its Controlled Affiliates of any new business; (iv) any investment by TW Parent or any Controlled Affiliate of TW Parent in any other person; and (v) the sale or issuance by TW Parent or any Controlled Affiliate of TW Parent of TW Securities to any person or the repurchase, redemption or other acquisition by TW Parent or any Controlled Affiliate of TW Parent of any TW Securities; excluding, in all of the cases, any of the foregoing actions that TW Parent or any Controlled Affiliate of TW Parent is required to take pursuant to, or that is expressly contemplated by, this Agreement, the Amended and Restated Merger Agreement, (prior to the execution and delivery of the Amended and Restated Merger Agreement) the Original Merger Agreement, any Additional Agreement or any other agreement expressly contemplated by this Agreement, the Amended and Restated Merger Agreement or any Additional Agreement. "Additional Agreements" shall mean the Registration Rights Agreement, the First Refusal Agreement, the SSSI Agreement, the Distribution Contract, the Rights Amendment (if entered into), the SportSouth Agreement, the Sunshine Agreement, the Contribution and Exchange Agreement and the Program and Digitization Agreement. "Adjustment Amount", with respect to the disposition of any TW Securities as to which TW Parent is obligated to pay an Adjustment Amount to a Liberty Party or a SpinCo Party, means an amount equal to the Nominal Tax Amount divided by the Gross-up Factor. For purposes of this definition, the "Nominal Tax Amount" means an amount equal to the product of (i) the gain or income recognized for Federal income tax purposes from the disposition of such TW Securities and (ii) the Blended Rate, and the "Gross-up Factor" is equal to 1 minus the Blended Rate. "Affiliate", when used with respect to a specified person, means any other person which directly or indirectly Controls, is under common Control with or is Controlled by such first person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. For purposes of this Agreement: (i). no Liberty Party or SpinCo Party shall be deemed to be an Affiliate of TW Parent or any of its subsidiaries and neither TW Parent nor any of its Affiliates shall be deemed to be an Affiliate of any Liberty Party or SpinCo Party; prior to the effective time of the TBS Merger, neither TW Parent nor any of its Affiliates nor TCI, LMC Parent or any of their respective Affiliates shall be deemed to be an Affiliate of the Company or any of its subsidiaries; and after the effective time of the Distribution, in determining whether any person is an Affiliate of SpinCo, the SpinCo Convertible Preferred Stock shall be assumed to have been converted by the holders thereof into SpinCo Series A Common Stock and SpinCo Series B Common Stock, as applicable. "Blended Rate", as to any Liberty Party or SpinCo Party, as applicable, for any relevant taxable year, means the tax rate that is the highest combined corporate Federal, state and local marginal capital gain rate (determined by taking into account any deduction for net capital gain) applicable to gain or income upon dispositions of TW Securities beneficially owned by such Liberty Party or SpinCo Party during such taxable year as contemplated by Section 4.3 and Section 4.4(a), provided, however, that if the tax liability of the Liberty Party (or of the consolidated group of which such Liberty Party is a member for tax purposes) or of the SpinCo Party (or of the consolidated group of which such SpinCo Party is a member for tax purposes) with respect to such income or gain for such taxable year is not determined under Section 1201 of the Internal Revenue Code of 1986, as amended (or any successor Section), such tax rate shall be the highest combined regular corporate Federal, state and local ordinary income tax rate applicable to such Liberty Party (or such consolidated group) or such SpinCo Party (or such consolidated group), as applicable, for such taxable year. Such tax rate shall be determined taking into account such Liberty Party's (or its consolidated group's) or such SpinCo Party's (or its consolidated group's) relevant state and local apportionment factors with respect to such gain or income, the deductibility of state and local taxes for Federal income tax purposes (and the deductibility of taxes imposed by any taxing jurisdiction for purposes of computing the tax liability to any other taxing jurisdiction), the dividends received deduction (where such gain or income is eligible for such deduction) and any other relevant considerations. "Change in Control Event" shall mean any of the following events: (i) any person becoming an Acquiring Person (as defined in the Rights Agreement as in effect on September 22, 1995, as if amended in accordance with the Rights Amendment), including any person that would otherwise be excluded from the definition of Acquiring Person in the Rights Agreement by virtue of the acquisition of shares pursuant to a Qualifying Offer (as defined in the Rights Agreement as in effect on September 22, 1995, as if amended in accordance with the Rights Amendment) and regardless of whether the Rights Agreement continues to be in effect or is so amended, or (ii) TW Parent's entering into any agreement (other than the Original Merger Agreement, the Amended and Restated Merger Agreement or any amendment thereto) providing for any merger or consolidation of TW Parent into any other person, a binding share exchange, or a merger of TW Parent with any other person in which the shares of capital stock of TW Parent are exchanged for or converted into the right to receive anything other than common stock, par value $1.00 per share, of TW Parent, or (iii) prior to the Closing, Holdco ceasing to be a wholly owned subsidiary of Old TW or entering into any agreement (other than the Amended and Restated Merger Agreement or any amendment thereto) that would result in Holdco ceasing to be a wholly owned subsidiary of Old TW. "Communications Laws" shall mean the Communications Act of 1934 (as amended and supplemented from time to time and any successor statute or statutes regulating telecommunications companies) and the rules and regulations (and interpretations thereof and determinations with respect thereto) promulgated, issued or adopted from time to time by the FCC. All references herein to the Communications Laws shall include as of any relevant date in question the Communications Laws as then in effect (including any Communications Law or part thereof the effectiveness of which is then stayed) and as then formally proposed by the FCC by publication in the Federal Register or promulgated with a delayed effective date. "Company Letter" shall mean those certain letters dated September 22, 1995, December 1, 1995, and August 8, 1996, from the Company to Old TW and LMC Parent. "Contract" shall mean any agreement, contract, commitment, indenture, lease, license, instrument, note, bond, security, undertaking, promise, covenant, or legally binding arrangement or understanding. "Contribution and Exchange Agreement" shall mean the Contribution and Exchange Agreement, dated as of September 22, 1995, to be entered into by Holdco, Old TW, TCITP and LBI, concurrently with the execution and delivery of this Agreement, and the Exhibit and Schedules thereto, a copy of which is annexed hereto as Exhibit I. "Control", as to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person (whether through ownership of securities, partnership interests or other ownership interests, by contract, by participation or involvement in the board of directors, management committee or other management structure of such person, or otherwise). The terms "Controlled", "Controlling" and similar variations shall have correlative meanings. "Controlled Affiliate" of any specified person shall mean an Affiliate of such specified person that is Controlled by such specified person and is not Controlled by another person (other than another Controlled Affiliate of the specified person), except that as used in the definition of "Action" in this Section 1.1, the term "Controlled Affiliate" shall include an Affiliate of the specified person that is also Controlled by another person if the specified person has the power (by contract, ownership of voting securities or otherwise) to cause such Affiliate to refrain from taking the Action in question. "Covered TW Securities" shall mean: (i) (A) the shares of TW Parent Common Stock beneficially owned by LMC Parent immediately following the consummation of the TBS Merger as a result of the conversion in the TBS Merger of the shares of Company Capital Stock beneficially owned by LMC Parent on September 22, 1995; (B) the shares of TW Parent Common Stock received by TCITP and LBI pursuant to the Contribution and Exchange Agreement in connection with their contribution to Holdco of the issued and outstanding shares of capital stock of UCTI, assuming that the shares of Company Capital Stock owned by UCTI did not include any shares of Company Capital Stock not beneficially owned by LMC Parent on September 22, 1995; and (ii) all shares of Holdco LMC Common Stock issued pursuant to the SSSI Agreement; and (iii) all shares of Holdco LMC Common Stock for which the shares of TW Parent Common Stock referred to in clause (i) above may be exchanged pursuant to Section 4.1; in each case as such shares may have been changed after issuance thereof. The number of Covered TW Securities shall be appropriately adjusted from time to time to take into account the occurrence of any stock dividends, splits, reverse splits, combinations and the like. "Distribution" means the proposed distribution by TCI to the holders of shares of Tele-Communications, Inc. Series A Liberty Media Group Common Stock, and to the holders of shares of Tele-Communications, Inc. Series B Liberty Media Group Common Stock, of all of the issued and outstanding shares of common stock of SpinCo. "Distribution Contract" shall mean the Distribution Contract, substantially in the form of Exhibit 1 to the SSSI Agreement, to be entered into by Holdco, SpinCo and Satellite, at or prior to the Closing (but will not become effective until the "Closing" under the SSSI Agreement). "Exchange Act" means the Securities Exchange Act of 1934, and the rules and regulations thereunder. "FCC" shall mean the Federal Communications Commission and any successor agency or other agency charged with the administration of any Communications Law. "First Refusal Agreement" shall mean the Stockholders Agreement substantially in the form of Exhibit B, to be entered into by Holdco, the Shareholders (other than UCTI), LBI and certain other shareholders of the Company at or prior to the Closing. "Holdco LMC Common Stock" shall mean the LMCN-V Common Stock and the Voting Holdco LMC Common Stock, collectively. "Holdco Rights Plan" shall have the meaning given to such term in Section 2.3(c). "Horizontal Rule" shall mean the rule promulgated by the FCC that is set forth at 47 C.F.R. 76.503 on September 22, 1995. "Judgment" shall mean any order, judgment, writ, decree, injunction, award or other determination, decision or ruling of any court, any other Governmental Entity or any arbitrator. "LBI" shall mean Liberty Broadcasting, Inc., an Oregon corporation. "Liberty Party" shall mean LMC Parent and each Affiliate of LMC Parent that is controlled by LMC Parent from time to time and, for so long as LMC Parent is an Affiliate of TCI, shall also mean TCI and each Affiliate of TCI that is controlled by TCI. "Lien" shall mean any pledge, claim, lien, charge, encumbrance or security interest of any kind or nature whatsoever. "LMCN-V Common Stock" shall mean the Series LMCN-V Common Stock of Holdco, having the terms set forth in Exhibit A. "Old TW" shall mean the Delaware corporation known as "Time Warner Inc." on September 22, 1995, and, in the event of any merger, consolidation or binding share exchange after such date (other than pursuant to the Amended and Restated Merger Agreement or any amendment thereto), any successor corporation. "Option Consideration" shall mean the shares of Holdco LMC Common Stock to be issued and delivered, and, if so elected by Holdco as provided in the SSSI Agreement, the cash to be paid by TW Parent pursuant to the SSSI Agreement in respect of the non-competition agreement and contract option contained therein (specifically excluding any amounts to be paid under the Distribution Contract). "person" shall have the meaning ascribed to such term in the Amended and Restated Merger Agreement and shall include any Governmental Entity. "Program and Digitization Agreement" shall mean the letter agreement, dated August __, 1996, between Satellite and the Company with respect to, among other things, the carriage by Satellite of certain programming services of the Company and Satellite's non- exclusive right to digitize, compress and reuplink certain programming services of the Company. "Prohibited Effect" shall mean the effect or consequence (in each case either immediately or following any notice, demand, hearing, proceeding, determination or other action by any Governmental Entity) (a)(i) of making the continued ownership by the Liberty Parties or any of them of any TW Securities then owned by the Liberty Parties or any of them illegal under any Specified Law or (ii) of making the continued ownership by the SpinCo Parties or any of them of any TW Securities then owned by the SpinCo Parties or any of them illegal under any Specified Law or (b) of imposing or resulting in the imposition under any Specified Law on the Liberty Parties or any of them or the SpinCo Parties or any of them of damages or penalties by reason of or as a result of the ownership by any of the Liberty Parties or SpinCo Parties of TW Securities or (c) of requiring the divestiture of, or resulting in the requirement to divest, any TW Securities by any Liberty Party or SpinCo Party under any Specified Law, or (d) of requiring, or resulting in the requirement, under any Specified Law that any Liberty Party or SpinCo Party discontinue any business or divest of any business or assets or that any license that such Liberty Party or SpinCo Party holds or is required to hold under the Communications Laws be modified in any significant respect or not be renewed as a result of such continued ownership. "Registration Rights Agreement" shall mean the LMC Registration Rights Agreement substantially in the form of Exhibit E, to be entered into by Holdco, LMC Parent, the Shareholders (other than UCTI), LBI and SpinCo at or prior to the Closing. "Requirement of Law", when used with respect to any person, shall mean any law, statute, code, rule, regulation or Judgment, and any interpretation of or determination with respect to any of the foregoing, of any court or other Governmental Entity applicable to or binding upon such person, or to which such person, any of its assets or any business conducted by it is subject, whether now existing or at any time hereafter enacted, promulgated, issued, entered or otherwise becoming effective. "Restriction Period" shall mean the period of time commencing on the date any Covered TW Securities are first issued and (i) if the Distribution does not occur, continuing until the first time that the ownership or deemed ownership by the Liberty Parties of the TW Parent Common Stock, Voting Holdco LMC Common Stock and other voting securities of TW Parent then owned by the Liberty Parties (assuming conversion in full of all LMCN-V Common Stock and the absence of any restriction on the exercise of the rights of a holder of voting securities of TW Parent) would not either (x) have a Prohibited Effect under any Communications Law (determined on the assumption that the Horizontal Rule, unless previously declared invalid by a final unappealable Judgment, is in full force and effect) or (y) violate the FTC Consent Decree; and (ii) if the Distribution occurs, continuing until the first time that both the ownership by the SpinCo Parties of the TW Parent Common Stock, Voting Holdco LMC Common Stock and other voting securities of TW Parent then owned by the SpinCo Parties (assuming conversion in full of all LMCN-V Common Stock and the absence of any restriction on the exercise of the rights of a holder of voting securities of TW Parent), and any deemed ownership of such TW Parent securities (assuming such conversion and absence of restrictions) by the Liberty Parties pursuant to any relevant attribution rules of the Communications Laws (assuming for this purpose the conversion of the SpinCo Convertible Preferred Stock into SpinCo Series A Common Stock and SpinCo Series B Common Stock, as applicable, by the holders thereof), would not either (x) have a Prohibited Effect under any Communications Law (determined on the assumption that the Horizontal Rule, unless previously declared invalid by a final unappealable Judgment, is in full force and effect) or (y) violate the FTC Consent Decree. Notwithstanding the foregoing, if any LMCN-V Common Stock is converted into TW Parent Common Stock or into Voting Holdco LMC Common Stock by any Liberty Party (other than in connection with the transfer thereof, whether voluntary or involuntary, to a person that is not a Liberty Party or SpinCo Party), then the Restriction Period shall be deemed to terminate upon such conversion with respect to the Liberty Parties and if any LMCN-V Common Stock is converted into TW Parent Common Stock or into Voting Holdco LMC Common Stock by any SpinCo Party (other than in connection with the transfer thereof, whether voluntary or involuntary, to a person that is not a Liberty Party or SpinCo Party), then the Restriction Period shall be deemed to terminate upon such conversion with respect to the SpinCo Parties. "Rights Amendment" shall mean those amendments described on Exhibit F to the terms of the Rights Agreement. "Satellite" shall mean Satellite Services, Inc., a Delaware corporation. "Specified Law", when used with respect to the Liberty Parties or SpinCo Parties, shall mean (i) the Communications Laws, (ii) any United States Federal law or statute and any law or statute of any state of the United States or of the District of Columbia, (iii) the rules and regulations (and interpretations thereof or determinations with respect thereto) of any agency charged with the administration of any Specified Law within the meaning of clause (ii), applicable to or binding upon a Liberty Party or SpinCo Party or to which a Liberty Party or SpinCo Party, any of its assets or any business conducted by it is subject and (iv) the FTC Consent Decree. Following the Distribution, "Specified Law" shall specifically exclude the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. All references herein to Specified Law shall include as of any relevant date in question each Specified Law as then in effect (including any Specified Law or part thereof the effectiveness of which is then stayed) and as then formally proposed by the relevant Governmental Entity or promulgated with a delayed effective date. "SpinCo" shall mean Southern Satellite Systems, Inc., a Georgia corporation, and any successor thereto by operation of law. "SpinCo Party" shall mean, after the effective time of the Distribution, SpinCo and each Affiliate of SpinCo that is Controlled by SpinCo from time to time and, for so long as SpinCo is an Affiliate of TCI, shall also mean TCI and each Affiliate of TCI that is Controlled by TCI. "SpinCo Convertible Preferred Stock" shall mean the classes or series of preferred stock of SpinCo to be issued immediately following the Distribution to John C. Malone, Bob Magness and Kearns-Tribune Corporation in exchange for their shares of SpinCo Series A Common Stock and in exchange for their shares of SpinCo Series B Common Stock, as contemplated by the FTC Consent Decree. One class or series of the SpinCo Convertible Preferred Stock will be convertible into SpinCo Series A Common Stock, and the other series will be convertible into SpinCo Series B Common Stock, subject to the restrictions of the FTC Consent Decree. "SpinCo Series A Common Stock" shall mean that series of SpinCo's common stock to be known as Series A Common Stock, $.01 par value per share. The Series A Common Stock will have one vote per share. "SpinCo Series B Common Stock" shall mean that series of SpinCo's common stock to be known as Series B Common Stock, $.01 par value per share. The Series B Common Stock will have ten votes per share. "SportSouth Agreement" shall mean the Stock Purchase Agreement, dated as of September 22, 1995, between the Company and LMC Southeast Sports, Inc., and the Exhibits and Schedules thereto, a copy of which is annexed hereto as Exhibit G. "SSSI Agreement" shall mean the SSSI Agreement substantially in the form of Exhibit D, to be entered into by Holdco, LMC Parent, SpinCo and Satellite at or prior to the Closing. "Sunshine Agreement" shall mean an agreement substantially in the form of Exhibit H to be entered into by Time Warner Entertainment Company, L.P. and Liberty Sports, Inc. at or prior to the Closing. A "Takeover Proposal" shall be pending if any bona fide tender or exchange offer for the TW Parent Common Stock shall have been commenced or publicly announced and not terminated or withdrawn if consummation of such offer in accordance with its terms would result in a Change in Control Event. A tender offer will not be deemed to be bona fide that is not fully financed unless it is made or guaranteed by a person whose senior debt securities have investment grade ratings in one of the four highest investment grade categories. "Transactions" shall mean the Mergers, the other transactions contemplated by the Amended and Restated Merger Agreement and the transactions contemplated by this Agreement and the Additional Agreements. "Turner Letter" shall mean those certain letters dated September 22, 1995, December 1, 1995, and August 8, 1996, from R.E. Turner, III to Old TW and LMC Parent. "TW Parent" shall mean (i) Old TW, with respect to all times prior to the Closing, and (ii) Holdco, with respect to all times from and after the Closing. "TW Parent Common Stock" shall mean (i) prior to the Closing, the common stock, par value $1.00 per share, of Old TW, as it exists on September 22, 1995, and (ii) on and after the Closing, the Common Stock, par value $.01 per share, of Holdco as it then exists, and shall include, in all cases, where appropriate, in the case of any reclassification, recapitalization or other change in the TW Parent Common Stock, or in the case of a consolidation or merger of TW Parent with or into another person affecting the TW Parent Common Stock (other than the TW Merger), such capital stock or other securities to which a holder of TW Parent Common Stock shall be entitled upon the occurrence of such event. "TW Securities" shall mean any and all shares of capital stock and any and all other equity securities of TW Parent of any class, series, issue or other type, whether now authorized or existing or hereafter authorized or designated or otherwise created, including the TW Parent Common Stock, the Voting Holdco LMC Common Stock and the LMCN-V Common Stock. "UCTI" shall mean United Cable Turner Investment, Inc., a Colorado corporation. "Voting Holdco LMC Common Stock" shall mean the Series LMC Common Stock of Holdco, having the terms set forth in Exhibit C. SECTION 1.2 Terms Generally. The definitions of terms contained in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The words "herein", "hereof" and "hereunder" and words of similar import refer to this Agreement in its entirety and not to any part hereof unless the context shall otherwise require. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Any reference in this Agreement to a "day" or number of "days" (without the explicit qualification of "business") shall be interpreted as a reference to a calendar day or number of calendar days. If any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a business day, then such action or notice shall be deferred until, or may be taken or given on, the next business day. ARTICLE II COVENANTS WITH RESPECT TO THE MERGER SECTION 2.1 Agreement to Vote; Related Matters. (a) Subject to the terms and conditions of this Agreement, each of the Shareholders agrees that such Shareholder shall attend, and LMC Parent shall cause the Shareholders to attend, the Shareholders Meeting and each adjournment thereof (provided in each case that the same is held prior to the Termination Date), in person or by proxy, and shall vote all the Shareholder Shares (and each class thereof) of such Shareholder that such Shareholder is entitled to vote, in favor of the approval of the TBS Merger and each of the other transactions contemplated by the Amended and Restated Merger Agreement and in favor of the approval of the Amended and Restated Merger Agreement (as the same may be amended from time to time to the extent consistent with clause (i) of the following sentence). The foregoing agreement of LMC Parent and each Shareholder is subject to the satisfaction of the following conditions as of the time of the Shareholders Meeting or any adjournment thereof at which the Shareholder Approvals are sought: (i) the Amended and Restated Merger Agreement shall be in full force and effect in the form originally executed, as amended through August 8, 1996, and shall not have been thereafter amended in any respect, nor shall any right of the Company or obligation of Old TW thereunder (including any condition to the obligation of the Company to consummate the TBS Merger and the other transactions contemplated by the Amended and Restated Merger Agreement) have been waived, other than any amendments and waivers that do not change the consideration to be received in exchange for Company Capital Stock in the TBS Merger or the exchange ratio therefor (except to increase the number of shares of TW Parent Common Stock to be issued in exchange for each share of Company Capital Stock or to provide additional consideration to all stockholders of the Company that does not affect the tax-free nature of the transaction) and that, when taken together with all other amendments and waivers, do not have a material adverse effect on the value of the consideration to be received in exchange for Company Capital Stock in the TBS Merger; (ii) R.E. Turner, III, as a shareholder of the Company, shall have voted or shall simultaneously be voting all his shares of Company Capital Stock in favor of the approval of the TBS Merger; (iii) if the Parent Stockholder Approvals shall have been voted upon, the Parent Stockholder Approvals shall have been obtained; (iv) no Judgment shall have been entered and be continuing that restrains or enjoins (preliminarily, temporarily or permanently) LMC Parent or any Shareholder from voting the Shareholder Shares; and (v) no Change of Control Event shall have occurred. (b) While this Agreement is in effect, each Shareholder agrees that it shall not, and LMC Parent agrees to cause each Shareholder not to, (i) grant or permit any of its subsidiaries to grant any proxy or other right with respect to the voting of the Shareholder Shares of such Shareholder or (ii) transfer or permit any of its subsidiaries to transfer (including by operation of law in a merger) any of such shares to any person (other than TW Parent) unless such transferee agrees to be bound with respect to such transferred shares by this Section 2.1 to the same extent as the transferor was so bound with respect to such transferred shares and such transfer is made in compliance with all applicable requirements of the Stock Agreements (as defined in Section 3.1(a)). (c) To the extent that such consent or waiver is required by the terms of any agreement (any "Relevant Agreement") to which the Company, Old TW, Time TBS Holdings, Inc. ("Time-TBS"), TCI , TCI Communications, Inc. ("TCIC") and/or any of the Shareholders is a party which relates to the ownership, voting or disposition of any shares of the capital stock of the Company of any class or series (including the Stock Agreements), each of Old TW, Time-TBS, TCI, TCIC and each Shareholder hereby consents to the execution, delivery and performance of the Support Agreement, this Agreement, the Additional Agreements, the Original Merger Agreement and the Amended and Restated Merger Agreement by all parties (and intended parties) to each such agreement and waives any inconsistent provision of any Relevant Agreement and any rights or remedies which such party might otherwise have under any Relevant Agreement or by virtue thereof by reason of such execution, delivery or performance. Each of Old TW, Time-TBS, TCI, TCIC, LMC Parent and each Shareholder confirms and agrees that the execution, delivery and performance of this Agreement, the Original Merger Agreement, the Amended and Restated Merger Agreement, the Additional Agreements and the Support Agreement by all parties (and intended parties) thereto do not and will not conflict with any provision of the Amended and Restated Articles of Incorporation of the Company and do not and will not result in the loss of any right, power, privilege, remedy or benefit which any holder of Class C Preferred Stock otherwise has or might have or in the reduction, qualification or other modification of any such right, power, privilege, remedy or benefit; none of them shall make, join in, endorse or recognize any claim to the contrary, and each of them shall vigorously oppose any such claim made by any other person. Each Shareholder and LMC Parent consents to the execution and delivery by Old TW, Holdco, Delaware Sub, Georgia Sub and the Company of Amendment No. 1 to the Amended and Restated Merger Agreement and the execution and delivery by Old TW and the Company of the FTC Consent Decree. Old TW and Holdco each consent to the execution and delivery by LMC Parent and TCI of the FTC Consent Decree. (d) Nothing contained in this Agreement shall create any obligation on the part of LMC Parent, any Shareholder or any of LMC Parent's Affiliates or restrict LMC Parent, any Shareholder or any of LMC Parent's Affiliates in the exercise and enjoyment of full rights of ownership of shares of capital stock of the Company, except as expressly provided in this Section 2.1. Without limiting the generality of the immediately preceding sentence, if the grant or effectiveness of any consent or approval of any Governmental Entity required in connection with the consummation of the Transactions shall be conditioned upon the surrender or modification in any significant respect of any license, franchise or permit held by TCI or any of its Affiliates, the divestiture or rearrangement of the composition of any assets of TCI or any of its Affiliates, the holding of any assets of any such person in a trust or otherwise separate and apart from such person's other assets, limitations on any such person's freedom of action with respect to future acquisitions of assets or with respect to any existing or future business or activities or its enjoyment of the full rights of ownership, possession and use of any asset now owned or hereafter acquired by such person (including any requirement not to receive shares of TW Parent Common Stock or Voting Holdco LMC Common Stock pursuant to the Amended and Restated Merger Agreement, the SSSI Agreement, the First Refusal Agreement or otherwise), any agreement to divest of any such shares, any requirement not to receive, or to agree to divest, shares of Voting Holdco LMC Common Stock or LMCN-V Common Stock to be received pursuant to Section 4.1, any change in such person's ownership or in any rights of or arrangements among its equity holders or any other restrictions, limitations, requirements or conditions which are or might be burdensome or adverse to any such person (other than, in any case, as provided in the FTC Consent Decree and other than the required exchange of TW Parent Common Stock for Holdco LMC Common Stock, as contemplated by Section 4.1, or compliance with this Agreement and the Additional Agreements), then nothing in this Agreement (including Section 2.2) shall be construed as imposing any obligation or duty on the part of TCI or any of its Affiliates to agree to, approve or otherwise be bound by or satisfy any such condition. Nothing contained in this Agreement shall require LMC Parent, any Shareholder or any of LMC Parent's other Affiliates to terminate or modify the terms of any pledge of any shares of capital stock of the Company held by LMC Parent, such Shareholder or Affiliate existing as of the date of execution hereof (including, without limitation, either of the Pledge Agreements, as such term is defined in the letter dated June 28, 1996, from LMC Parent to Old TW and Holdco). SECTION 2.2 Reasonable Efforts. Prior to the Termination Date, TCI and LMC Parent shall, and LMC Parent shall cause each Shareholder to, and Old TW and Holdco shall, use reasonable efforts (a) to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with each other in good faith in doing, all things necessary to obtain, in the most expeditious manner practicable, all actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings with Governmental Entities, in each case as may be necessary for the consummation of the Transactions or to avoid any action or proceeding by any Governmental Entity; and (b) to defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Amended and Restated Merger Agreement, this Agreement, any of the Additional Agreements or the consummation of the Transactions, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed; provided, however, that nothing in this Section 2.2 shall require any such person (i) to agree to, approve or otherwise be bound by or satisfy any condition of any kind referred to in Section 2.1(d), (ii) to agree to enter into or be bound by any settlement or judgment (other than the FTC Consent Decree), (iii) to agree to any change to the terms of this Agreement or any of the Additional Agreements or (iv) to seek or agree to any changes to the terms of the FTC Consent Decree. SECTION 2.3 Agreement to Abandon. Old TW and Holdco shall, upon the written request of LMC Parent, terminate the Amended and Restated Merger Agreement and abandon the TBS Merger if: (a) on the date fixed for the Closing (i). this Agreement, any Additional Agreement or the Amended and Restated Merger Agreement or consummation of the Mergers or any other Transaction shall be illegal, the consummation of the Mergers or any other Transaction would result in the imposition on the Liberty Parties (or, after the Distribution, the SpinCo Parties) of damages or penalties (other than any such damages or penalties arising out of a breach of this Agreement, any Additional Agreement or the FTC Consent Decree by LMC Parent or any of its Affiliates or for which TW Parent and/or Holdco has agreed to indemnify LMC Parent and its Affiliates), the FTC has failed to accept or denied acceptance of the FTC Consent Decree for public comment or there shall be pending any suit, action or proceeding by any Governmental Entity in which the relief sought would have any of the effects described in clause (i) and (ii) above or in Section 2.1(d) (including any proceeding with respect to an alleged violation of the FTC Consent Decree other than any proceeding by or before the FTC as contemplated by the FTC Consent Decree); or (b) on the date fixed for the Closing, any consent or approval of any Governmental Entity required in connection with the consummation of the Transactions shall be subject to any condition of any kind referred to in Section 2.1(d) and LMC Parent, any Shareholder or any other Affiliate of LMC Parent has (without the consent of TCI or LMC Parent) become bound to comply with such condition; or (c) at or prior to the Closing, Holdco shall have adopted any shareholder rights plan or other form of poison pill (any such plan (regardless of when adopted by Holdco), the "Holdco Rights Plan"), other than a shareholder rights plan identical in all material respects to the Rights Agreement, as amended in accordance with the Rights Amendment (the "Amended TW Plan"); or (d) on or prior to the date fixed for the Closing, a Change in Control Event shall have occurred or on the Closing Date a Takeover Proposal shall be pending; or (e) on the date fixed for the Closing, the condition set forth in Section 6.03(a) of the Amended and Restated Merger Agreement to the Company's obligations has not been satisfied (determined without regard to the Company's willingness to waive the failure of such condition); or (f) any Action shall have been taken by Old TW or any of its Controlled Affiliates after September 22, 1995 and prior to the Closing which if taken after the Effective Time of the Mergers would result in a Prohibited Effect; or (g) as of the date fixed for the Closing, (i) the representations and warranties of Old TW and Holdco made herein and to be made in each Additional Agreement to which Old TW or Holdco is intended to be a party shall not be true and correct in all material respects as of such date with the same force and effect as if then made, or (ii) any signatory hereto (other than TCI, LMC Parent and the Shareholders) shall be in breach or default in any material respect of any of its obligations hereunder, or (iii) any party (other than TCI, LMC Parent or any of their respective Affiliates) to any of the Additional Agreements then in effect shall be in breach or default in any material respect of any of its obligations thereunder or any intended party (other than TCI, LMC Parent or any of their respective Affiliates) to any of the Additional Agreements (other than the Distribution Contract) shall have failed to execute and deliver to the other parties thereto any such Additional Agreement or any of the other closing deliveries contemplated by the Company Letter or Turner Letter shall not have been made; or (h) as of the date fixed for the Closing, any required approval by the stockholders of Old TW of the issuance and payment of the Option Consideration or of this Agreement, any of the Additional Agreements or the Transactions has not been obtained. SECTION 2.4 Closing Deliveries. At the Closing, Old TW, Holdco, LMC Parent and the Shareholders shall (and shall cause their respective Affiliates which are named as parties in the Additional Agreements to) execute and deliver to the other parties thereto each Additional Agreement to which he or it is intended to be a party or, in the case of the Contribution and Exchange Agreement and any other Additional Agreement entered into prior to the Closing, deliver an officer's certificate signed by its president or a senior vice president confirming that such Additional Agreement is effective in accordance with its terms and such party is in compliance with its obligations thereunder in all material respects. LMC Parent and TW Parent shall each deliver to the other at the Closing, an officer's certificate signed by its president or a senior vice president to the effect that the representations and warranties set forth in Section 3.1 and Sections 3.2 and 3.3, respectively, are true in all material respects on and as of the Closing Date with the same force and effect as if then made and that such party is in compliance in all material respects with the FTC Consent Decree. SECTION 2.5 Dissenters' Rights. None of the Shareholders shall, nor shall LMC Parent permit any Shareholder to, give notice pursuant to Section 1321 of the Georgia BCC of such Shareholder's intent to demand payment for any shares of Company Capital Stock, or take any other action to exercise dissenters' rights under Article 13 of the Georgia BCC, if the TBS Merger is effectuated. SECTION 2.6 Abandoned and Terminated Agreements. The parties hereto acknowledge that upon the initial acceptance by the FTC of the FTC Consent Decree for public comment, the Voting Trust Agreement in the form of Exhibit J to the Original LMC Agreement, as amended by the Amended LMC Agreement, and the SSSI Agreement (including the related Cable Carriage Agreement) in the form of Exhibit D to the Original LMC Agreement, as amended by the Amended LMC Agreement, will not be entered into and have been abandoned. The TW/LMC Letter Agreement (as defined in the Amended LMC Agreement) is hereby terminated and the "Elective Merger" contemplated thereby abandoned. Upon the initial acceptance by the FTC Consent Decree for public comment, the Program Service Agreement, dated September 15, 1995, a copy of which was attached as Exhibit E to the Original LMC Agreement, will automatically be terminated by the parties thereto. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1 Representations and Warranties of LMC Parent and the Shareholders. Each Shareholder represents and warrants to Old TW, as to itself, and LMC Parent represents and warrants to Old TW as to itself and as to each Shareholder, that (assuming that the consents, waivers and agreements given and made by Old TW and Time-TBS pursuant to Section 2.1(c) and by the Company in the Company Letter and by R.E. Turner, III in the Turner Letter are valid and effective for the intended purposes): (a) Each Shareholder is as of September 22, 1995 the record and beneficial owner of the Shareholder Shares set forth opposite the name of such Shareholder on Schedule I hereto, such Shareholder has the right to vote such Shareholder Shares in the manner provided in Section 2.1(a), and such Shareholder Shares constitute all of the shares of capital stock of the Company owned of record or beneficially by such Shareholder. The Shareholder Shares constitute all shares of capital stock of the Company beneficially owned by TCI, other than the Excluded Shares (as defined in Section 4.1). None of the Shareholder Shares owned by any Shareholder is subject to any proxy, voting trust or other agreement, arrangement or restriction with respect to the voting of such Shareholder Shares which is inconsistent with the agreement of such Shareholder pursuant to Section 2.1 hereof, other than the Stock Agreements. The "Stock Agreements" means (i) the Investors Agreement dated as of June 3, 1987, among the Company and the original holders of the Class C Preferred Stock; (ii) the Shareholders' Agreement dated as of June 3, 1987, as amended by the First Amendment dated as of April 15, 1988, among the Company, R.E. Turner, III, and the original holders of the Class C Preferred Stock; (iii) the Voting Agreement dated as of June 3, 1987, among certain holders of Class C Preferred Stock; and (iv) the Agreement dated as of June 3, 1987 among Old TW, certain of the Shareholders and certain other holders of Class C Preferred Stock affiliated with Old TW and/or LMC Parent. To the knowledge of TCI and LMC Parent, none of TCI, LMC Parent or any of their respective Affiliates are party to any agreement with the Company, any of the Company's Affiliates, Old TW or any of Old TW's Affiliates that would require the consent, waiver or approval of or by TCI, LMC Parent or any of their respective Affiliates of the Mergers or for the consummation of any of the Transactions, or the execution, delivery or performance of the Amended and Restated Merger Agreement, this Agreement or the Additional Agreements, other than the Stock Agreements. (b) LMC Parent and the Shareholders each have the requisite corporate power and authority to enter into this Agreement, the FTC Consent Decree and each of the Additional Agreements to which it is contemplated to be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the FTC Consent Decree and each of such Additional Agreements by LMC Parent and the Shareholders and the consummation by them of the Transactions have been duly authorized by all necessary corporate action. This Agreement and the FTC Consent Decree have been, and when delivered at or prior to the Closing each of such Additional Agreements will have been, duly executed and delivered by LMC Parent, the Shareholders and the applicable Affiliates of LMC Parent named as parties thereto (each, an "Applicable LMC Affiliate") and constitutes, or in the case of such Additional Agreements will as of the Closing constitute, a valid and binding obligation of each such party, enforceable against each such party in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). The execution and delivery of this Agreement, the FTC Consent Decree and each of the Additional Agreements to which it is contemplated to be a party by LMC Parent and each Applicable LMC Affiliate do not, and the performance by them of their respective obligations hereunder and thereunder and the consummation of the Transactions will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of LMC Parent or any Applicable LMC Affiliate under, (i) the Certificate of Incorporation or By-laws of LMC Parent or the comparable organizational documents of any Applicable LMC Affiliate, (ii) any Contract to which LMC Parent or any Applicable LMC Affiliate is a party or by which any of them or their respective properties or assets are bound, or (iii) subject to the governmental filings and other matters referred to in Sections 3.01(d) and 3.02(d) of the Amended and Restated Merger Agreement and in the following sentence, any Requirement of Law applicable to LMC Parent or any Applicable LMC Affiliate or their respective properties or assets, other than the Horizontal Rule as to which no representation is being made, and other than, in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) prevent LMC Parent or any Applicable LMC Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or (y) prevent or delay in any material respect the consummation of any of the Transactions. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to LMC Parent or any Applicable LMC Affiliate in connection with the execution and delivery of this Agreement or any applicable Additional Agreement by them or the consummation by them of the Transactions, except for (i) filings under the HSR Act and the initial acceptance of the FTC Consent Decree, (ii) such filings with, and orders of, the FCC as may be required under the Communications Laws in connection with the Transactions and (iii) such other consents, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not prevent or delay in any material respect the consummation of any of the Transactions or prevent LMC Parent or any Applicable LMC Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect. (c) Except as disclosed on Schedule 3.1, as of September 22, 1995, there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of LMC Parent and TCI, threatened against or affecting LMC Parent or any of its Affiliates (and LMC Parent and TCI are not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected to (i) prevent LMC Parent or any Applicable LMC Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or (ii) prevent or delay in any material respect the consummation of the Mergers or any of the other Transactions. As of September 22, 1995, and other than the Horizontal Rule, neither LMC Parent nor any Applicable LMC Affiliate is aware of any current or formally proposed Communications Law that would prevent any Shareholder from receiving, or would require any Shareholder to divest all or any part of, the TW Parent Common Stock issuable to such Shareholder in connection with the Mergers (assuming no exchange of such TW Parent Common Stock pursuant to Section 4.1). (d) No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of LMC Parent or any Shareholder. SECTION 3.2 Representations and Warranties of Old TW. Old TW represents and warrants to LMC Parent and each Shareholder that (assuming that the consents, waivers and agreements given and made by TCI, LMC Parent and the Shareholders pursuant to Section 2.1(c) and by the Company in the Company Letter and by R.E. Turner, III in the Turner Letter are valid and effective for the intended purposes): (a) Old TW has delivered to LMC Parent complete and correct copies of its Restated Certificate of Incorporation, By-laws and the Rights Agreement and of the certificates of incorporation and by-laws or comparable organizational documents of the Material Parent Subsidiaries, in each case as amended to September 22, 1995. As of September 22, 1995, no amendments to the Rights Agreement have been authorized, approved or adopted and there is no commitment, arrangement or understanding by Old TW to effect any amendment other than the Rights Amendment. (b) Old TW has all requisite corporate power and authority to enter into this Agreement, the FTC Consent Decree and each of the Additional Agreements to which it is contemplated to be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the FTC Consent Decree and each such Additional Agreement by Old TW and the consummation by it of the Transactions have been duly authorized by all necessary corporate action subject to the Parent Stockholder Approvals. This Agreement and the FTC Consent Decree have been, and when delivered at or prior to the Closing each of such Additional Agreements will have been, duly executed and delivered by Old TW and the applicable Affiliates of Old TW named as parties thereto (if any) (each, an "Applicable TW Affiliate", which term shall also include Holdco, Delaware Sub and Georgia Sub) and constitutes, or in the case of such Additional Agreements will as of the Closing constitute, a valid and binding obligation of each such party, enforceable against each such party in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). Except as otherwise set forth in the Amended and Restated Merger Agreement or in the Parent Disclosure Letter, the execution and delivery of this Agreement, the FTC Consent Decree and each of the Additional Agreements to which it is contemplated to be a party by Old TW and each Applicable TW Affiliate and the consummation by them of the transactions contemplated hereby and thereby and compliance with the provisions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Old TW or any Parent Subsidiary under, (i) the Restated Certificate of Incorporation or By-laws of Old TW or the comparable organizational documents of any Parent Subsidiary, (ii) any Contract to which Old TW or any Parent Subsidiary is a party or by which any of them or their respective properties or assets are bound, or (iii) subject to the governmental filings and other matters referred to in Sections 3.01(d) and 3.02(d) of the Amended and Restated Merger Agreement and in the following sentence, any Requirement of Law applicable to Old TW or any Parent Subsidiary or their respective properties or assets, other than the Horizontal Rule as to which no representation is being made, and other than, in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a Parent Material Adverse Effect, (y) prevent Old TW or any Applicable TW Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or (z) prevent or delay in any material respect the consummation of any of the Transactions. Except as otherwise set forth in the Amended and Restated Merger Agreement or in the Parent Disclosure Letter, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Old TW or any Applicable TW Affiliate in connection with the execution and delivery of this Agreement or any applicable Additional Agreement by Old TW or any Applicable TW Affiliate or the consummation by Old TW or any Applicable TW Affiliate, as the case may be, of any of the Transactions, except for (i) filings under the HSR Act and the initial acceptance of the FTC Consent Decree, (ii) such filings with, and orders of, the FCC as may be required under the Communications Laws in connection with the Transactions, (iii) approvals of cable franchising authorities and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not prevent or delay in any material respect the consummation of any of the Transactions or otherwise prevent Old TW or any Applicable TW Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or have, individually or in the aggregate, a Parent Material Adverse Effect. To the knowledge of Old TW, none of Old TW or any of its Affiliates are party to any agreement with the Company, any of the Company's Affiliates, TCI or any of TCI's Affiliates that would require the consent, waiver or approval of or by Old TW or any of its Affiliates of the Mergers or for the consummation of any of the Transactions, or the execution, delivery or performance of the Amended and Restated Merger Agreement, this Agreement or the Additional Agreements, other than the Stock Agreements. (c) Except as disclosed in the Parent Disclosure Letter, as of September 22, 1995, there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of Old TW, threatened against or affecting Old TW or any of its Affiliates (and Old TW is not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected to (i) prevent Old TW or any Applicable TW Affiliate from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect, or (ii) prevent or delay in any material respect the consummation of the Mergers or any of the other Transactions. (d) As of September 22, 1995, and other than the Horizontal Rule, Old TW is not aware of any current or formally proposed Communications Law that would prevent any Shareholder from receiving, or would require any Shareholder to divest all or any part of, the TW Parent Common Stock issuable to such Shareholder in connection with the Mergers (assuming no exchange of such TW Parent Common Stock pursuant to Section 4.1). (e) No broker, investment banker, financial advisor or other person, other than Morgan Stanley & Co., Incorporated and Bear, Stearns & Co. Inc., the fees and expenses of which will be paid by Old TW, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Old TW or Holdco. SECTION 3.3 Representations and Warranties of Holdco. Holdco represents and warrants to LMC Parent and each Shareholder that: (a) Holdco has delivered to LMC Parent complete and correct copies of its Certificate of Incorporation and By-laws and the Holdco Rights Plan, if any, in each case as amended to the date of execution of this Agreement, including, without limitation, all certificates of designation. As of the date of execution hereof, no amendments to any of the foregoing have been authorized, approved or adopted and there is no commitment, arrangement or understanding by Holdco (other than pursuant to the Amended and Restated Merger Agreement and this Agreement) to effect any such amendment. All shares of Holdco LMC Common Stock which may be issued pursuant to Section 4.1 or 4.2 or pursuant to the SSSI Agreement will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. (b) Holdco has all requisite corporate power and authority to enter into this Agreement and each of the Additional Agreements to which it is contemplated to be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each such Additional Agreement by Holdco and the consummation by it of the Transactions have been duly authorized by all necessary corporate action. This Agreement has been, and when delivered at or prior to the Closing each of such Additional Agreements will have been, duly executed and delivered by Holdco and constitutes, or in the case of such Additional Agreements will as of the Closing constitute, a valid and binding obligation of Holdco, enforceable against Holdco in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). Except as otherwise set forth in the Merger Agreement or in the Parent Disclosure Letter, the execution and delivery of this Agreement and each of the Additional Agreements to which it is contemplated to be a party by Holdco and the consummation by it of the transactions contemplated hereby and thereby and compliance with the provisions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Holdco or any subsidiary of Holdco under, (i) the Certificate of Incorporation or By-laws of Holdco or the comparable organizational documents of any subsidiary of Holdco, (ii) any Contract to which Holdco or any subsidiary of Holdco is a party or by which any of them or their respective properties or assets are bound, other than the Stock Agreements as to which no representation is being made or (iii) subject to the governmental filings and other matters referred to in Sections 3.01(d) and 3.02(d) of the Merger Agreement and in the following sentence, any Requirement of Law applicable to Holdco or any subsidiary of Holdco or their respective properties or assets, other than the Horizontal Rule as to which no representation is being made, and other than, in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a Parent Material Adverse Effect, (y) prevent Holdco or any subsidiary of Holdco from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or (z) prevent or delay in any material respect the consummation of any of the Transactions. Except as otherwise set forth in the Merger Agreement or in the Parent Disclosure Letter, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Holdco or any subsidiary of Holdco in connection with the execution and delivery of this Agreement or any applicable Additional Agreement by Holdco or the consummation by Holdco or any subsidiary of Holdco, as the case may be, of any of the Transactions, except for (i) filings under the HSR Act and the initial acceptance of the FTC Consent Decree, (ii) such filings with, and orders of, the FCC as may be required under the Communications Laws in connection with the Transactions, (iii) approvals of cable franchising authorities and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not prevent or delay in any material respect the consummation of any of the Transactions or otherwise prevent Holdco or any subsidiary of Holdco from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect or have, individually or in the aggregate, a Parent Material Adverse Effect. To the knowledge of Holdco, none of Holdco or any of its Affiliates are party to any agreement with the Company, any of the Company's Affiliates, TCI or any of TCI's Affiliates that would require the consent, waiver or approval of or by Holdco or any of its Affiliates of the Mergers or for the consummation of any of the Transactions, or the execution, delivery or performance of the Merger Agreement, this Agreement or the Additional Agreements, other than the Stock Agreements. (c) Except as disclosed in the Parent Disclosure Letter, as of September 22, 1995, there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of Holdco, threatened against or affecting Holdco or any its Affiliates (and Holdco is not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected to (i) prevent Holdco from performing its obligations under this Agreement or any applicable Additional Agreement in any material respect, or (ii) prevent or delay in any material respect the consummation of the Mergers or any of the other Transactions. (d) As of September 22, 1995, and other than the Horizontal Rule, Holdco is not aware of any current or formally proposed Communications Law that would prevent any Shareholder from receiving, or would require any Shareholder to divest all or any part of, the TW Parent Common Stock issuable to such Shareholder in connection with the Mergers (assuming no exchange of such TW Parent Common Stock pursuant to Section 4.1). (e) No broker, investment banker, financial advisor or other person, other than Morgan Stanley & Co., Incorporated and Bear, Stearns & Co. Inc., the fees and expenses of which will be paid by Old TW, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Old TW or Holdco. ARTICLE IV CERTAIN POST-CLOSING COVENANTS SECTION 4.1 Share Exchange. Immediately following the Effective Time of the Mergers, each Shareholder shall cause all of its Covered TW Securities that consist of shares of TW Parent Common Stock to be delivered to TW Parent for exchange into, and TW Parent shall issue in exchange therefor, shares of LMCN-V Common Stock. The rate of exchange pursuant to the foregoing provisions of this Section 4.1 shall be one share of TW Parent Common Stock for each whole share of LMCN-V Common Stock. An exchange for LMCN-V Common Stock shall be effected through a direction from each Shareholder to the Exchange Agent (or, in the case of an exchange in connection with the Contribution and Exchange Agreement, such other agent of Holdco exercising a similar function) to register all of the shares of TW Parent Common Stock issuable to such Shareholder in the Mergers (or the transactions relating to the Contribution and Exchange Agreement, as applicable) in the name of, and to deliver the appropriate certificates to, TW Parent and, upon receipt by TW Parent of such certificates, the issuance and delivery by TW Parent to each Shareholder of the appropriate number of shares of LMCN-V Common Stock. All shares of Holdco LMC Common Stock delivered to the Liberty Parties or the SpinCo Parties from time to time in accordance with this Agreement shall be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights. For so long as the Liberty Parties or SpinCo Parties hold any LMCN-V Common Stock, all of the TW Parent Common Stock and Voting Holdco LMC Common Stock from time to time owned beneficially or of record (a) by LMC Parent or any of its Controlled Affiliates, (b) by any SpinCo Party or (c) for so long as TCI is a Liberty Party, by TCI or any of its Controlled Affiliates (other than any of the shares (the "Excluded Shares") described in the letter from Baker & Botts, L.L.P., counsel to TCI, to Peter Haje, Esq., General Counsel of Old TW dated September 22, 1995, unless and until TCI acquires sole voting and dispositive control of such shares) shall be delivered to TW Parent for exchange for LMCN-V Common Stock; provided, however, that the obligations in this sentence shall terminate with respect to (x) LMC Parent and its Controlled Affiliates, and TCI and its Controlled Affiliates, upon the termination of the Restriction Period with respect to the Liberty Parties and (y) the SpinCo Parties, upon the termination of the Restriction Period with respect to the SpinCo Parties. TW Parent shall issue, in exchange for the TW Parent Common Stock delivered to it pursuant to the immediately preceding sentence, a number of shares of LMCN-V Common Stock equal to (i) the number of shares of TW Parent Common Stock so delivered divided by (ii) the Formula Number then in effect pursuant to the terms of the LMCN-V Common Stock, and, in exchange for each share of Voting Holdco LMC Common Stock delivered to it at any time pursuant to the two immediately preceding sentences, one share of LMCN-V Common Stock. SECTION 4.2 No Redemption. The Voting Holdco LMC Common Stock and the LMCN-V Common Stock shall not be redeemable at the option of TW Parent, including pursuant to any provision equivalent to Section 5 of Article IV of Old TW's Restated Certificate of Incorporation, as amended, as in effect on September 22, 1995 contained in Holdco's Certificate of Incorporation ("TW Article IV"). TW Parent further agrees that it shall not exercise any right pursuant to TW Article IV to require the redemption from any Liberty Party or SpinCo Party of any of its shares of TW Parent Common Stock unless it has first given at least 10 business days' prior written notice of such redemption to each Liberty Party or SpinCo Party, as applicable (which notice shall state that TW Parent intends to effect the redemption of shares of TW Parent Common Stock held by such Liberty Party or SpinCo Party, the number of shares to be redeemed and the proposed redemption date (in addition to any other information required by TW Article IV)), and each Liberty Party or SpinCo Party, as applicable, shall have the right at any time prior to the redemption date to exchange the shares to be redeemed for a number of shares of Voting Holdco LMC Common Stock that are convertible into the same number of shares of TW Parent Common Stock so called for redemption. SECTION 4.3 Certain Post-Closing Compensation Obligations. (a) If, after the Effective Time of the Mergers, (i) any Action shall be taken by TW Parent or any of its Controlled Affiliates (including, after the effective time of the TBS Merger, the Company and its Controlled Affiliates) which has a Prohibited Effect under any Specified Law then in effect (including any Specified Law the effectiveness of which has been stayed if such stay is subsequently lifted) or then formally proposed or promulgated with a delayed effective date if such Specified Law becomes effective thereafter, and (ii) such Prohibited Effect did not exist prior to the taking of such Action and did not result from any breach of this Agreement or the FTC Consent Decree by LMC Parent or any Applicable LMC Affiliate or by any SpinCo Party; and (iii) if such Prohibited Effect relates to a Liberty Party, such Action shall have been taken prior to the termination of the Restriction Period with respect to the Liberty Parties; and if such Prohibited Effect relates to a SpinCo Party, such action shall have been taken prior to the termination of Restriction Period with respect to the SpinCo Parties; then, in any such case, the provisions of this Section 4.3 shall apply. (b) As promptly as practicable after obtaining actual knowledge that TW Parent intends to take an Action and that such Action will likely result in a Prohibited Effect, LMC Parent, if the Prohibited Effect is with respect to a Liberty Party, or SpinCo, if the Prohibited Effect is with respect to a SpinCo Party, shall notify TW Parent thereof. If such notice is received by TW Parent prior to the taking of the referenced Action, then either TW Parent and its Controlled Affiliates shall not take such Action or if the Action is taken and a Prohibited Effect described in Section 4.3(a) occurs, TW Parent shall be obligated to pay compensation pursuant to this Section 4.3. (c) As promptly as practicable after obtaining actual knowledge that a Prohibited Effect has occurred or will likely occur (other than a Prohibited Effect with respect to which notice has been given under Section 4.3(b)), LMC Parent, if the Prohibited Effect is with respect to a Liberty Party, or SpinCo, if the Prohibited Effect is with respect to a SpinCo Party (the applicable of the foregoing being the "Notice Party"), shall notify TW Parent thereof. Following the giving of such notice, the Notice Party shall at TW Parent's request consult with TW Parent as to such Prohibited Effect and its causes and discuss in good faith the actions that either party might take to avoid or cure such Prohibited Effect. If the Notice Party and TW Parent agree that certain actions can be taken by TW Parent and its Controlled Affiliates to cure or avoid the Prohibited Effect, then TW Parent and its Controlled Affiliates shall either take such actions or become obligated to compensate the Liberty Parties (if prior to the Distribution or the Distribution does not occur) or the SpinCo Parties (if the Distribution occurs) (the Liberty Parties or the SpinCo Parties, as applicable, being the "Affected Parties") pursuant to this Section 4.3 if a Prohibited Effect described in Section 4.3(a) occurs; provided, however, that if the Notice Party and TW Parent also agree that certain actions could be taken by the Notice Party and its Controlled Affiliates (or by the Affected Party, if different from the Notice Party, and its Controlled Affiliates) to eliminate the Prohibited Effect which would be substantially less burdensome to the Notice Party and its Controlled Affiliates (and to the Affected Party, if different from the Notice Party, and its Controlled Affiliates) than the actions that TW Parent and its Controlled Affiliates would be required to take in order to cure the Prohibited Effect would be to TW Parent and its Controlled Affiliates and the costs to effect such actions would be substantially less than the cost to compensate the Affected Parties pursuant to this Section 4.3, then subject to the following sentence, the Liberty Parties or SpinCo Parties, as the case may be, shall, at TW Parent's expense, use reasonable efforts to take such actions. Notwithstanding the foregoing, unless such Liberty Party or SpinCo Party otherwise agrees, no Liberty Party or SpinCo Party shall be required to dispose of any of its TW Securities, to dispose of any assets or discontinue any business or investments that LMC Parent or SpinCo, as applicable, determines in good faith are material to the Liberty Parties or SpinCo Parties or their respective strategic objectives, or to agree to any restrictions or limitations that LMC Parent or SpinCo, as applicable, deems significant on the future operation of its business. (d) If the Prohibited Effect cannot be cured or avoided, or for any reason (including the failure of the parties to agree upon any course of action or alternative courses of action that would cure or avoid the Prohibited Effect or the relative burdens thereof) has not been cured or avoided (x) within 60 days after notice has been given to TW Parent pursuant to this Section 4.3 (unless prior to the expiration of such 60-day period, TW Parent or the applicable of the Liberty Parties or SpinCo Parties, as agreed by TW Parent and LMC Parent or SpinCo, as applicable, have commenced an agreed upon course of action to cure such Prohibited Effect and such cure is effected within an agreed period of time thereafter), or (y) if earlier, by such date as any Liberty Party or SpinCo Party would be required by any Governmental Entity or pursuant to any Judgment against it or its properties to divest of any TW Securities or suffer any consequences of the kind enumerated in clauses (b) through (d) of the definition of Prohibited Effect, then in any such event TW Parent shall be obligated to compensate the Affected Parties pursuant to this Section 4.3. (e) If TW Parent becomes obligated to compensate the Affected Parties pursuant to this Section 4.3, then TW Parent shall be required to (i) compensate any Affected Party that disposes of Covered TW Securities to the extent required by or to the extent necessary to avoid the applicable Prohibited Effect and (ii) if the aggregate number of Covered TW Securities disposed of by the Affected Parties pursuant to clause (i) above equals or exceeds (on an as converted basis, if applicable) 5% of the sum of the number of Covered TW Securities of all Shareholders immediately after the Effective Time of the Mergers, plus the number of Covered TW Securities included in the Option Consideration (as such numbers shall be appropriately adjusted from time to time to take into account the occurrence of any stock dividends, splits, reverse splits, combinations and the like), then, at the option of LMC Parent (if the Affected Party is a Liberty Party) or SpinCo (if the Affected Party is a SpinCo Party) (exercised by notice in writing to TW Parent within 60 days of the first disposition pursuant to clause (i) above), compensate all Affected Parties for the disposition of all the Covered TW Securities if all TW Securities of all Affected Parties are disposed of within 12 months of such notice (provided that claims for compensation may be made pursuant to the following sentences as dispositions are made during such 12-month period and payment of such claims shall not be delayed or deferred for such 12 month period, but rather shall be paid as provided below, and provided, further, that if all TW Securities of the Affected Parties are not disposed of within such 12-month period, the Affected Parties shall reimburse TW Parent for the amount of compensation paid pursuant to this clause (ii) that is in excess of the amount that was required to be paid pursuant to clause (i) of this sentence). If TW Parent becomes obligated to compensate any Affected Party pursuant to this Section 4.3, then such Affected Party, if it desires to assert a claim for compensation hereunder, shall provide to TW Parent a statement, certified by independent public accountants of national standing, setting forth the estimated Blended Rate for the taxable year in which the particular disposition occurred and the estimated Adjustment Amount owed to such Affected Party with respect to those of its TW Securities so disposed of. Within 30 days after delivery of such statement, TW Parent shall pay to such Affected Party the estimated Adjustment Amount by wire transfer of immediately available funds to such account and in accordance with such instructions as such Affected Party shall have previously advised TW Parent in writing. Within 30 days after the end of the taxable year in which the particular disposition of TW Securities by such Affected Party occurred, such Affected Party shall provide to TW Parent a statement, certified by independent public accountants of national standing, setting forth the actual Blended Rate for such taxable year and the actual Adjustment Amount owed to such Affected Party with respect to such disposition. Within five days after delivery of such statement, (i) TW Parent shall pay to such Affected Party an amount equal to the amount by which the Adjustment Amount exceeds the estimated Adjustment Amount, or (ii) such Affected Party shall pay to TW Parent an amount equal to the amount by which the estimated Adjustment Amount exceeds the Adjustment Amount. Any such payment shall be made by wire transfer of immediately available funds to such account and in accordance with such instructions as such payee shall have previously advised such payor in writing. (f) LMC Parent shall upon request from time to time advise TW Parent of the identity of each Liberty Party and, following the Distribution, SpinCo shall upon request from time to time advise TW Parent of the identity of each SpinCo Party. SECTION 4.4 Certain Post-Closing Covenants. (a) If a Holdco Rights Plan is in effect immediately following the Effective Time of the Mergers or no Holdco Rights Plan is then in effect, but a Holdco Rights Plan is thereafter adopted, then, in either such case, such Holdco Rights Plan (the "Initial Rights Plan") shall, in all material respects, be the same as the Amended TW Plan. If Holdco amends the Initial Rights Plan or adopts a new Holdco Rights Plan after adoption of the Initial Rights Plan (such amended or new plan, the "Subsequent Rights Plan") and the "Beneficial Ownership" by any Liberty Party or SpinCo Party, alone or together with all of its "Affiliates" and "Associates", of TW Securities would, by reason of and immediately upon such amendment or adoption, have effects ("Rights Plan Effects") under such Subsequent Rights Plan analogous to the effects under the Rights Agreement of a person becoming an "Acquiring Person" (as defined therein) or of the rights issued pursuant to the Rights Agreement becoming transferable separately from the TW Parent Common Stock, but such "Beneficial Ownership" would not have had such effects under the Amended TW Plan, then Holdco shall be required to (i) compensate, as provided below, any such Liberty Party or SpinCo Party, together with its "Affiliates" and "Associates", that disposes of TW Securities (the "Selling Parties") to the extent necessary to avoid the Rights Plan Effects and (ii) if the aggregate number of TW Securities disposed of by the Selling Parties pursuant to clause (i) above equals or exceeds (on an as converted basis, if applicable) 5% of the sum of the number of Covered TW Securities of all Shareholders immediately after the Effective Time of the Mergers, plus the number of Covered TW Securities included in the Option Consideration (as such numbers shall be appropriately adjusted from time to time to take into account the occurrence of any stock dividends, splits, reverse splits, combinations and the like), then, at the option of LMC Parent, on behalf of the Liberty Parties, and at the option of SpinCo, on behalf of the SpinCo Parties (exercised by notice in writing to Holdco within 60 days of the first disposition pursuant to clause (i) above), compensate, as provided below (x) all Selling Parties that are Liberty Parties for the disposition of all TW Securities owned by the Liberty Parties of the type considered by the Subsequent Rights Plan in determining the "Beneficial Ownership" that would trigger Rights Plan Effects (the "Relevant TW Securities") and (y) all Selling Parties that are SpinCo Parties for the disposition of all Relevant TW Securities owned by the SpinCo Parties, as applicable, provided, in each case, that all Relevant TW Securities of the Liberty Parties or the SpinCo Parties, as applicable, are disposed of within 12 months of such notice (provided that claims for compensation may be made pursuant to the following sentences as dispositions are made during such 12-month period and payment of such claims shall not be delayed or deferred for such 12-month period, but rather shall be paid as provided below, and provided, further, that if all Relevant TW Securities of the Selling Parties are not disposed of within such 12-month period, the Selling Parties shall reimburse TW Parent for the amount of compensation paid pursuant to this clause (ii) that is in excess of the amount that was required to be paid pursuant to clause (i) of this sentence). The obligation of Holdco to compensate any Selling Party pursuant to this Section 4.4(a) shall be subject to the condition that, as of the date of the adoption of the Subsequent Rights Plan, (i) such Selling Party and its "Affiliates" and "Associates" shall have made all filings on Schedule 13D with respect to their beneficial ownership of Relevant TW Securities due on or prior to such date in compliance with Regulation 13D-G under the Exchange Act, and (ii) LMC Parent or Spinco, as applicable, shall be in compliance with its obligations under Section 4.4(b), except to the extent any failure to make any such filings, and/or any failure to be in compliance with such obligations, shall not have prejudiced Holdco. If TW Parent becomes obligated to compensate any Selling Party pursuant to this Section 4.4(a), then such Selling Party, if it desires to assert a claim for compensation hereunder, shall provide to TW Parent a statement, certified by independent public accountants of national standing, setting forth the estimated Blended Rate for the taxable year in which the particular disposition occurred and the estimated Adjustment Amount owed to such Selling Party with respect to those of its Relevant TW Securities so disposed of. Within 30 days after delivery of such statement, TW Parent shall pay to such Selling Party the estimated Adjustment Amount by wire transfer of immediately available funds to such account and in accordance with such instructions as such Selling Party shall have previously advised TW Parent in writing. Within 30 days after the end of the taxable year in which the particular disposition of Relevant TW Securities by such Selling Party occurred, such Selling Party shall provide to TW Parent a statement, certified by independent public accountants of national standing, setting forth the actual Blended Rate for such taxable year and the actual Adjustment Amount owed to such Selling Party with respect to such disposition. Within five days after delivery of such statement, (i) TW Parent shall pay to such Selling Party an amount equal to the amount by which the Adjustment Amount exceeds the estimated Adjustment Amount, or (ii) such Selling Party shall pay to TW Parent an amount equal to the amount by which the estimated Adjustment Amount exceeds the Adjustment Amount. Any such payment shall be made by wire transfer of immediately available funds to such account and in accordance with such instructions as such payee shall have previously advised such payor in writing. (b) Prior to the Closing, LMC Parent shall, and following the Closing, if Holdco adopts a Holdco Rights Plan having the terms contemplated by the first sentence of Section 4.4(a), LMC Parent and SpinCo (following the Distribution) shall, promptly notify TW Parent in writing of (i) any acquisition of "Beneficial Ownership" of "Common Shares" by any of its "Affiliates" or "Associates", and (ii) any "Person" who has "Beneficial Ownership" of any "Common Shares" becoming its "Affiliate" or "Associate", in each case promptly following LMC Parent's or SpinCo's (as applicable) obtaining actual knowledge of such occurrence. (c) Except as otherwise expressly indicated, terms used in Section 4.4(a) and Section 4.4(b) in quotation marks have the meanings given such terms (i) prior to the Closing, in the Amended TW Plan, and (ii) from and after the Closing, the Holdco Rights Plan, if any, except that the Liberty Parties or, following the Distribution, the SpinCo Parties shall be deemed to "Beneficially Own" any TW Securities the subject of an "Offer Notice" (under Section 3 of the First Refusal Agreement) from any Turner Stockholder (as defined in the First Refusal Agreement), any "Fast-Track Offer Notice" (under Section 3.3 of the First Refusal Agreement) from any Turner Stockholder or any "Tender Notice" (under Section 3.4 of the First Refusal Agreement) from any Turner Stockholder, in each case until the earlier of the purchase of such TW Securities pursuant to the First Refusal Agreement and the first date upon which such Turner Stockholder is free to sell such TW Securities. ARTICLE V MISCELLANEOUS SECTION 5.1 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 5.2 Specific Performance. Each of LMC Parent and the Shareholders, on the one hand, and Old TW and Holdco, on the other hand, agrees that the other parties would be irreparably damaged if for any reason such party fails to perform any of such party's obligations under this Agreement, and that the other parties would not have an adequate remedy at law for money damages in such event. Accordingly, any of the other parties shall be entitled to seek specific performance and injunctive and other equitable relief to enforce the performance of this Agreement by such party. This provision is without prejudice to any other rights the parties may have against each other for any failure to perform their respective obligations under this Agreement. SECTION 5.3 Amendments; Termination. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. The representations, warranties, covenants and agreements set forth herein shall terminate, except with respect to liability for prior breaches thereof, upon the first to occur of (x) December 31, 1996, if the Effective Time of the Mergers has not occurred on or prior to such date and (y) the termination of the Amended and Restated Merger Agreement in accordance with its terms or the abandonment thereof by TW Parent if required pursuant to Section 2.3 (the "Termination Date"). The representations, warranties, covenants and agreements set forth herein (other than in Article II) shall survive the Effective Time of the Mergers. SECTION 5.4 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that a party may not assign, delegate or otherwise transfer any of such party's rights or obligations under this Agreement without the consent of the other parties hereto and any purported assignment, delegation or transfer without such consent shall be null and void. Each Liberty Party and SpinCo Party from time to time, provided that it is a Liberty Party or SpinCo Party as of the relevant time, shall be an intended third party beneficiary of the covenants of TW Parent contained in Article IV. SECTION 5.5 Entire Agreement. This Agreement (including the Exhibits and Schedules attached hereto), together with the Stock Agreements, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. SECTION 5.6 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given (i) on the first business day following the date received, if delivered personally or by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on the business day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and (iii) on the first business day that is at least five days following deposit in the mails, if sent by first class mail, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to TW Parent, to it at: 75 Rockefeller Plaza New York, New York 10019 Facsimile: (212) 956-7281 Attention: General Counsel with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Facsimile: (212) 474-3700 Attention: Richard Hall, Esq. If to LMC Parent or any Shareholder, to it at: 8101 East Prentice Avenue Suite 500 Englewood, Colorado 80111 Facsimile: (303) 721-5415 Attention: President with a copy (which shall not constitute notice) to each of: Stephen M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Tower II 5619 DTC Parkway Englewood, Colorado 80111-3000 Facsimile: (303) 488-3245 Baker & Botts, L.L.P. 599 Lexington Avenue New York, New York 10022 Facsimile: (212) 705-5125 Attention: Elizabeth M. Markowski, Esq. SECTION 5.7 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. SECTION 5.8 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties. SECTION 5.9 Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. SECTION 5.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. The parties shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provision with a valid provision the effects of which come as close as possible to those of such invalid, illegal or unenforceable provisions. SECTION 5.11 Attorney's Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. SECTION 5.12 Obligations of Old TW and Holdco Joint and Several. Each of Old TW and Holdco (collectively, the "TW Parties") covenants and agrees with LMC Parent and each Shareholder that such TW Party is and shall be jointly and severally liable, as a primary obligor and not merely a surety, for the full and timely payment and performance of all obligations of each other TW Party to be paid and/or performed under this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated LMC Agreement to be duly executed and delivered as of the day and year first above written. TIME WARNER INC. LIBERTY MEDIA CORPORATION By: By: Name: Name: Title: Title: TW INC. SUBSIDIARIES OF LMC PARENT: TCI TURNER PREFERRED, INC. By: Name: Title: By: Name: Title: COMMUNICATION CAPITAL CORP. By: Name: Title: UNITED CABLE TURNER INVESTMENT INC. By: Name: Title: With respect to Sections 2.1(c), 2.2, 3.1(c) and 4.1 only: TELE-COMMUNICATIONS, INC. By: Name: Title: With respect to Section 2.1(c) only: TCI COMMUNICATIONS, INC. By: Name: Title: TIME TBS HOLDINGS, INC. By: Name: Title: EX-10 5 EXHIBIT 10AA SECOND AMENDMENT AND RESTATED AGMT EXHIBIT A TO SECOND AMENDED AND RESTATED LMC AGREEMENT CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF SERIES LMCN-V COMMON STOCK OF TW INC. -------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware -------------------- TW INC., a corporation organized and existing by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that the following resolution was duly adopted by action of the Board of Directors of the Corporation (the "Board of Directors") at a meeting duly held on [ ], 1996. RESOLVED that pursuant to the authority expressly granted to and vested in the Board of Directors by the provisions of Section 3 of Article IV of the Restated Certificate of Incorporation of the Corporation (the "Certificate of Incorporation") and Section 151(g) of the General Corporation Law of the State of Delaware (the "DGCL"), the Board of Directors hereby creates, from the authorized shares of Series Common Stock, par value $.01 per share (the "Series Common Stock"), of the Corporation authorized to be issued pursuant to the Certificate of Incorporation, a series of Series Common Stock, and hereby fixes the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such series as follows: The series of Series Common Stock hereby established shall consist of [ ] shares designated as Series LMCN-V Common Stock. The number of shares constituting such series may be increased or decreased (but not below the number of shares then outstanding) from time to time by a resolution or resolutions of the Board of Directors. The terms of such series shall be as follows: 1. Definitions. As used herein, the following terms shall have the indicated meanings: 1.1 "Board of Directors" shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action. 1.2 "Capital Stock" shall mean any and all shares of corporate stock of a Person (however designated and whether representing rights to vote, rights to participate in dividends or distributions upon liquidation or otherwise with respect to such Person, or any division or subsidiary thereof, or any joint venture, partnership, corporation or other entity). 1.3 "Certificate" shall mean the Certificate of the Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Special Rights, and Qualifications, Limitations or Restrictions Thereof, of Series LMCN-V Common Stock filed with the Secretary of State of the State of Delaware pursuant to Section 151 of the DGCL. 1.4 "Closing Price" of the Common Stock shall mean the last reported sale price of the Common Stock (regular way) as shown on the Composite Tape of the NYSE, or, in case no such sale takes place on such day, the average of the closing bid and asked prices on the NYSE, or, if the Common Stock is not listed or admitted to trading on the NYSE, on the principal national securities exchange on which such stock is listed or admitted to trading, or, if it is not listed or admitted to trading on any national securities exchange, the last reported sale price of the Common Stock, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported by NASDAQ. 1.5 "Common Stock" shall mean the class of Common Stock, par value $.01 per share, of the Corporation authorized at the date of the Certificate, or any other class of stock resulting from (x) successive changes or reclassifications of such Common Stock consisting of changes in par value, or from par value to no par value, (y) a sub- division or combination or (z) any other changes for which an adjustment is made under Section 2.4(a), and in any such case including any shares thereof authorized after the date of the Certificate, together with any rights associated generally with the shares of Common Stock. 1.6 "Communications Laws" shall mean the Communications Act of 1934 (as amended and supplemented from time to time and any successor statute or statutes regulating telecommunications companies) and the rules and regulations (and interpretations thereof and determinations with respect thereto) promulgated, issued or adopted from time to time by the Federal Communications Commission (the "FCC"). All references herein to Communications Laws shall include as of any relevant date in question the Communications Laws as then in effect (including any Communications Law or part thereof the effectiveness of which is then stayed or promulgated with a delayed effective date). 1.7 "Conversion Date" shall have the meaning set forth in Section 3.5. 1.8 "Corporation" shall mean TW Inc., a Delaware corporation, and any of its successors by operation of law, including by merger or consolidation. 1.9 "DGCL" shall mean the General Corporation Law of the State of Delaware, as amended from time to time. 1.10 "Dividend Payment Date" shall have the meaning set forth in Section 2.1. 1.11 "Formula Number" shall have the meaning set forth in Section 2.1. 1.12 "LMC Agreement" shall mean the Second Amended and Restated LMC Agreement dated as of September 22, 1995, among a Delaware corporation known on such date as "Time Warner Inc.", the Corporation, Liberty Media Corporation, a Delaware corporation ("LMC Parent"), and certain subsidiaries of LMC Parent listed under "Subsidiaries of LMC Parent" on the signature pages thereto, as amended from time to time. 1.13 "NASDAQ" shall mean The Nasdaq Stock Market. 1.14 "NYSE" shall mean the New York Stock Exchange, Inc. 1.15 "Parity Stock" shall mean shares of Common Stock and shares of any other class or series of Capital Stock of the Corporation that, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall, in the event that the stated dividends thereon are not paid in full, be entitled to share ratably with the shares of this Series in the payment of dividends in accordance with the sums that would be payable on such shares if all dividends were declared and paid in full, or shall, in the event that the amounts payable thereon in liquidation are not paid in full, be entitled to share ratably with the shares of this Series in any distribution of assets other than by way of dividends in accordance with the sums that would be payable in such distribution if all sums payable were discharged in full. 1.16 "Permitted Transferee" shall mean any Liberty Party or any SpinCo Party, as such terms are defined in the LMC Agreement. 1.17 "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 1.18 "Preferred Stock" shall mean the class of Preferred Stock, par value $.10 per share, of the Corporation authorized at the date of the Certificate, including any shares thereof authorized after the date of the Certificate. 1.19 "Record Date" shall have the meaning set forth in Section 2.1. 1.20 "Senior Stock" shall mean shares of any class or series of Capital Stock of the Corporation that, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall be senior to the shares of this Series in respect of the right to receive dividends or to participate in any distribution of assets other than by way of dividends. 1.21 "Series Common Stock" shall mean the class of Series Common Stock, par value $.01 per share, of the Corporation authorized at the date of the Certificate, including any shares thereof authorized after the date of the Certificate. 1.22 "Series LMC Common Stock" shall mean the series of Series Common Stock authorized and designated as Series LMC Common Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.23 "Series LMCN-V Common Stock" and "this Series" shall mean the series of Series Common Stock authorized and designated as Series LMCN-V Common Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.24 "Trading Day" shall mean, so long as the Common Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, or, if the Common Stock is not listed or admitted to trading on the NYSE, a day on which the principal national securities exchange on which the Common Stock is listed is open for the transaction of business, or, if the Common Stock is not so listed or admitted for trading on any national securities exchange, a day on which the National Market System of NASDAQ is open for the transaction of business. 2. Dividends. 2.1 The holders of shares of this Series shall be entitled to receive dividends, out of funds legally available therefor, payable on such dates as may be set by the Board of Directors for payment of cash dividends on the Common Stock (each such date being referred to herein as a "Dividend Payment Date"), in cash, in an amount per share equal to the product of (i) the Formula Number in effect as of such Dividend Payment Date multiplied by (ii) the amount of the regularly scheduled cash dividend to be paid on one share of Common Stock on such Dividend Payment Date; provided, however, dividends on the shares of this Series shall be payable pursuant to this Section 2.1 only to the extent that regularly scheduled cash dividends are declared and paid on the Common Stock. As used herein, the "Formula Number" shall initially be 1.0000, which shall be adjusted from time to time pursuant to Section 2.4. The dividends payable on any Dividend Payment Date shall be paid to the holders of record of shares of this Series at the close of business on the record date for the related regularly scheduled cash dividend on the Common Stock (each such date being referred to herein as a "Record Date"). The amount of dividends that are paid to each holder of record on any Dividend Payment Date shall be rounded to the nearest cent. 2.2 In case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation and other than a distribution of Common Stock as a result of which an adjustment to the Formula Number is made pursuant to Section 2.4) to the holders of its shares of Common Stock any assets or property, including evidences of indebtedness or securities of the Corporation or of any other Person (including common stock of such Person) or cash (but excluding regularly scheduled cash dividends payable on shares of Common Stock), or in case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation) to such holders rights, options or warrants to subscribe for or purchase shares of Common Stock (including shares held in the treasury of the Corporation), or rights, options or warrants to subscribe for or purchase any other security or rights, options or warrants to subscribe for or purchase any assets or property (in each case, whether of the Corporation or otherwise, but other than any distribution of rights to purchase securities of the Corporation if the holder of shares of this Series would otherwise be entitled to receive such rights upon conversion of shares of this Series for Common Stock pursuant to Section 3, provided, however, that if such rights are subsequently redeemed by the Corporation, such redemption shall be treated for purposes of this Section 2.2 as a cash dividend (but not a regularly scheduled cash dividend) on the Common Stock), the Corporation shall simultaneously distribute such assets, property, securities, rights, options or warrants to the holders of shares of this Series on the record date fixed for determining the holders of Common Stock entitled to participate in such distribution (or, if no such record date shall be established, the effective time thereof) in an amount per share of this Series equal to the amount that a holder of one share of this Series would have been entitled to receive had such share of this Series been converted into Common Stock immediately prior to such record date (or effective time). In the event of a distribution to holders of shares of this Series pursuant to this Section 2.2, such holders shall be entitled to receive fractional shares or interests only to the extent that holders of Common Stock are entitled to receive the same. The holders of shares of this Series on the applicable record date (or effective time) shall be entitled to receive in lieu of such fractional shares or interests the same consideration as is payable to holders of Common Stock with respect thereto. If there are no fractional shares or interests payable to holders of Common Stock, the holders of shares of this Series on the applicable record date (or effective time) shall receive in lieu of such fractional shares or interests the fair value thereof as determined by the Board of Directors. 2.3 In the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities or other property receivable by them in any distribution that is subject to Section 2.2, the kind and amount of securities or other property that shall be distributable to the holders of shares of this Series shall be based on (i) the election, if any, made by the holder of record (as of the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of this Series in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable by holders of shares of this Series shall be based on the kind or amount of securities or other property receivable by a plurality of the shares held by the nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section 2.3, the Corporation shall mail a copy thereof to the holders of record of shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of record of shares of this Series to make such an election. 2.4 The Formula Number shall be adjusted from time to time as follows, whether or not any shares of this Series have been issued by the Corporation, for events occurring on or after [ ]: (a) In case the Corporation shall (i) pay a dividend in shares of its Common Stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock or (iv) reclassify (other than by way of a merger or consolidation that is subject to Section 3.6) its shares of Common Stock, then the Formula Number in effect immediately before such event shall be appropriately adjusted so that immediately following such event the holders of shares of this Series shall be entitled to receive upon conversion thereof the kind and amount of shares of Capital Stock of the Corporation that they would have owned or been entitled to receive upon or by reason of such event if such shares of this Series had been converted immediately before the record date (or, if no record date, the effective date) for such event (it being understood that any distribution of cash or Capital Stock (other than Common Stock) that shall accompany a reclassification of the Common Stock, shall be subject to Section 2.2 rather than this Section 2.4(a)). An adjustment made pursuant to this Section 2.4(a) shall become effective retroactively immediately after the record date in the case of a dividend or distribution and shall become effective retroactively immediately after the effective date in the case of a subdivision, combination or reclassification. For the purposes of this Section 2.4(a), in the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities receivable by them in any transaction that is subject to this Section 2.4(a) (including any election that would result in all or a portion of the transaction becoming subject to Section 2.2), the kind and amount of securities that shall be distributable to the holders of shares of this Series shall be based on (i) the election, if any, made by the holder of record (as of - ----------- [FN] Insert the earliest of (x) the date of filing of the Certificate, (y) the date of filing of the certificate for the Series LMC Common Stock or (z) the closing of the Mergers. the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of this Series in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities is not the same for each nonelecting holder, then the kind and amount of securities receivable shall be based on the kind or amount of securities receivable by a plurality of nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section 2.4(a), the Corporation shall mail a copy thereof to the holders of record of shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of record of shares of this Series to make such an election. (b) The Corporation shall be entitled to make such additional adjustments in the Formula Number, in addition to those required by Section 2.4(a) as shall be necessary in order that any dividend or distribution in Common Stock or any subdivision, reclassification or combination of shares of Common Stock referred to above, shall not be taxable to the holders of Common Stock for United States Federal income tax purposes, so long as such additional adjustments pursuant to this Section 2.4(b) do not decrease the Formula Number. (c) All calculations under this Section 2 and Section 3 shall be made to the nearest cent, one- hundredth of a share or, in the case of the Formula Number, one hundred-thousandth. Notwithstanding any other provision of this Section 2.4, the Corporation shall not be required to make any adjustment of the Formula Number unless such adjustment would require an increase or decrease of at least one percent (1%) of the Formula Number. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment that, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least one percent (1%) of the Formula Number. Any adjustments under this Section 2.4 shall be made successively whenever an event requiring such an adjustment occurs. (d) Promptly after an adjustment in the Formula Number is required, the Corporation shall provide written notice to each of the holders of shares of this Series, which notice shall state the adjusted Formula Number. (e) If a distribution is made in accordance with the provisions of Section 2.2, anything in this Section 2.4 to the contrary notwithstanding, no adjustment pursuant to this Section 2.4 shall be effected by reason of the distribution of such assets, property, securities, rights, options or warrants or the subsequent modification, exercise, expiration or termination of such securities, rights, options or warrants. 3. Conversion at the Option of the Holder. 3.1 Each holder of a share of this Series shall have the right at any time to convert such share of this Series into either: (i) a number of shares of Common Stock per share of this Series equal to the Formula Number in effect on the Conversion Date or (ii) one share of Series LMC Common Stock per share of this Series; provided, however, that such holder may convert shares of this Series only to the extent that the ownership by such holder or its designee of the shares of Common Stock or Series LMC Common Stock issuable upon such conversion would not violate the Communications Laws. 3.2 No adjustments in respect of payments of dividends on shares of this Series surrendered for conversion or any dividend on the Common Stock or Series LMC Common Stock issued upon conversion shall be made upon the conversion of any shares of this Series (it being understood that if the Conversion Date for shares of this Series occurs after the Record Date and prior to the Dividend Payment Date of any such dividend, the holders of record of shares of this Series on such Record Date shall be entitled to receive the dividend payable with respect to such shares on the related Dividend Payment Date pursuant to Section 2.1). 3.3 The Corporation may, but shall not be required to, in connection with any conversion of shares of this Series into shares of Common Stock, issue a fraction of a share of Common Stock, and if the Corporation shall determine not to issue any such fraction, the Corporation shall make a cash payment (rounded to the nearest cent) equal to such fraction multiplied by the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date. The Corporation shall issue a fraction of a share of Series LMC Common Stock in order to effect a conversion of a fraction of a share of this Series into Series LMC Common Stock. 3.4 Any holder of shares of this Series electing to convert such shares into Common Stock or Series LMC Common Stock shall surrender the certificate or certificates for such shares at the principal executive office of the Corporation (or at such other place as the Corporation may designate by notice to the holders of shares of this Series) during regular business hours, duly endorsed to the Corporation or in blank, or accompanied by instruments of transfer to the Corporation or in blank, or in form satisfactory to the Corporation, and shall give written notice to the Corporation at such office that such holder elects to convert such shares of this Series, which notice shall state whether the shares of this Series delivered for conversion shall be converted into shares of Common Stock or shares of Series LMC Common Stock. If any such certificate or certificates shall have been lost, stolen or destroyed, the holder shall, in lieu of delivering such certificate or certificates, deliver to the Corporation (or such other place) an indemnification agreement and bond satisfactory to the Corporation. The Corporation shall, as soon as practicable (subject to Section 3.8) after such deposit of certificates for shares of this Series or delivery of the indemnification agreement and bond, accompanied by the written notice above prescribed, issue and deliver at such office (or such other place) to the holder for whose account such shares were surrendered, or a designee of such holder, certificates representing either (i) the number of shares of Common Stock and the cash, if any, or (ii) the number of shares of Series LMC Common Stock, as the case may be, to which such holder is entitled upon such conversion. Each share of Common Stock delivered to a holder or its designee as a result of conversion of shares of this Series pursuant to this Section 3 shall be accompanied by any rights associated generally with each other share of Common Stock outstanding as of the Conversion Date. 3.5 Conversion shall be deemed to have been made as of the date (the "Conversion Date") that the certificate or certificates for the shares of this Series to be converted and the written notice prescribed in Section 3.4 are received by the Corporation; and the Person entitled to receive the Common Stock or Series LMC Common Stock issuable upon such conversion shall be treated for all purposes as the holder of record of such Common Stock or Series LMC Common Stock, as the case may be, on such date. The Corporation shall not be required to deliver certificates for shares of Common Stock or Series LMC Common Stock while the stock transfer books for such stock or for this Series are duly closed for any purpose, but certificates for shares of Common Stock or Series LMC Common Stock, as the case may be, shall be delivered as soon as practicable after the opening of such books. 3.6 In the event that on or after [ ], whether or not any shares of this Series have been issued by the Corporation, either (a) any consolidation or merger to which the Corporation is a party, other than a merger or consolidation in which the Corporation is the surviving or continuing corporation and that does not result in any reclassification of, or change (other than a change in par value or from par value to no par value or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (b) any sale or conveyance of all or substantially all of the property and assets of the Corporation, then lawful provision shall be made as part of the terms of such transaction whereby the holder of each share of this Series shall have the right thereafter, during the period such share shall be convertible, to convert such share into the kind and amount of shares of stock or other securities and property receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock into which such shares of this Series could have been converted immediately prior to such consolidation, merger, sale or conveyance, subject to adjustment that shall [FN] Insert the earliest of (x) the date of filing of the Certificate, (y) the date of filing of the certificate for the Series LMC Common Stock or (z) the closing of the Mergers. be as nearly equivalent as may be practicable to the adjustments provided for in Section 2.4 and this Section 3 (based on (i) the election, if any, made in writing to the Corporation by the holder of record (as of the date used for determining holders of Common Stock entitled to make such election) of the largest number of shares of this Series on or prior to the last date on which a holder of Common Stock may make an election regarding the kind or amount of securities or other property receivable by such holder in such transaction or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable shall be based upon the kind and amount of securities or other property receivable by a plurality of the nonelecting holders of Common Stock)). In the event that any of the transactions referred to in clause (a) or (b) of the first sentence of this Section 3.6 involves the distribution of cash or property (other than equity securities) to a holder of Common Stock, lawful provision shall be made as part of the terms of the transaction whereby the holder of each share of this Series on the record date fixed for determining holders of Common Stock entitled to receive such cash or property (or if no such record date is established, the effective date of such transaction) shall be entitled to receive the amount of cash or property that such holder would have been entitled to receive had such holder converted his shares of this Series into Common Stock immediately prior to such record date (or effective date) (based on the election or nonelection made by the holder of record of the largest number of shares of this Series, as provided above). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election regarding the kind or amount of securities or other property that will be receivable by such holders in any transaction described in clause (a) or (b) of the first sentence of this Section 3.6, the Corporation shall mail a copy thereof to the holders of record of the shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of shares of this Series to make such an election. The Corporation shall not enter into any of the transactions referred to in clause (a) or (b) of the first sentence of this Section 3.6 unless effective provision shall be made in the certificate or articles of incorporation or other constituent documents of the Corporation or the entity surviving the consolidation or merger, if other than the Corporation, or the entity acquiring the Corporation's assets, as the case may be, so as to give effect to the provisions set forth in this Section 3.6. The provisions of this Section 3.6 shall apply similarly to successive consolidations, mergers, sales or conveyances. For purposes of this Section 3.6, the term "Corporation" shall refer to the Corporation as constituted immediately prior to the merger, consolidation or other transaction referred to in this Section 3.6. 3.7 The Corporation shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of this Series, such number of its duly authorized shares of Common Stock and Series LMC Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of this Series into shares of Common Stock or Series LMC Common Stock at any time (assuming that, at the time of the computation of such number of shares, all such Common Stock or Series LMC Common Stock would be held by a single holder); provided, however, that nothing contained herein shall preclude the Corporation from satisfying its obligations in respect of the conversion of the shares by delivery of purchased shares of Common Stock or Series LMC Common Stock that are held in the treasury of the Corporation. All shares of Common Stock or Series LMC Common Stock that shall be deliverable upon conversion of the shares of this Series shall be duly and validly issued, fully paid and nonassessable. For purposes of this Section 3, any shares of this Series at any time outstanding shall not include shares held in the treasury of the Corporation. 3.8 In any case in which Section 2.4 shall require that any adjustment be made effective as of or retroactively immediately following a record date, the Corporation may elect to defer (but only for five (5) Trad- ing Days following the occurrence of the event that necessitates the notice referred to in Section 2.4(d)) issuing to the holder of any shares of this Series converted after such record date (i) the shares of Common Stock issuable upon such conversion over and above (ii) the shares of Common Stock issuable upon such conversion on the basis of the Formula Number prior to adjustment; provided, however, that the Corporation shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. 3.9 If any shares of Common Stock or Series LMC Common Stock that would be issuable upon conversion pursuant to this Section 3 require registration with or approval of any governmental authority before such shares may be issued upon conversion (other than any such registration or approval required to avoid a violation of the Communications Laws), the Corporation will in good faith and as expeditiously as possible cause such shares to be duly registered or approved, as the case may be. The Corporation will use commercially reasonable efforts to list the shares of (or depositary shares representing fractional interests in) Common Stock required to be delivered upon conversion of shares of this Series prior to such delivery upon the principal national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. 3.10 The Corporation shall pay any and all issue or other taxes that may be payable in respect of any issue or delivery of shares of Common Stock or Series LMC Common Stock on conversion of shares of this Series pursuant hereto. The Corporation shall not, however, be required to pay any tax that is payable in respect of any transfer involved in the issue or delivery of Common Stock or Series LMC Common Stock in a name other than that in which the shares of this Series so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Corporation the amount of such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. 3.11 In case of (i) the voluntary or involuntary dissolution, liquidation or winding up of the Corporation or (ii) any action triggering an adjustment to the Formula Number pursuant to Section 2.4 or Section 3.6, then, in each case, the Corporation shall cause to be mailed, first-class postage prepaid, to the holders of record of the outstanding shares of this Series, at least fifteen (15) days prior to the applicable record date for any such transaction (or if no record date will be established, the effective date thereof), a notice stating (x) the date, if any, on which a record is to be taken for the purpose of any such transaction (or, if no record date will be established, the date as of which holders of record of Common Stock entitled to participate in such transaction are determined), and (y) the expected effective date thereof. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 3.11. 4. Voting. 4.1 The shares of this Series shall have no voting rights except as expressly provided in this Section 4 or as required by law. 4.2 Each share of this Series shall be entitled to vote together as one class with the holders of shares of Common Stock upon the election of the directors of the Corporation. In any such vote, the holders of shares of this Series shall be entitled to a number of votes per share of this Series equal to the product of (i) the Formula Number then in effect multiplied by (ii) the maximum number of votes per share of Common Stock that any holder of shares of Common Stock generally then has with respect to such matter divided by (iii) 100. 4.3 So long as any shares of this Series remain outstanding, unless a greater percentage shall then be required by law, the Corporation shall not, without the affirmative vote of the holders of shares of this Series representing at least 66-2/3% of the aggregate voting power of shares of this Series then outstanding, amend, alter or repeal any of the provisions of the Certificate or the Certificate of Incorporation so as, in any such case, as applicable, to (i) amend, alter or repeal any of the powers, preferences or rights of the Series Common Stock or (ii) adversely affect the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of this Series or the Series LMC Common Stock; provided, however, that no affirmative vote of any shares of this Series shall be required to amend, alter or repeal any of the powers, preferences or rights of any series of Series Common Stock other than this Series and the Series LMC Common Stock. 4.4 So long as any shares of this Series remain outstanding, the Corporation shall not, without the affirmative vote of the holders of shares of this Series representing 100% of the aggregate voting power of shares of this Series then outstanding, amend, alter or repeal the provisions of Section 7.7. 4.5 No consent of holders of shares of this Series shall be required for (i) the creation of any indebt- edness of any kind of the Corporation, (ii) the authorization or issuance of any class or series of Parity Stock or Senior Stock, (iii) the approval of any amendment to the Certificate of Incorporation that would increase or decrease the aggregate number of authorized shares of Series Common Stock or Common Stock or (iv) the authorization of any increase or decrease in the number of shares constituting this Series; provided, however, that the number of shares constituting this Series shall not be decreased below the number of such shares then outstanding. 5. Liquidation Rights. 5.1 Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of this Series shall be entitled to receive, contemporaneously with any distribution to holders of shares of Common Stock upon such liquidation, dissolution or winding up, an aggregate amount per share equal to the product of the Formula Number then in effect multiplied by the aggregate amount to be distributed per share to holders of Common Stock. 5.2 Neither the sale, exchange or other conveyance (for cash, shares of stock, securities or other consideration) of all or substantially all the property and assets of the Corporation nor the merger or consolidation of the Corporation into or with any other corporation, or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 5. 6. Transfer Restrictions. 6.1 Without the prior written consent of the Corporation, no holder of shares of this Series shall offer, sell, transfer, pledge, encumber or otherwise dispose of, or agree to offer, sell, transfer, pledge, encumber or otherwise dispose of, any shares of this Series or interests in any shares of this Series except to a Permitted Transferee that shall agree that, prior to such Permitted Transferee ceasing to be a Permitted Transferee, such Permitted Transferee must transfer ownership of any shares of this Series, and all interests therein, held by such Permitted Transferee to any Permitted Transferee. For the avoidance of doubt, the preceding sentence is not intended to prohibit a holder of shares of this Series from entering into, or offering to enter into, (a) any arrangement under which such holder agrees to promptly convert shares of this Series and sell, transfer or otherwise dispose of the Common Stock issuable upon such conversion or (b) any pledge or encumbrance of shares of this Series; provided, however, that the terms of any such pledge or encumbrance must require that, in the event of any sale or foreclosure with respect to shares of this Series, such shares must be delivered immediately to the Corporation for conversion into Common Stock. The provisions of this Section 6.1 shall continue to be in effect with respect to any shares of this Series received by any holder by virtue of merger, consolidation, operation of law or otherwise. 6.2 Certificates for shares of this Series shall bear such legends as the Corporation shall from time to time deem appropriate. 7. Other Provisions. 7.1 All notices from the Corporation to the holders of shares of this Series shall be given by one of the methods specified in Section 7.2. With respect to any notice to a holder of shares of this Series required to be provided hereunder, neither failure to give such notice, nor any defect therein or in the transmission thereof, to any particular holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other holders or affect the legality or validity of any distribution, right, warrant, reclassification, consolidation, merger, conveyance, trans- fer, dissolution, liquidation or winding up, or the vote upon any such action. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. 7.2 All notices and other communications hereunder shall be deemed given (i) on the first Trading Day following the date received, if delivered personally, (ii) on the Trading Day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and (iii) on the first Trading Day that is at least five days following deposit in the mails, if sent by first class mail to (x) a holder at its last address as it appears on the transfer records or registry for the shares of this Series and (y) the Corporation at the following address (or at such other address as the Corporation shall specify in a notice pursuant to this Section 7.2): TW Inc., 75 Rockefeller Plaza, New York, New York 10019, Attention: General Counsel. 7.3 Any shares of this Series that have been converted or otherwise acquired by the Corporation shall, after such conversion or acquisition, as the case may be, be retired and promptly cancelled and shall become authorized but unissued shares of this Series, unless the Board of Directors determines otherwise. 7.4 The Corporation shall be entitled to recognize the exclusive right of a Person registered on its records as the holder of shares of this Series, and such holder of record shall be deemed the holder of such shares for all purposes. 7.5 All notice periods referred to in the Certificate shall commence on the date of the mailing of the applicable notice. 7.6 Any registered holder of shares of this Series may proceed to protect and enforce its rights by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in the Certificate or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 7.7 The shares of this Series shall not be subject to redemption at the option of the Corporation, including pursuant to Section 5 of Article IV of the Certificate of Incorporation (or any equivalent provision in any further amendment to or restatement of the Certificate of Incorporation). IN WITNESS WHEREOF, TW Inc. has caused this certificate to be signed and attested this [ ] day of [ ], 1996. TW INC., by Name: Title: EX-10 6 EXHIBIT 10 AB STOCKHOLDERS' AGREEMENT EXHIBIT B TO SECOND AMENDED AND RESTATED LMC AGREEMENT STOCKHOLDERS' AGREEMENT Stockholders' Agreement, dated ___________, 199_, by and among TCI Turner Preferred, Inc., a Colorado corporation ("TCITP"), Liberty Broadcasting, Inc. ("LBI") and Communication Capital Corp. ("CCC" and, together with LBI and TCITP, the "TCITP Stockholders"), R.E. Turner, III ("Turner") and Turner Outdoor, Inc. ("TOI" and, together with Turner, the "Turner Stockholders"), and TW Inc., a Delaware corporation, which promptly following the date hereof will change its name to Time Warner Inc. ("Holdco"). Each of the TCITP Stockholders and the Turner Stockholders is or may become a beneficial owner of shares of capital stock of Holdco. The Turner Stockholders, Holdco and the TCITP Stockholders desire to enter into the arrangements set forth in this Agreement regarding future dispositions of shares of Holdco capital stock which the Turner Stockholders or the TCITP Stockholders now or may in the future beneficially own. Therefore, in consideration of the premises and the mutual benefits to be derived hereunder and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions: The following terms in this Agreement shall have the respective meanings listed below: Affiliate: With respect to any Person, any other Person which directly or indirectly Controls, is under common Control with or is Controlled by such first Person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. For purposes of this Agreement (i) the Turner Foundation, Inc. (the "Turner Foundation"), the R.E. Turner Charitable Remainder Unitrust No. 2 (the "Turner Unitrust") and any other Charitable Transferee or Qualified Trust shall be deemed not to be Affiliates of any Turner Stockholder and (ii) (A) no TCITP Affiliate shall be deemed to be an Affiliate of any Turner Affiliate, or vice versa, and (B) no TCITP Affiliate or Turner Affiliate shall be deemed to be an Affiliate of any Holdco Affiliate, or vice versa. Affiliated Group: With respect to any Stockholder, the group consisting of such Stockholder and all Controlled Affiliates of such Stockholder. Agreement: This Agreement as the same may be amended from time to time in accordance with its terms. Appraised Value: As defined in Section 4.1 hereof. The "beneficial owner" of any security means a direct or indirect beneficial owner of such security within the meaning of Rule 13d-3 under the Exchange Act, as in effect on and as interpreted by the Commission through the date of this Agreement, and the terms (whether or not capitalized) "beneficially own," "beneficially owned" and "owned beneficially" shall have correlative meanings; provided, however, that any Person who at any time beneficially owns any Option or Convertible Security shall also be deemed to beneficially own the Underlying Securities, whether or not such Option or Convertible Security then is or within 60 days will be exercisable, exchangeable or convertible. Board of Directors: The Board of Directors of Holdco. Bona Fide Offer: As defined in Section 3.1 hereof. Broker Transactions: "Broker's transactions" within the meaning of paragraph (g) of Rule 144 of the General Rules and Regulations under the Securities Act. Charitable Transfer: Any Disposition of Covered Securities by a Turner Stockholder to the Turner Foundation, any other Charitable Transferee, the Turner Unitrust or any other Qualified Trust that is not an Exempt Transfer pursuant to clause (vii) of the definition of Exempt Transfer; provided, however, that any such transferee shall, by a written instrument in form and substance reasonably satisfactory to TCITP, agree to be bound by the provisions of this Agreement with respect to the Covered Securities that are the subject of such Charitable Transfer to the same extent as the Turner Stockholder making such Disposition. Charitable Transferee: Any charitable organization described in Section 501(c)(3) of the Code. Code: The Internal Revenue Code of 1986, as amended. Commission: The Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act or the Exchange Act. Common Stock: The common stock, par value $.01 per share, of Holdco or any other shares of capital stock of Holdco into which the Common Stock may be reclassified or changed. Contract: Any agreement, contract, commitment, indenture, lease, license, instrument, note, bond or security. Control: As to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person (whether through ownership of securities, partnership interests or other ownership interests, by contract, or otherwise). The terms "Controlled," "Controlling" and similar variations shall have correlative meanings. Controlled Affiliate: When used with respect to a specified Person, means each Affiliate of such Person which is Controlled by such Person and which is not Controlled by or under common Control with any other Person (except one or more other Controlled Affiliates of such specified Person); provided, however, that for purposes of any provision of this Agreement which requires any Stockholder to cause one or more of its Controlled Affiliates to take or refrain from taking any action (including any action relating to the Disposition of any Covered Securities) or which otherwise purports to be applicable to any Covered Securities owned or held by one or more Controlled Affiliates of such Stockholder, no Affiliate of such Stockholder which otherwise would be a Controlled Affiliate of such Stockholder shall be deemed to be a Controlled Affiliate of such Stockholder unless such Stockholder possesses, directly or indirectly, the power to direct decisions regarding such action or the Disposition of such Covered Securities. Convertible Securities: Evidences of indebtedness, shares of stock or other securities or obligations which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for any Holdco Shares, either immediately or upon the occurrence of a specified date or a specified event, the satisfaction of or failure to satisfy any condition or the happening or failure to happen of any other contingency. Covered Securities: Any and all Holdco Shares, Convertible Securities and Options. Current Market Price: As to any share of Common Stock at any date, the average of the daily closing prices for shares of the Common Stock for the 5 consecutive trading days ending on the trading day immediately before the day in question. The closing price for such shares for each day shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the principal United States securities exchange on which such shares are listed or admitted to trading, or if they are not listed or admitted to trading on any such exchange, the last reported sale price (or the average of the quoted closing bid and asked prices if no sale is reported) as reported on the Nasdaq Stock Market, or any comparable system, or if such shares are not quoted on the Nasdaq Stock Market, or any comparable system, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected by Holdco. Defensive Provision: (i) any control share acquisition, interested stockholder, business combination or other similar antitakeover statute (including the Delaware Statute) applicable to Holdco, (ii) any provision of the Restated Certificate of Incorporation or Bylaws of Holdco (including Article V of such Restated Certificate of Incorporation), and (iii) any plan or agreement to which Holdco is a party, whether now or hereafter existing, which would constitute a "poison pill" or similar antitakeover device (including any Rights Plan). Delaware Statute: Section 203 of the Delaware General Corporation Law or any successor statutory provision. Disadvantageous Result: (i) The breach or violation of any Restriction applicable to any member of the Group of such Stockholder or its Affiliates, (ii) any member of the Group of such Stockholder or its Affiliates becoming subject to any Restriction to which it was not previously subject, or (iii) the occurrence of any Rights Plan Triggering Event. Disposition: When used with respect to any Covered Security, any sale, assignment, alienation, gift, exchange, conveyance, transfer, hypothecation or other disposition whatsoever, whether voluntary or involuntary and whether direct or indirect, of such Covered Security or of dispositive control over such Covered Security. "Disposition" shall not include (i) a transfer of voting control of a Covered Security to the extent required to avoid imposition of any prohibition, restriction, limitation or condition on or requirement under any Requirement of Law or Defensive Provision having any of the effects described in clauses (A) and (B) of the definition of Restriction herein, or (ii) delivery of a revocable proxy in the ordinary course of business. The term "dispose" (whether or not capitalized) shall mean to make a Disposition. Without limiting the generality of the foregoing: (i) any redemption, purchase or other acquisition in any manner (whether or not for any consideration) by Holdco of any Covered Securities shall be deemed to be a Disposition of such Covered Securities; and (ii) none of the conversion or exchange of a Convertible Security, the exercise of any Option or the failure to convert or exchange a Convertible Security or to exercise any Option prior to the expiration of the right of conversion, exchange or exercise shall be deemed to be a Disposition of such Convertible Security or such Option. For purposes of this Agreement any Disposition of any Option or Convertible Security shall also constitute a Disposition of the Underlying Securities. Effective Time: "Effective Time of the Merger", as defined in the Merger Agreement. Encumbrance: As defined in Section 3.1(f) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, as from time to time in effect. Exempt Transfer: Any Disposition that falls within any one of the following clauses: (i) An exchange or conversion of Covered Securities which occurs by operation of law in connection with a merger, consolidation of Holdco with or into another corporation, or a recapitalization, reclassification or similar event that has been duly authorized and approved by the required vote of the Board of Directors and the stockholders of Holdco pursuant to the Restated Certificate of Incorporation of Holdco and the law of the jurisdiction of incorporation of Holdco; (ii) any surrender by a Stockholder to Holdco of Covered Securities upon redemption by Holdco of such Covered Securities pursuant to any right or obligation under the express terms of such Covered Securities that is made on a proportionate basis from all holders of such Covered Securities and is not at the option of such Stockholder; (iii) any Permitted Pledge and any transfer of such pledged Covered Securities to the Pledgee upon default of the obligations secured by such pledge; (iv) any transfer solely from one member of the Affiliated Group of a Stockholder to another member of the Affiliated Group of a Stockholder; (v) any transfer by a Stockholder who is an individual to (A) a spouse, (B) any other member of his immediate family (i.e., parents, children, including those adopted before the age of 18, grandchildren, brothers, sisters, and the spouses or children of the foregoing), (C) Qualified Trust or (D) a custodian under the Uniform Gifts to Minors Act or similar fiduciary for the exclusive benefit of his children during their lives; (vi) subject to Section 4, any transfer to the legal representatives of a Stockholder who is an individual upon his death or adjudication of incompetency or by any such legal representatives to any Person to whom such Stockholder could have transferred such Covered Securities pursuant to any clause of this definition; (vii) a transfer by the Turner Stockholders of up to an aggregate of 12 million shares (less the product of (A) the number of shares of Class A Common Stock and Class B Common Stock of TBS that are the subject of a Disposition (as such term is defined in the TBS Shareholders' Agreement) effected by Turner that is contemplated by Section 3(a) of the TBS Shareholders' Agreement after September 22, 1995, and (B) the Common Conversion Number (as defined in the Merger Agreement)) of Common Stock (appropriately adjusted to take into account any stock split, reverse stock split, reclassification, recapitalization, conversion, reorganization, merger or other change in such Common Stock) to any Charitable Transferee if, in the written opinion of legal counsel reasonably acceptable to TCITP, requiring such Charitable Transferee to become a party to this Agreement would limit by a material amount the amount of the deduction for federal income tax purposes that would be available to the applicable Turner Stockholder in the absence of such requirement, and any subsequent transfer by any such Charitable Transferee of any such shares; (viii) any exchange, conversion or transfer of Covered Securities pursuant to Section 4.1 of the LMC Agreement; and (ix) any sale or transfer permitted by and made in accordance with Section 3 or 4 hereof; provided, however, that no Disposition pursuant to clause (iii), (iv), (v) or (vi) shall be an Exempt Transfer, unless each Person to whom any such Disposition is made, unless already a party to this Agreement and bound by such provisions or a Controlled Affiliate of a party to this Agreement who is bound by such provisions, shall by a written instrument become a party to this Agreement bound by all of the provisions hereof applicable to the Stockholder making such Disposition. Exercise Notice: Either an Other Stockholder Exercise Notice or a Holdco Exercise Notice, as the context requires. Fast-Track Offer Notice: As defined in Section 3.3(a) hereof. Fast-Track Sale: Any sale of shares of Common Stock for the account of any Stockholder which meets all of the following requirements as of the date a Fast-Track Offer Notice is given with respect thereto pursuant to Section 3.3: (i) such Stockholder has a bona fide intention to sell such shares of Common Stock within a period of 115 days after such date and such sale is not being undertaken as a result of any offer to buy, bid or request, invitation or solicitation to sell made by any Person (other than any such offer, bid, request, invitation or solicitation from a registered broker-dealer or investment banker not intended to circumvent the provisions of Section 3.1); (ii) the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act and is listed for trading on a national securities exchange registered under the Exchange Act or traded in the over-the-counter market and quoted in an automated quotation system of the National Association of Securities Dealers, Inc.; (iii) such sale is to be effected through Broker Transactions or pursuant to a registration statement covering such shares in effect at the date of the Fast-Track Offer Notice; and (iv) the following sum does not exceed $100 million: (A) the aggregate Current Market Price of the shares of Common Stock to be sold (determined as of the date a Fast-Track Offer Notice with respect thereto is given pursuant to Section 3.3), plus (B) the aggregate sale price of all shares of Common Stock sold pursuant to Section 3.3 by any member or former member of the same Group as such Stockholder during the 90 days immediately preceding the date of such Fast Track Offer Notice, plus (c) without duplication, the aggregate Current Market Price, determined as of the date specified in subclause (A) of this clause (iv), of all shares of Common Stock as to which any Fast-Track Offer Notice is given by any other Stockholder who is a member of the same Group as such Stockholder within two business days before or two business days after such date. Fast-Track Shares: As defined in Section 3.3(a) hereof. Free to Sell Date: As defined in Section 3.1(j) hereof. FTC: The Federal Trade Commission. FTC Consent Decree: The Agreement Containing Consent Order (the "ACCO") dated as of August __, 1996 among Old TW, TCI, TBS, LMC and the FTC which contemplates the issuance of an Order, together with such Order and the Interim Agreement attached as Exhibit I to the ACCO, in each case as the same may be amended from time to time hereafter. Governmental Authority: Any nation or government, any state or other political subdivision thereof and any court, commission, agency or other body exercising executive, legislative, judicial or regulatory functions. Group: Either the TCITP Stockholders considered collectively as a group or the Turner Stockholders considered collectively as a group, as the context requires. Holdco: As defined in the opening paragraphs of this Agreement. Holdco Affiliates: Holdco and Affiliates of Holdco. Holdco Elected Shares: In the case of any Offer Notice, any Subject Shares covered thereby as to which Holdco exercises its right of purchase pursuant to Section 3.1(e). Holdco Exercise Notice: As defined in Section 3.1(e). Holdco Shares: Any and all shares of capital stock of Holdco of any class or series, whether now or hereafter authorized or existing. Holdco Stockholders Agreement: Any stockholders' agreement between Holdco and any one or more of the Turner Stockholders in effect on the date hereof. Initial Trigger: As of a given time, for either Stockholder, with respect to the Subject Shares covered by any Offer Notice or Tender Notice, the greatest number of such Subject Shares as may then be acquired by such Stockholder (or its Affiliates) without causing a Disadvantageous Result. Involuntary Event: As defined in Section 4.1 hereof. Judgment: Any order, judgment, writ, decree, award or other determination, decision or ruling of any court, judge, justice or magistrate, any other Governmental Authority or any arbitrator. LMC Agreement: The Second Amended and Restated LMC Agreement dated as of September 22, 1995, among Old TW, Holdco, LMC Parent and certain subsidiaries of LMC Parent. LMC Parent: Liberty Media Corporation, a Delaware corporation. Merger Agreement: The Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, among Old TW, Holdco, TW Acquisition Corp., a Georgia corporation, Time Warner Acquisition Corp., a Delaware corporation, and TBS, as amended by Amendment No. 1 thereto dated as of August 8, 1996. Offer Notice: As defined in Section 3.1(a) hereof. Old TW: The Delaware corporation known on September 22, 1995 as Time Warner Inc. Old TW Rights Plan: The Rights Agreement dated as of January 20, 1994, between Old TW and Chemical Bank, as Rights Agent. Options: Any options, warrants or other rights (except Convertible Securities), however denominated, to subscribe for, purchase or otherwise acquire any Holdco Shares or Convertible Securities, with or without payment of additional consideration in cash or property, either immediately or upon the occurrence of a specified date or a specified event or the satisfaction or failure to satisfy any condition or the happening or failure to happen of any other contingency. Other Stockholder: With respect to a Turner Stockholder, the "Other Stockholder" shall be TCITP, and with respect to a TCITP Stockholder, the "Other Stockholder" shall be Turner. Other Stockholder Elected Shares: As defined in Section 3.1(e) hereof. Other Stockholder Exercise Notice: As defined in Section 3.1(e) hereof. Other Stockholder Group: With respect to any Other Stockholder, the Group of which such Other Stockholder is a member. Permitted Pledge: A bona fide pledge of Covered Securities by a Stockholder to a financial institution to secure borrowings permitted by applicable law; provided that such financial institution agrees in writing to be bound by the provisions of Sections 2, 3 and 4 of this Agreement to the same extent and with the same effect as such Stockholder and the borrowings so secured are with full recourse against other assets of such Stockholder or other collateral. Per-Share Offer Consideration: As defined in Section 3.1(a) hereof. Person: Any individual, corporation, limited liability company, general or limited partnership, joint venture, association, joint stock company, trust, unincorporated business or organization, governmental authority or other legal entity or legal person, whether acting in an individual, fiduciary or other capacity. The term "Person" also includes any group of two or more Persons formed for any purpose. Prospective Purchaser: As defined in Section 3.1 hereof. Public Sale: Any sale to the public for the account of any Stockholder, (i) in Broker Transactions, (ii) otherwise pursuant to Rule 144 or (iii) through a registered offering pursuant to an effective registration statement under the Securities Act which in any case meets both of the following requirements (to the extent applicable) as of the date an Offer Notice is given: (A) such Stockholder has a bona fide intention to sell such shares of Common Stock as promptly as practicable after all applicable requirements of the Securities Act are satisfied, and such sale is not being undertaken as a result of any offer to buy, bid or request, invitation or solicitation to sell made by any Person (other than any such offer, bid, request, invitation or solicitation from a registered broker-dealer or investment banker not intended to circumvent the provisions of Section 3.1); and (B) in the case of a registered offering, such shares either have been registered under the Securities Act or such Stockholder has the immediate right to require Holdco to register such shares under the Securities Act. Purchase Price: As defined in Section 3.1(a) hereof. Purchase Right: As defined in Section 3.1(c) hereof. Purchased Shares: When used with reference to a Purchaser which is the Other Stockholder, the Other Stockholder Elected Shares, and when used with respect to a Purchaser which is a Holdco Affiliate, the Holdco Elected Shares. Purchaser: The term "Purchaser" means TCITP, in the case of any purchase of TCITP Elected Shares pursuant to any Other Stockholder Exercise Notice, Turner, in the case of any purchase of Turner Elected Shares pursuant to any Other Stockholder Exercise Notice, and Holdco, in the case of any purchase of Holdco Elected Shares pursuant to any Holdco Exercise Notice. Qualified Trust: Any trust described in Section 664 of the Code of which a Stockholder, members of his family or a Charitable Transferee (and no other persons) are income beneficiaries. Related Party: As to any Person, any Affiliate of such Person and, if such Person is a natural person, such Person's parents, children, siblings and spouse, the parents and siblings of such Person's spouse and the spouses of such Person's children who become parties to this Agreement. Requirement of Law: With respect to any Person, all federal, state and local laws, rules, regulations, Judgments, injunctions and orders of a court or other Governmental Authority or an arbitrator, applicable to or binding upon such Person, any of its property or any business conducted by it or to which such Person, any of its assets or any business conducted by it is subject. Restriction: Any prohibition, restriction, limitation or condition on or requirement under any Defensive Provision or Requirement of Law, including the FTC Consent Decree, (A) that (i) limits the ability of any Stockholder to acquire additional Holdco Shares or hold or dispose of any Holdco Shares or to participate in any material right or benefit otherwise available or to be distributed to security holders of the same class as the Holdco Shares, generally, or requires such Stockholder to Dispose of any Holdco Shares, (ii) reduces or otherwise limits the ability to exercise the voting or other rights of all or a portion of the Holdco Shares beneficially owned by such Stockholder below that applicable to Holdco Shares generally, or (iii) limits the ability of any Stockholder to consummate any merger, consolidation, business combination or other transaction with, Holdco or any of its subsidiaries or other Affiliates or substantially increases the cost of consummation or (B) under which the acquisition or ownership of additional Holdco Shares (i) would result in a material violation of applicable law, (ii) would require the discontinuance of any material business or activity or the divestiture of any material portion of any business or property, or (iii) would make the continuation of any such business or activity or the ownership of such property illegal or subject to material damages or penalties. Rights: The rights issued to the holders of record of the Common Stock pursuant to any Rights Plan, having the rights and privileges, and subject to the terms and conditions, set forth in such Rights Plan, and any other security or right which may be issued or granted in exchange or substitution therefor or in replacement or upon exercise thereof. Rights Plan: Any stockholder rights plan or other form of "poison pill" adopted by Holdco and in effect at any time during the term of this Agreement, as amended or modified from time to time. Rights Plan Trigger: As of a given time, for either Stockholder, with respect to the Subject Shares covered by any Offer Notice or Tender Notice, the greatest number of such Subject Shares as may then be acquired by such Stockholder (or its Affiliates) without causing a Rights Plan Triggering Event; provided, however, that if at such time there shall be no Rights Plan in effect, the Rights Plan Trigger shall be equal to the total number of Subject Shares covered by such Offer Notice or Tender Notice. Rights Plan Triggering Event: Any event under any Rights Plan analogous (in terms of its effects under such Rights Plan) to one of the following events under the Old TW Rights Plan: (i) any member of either Group becoming an "Acquiring Person" within the meaning of the Old TW Rights Plan or (ii) the Rights becoming transferable separately from shares of the Common Stock; in any such case, in the event of a dispute, as determined in accordance with Section 3.1(d). Sale Agreement: As defined in Section 3.1(f) hereof. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, as from time to time in effect. Selling Stockholder: As defined in Section 3.1 hereof. Stockholder: Any TCITP Stockholder or Turner Stockholder. Subject Shares: As defined in Section 3.1 hereof. TBS: Turner Broadcasting System, Inc. TBS Shareholders' Agreement: The Shareholders' Agreement dated as of June 3, 1987, among TBS, Turner and the Original Investors named therein. TCITP: As defined in the opening paragraphs of this Agreement. TCITP Affiliates: TCITP and the Affiliates of TCITP. TCITP Stockholders: TCITP and all Controlled Affiliates of TCITP, in each case so long as such Person is or is required to be a party to this Agreement or is the beneficial owner of any TCITP Holdco Shares. TCITP Holdco Shares: Any and all Covered Securities of which any TCITP Stockholder becomes the direct or indirect beneficial owner at the Effective Time or thereafter. Tendering Stockholder: As defined in Section 3.4(a) hereof. Tender Notice: As defined in Section 3.4(a) hereof. Tender Shares: As defined in Section 3.4(a) hereof. TOI: As defined in the opening paragraphs of this Agreement. Turner: As defined in the opening paragraphs of this Agreement. Turner Affiliates: The Turner Stockholders and the Affiliates of the Turner Stockholders. Turner Stockholders: Turner and all Affiliates of Turner, in each case so long as such Person is the beneficial owner of any Covered Securities, the Turner Foundation, the Turner Unitrust or any other Charitable Transferee if such entity is required to become a party to this Agreement as a result of a Charitable Transfer (provided, however, that any such entity shall be deemed a Turner Stockholder only with respect to Turner Holdco Shares acquired by such entity in a Charitable Transfer) and any Turner Related Party who is required to become a party to this Agreement pursuant to the terms hereof. Turner Holdco Shares: Any and all Covered Securities of which any Turner Stockholder becomes the direct or indirect beneficial owner at the Effective Time or thereafter; provided, however, that Covered Securities beneficially owned by the Turner Foundation or the Turner Unitrust immediately after the Effective Time shall not be Turner Holdco Shares. Underlying Securities: When used with reference to any Option or Convertible Security as of any time, the Covered Securities issuable or deliverable upon exercise, exchange or conversion of such Option or Convertible Security (whether or not such Option or Convertible Security is then exercisable, exchangeable or convertible). In the case of an Option to acquire a Convertible Security, the Underlying Securities of such Option shall include the Underlying Securities of such Convertible Security. 2. Restrictions on Dispositions of Covered Securities. No Turner Stockholder shall Dispose of any Turner Holdco Shares, except in an Exempt Transfer or a Charitable Transfer. No TCITP Stockholder shall Dispose of any TCITP Holdco Shares, except in an Exempt Transfer. Any purported Disposition of Covered Securities in violation of this Agreement shall be null and void and of no force or effect, and, if Holdco has actual knowledge of such violation, Holdco shall (and shall direct each registrar and transfer agent, if any, for the Covered Securities to) refuse to register or record any such purported Disposition on its transfer and registration books and records or to otherwise recognize such purported Disposition. Subject to Section 4, if any Involuntary Event affecting any Stockholder shall occur, such Stockholder's legal representatives, heirs, successors or transferees, as the case may be, and all Covered Securities beneficially owned by them shall be bound by all the terms and provisions of this Agreement. The Turner Stockholders shall, and shall cause each Related Party of Turner to, comply with the provisions of this Agreement intended to be applicable to the Turner Stockholders or any Turner Holdco Shares. The TCITP Stockholders shall, and shall cause each Related Party of each TCITP Stockholder to, comply with the provisions of this Agreement intended to be applicable to the TCITP Stockholders or any TCITP Holdco Shares. 3. Right of First Refusal: 3.1 If any Stockholder (the "Selling Stockholder") desires to accept an offer (other than with respect to a Public Sale or a Fast-Track Sale, consistent with the definitions thereof, or a tender or exchange offer to which Section 3.4 is applicable) (a "Bona Fide Offer") from a Person which is not a Related Party of such Selling Stockholder (the "Prospective Purchaser") to purchase any or all of the Covered Securities beneficially owned by such Selling Stockholder (the "Subject Shares"), such Selling Stockholder shall, in accordance with the following procedures, terms and conditions, first offer to sell the Subject Shares to the Other Stockholder for consideration (subject to subsections (g) and (h) of this Section 3.1) and on terms no more favorable to the Selling Stockholder than those which would apply if the Selling Stockholder accepted the Bona Fide Offer: (a) The Selling Stockholder shall deliver to the Other Stockholder a written notice (the "Offer Notice", which term shall include any Offer Notice delivered pursuant to Section 3.2(a)) which shall (i) state the number of shares or other appropriate unit of Covered Securities of each class, series or other type that comprise the Subject Shares; (ii) identify the Prospective Purchaser; and (iii) state the aggregate purchase price to be paid by the Prospective Purchaser for the Subject Shares (the "Purchase Price") and the kind and amount of consideration proposed to be paid or delivered by the Prospective Purchaser for the Subject Shares of each class, series or other type and the amount thereof allocable to each share or other appropriate unit of the Subject Shares of that class, series or other type (the "Per-Share Offer Consideration" for the Covered Securities of that class, series or other type), the timing and manner of the payment or other delivery thereof and any other material terms of such Bona Fide Offer. The Selling Stockholder shall deliver a copy of the Offer Notice to Holdco at the same time it is delivered to the Other Stockholder. (b) The Offer Notice shall be accompanied by a true and complete copy of the Bona Fide Offer. (c) If an Offer Notice is given by a Selling Stockholder, the Other Stockholder shall have the right (the "Purchase Right"), exercisable in the manner hereinafter provided, to require the Selling Stockholder to sell to the Other Stockholder the number or other amount of the Subject Shares determined in accordance with this Section 3.1(c). If there is no Defensive Provision or Requirement of Law in effect at the time any Offer Notice is given that imposes any Restriction on the Other Stockholder (or that would impose a Restriction if the Other Stockholder were to exercise the Purchase Right as to all the Subject Shares), the Other Stockholder may exercise the Purchase Right only as to all, but not less than all of the Subject Shares. If there are one or more Defensive Provisions or Requirements of Law in effect at the time such Offer Notice is given that impose any Restriction on the Other Stockholder (or that would impose such a Restriction if the Other Stockholder were to exercise the Purchase Right as to all the Subject Shares), the Other Stockholder may exercise the Purchase Right only as to a number of Subject Shares that is greater than or equal to the Initial Trigger relating to the Other Stockholder at such time and less than or equal to the Rights Plan Trigger relating to the Other Stockholder at such time. For purposes of this Section 3.1(c), the Initial Trigger and the Rights Plan Trigger will be determined as provided in Section 3.1(d). (d) Commencing not later than the second business day after an Offer Notice is given if there are one or more Defensive Provisions in effect at such time, the Selling Stockholder and the Other Stockholder shall consult with each other and Holdco in an effort to agree with respect to the Initial Trigger and the Rights Plan Trigger, and upon request Holdco will provide the Stockholders with information relating thereto pursuant to Section 3.5. If agreement is not reached by the Selling Stockholder and the Other Stockholder on or prior to the fifth business day after the Offer Notice was given, then, within two business days after such fifth business day, the Selling Stockholder and the Other Stockholder shall jointly designate an independent law firm of recognized national standing, which firm will be directed to submit a written report regarding its conclusions as to the Initial Trigger and the Rights Plan Trigger within 5 business days (which report shall include, if requested, such law firm's conclusion as to whether any specified event under a Rights Plan constitutes a Rights Plan Triggering Event). The number of Subject Shares as to which the Other Stockholder may exercise the Purchase Right shall be determined as follows: (i) upon such law firm rendering a written report within such 5 business day period as to the Initial Trigger and the Rights Plan Trigger, if the Other Stockholder elects to exercise its Purchase Right, the Other Stockholder may exercise such Purchase Right only as to a number of Subject Shares equal to or greater than the Initial Trigger and less than or equal to the Rights Plan Trigger, as such amounts shall be specified in such report; and (ii) if such law firm does not render a written report as to the Initial Trigger and the Rights Plan Trigger within such 5 business day period, if the Other Stockholder elects to exercise its Purchase Right, the Other Stockholder may exercise such Purchase Right only as to a number of Subject Shares equal to or greater than the Initial Trigger and less than or equal to the Rights Plan Trigger, as determined by such Other Stockholder. If any law firm is so retained, Holdco, the Other Stockholder and the Selling Stockholder shall provide such law firm with such information as may be reasonably requested in connection with the preparation of such report and shall otherwise cooperate with each other and such law firm with the goal of allowing such law firm to render such report as promptly as reasonably practicable. Each of Holdco, the Other Stockholder and the Selling Stockholder shall be responsible for the payment of one-third of the fees and disbursements of such law firm, except that if, at the time such law firm is retained, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by the Selling Stockholder and the Other Stockholder. If the Selling Stockholder and the Other Stockholder are unable to agree upon the selection of an independent law firm within the two business day period provided for in this Section 3.1(d), either such Stockholder may apply to the American Arbitration Association (or another nationally- recognized organization that provides alternative dispute resolution services) to appoint an independent law firm to prepare and submit the report provided for in this Section 3.1(d), and any law firm so appointed shall constitute the law firm contemplated by this Section 3.1(d). Anything contained herein to the contrary notwithstanding, no determination relating to the Initial Trigger, the Rights Plan Trigger or any Rights Plan Triggering Event pursuant to this Section 3.1(d) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Stockholders with any such written instrument). (e) If the Other Stockholder desires to exercise the Purchase Right with respect to any Subject Shares covered by any Offer Notice, it shall do so by a written notice (an "Other Stockholder Exercise Notice") delivered to the Selling Stockholder by the Other Stockholder prior to 5:00 P.M., New York City time, on the eighth business day following the receipt of an Offer Notice or, if there is any dispute as to the Initial Trigger or the Rights Plan Trigger, within 3 business days after the resolution of such dispute. The Other Stockholder Exercise Notice shall state the aggregate number or other appropriate amount of each class, series or other type of the Subject Shares to be purchased (the "Other Stockholder Elected Shares"). A copy of the Other Stockholder Exercise Notice shall be sent to Holdco at the same time it is given to the Selling Stockholder. If an Other Stockholder Exercise Notice is given within such period but, in accordance with Sections 3.1(c) and 3.1(d), such Other Stockholder Exercise Notice specifies that only a portion of the Subject Shares are elected to be purchased (a "Partial Exercise Notice"), then the Selling Stockholder shall have the right, exercisable by written notice to each of the Other Stockholder and Holdco given within five business days after the Partial Exercise Notice was given, to terminate the Offer Notice and abandon the proposed sale pursuant to the Bona Fide Offer, in which case the provisions of this Section 3.1 shall be reinstated with respect to any and all proposed future Dispositions of the same or any Subject Shares pursuant to any subsequent Bona Fide Offer by the same or any other Prospective Purchaser. If no Other Stockholder Exercise Notice is delivered within the applicable number of business days, or if an Other Stockholder Exercise Notice is delivered but the number of Other Stockholder Elected Shares is less than the number of Covered Securities that are the subject of such Offer Notice and the Selling Stockholder does not exercise its right to terminate the Offer Notice and abandon the proposed sale pursuant to the preceding sentence, Holdco shall have the right, exercisable by a written notice (a "Holdco Exercise Notice") given to the Selling Stockholder by Holdco prior to 5:00 P.M., New York City time, on the second business day following the expiration of such period of 8 or 3 business days, as the case may be, to elect to purchase all, but not less than all of the Subject Shares which are not Other Stockholder Elected Shares, in accordance with the procedures, terms and conditions set forth below in this Section 3.1 and for a consideration (subject to subsections (g) and (h) of this Section 3.1) and on terms no more favorable to the Selling Stockholder than those which would apply if the Selling Stockholder accepted the Bona Fide Offer with respect to the Holdco Elected Shares. A copy of the Holdco Exercise Notice shall be sent to the Other Stockholder at the same time it is given to the Selling Stockholder. The Selling Stockholder shall have the right to condition the closing of the sale of the Other Stockholder Elected Shares to the Other Stockholder upon the closing of the sale of any Holdco Elected Shares and the closing of the sale of any Holdco Elected Shares on the closing of the sale of the Other Stockholder Elected Shares. (f) If an Exercise Notice is given in accordance with Section 3.1(e), within 5 business days thereafter the Purchaser and the Selling Stockholder shall enter into a binding agreement (the "Sale Agreement") for the sale of the Purchased Shares to the Purchaser, which agreement shall contain such representations, warranties, covenants and conditions no less favorable to the Selling Stockholder than the terms contemplated by the Bona Fide Offer, except with respect to the kind and number or other amount of Subject Shares to be purchased and the aggregate purchase price payable in the event that the Purchased Shares constitute fewer than all the Subject Shares. The Sale Agreement shall provide for the closing of the purchase and sale of the Purchased Shares to be held at the offices of the Selling Stockholder at 11:00 a.m. local time on the 60th day after the Offer Notice was given (subject to extension in accordance with Sections 3.1(i) and 5.1) or at such other place or on such earlier date as the parties to the Sale Agreement may agree. At such closing, the Purchaser shall (subject to subsections (e), (g) and (h) of this Section 3.1) purchase the Purchased Shares for cash by wire transfer of immediately available funds in an account at a bank designated by the Selling Stockholder, such designation to be made no less than three days prior to closing. At the closing, the Selling Stockholder shall deliver the certificates and other evidences of the Purchased Shares to the Purchaser, against payment in full for the Purchased Shares, free and clear of any pledge, claim, lien, option, restriction, charge, shareholders' agreement, voting trust or other encumbrance of any nature whatsoever to which the Purchased Shares are subject in the hands of the Selling Stockholder other than restrictions on transfer arising under federal and state securities laws and claims, restrictions, options and encumbrances arising under this Agreement (an "Encumbrance"). Without limiting the generality of the immediately preceding sentence, if such Purchased Shares are Other Stockholder Elected Shares and if the Other Stockholder is TCITP, such Purchased Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale of such Purchased Shares pursuant hereto. The certificates evidencing the Purchased Shares will be in proper form for transfer, with appropriate stock powers executed in blank attached and documentary or transfer tax stamps affixed. The Selling Stockholder shall execute such other documents as shall be necessary to effectuate the sale of the Purchased Shares and such additional documents as may be contemplated by the Bona Fide Offer or as may reasonably be requested by any purchaser. The Other Stockholder may assign any or all of its rights, and delegate any or all of its obligations, under any Sale Agreement to which it is a party with respect to the purchase and sale of any or all of the Other Stockholder Elected Shares to any Controlled Affiliate of the Other Stockholder, provided that no such assignment or delegation shall release the Other Stockholder from its obligations thereunder without the written consent of the Selling Stockholder. Holdco may assign any or all of its rights, and delegate any or all of its obligations, under any Sale Agreement to which it is a party or otherwise with respect to the purchase and sale of any or all of the Holdco Elected Shares to any Controlled Affiliate of Holdco, provided that no such assignment or delegation shall release Holdco from its obligations thereunder without the written consent of the Selling Stockholder. (g) Subject to Section 3.1(h), if the Bona Fide Offer contemplated that the Purchase Price for the Subject Shares proposed to be Disposed of by the Selling Stockholder would be paid, in whole or in part, other than in cash, then the Purchaser shall pay for its Purchased Shares in cash in lieu of such other consideration in an amount equal to the fair market value of such other consideration as agreed by the Selling Stockholder and the Other Stockholder. In the event of any disagreement between the Other Stockholder and the Selling Stockholder as to the fair market value of any non-cash consideration payable to the Selling Stockholder, then at the request of either such party given within 5 business days following the delivery of the Offer Notice such determination shall be conclusively made by a panel of appraisers, one of whom shall be selected by the Other Stockholder, the second of whom shall be selected by the Selling Stockholder and the third of whom shall be selected by the first two appraisers. The Other Stockholder and the Selling Stockholder shall each designate their appraiser within 3 business days after receipt of any request for appraisal, and such appraisers shall designate the third appraiser within 3 business days thereafter. Each appraiser shall submit its determination of the fair market value of such non-cash consideration to the Other Stockholder, Holdco and the Selling Stockholder within 5 business days after the panel is empaneled and such fair market value shall be the average of the two closest valuations (or the middle valuation, if the highest and lowest valuation differ from the middle valuation by an equal amount). Each appraiser appointed shall be a nationally recognized investment banking, appraisal or accounting firm which is not directly or indirectly a Related Party of any party to this Agreement or any Prospective Purchaser and which has no interest (other than the receipt of customary fees) in the event giving rise to the need for the appraisal. Each of the Other Stockholder and the Selling Stockholder shall be responsible for the payment of one-half of the costs of such appraisal. (h) If the Bona Fide Offer contemplated that any part of the Purchase Price for any Subject Shares would be paid in debt securities, each purchaser of any of such Subject Shares may, in its discretion, elect to pay the equivalent portion of its allocable share of the Purchase Price for the Purchased Shares through the issuance of debt securities with substantially similar terms in an amount the fair market value of which is equal to the fair market value of the equivalent portion of the debt securities specified in the Bona Fide Offer, in each case as agreed by such purchaser and the Selling Stockholder or, failing such agreement, as determined in accordance with the appraisal procedures specified in Section 3.1(g), taking into consideration relevant credit factors relating to the Prospective Purchaser and such purchaser and the marketability and liquidity of such debt securities. (i) All time periods specified in subsection (e) or (f) of this Section 3.1 shall be extended for a number of days equal to the number of days in the period from the date the request for appraisal is made pursuant to subsection (g) or (h) of this Section 3.1 or Section 4 (as the case may be) through and including the date of submission of the last to be submitted of the required appraisals. Each of the Other Stockholder, the Selling Stockholder and Holdco shall be responsible for the payment of one-third of the costs of each appraisal pursuant to subsection (h) of this Section 3.1 (including the fees of all appraisers appointed in accordance with subsection (h) of this Section 3.1), except that, if, at the time such appraisal is requested, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by the Selling Stockholder and the Other Stockholder. (j) The Selling Stockholder shall have the right to sell Subject Shares to the Prospective Purchaser only in the following circumstances: (i) If neither an Other Stockholder Exercise Notice nor a Holdco Exercise Notice is given in accordance with Section 3.1(e) within the applicable time period specified therein (as such period may be extended pursuant to subsection (i) of this Section 3.1), the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all but not less than all of the Subject Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day following the expiration of the last to expire of all time periods provided for in Section 3.1(e). (ii) If an Other Stockholder Exercise Notice is given but the number of Other Stockholder Elected Shares is less than the number of Covered Securities that are subject to the relevant Offer Notice, and if no Holdco Exercise Notice is given in accordance with Section 3.1(e) within the applicable time period specified therein (as such period may be extended pursuant to subsection (i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Subject Shares which are not Other Stockholder Elected Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the earlier of the fifth business day following the date the Other Stockholder Exercise Notice was given and the date that Holdco notifies the Selling Stockholder that it has determined not to purchase any such Subject Shares. (iii) If an Other Stockholder Exercise Notice is given but a Sale Agreement for the Other Stockholder Elected Shares is not executed by the Purchaser and tendered to the Selling Stockholder for execution within the 5 business day period specified in the first sentence of Section 3.1(f) (as such period may be extended pursuant to subsection (i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Subject Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day after expiration of such 5 business day period. (iv) If a Holdco Exercise Notice is given but a Sale Agreement for the Holdco Elected Shares is not executed by the Purchaser and tendered to the Selling Stockholder for execution within the 5 business day period specified in the first sentence of Section 3.1(f) (as such period may be extended pursuant to subsection (i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Holdco Elected Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day after the expiration of such 5 business day period. (v) If a Sale Agreement for either Other Stockholder Elected Shares or Holdco Elected Shares is executed by the Purchaser and the Selling Stockholder, but the closing of the purchase and sale thereunder shall not occur by the latest date for such closing determined in accordance with Sections 3.1(f), 3.1(i) and 5.1 for any reason other than a breach or violation by the Selling Stockholder of any of such Selling Stockholder's representations, warranties, covenants or agreements that are a condition to such closing, then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of such Other Stockholder Elected Shares or the Holdco Elected Shares covered by such Sale Agreement to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day after such latest date for such closing as so determined. (vi) If between the date an Other Stockholder Election Notice is given with respect to any Other Stockholder Elected Shares and the closing of the purchase and sale of such Other Stockholder Elected Shares, there shall be any amendment or modification adverse to the Other Stockholder of any Defensive Provision in effect on the date the Other Stockholder Election Notice was given, adoption of any other Defensive Provision adverse to the Other Stockholder, waiver adverse to the Other Stockholder of any term or provision of or exercise adverse to the Other Stockholder of any other discretionary right or power under any Defensive Provision (whether then or thereafter in effect), any reorganization, transfer of assets, consolidation, merger, share exchange, dissolution, issue or sale of securities or any other action or event which in the opinion of the Other Stockholder would, if such purchase and sale were consummated, have a Disadvantageous Result, then notwithstanding any other provision of this Agreement or any provision of any Sale Agreement to which any member of the Other Stockholder Group may be a party and without any liability or obligation to the Selling Stockholder, Holdco, any other party to this Agreement or any Prospective Purchaser, the Other Stockholder may, by written notice given to the Selling Stockholder and Holdco within five business days after the Other Stockholder acquires actual knowledge of such action or event, rescind the Other Stockholder Election Notice and any Sale Agreement to which any member of the Other Stockholder Group may be a party and abandon the purchase and sale of the Other Stockholder Elected Shares pursuant thereto. In such event, the Selling Stockholder shall have the right to sell all or any portion of the Subject Shares to the Prospective Purchaser and the "Free to Sell Date" shall be the business day following receipt by the Selling Stockholder of such written notice of abandonment. Any sale of Subject Shares to the Prospective Purchaser permitted by this Section shall be for the Purchase Price (or a greater price), payable in the manner specified in the Bona Fide Offer, and otherwise on terms and conditions no more favorable to the Prospective Purchaser than those contained in the Bona Fide Offer; provided, however, that if such Subject Shares constitute fewer than all the Subject Shares, the purchase price therefor shall be equal to or greater than the portion of the Purchase Price allocable to such Subject Shares (determined by multiplying each share or other appropriate unit of such Subject Shares of each class, series or other type by the Per-Share Offer Consideration for the Subject Shares of that class, series or other type). In the event that (i) the Prospective Purchaser has not entered into a binding agreement with the Selling Stockholder for the purchase of such Subject Shares within the 30-day period following the Free to Sell Date or (ii) the Prospective Purchaser has not purchased such Subject Shares within the time period which would be applicable to a purchase thereof by a Purchaser under the second sentence of Section 3.1(f) as if calculated from the Free to Sell Date (except that the 60-day period referred to therein shall be construed as a 120-day period for this purpose), then, in either such case, the Selling Stockholder's right to sell Subject Shares to the Prospective Purchaser pursuant to this Section 3.1(j) shall expire and the provisions of this Section 3.1 shall be reinstated with respect to any and all proposed future Dispositions of the same or any other Subject Shares pursuant to any subsequent Bona Fide Offer by the same or any other Prospective Purchaser. 3.2 Public Sales. (a) If any Stockholder at any time intends to effect a Public Sale of Covered Securities (other than a Fast-Track Sale), such Stockholder may deliver to the Other Stockholder an Offer Notice pursuant to Section 3.1 offering to sell such Covered Securities to the Other Stockholder at a price equal to the aggregate Current Market Price thereof on the date on which such Offer Notice is given. A copy of such Offer Notice shall be sent to Holdco at the same time it is given to the Other Stockholder. If any such Offer Notice with respect to any Covered Securities is given, the Stockholder giving the Offer Notice shall have all rights and obligations of a "Selling Stockholder" under Section 3.1 and each of the Other Stockholder and Holdco shall have all of their respective rights and obligations provided for in Section 3.1, in each case with the same effect as if such Covered Securities were "Subject Shares" proposed to be sold by the Selling Stockholder to a Prospective Purchaser for "Per-Share Offer Consideration" consisting of cash in an amount equal to the Current Market Price of the Covered Securities on the date such Offer Notice is given and for a "Purchase Price" equal to the total Current Market Price on such date of all such Subject Shares, and as if the other terms of the Public Sale were the terms of the "Bona Fide Offer" made by such assumed Prospective Purchaser, except that subsections (g), (h) and (i) of Section 3.1 shall not apply and the provisions of subsection (j) of Section 3.1 shall apply only as modified by subsection (b) of this Section 3.2. (b) Subject Shares covered by any Offer Notice given pursuant to this Section 3.2 may be sold (after full compliance with this Section 3.2 and the applicable provisions of Section 3.1) by the Selling Stockholder at any available price in a Public Sale of the type described in such Offer Notice, provided that such sale or sales are completed within the period of 120 days after the applicable Free to Sell Date; provided, however, that if the issuer of any Covered Securities exercises any right to delay the filing or effectiveness of a registration statement relating to such Covered Securities or to suspend sales under such registration statement, then the period shall be extended by the number of days in any such delay or suspension period. If any Subject Shares covered by such Offer Notice which such Selling Stockholder becomes obligated under this Section 3.2 to sell to one or more purchasers or their permitted assignees are not, for any reason, sold to such Persons within any applicable period determined pursuant to Section 3.1, or if any such Subject Shares which such Selling Stockholder is entitled, pursuant to the first sentence of this Section 3.2(b), to sell in the Public Sale are not so sold within the period provided in such sentence, then in each case the right of such Selling Stockholder to sell such unsold Subject Shares shall terminate and such Subject Shares shall thereafter continue to be subject to the restriction on Dispositions of Covered Securities contained in Section 2. 3.3 Fast-Track Sales. (a) Any Stockholder who proposes to make a Fast-Track Sale may deliver to each of the Other Stockholder and Holdco a written notice (the "Fast-Track Offer Notice") to such effect which states the number of shares of Common Stock proposed to be sold (the "Fast-Track Shares"). The delivery of any such notice shall constitute the offer by such Stockholder to sell to the Other Stockholder, Holdco or both all or such portion of the Fast-Track Shares as it or they may have the right to purchase in accordance with this Section 3.3 at a price payable in cash equal to the aggregate Current Market Price thereof on the date on which such Fast-Track Offer Notice is given. (b) The Other Stockholder shall have the right to elect to purchase (or to designate any one or more of the members of the Other Stockholder Group as purchasers of) all or any number of the Fast-Track Shares. The Other Stockholder and Holdco shall consult with each other in an effort to resolve any questions as to the Initial Trigger and the Rights Plan Trigger; provided, that if the Other Stockholder and Holdco cannot resolve such issue, then the Other Stockholder shall have the right to purchase only the number of Fast- Track Shares that Holdco shall specify. Anything contained herein to the contrary notwithstanding, no determination relating to the Initial Trigger or the Rights Plan Trigger pursuant to this Section 3.3(b) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Other Stockholder with any such written instrument). If the Other Stockholder desires to exercise its purchase right under this Section 3.3, it shall do so by a written notice specifying the number of the Fast-Track Shares to be purchased and identifying the purchasers thereof, given to the Stockholder who gave the Fast-Track Offer Notice prior to 5:00 P.M., New York City time, on the third business day following the receipt by the Other Stockholder of the Fast-Track Offer Notice (provided that any Fast-Track Offer Notice received on a day that is not a business day or after 12 noon, New York City time, on a business day, shall be deemed to have been received on the next following business day). Holdco shall have the right to elect to purchase any or all of the Fast-Track Shares that the Other Stockholder does not elect to purchase or have one or more other members of the Other Stockholder Group purchase in accordance with the immediately preceding sentence, which right shall be exercisable by a written notice specifying the number of such Fast-Track Shares to be purchased, which notice shall be given by Holdco to the Stockholder proposing to sell such Fast-Track Shares and the Other Stockholder prior to 5:00 P.M., New York City time, on the fifth business day following the receipt by the Other Stockholder and Holdco of the Fast-Track Offer Notice. If any such notice is given by either the Other Stockholder or Holdco, the closing of the purchase and sale of the Fast-Track Shares covered thereby shall be held at the offices in the continental United States of the Other Stockholder or Holdco (as the case may be) specified in such notice, 11:00 A.M., New York City time, on the fourth business day after such notice was given or at such other place or date as the Stockholder selling the Fast-Track Shares and the purchasers thereof may agree, and such closing date shall not be subject to extension pursuant to Section 5.1 or otherwise unless such selling Stockholder and such purchasers agree to such extension. At such closing, the purchasers shall purchase such Fast-Track Shares for cash by wire transfer of immediately available funds in an account at a bank designated by the selling Stockholder, such designation to be made no less than three business days prior to closing, against delivery at the closing by the selling Stockholder of the certificates evidencing the Fast-Track Shares to be sold to such purchasers, in proper form for transfer, with appropriate stock powers executed in blank attached and documentary or transfer tax stamps affixed. Such delivery of such certificates shall constitute the representation and warranty of such selling Stockholder that upon such delivery, such selling Stockholder duly transferred good and marketable title to the shares evidenced thereby, clear of any Encumbrance. Without limiting the generality of the immediately preceding sentence, if the Other Stockholder is TCITP, such purchased Fast-Track Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale thereof. The purchase price payable for each Fast-Track Share purchased pursuant to this Section 3.3 shall be the Current Market Price determined as of the date the Fast-Track Offer Notice was given. (c) Any Fast-Track Shares not purchased pursuant to Section 3.3(b) may be sold by the selling Stockholder at any available price in one or more Fast-Track Sales within the 90-day period following the twelfth business day after the receipt by both Holdco and the Other Stockholder of the Fast-Track Offer Notice, and if all Fast-Track Shares for any reason are not sold within such period either pursuant to Section 3.3(b) or in one or more Fast-Track Sales, then the right to sell such Fast-Track Shares shall terminate and such Fast-Track Shares shall thereafter continue to be subject to the restrictions on Dispositions of Covered Securities contained in Section 2. 3.4 Tender or Exchange Offer Sales. (a) If any Person shall make a tender or exchange offer to acquire any Covered Securities, and if any Stockholder (a "Tendering Stockholder") intends to tender any Covered Securities, such Tendering Stockholder shall give the Other Stockholder written notice (the "Tender Notice") of such intention not later than ten calendar days prior to the latest time by which securities must be tendered in order to be accepted pursuant to such offer as such date may from time to time be extended (the "Tender Date"), specifying the Covered Securities proposed to be tendered (the "Tender Shares"), together with copies of all written materials by which such offer is being made. A copy of such Tender Notice shall be sent to Holdco at the same time it is given to the Other Stockholder. (b) Any Tender Notice given by any Tendering Stockholder shall constitute an offer by such Tendering Stockholder to sell to the Other Stockholder the Tender Shares. The Other Stockholder shall have the right to elect to purchase (or to designate any one or more of the members of the Other Stockholder Group as purchasers of) all or any number of the Tender Shares in accordance with this Section 3.4. The Other Stockholder and Holdco shall consult with each other in an effort to resolve any questions as to the Initial Trigger and the Rights Plan Trigger, but the rights of the Other Stockholder under this Section 3.4 shall not be affected by the failure of Holdco to concur in any conclusion of the Other Stockholder with respect to any such matter. Anything contained herein to the contrary notwithstanding, no determination relating to the Initial Trigger or the Rights Plan Trigger pursuant to this Section 3.4(b) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Other Stockholder with any such written instrument). If the Other Stockholder desires to exercise its purchase right under this Section 3.4, it shall do so by a written notice specifying the number of the Tender Shares to be purchased and identifying the purchasers thereof, given to the Tendering Stockholder at least three business days prior to the Tender Date. If any such notice is given by the Other Stockholder, the closing of the purchase and sale of the Tender Shares covered thereby shall be held at the offices of the Other Stockholder within the continental United States specified in such notice at 11:00 A.M., New York City time, on a date specified in such notice that is not later than two business days prior to the Tender Date, or at such other place or date as the Tendering Stockholder and the Other Stockholder may agree, and such closing date shall not be subject to extension pursuant to Section 5.1 or otherwise unless the Tendering Stockholder and the Other Stockholder agree to such extension. At such closing, the purchasers identified by the Other Stockholder shall purchase such Tender Shares for cash by wire transfer of immediately available funds to an account at a bank designated by the Tendering Stockholder in the Tender Notice, against delivery at the closing by the Tendering Stockholder of the certificates or other instruments evidencing the Tender Shares to be sold to such purchasers, in proper form for transfer, with appropriate stock powers executed in blank attached and documentary or transfer tax stamps affixed. Such delivery of such certificates shall constitute the representation and warranty of such Tendering Stockholder that upon such delivery, such Tendering Stockholder duly transferred good and marketable title to the shares evidenced thereby, free and clear of any Encumbrance. Without limiting the generality of the immediately preceding sentence, such purchased Tender Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale thereof. The total purchase price to be paid by such purchasers for such Tender Shares shall be (i) if such tender or exchange offer is consummated, the purchase price that the Tendering Stockholder would have received if it had tendered such Tender Shares and all such Tender Shares had been purchased in such tender or exchange offer, including any increases in the price paid by the offeror after exercise by the Other Stockholder of its right of first refusal under this Section 3.4 or after the closing of the purchase of Tender Shares pursuant to such exercise, (ii) if such tender or exchange offer is not consummated, the highest price offered pursuant thereto, or (iii) if any other tender or exchange offer is commenced prior to the expiration or termination of such tender or exchange offer, the highest price offered in either such tender or exchange offers in each case with any offered securities or other property except cash to be valued as provided in Section 3.4(c). (c) If the consideration offered in such tender or exchange offer consists, in whole or in part, of securities or other property except cash, then the purchasers identified by the Other Stockholder shall pay for the Tender Shares cash in lieu of such other consideration in an amount equal to the fair market value of such other consideration as agreed by the Tendering Stockholder and the Other Stockholder. In the event the Tendering Stockholder and the Other Stockholder do not agree as to the fair market value of any such non-cash consideration by the beginning of the second business day after the Offer Notice is given, then such determination shall be conclusively made by a panel of appraisers, one of whom shall be selected by the Other Stockholder, the second of whom shall be selected by the Tendering Stockholder and the third of whom shall be selected by the first two appraisers. The Other Stockholder and the Tendering Stockholder shall each designate their appraiser within three business days after such Offer Notice is given, and such appraisers shall designate the third appraiser within three business days thereafter. Each appraiser shall submit its determination of the fair market value of such non-cash consideration within three business days after the panel is empaneled and such fair market value shall be the average of the two closest valuations (or the middle valuation, if the highest and lowest valuation differ from the middle valuation by an equal amount). Each appraiser appointed shall be a nationally recognized investment banking, appraisal or accounting firm which is not directly or indirectly a Related Party of any party to this Agreement or the Person making the tender or exchange offer and which has no interest (other than the receipt of customary fees) in the event giving rise to the need for the appraisal. Each of the Other Stockholder and the Tendering Stockholder shall be responsible for the payment of one-half of the costs of such appraisal. (d) If the Other Stockholder does not exercise its right of first refusal under this Section 3.4 by giving a notice of exercise in accordance with Section 3.4(b) or, having given such notice, fails to purchase and pay for (or have one or more of its designees purchase and pay for) such Tender Shares on or prior to the business day prior to the Tender Date, then the Tendering Stockholder shall be free to accept the tender or exchange offer with respect to which the Tender Notice was given or any other tender or exchange offer commenced during the pendency of the tender or exchange offer with respect to which the Tender Notice was given. 3.5 Holdco to Provide Certain Information. If requested at any time or from time to time by any Stockholder, Holdco shall promptly provide to such Stockholder in writing (i) all information which such Stockholder reasonably may request for the purpose of determining whether, based on the facts set forth by such Stockholder in such request, any acquisition of beneficial ownership by such Stockholder or the Other Stockholder would result in the occurrence of a Disadvantageous Result under or in respect of any Defensive Provision and (ii) such other non-confidential information known to Holdco as such Stockholder may reasonably request regarding (A) the number of Covered Securities issued and outstanding at any time, (B) the number of Covered Securities owned of record by any person at any time, or (C) the terms and conditions of any Defensive Provision. 3.6 Certain Actions by Holdco. In the event that Holdco shall (i) amend or modify any Defensive Provision in effect on the date hereof, or (ii) adopt any Defensive Provision after the date hereof, or (iii) purchase, redeem or otherwise acquire any outstanding Covered Securities, directly or indirectly through any Controlled Affiliate of Holdco, and the result of any such action is to reduce the Initial Trigger or the Rights Plan Trigger with respect to any Stockholder Group, then, in the case of any Offer Notice or Tender Notice delivered after such action, if such action shall have had the effect of reducing the number of Subject Shares covered by such Offer Notice that may then be purchased by the Other Stockholder pursuant to this Agreement, Holdco shall have no right under this Agreement to purchase any Subject Shares covered by such Offer Notice. 4. Involuntary Event; Death or Incapacity. 4.1 In the event that (i) any Stockholder shall be adjudicated bankrupt or insolvent or file a voluntary petition for bankruptcy (or an involuntary petition for bankruptcy shall have been filed against any Stockholder and the same shall not have been dismissed within 60 days after the date of filing), or file a pleading in any court of record admitting his inability to pay his debts as they become due, or make a general assignment for the benefit of creditors, or (ii) a receiver, administrator, guardian, legal committee or other legal custodian of any Stockholder's property shall be appointed (other than in connection with his death or incapacity) and not discharged within 60 days, or (iii) a writ of attachment or levy or other similar court order shall prevent any Stockholder from exercising his or its right to vote or Dispose of any of his or its Covered Securities and such writ or levy is not dismissed (or such court order is not reversed) within 60 days, then such Stockholder shall promptly notify the Other Stockholder of the occurrence of any such event (the "Involuntary Event"). Simultaneously with the delivery of any such notice required by this Section 4.1, such Stockholder shall deliver an Offer Notice to such Other Stockholder pursuant to Section 3.1, offering to sell all Covered Securities beneficially owned by such Stockholder to such Other Stockholder at the Appraised Value. Each Stockholder giving such an Offer Notice shall have, in respect of such Offer Notice, all rights and obligations under Section 3.1 of a Selling Stockholder, except that if such Stockholder is a Turner Stockholder, for so long as such Turner Stockholder is subject to the restrictions on transfer contained in the Holdco Stockholders' Agreement, it shall not be entitled to sell any Covered Securities to any Person other than the Purchasers, if any; each Other Stockholder and Holdco shall have, in respect of such Offer Notice, all rights and obligations under Section 3.1 which are provided for therein in the case of any Offer Notice given pursuant thereto. For the purpose hereof, the term "Appraised Value" means the fair market value of the Covered Securities to be sold as determined by appraisal in the same manner as provided in Section 3.1(h) with respect to appraisals of non-cash consideration. Each of such Stockholder, the Other Stockholder and Holdco shall be responsible for the payment of one-third of the costs of such appraisal, except that, if, at the time such appraisal is requested, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by such Stockholder and the Other Stockholder. All time periods specified in subsection (e) or (f) of Section 3.1 shall be extended for a number of days equal to the number of days in the period from the delivery of the Offer Notice pursuant to this Section 4.1 through and including the date of submission of the last to be submitted of the required appraisals. 4.2 Any Sale Agreement entered into by any Stockholder and the Purchaser pursuant to an Offer Notice required by Section 4.1 shall provide that the closing of the sale of the Covered Securities to be sold and purchased thereunder may be postponed for such period as may be necessary to effect the purchase of such Covered Securities free from any claims of a trustee in bankruptcy, any garnishee or any court order. In the event that any Covered Securities subject to such Offer Notice are not purchased for any reason, such Covered Securities shall continue to be subject to this Agreement. 4.3 In the event of Turner's incapacity or death, his legal representative or the executor or administrator of his estate, as the case may be, shall be bound by all the terms and provisions of this Agreement as fully as if such representative, executor or administrator were a party hereto and his or its name were substituted for Turner's name herein and shall be entitled to exercise Turner's rights and required to perform his obligations hereunder. 5. Regulatory Approvals; Certain Representations, Warranties and Covenants. 5.1 Regulatory Approvals. If any sale of Covered Securities to any Stockholder, Holdco or any permitted assignee of any Stockholder or Holdco in accordance with Section 3.1, 3.2 or 4 requires, as a condition to the legal and valid transfer thereof to such Purchaser, any consent, approval, waiver, or authorization of, notice to or filing with, any Governmental Authority or the expiration of any waiting period imposed by applicable law and if Section 3.1, 3.2 or 4 (as the case may be) provides for the closing of such sale to be held before some fixed or ascertainable date, then such date shall be extended for the period of time during which efforts to obtain each such consent, approval, waiver, or authorization, to give such notice or make such filing and to obtain the termination of each such waiting period at the earliest reasonably practicable time are diligently being made; provided, however, that in no event shall the extension of any such closing date pursuant to this Section 5.1 exceed 90 days. Each party shall (and shall cause such party's Controlled Affiliates to) reasonably cooperate with the other parties in obtaining any such consent, approval, waiver, or authorization, to give any such notice or make any such filing and in obtaining the termination of any such waiting period at the earliest practicable time. 5.2 Representation and Warranty of Holdco. Holdco represents and warrants to each of TCITP and Turner that, other than the Old TW Rights Plan, the provisions of TW's Restated Certificate of Incorporation and By-laws and the Delaware Statute, there were no Defensive Provisions in effect on September 22, 1995; provided, however, that no representation is made as to the laws of any jurisdiction other than Delaware. 6. Legend on Stock Certificates; No Recordation of Transfer. 6.1 Each certificate or instrument representing Covered Securities directly or indirectly beneficially owned by any Stockholder shall bear the following legend until such time as the shares represented thereby are no longer subject to this Agreement: "THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF________ ___, 1996, AMONG R.E. TURNER, III, TCI TURNER PREFERRED, INC., TIME WARNER INC. AND CERTAIN OTHER PERSONS. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF TIME WARNER INC. Holdco shall not be responsible for placing the above legend on any certificate representing Covered Securities, except to the extent that it has actual knowledge that such certificate has been issued in the name of any Stockholder. 6.2 Holdco agrees not to knowingly effect a transfer of any Covered Securities which to Holdco's actual knowledge are directly or indirectly beneficially owned by any Stockholder on its books except as permitted by the terms of this Agreement. A copy of this Agreement shall be filed with the Secretary of Holdco. 7. Representations and Warranties; Certain Additional Covenants. 7.1 Certain Representations and Covenants of the TCITP Stockholders. Each of the TCITP Stockholders represent and warrant to the Turner Stockholders and Holdco as follows: (a) Neither such TCITP Stockholder nor any of its Controlled Affiliates that hold Holdco Shares is a party to or bound by, any Contract, Requirement of Law or Judgment, other than Requirements of Law referred to in Section 7.3(d), that does or may prevent, impede or delay the due and punctual performance by any such Person of its agreements, obligations and commitments contained in this Agreement, and such TCITP Stockholder will not enter into or permit any of its Controlled Affiliates to enter into any such Contract or take any other voluntary action or voluntarily omit to take any action that would have any such effect. (b) Except for this Agreement and except for any Permitted Pledge in effect as of the date hereof, there is no option, warrant, right, call, proxy, or Contract that directly or indirectly provides for the sale, pledge or other Disposition of any of such TCITP Holdco Shares or any interest therein or any rights with respect thereto, relates to the voting, Disposition or control of any thereof or obligates or may obligate such TCITP Stockholder or any of its Controlled Affiliates to grant, offer or enter into any of the foregoing. No breach or violation of any of the foregoing representations, warranties or covenants shall result or be deemed to result directly or indirectly from or by reason of any Contract between TCITP and any of its Affiliates and Holdco and any of its Affiliates, directors or officers, whether now existing or hereafter entered into, nor from or by reason of the execution, delivery or performance of or action taken or omitted to be taken pursuant to the terms of any such Contract or the consummation of any transaction contemplated thereby, nor from or by reason of any option, warrant, right, call, proxy or other right granted, covenant made or obligation incurred under any such Contract that directly or indirectly provides for the sale, pledge or other Disposition of any of the TCITP Holdco Shares or any interest therein or any rights with respect thereto. 7.2 Certain Representations and Covenants of the Turner Stockholders. Each of the Turner Stockholders represents and warrants to the TCITP Stockholders and Holdco as follows: (a) Neither such Turner Stockholder nor any of his or its Controlled Affiliates that hold Holdco Shares is a party to or bound by, any Contract, Requirement of Law or Judgment, other than any Requirements of Law referred to in Section 7.3(d), that does or may prevent, impede or delay the due and punctual performance by any such Person of his or its agreements, obligations and commitments contained in this Agreement, and such Turner Stockholder will not enter into or permit any of his or its Controlled Affiliates to enter into any such Contract or take any other voluntary action or voluntarily omit to take any action that would have any such effect. (b) Except for this Agreement and any Holdco Stockholders Agreement and except for any Permitted Pledge in effect as of the date hereof, there is no option, warrant, right, call, proxy, or Contract that directly or indirectly provides for the sale, pledge or other Disposition of any of such Turner Holdco Shares or any interest therein or any rights with respect thereto, relates to the voting, Disposition or control of any thereof or obligates or may obligate such Turner Stockholder or any of his or its Controlled Affiliates to grant, offer or enter into any of the foregoing. Each of the Turner Stockholders has delivered to TCITP a true and complete copy of each Holdco Stockholders Agreement to which it is a party, if any, as amended through and in effect on the date of this Agreement. No Turner Stockholder shall permit the amendment of any Holdco Stockholders Agreement to which it is a party in any manner that would have any effect referred to in Section 7.2(a). 7.3 Representations and Warranties of Each Party. Each party, severally and not jointly, represents and warrants to each of the other parties as follows: (a) If such party is a corporation or partnership, such party has all requisite corporate power and authority or partnership power and authority (as the case may be) to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by such party of, and the consummation of the transactions contemplated by, this Agreement have been duly and validly authorized by all necessary corporate action or partnership action (as the case may be) on the part of such party. (b) If such party is a natural person (whether acting individually or in a fiduciary capacity), such party has full legal capacity, right, power and authority to execute, deliver and perform his or her obligations under this Agreement and to consummate the transactions contemplated hereby. (c) This Agreement has been duly executed and delivered by such party. This Agreement constitutes a legal, valid and binding obligation of such party enforceable in accordance with its terms, except that (i) such enforceability may be subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and (ii) such enforceability may be subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (d) The execution, delivery and performance of this Agreement by such party do not, either with or without the giving of notice or the passage of time or both, (i) assuming compliance with the requirements referred to in clause (ii) of this sentence, violate or conflict with any Requirement of Law or Judgment applicable to such party, (ii) except for (A) requirements, if any, arising out of any required pre-merger notification and related filings with the FTC and the Antitrust Division of the Department of Justice pursuant to the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, (B) requirements, if any, arising out of the rules and regulations adopted by the Federal Communications Commission, and (C) requirements, if any, arising out of the FTC Consent Decree, require the consent or authorization of or waiver by or filing with any Governmental Authority or (iii) conflict with, result in the breach of any provision of, result in the modification or termination of, require the consent or authorization of or waiver by or filing with any other parties to, or result in the creation or imposition of any Encumbrance pursuant to, or constitute a default under, any material agreement, permit, indenture, note, lease, license or franchise or any other material instrument to which such party is a party or by which such party's properties or assets are bound or from which such party derives benefit. For purposes of this Section 7.3(d), the word "party" includes (i) in the case of Holdco, Holdco and its Affiliates, and (ii) in the case of any Turner Stockholder, such Turner Stockholder and his or its Related Parties. 8. No Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and, in the event of the incapacity or death of any Turner Stockholder who is a natural person, his legal representatives, the executor or administrator of his estate, and his heirs and beneficiaries, as provided in Section 4 hereof. Except as specifically provided herein, this Agreement and the rights and obligations of the parties hereunder may not be assigned or delegated, in whole or in part. Without prejudice to the rights of Holdco under any other provision of this Agreement, none of the provisions of Section 2 (other than the third sentence of Section 2) of this Agreement are intended to be for the benefit of or enforceable by Holdco, and Holdco shall not have any right, remedy or claim against any Stockholder by reason of any breach or violation thereof. 9. Specific Performance. The parties hereto acknowledge that the benefits to them under this Agreement are unique, that they are willing to enter into this Agreement only upon performance by each other of all of their obligations hereunder and that monetary damage would not afford adequate remedy for failure to perform any such obligations hereunder. Accordingly, the parties hereby consent to specific performance of their obligations hereunder and waive any requirement for securing or posting of any bond in connection with the obtaining of any injunctive or other equitable relief to enforce their rights hereunder. 10. Termination, Amendment and Waiver. This Agreement shall terminate as to all parties on the first to occur of (i) the date on which no TCITP Stockholder beneficially owns any Covered Securities (otherwise than by reason of any Disposition made in violation of this Agreement), (ii) the date on which no Turner Stockholder beneficially owns any Covered Securities (otherwise than by reason of any Disposition made in violation of this Agreement) and (iii) any date of termination agreed to by TCITP and Turner. If, by reason of one or more Dispositions, the number of Holdco Shares directly or indirectly beneficially owned by the TCITP Stockholders, as a group, or the Turner Stockholders, as a group, is less than one-third of the number of the shares beneficially owned by such Group immediately after the Effective Time (which number, in the case of the TCITP Stockholders, shall be calculated after giving effect to the exchange required by Section 4.1 of the LMC Agreement and, as to each Group, shall be appropriately adjusted to take into account any stock split, reverse stock split, reclassification, recapitalization, conversion, reorganization, merger or other change in such Holdco Shares) then such group shall no longer have any right of first refusal under Section 3 or Section 4, but shall continue to be subject to all obligations and restrictions arising under this Agreement with respect to all Covered Securities which the members of that group continue to beneficially own. This Agreement may be amended by the parties hereto only by an instrument in writing signed by each party; provided, however, that execution of any such amendment by or on behalf of Holdco shall not be required unless such amendment adversely affects the rights or obligations of Holdco hereunder. Any term or provisions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof. 11. General Provisions 11.1 All periods of time referred to in this Agreement (other than references to business days ) shall include all Saturdays, Sundays or State of New York holidays provided that if the date or last date to perform the act or give any notice with respect to this Agreement shall fall on a Saturday, Sunday or State of New York holiday, such act or notice may be timely performed or given if performed or given on the next succeeding day which is not a Saturday, Sunday or State of New York holiday. 11.2 All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given or delivered upon confirmed facsimile transmission, personal delivery or the day following delivery to a courier service which guarantees overnight delivery of such notice or five (5) days after deposit with the U.S. Post Office, by registered or certified mail, return receipt requested, postage prepaid, and, in the case of courier or mail delivery, addressed to the intended recipient at his or its address as shown on Schedule I attached hereto or such other address as a party may specify in writing. 11.3 This Agreement constitutes the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, whether oral or written, relating to the subject matter hereof (it being understood that this Section 11.3 is not intended to obviate the respective rights and obligations of Turner, Holdco and the other parties thereto under the Investors Agreement (No. 1) dated as of the same date as this Agreement among Holdco, Turner and TOI). 11.4 Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.5 The headings of the articles and sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. The definitions in Section 1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The words "herein", "hereof" and "hereunder" and words of similar import refer to this Agreement in its entirety and not to any part hereof unless the context shall otherwise require. All references herein to Sections, Exhibits and Schedules shall be deemed references to and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Unless otherwise expressly provided herein or unless the context shall otherwise require, any references as of any time to the "Certificate of Incorporation", "Restated Certification of Incorporation", "Articles of Incorporation", "charter", "organizational or governing documents" or "By-laws" of any Entity, to any agreement (including this Agreement) or other Contract, instrument or document or to any statute or regulation or any specific section or other provision thereof are to it as amended and supplemented through such time (and, in the case of a statute or regulation or specific section or other provision thereof, to any successor of such statute, regulation, section or other provision). Unless otherwise expressly provided herein or unless the context shall otherwise require, any provision of this Agreement using a defined term (by way of example and without limitation, such as "Controlled Affiliate") which is based on a specified characteristic, qualification, feature, relationship or status shall, as of any time, refer only to such Persons who have the specified characteristic, qualification, feature, relationship or status as of that particular time. 11.6 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but which together shall constitute but one and the same instrument. 11.7 This Agreement and the validity, interpretation and performance of the terms and provisions hereof shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the provisions thereof relating to choice or conflict of laws, except to the extent that the laws of the jurisdiction of incorporation of Holdco shall be mandatorily applicable. 11.8 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY (AND OF ANY APPELLATE COURT TO WHICH AN APPEAL OF ANY JUDGMENT, ORDER, DECREE OR DECISION OF ANY SUCH COURT MAY BE TAKEN) IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH SUIT, ACTION OR PROCEEDING, (II) WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (III) WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. IN WITNESS WHEREOF, the parties have executed this Agreement in two or more counterparts as of the day and year first above written. TCI TURNER PREFERRED, INC. By: ---------------------------- Name: Title: LIBERTY BROADCASTING, INC. By: ---------------------------- Name: Title: COMMUNICATION CAPITAL CORP. By: ---------------------------- Name: Title: --------------------------------- R. E. TURNER, III TURNER OUTDOOR, INC. By: ---------------------------- Name: Title: TW INC. (which promptly following the date hereof is changing its name to Time Warner Inc.) By: ---------------------------- Name: Title: EX-10 7 EXHIBIT 10AC TO SECOND AMENDED AND RESTATED AGMT EXHIBIT C TO SECOND AMENDED AND RESTATED LMC AGREEMENT CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF SERIES LMC COMMON STOCK OF TW INC. -------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware -------------------- TW INC., a corporation organized and existing by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that the following resolution was duly adopted by action of the Board of Directors of the Corporation (the "Board of Directors") at a meeting duly held on [ ], 1996. RESOLVED that pursuant to the authority expressly granted to and vested in the Board of Directors by the provisions of Section 3 of Article IV of the Restated Certificate of Incorporation of the Corporation (the "Certificate of Incorporation") and Section 151(g) of the General Corporation Law of the State of Delaware (the "DGCL"), the Board of Directors hereby creates, from the authorized shares of Series Common Stock, par value $.01 per share (the "Series Common Stock"), of the Corporation authorized to be issued pursuant to the Certificate of Incorporation, a series of Series Common Stock, and hereby fixes the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such series as follows: The series of Series Common Stock hereby established shall consist of [ ] shares designated as Series LMC Common Stock. The number of shares constituting such series may be increased or decreased (but not below the number of shares then outstanding) from time to time by a resolution or resolutions of the Board of Directors. The terms of such series shall be as follows: 1. Definitions. As used herein, the following terms shall have the indicated meanings: 1.1 "Board of Directors" shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action. 1.2 "Capital Stock" shall mean any and all shares of corporate stock of a Person (however designated and whether representing rights to vote, rights to participate in dividends or distributions upon liquidation or otherwise with respect to such Person, or any division or subsidiary thereof, or any joint venture, partnership, corporation or other entity). 1.3 "Certificate" shall mean the Certificate of the Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Special Rights, and Qualifications, Limitations or Restrictions Thereof, of Series LMC Common Stock filed with the Secretary of State of the State of Delaware pursuant to Section 151 of the DGCL. 1.4 "Closing Price" of the Common Stock shall mean the last reported sale price of the Common Stock (regular way) as shown on the Composite Tape of the NYSE, or, in case no such sale takes place on such day, the average of the closing bid and asked prices on the NYSE, or, if the Common Stock is not listed or admitted to trading on the NYSE, on the principal national securities exchange on which such stock is listed or admitted to trading, or, if it is not listed or admitted to trading on any national securities exchange, the last reported sale price of the Common Stock, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported by NASDAQ. 1.5 "Common Stock" shall mean the class of Common Stock, par value $.01 per share, of the Corporation authorized at the date of the Certificate, or any other class of stock resulting from (x) successive changes or reclassifications of such Common Stock consisting of changes in par value, or from par value to no par value, (y) a subdivision or combination or (z) any other changes for which an adjustment is made under Section 2.4(a), and in any such case including any shares thereof authorized after the date of the Certificate, together with any rights associated generally with the shares of Common Stock. 1.6 "Communications Laws" shall mean the Communications Act of 1934 (as amended and supplemented from time to time and any successor statute or statutes regulating telecommunications companies) and the rules and regulations (and interpretations thereof and determinations with respect thereto) promulgated, issued or adopted from time to time by the Federal Communications Commission (the "FCC"). All references herein to Communications Laws shall include as of any relevant date in question the Communications Laws as then in effect (including any Communications Law or part thereof the effectiveness of which is then stayed or promulgated with a delayed effective date). 1.7 "Conversion Date" shall have the meaning set forth in Section 3.5. 1.8 "Corporation" shall mean TW Inc., a Delaware corporation, and any of its successors by operation of law, including by merger or consolidation. 1.9 "DGCL" shall mean the General Corporation Law of the State of Delaware, as amended from time to time. 1.10 "Dividend Payment Date" shall have the meaning set forth in Section 2.1. 1.11 "Formula Number" shall have the meaning set forth in Section 2.1. 1.12 "LMC Agreement" shall mean the Second Amended and Restated LMC Agreement dated as of September 22, 1995, among a Delaware corporation known on such date as "Time Warner Inc.", the Corporation, Liberty Media Corporation, a Delaware corporation ("LMC Parent"), and certain subsidiaries of LMC Parent listed under "Subsidiaries of LMC Parent" on the signature pages thereto, as amended from time to time. 1.13 "NASDAQ" shall mean The Nasdaq Stock Market. 1.14 "NYSE" shall mean the New York Stock Exchange, Inc. 1.15 "Parity Stock" shall mean shares of Common Stock and shares of any other class or series of Capital Stock of the Corporation that, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall, in the event that the stated dividends thereon are not paid in full, be entitled to share ratably with the shares of this Series in the payment of dividends in accordance with the sums that would be payable on such shares if all dividends were declared and paid in full, or shall, in the event that the amounts payable thereon in liquidation are not paid in full, be entitled to share ratably with the shares of this Series in any distribution of assets other than by way of dividends in accordance with the sums that would be payable in such distribution if all sums payable were discharged in full. 1.16 "Permitted Transferee" shall mean any Liberty Party or any SpinCo Party, as such terms are defined in the LMC Agreement. 1.17 "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 1.18 "Preferred Stock" shall mean the class of Preferred Stock, par value $.10 per share, of the Corporation authorized at the date of the Certificate, including any shares thereof authorized after the date of the Certificate. 1.19 "Record Date" shall have the meaning set forth in Section 2.1. 1.20 "Senior Stock" shall mean shares of any class or series of Capital Stock of the Corporation that, by the terms of the Certificate of Incorporation or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation, shall fix the relative rights, preferences and limitations thereof, shall be senior to the shares of this Series in respect of the right to receive dividends or to participate in any distribution of assets other than by way of dividends. 1.21 "Series Common Stock" shall mean the class of Series Common Stock, par value $.01 per share, of the Corporation authorized at the date of the Certificate, including any shares thereof authorized after the date of the Certificate. 1.22 "Series LMC Common Stock" and "this Series" shall mean the series of Series Common Stock authorized and designated as Series LMC Common Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.23 "Series LMCN-V Common Stock" shall mean the series of Series Common Stock authorized and designated as Series LMCN-V Common Stock at the date of the Certificate, including any shares thereof authorized and designated after the date of the Certificate. 1.24 "Trading Day" shall mean, so long as the Common Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, or, if the Common Stock is not listed or admitted to trading on the NYSE, a day on which the principal national securities exchange on which the Common Stock is listed is open for the transaction of business, or, if the Common Stock is not so listed or admitted for trading on any national securities exchange, a day on which the National Market System of NASDAQ is open for the transaction of business. 2. Dividends. 2.1 The holders of shares of this Series shall be entitled to receive dividends, out of funds legally available therefor, payable on such dates as may be set by the Board of Directors for payment of cash dividends on the Common Stock (each such date being referred to herein as a "Dividend Payment Date"), in cash, in an amount per share equal to the product of (i) the Formula Number in effect as of such Dividend Payment Date multiplied by (ii) the amount of the regularly scheduled cash dividend to be paid on one share of Common Stock on such Dividend Payment Date; provided, however, dividends on the shares of this Series shall be payable pursuant to this Section 2.1 only to the extent that regularly scheduled cash dividends are declared and paid on the Common Stock. As used herein, the "Formula Number" shall initially be 1.0000, which shall be adjusted from time to time pursuant to Section 2.4. The dividends payable on any Dividend Payment Date shall be paid to the holders of record of shares of this Series at the close of business on the record date for the related regularly scheduled cash dividend on the Common Stock (each such date being referred to herein as a "Record Date"). The amount of dividends that are paid to each holder of record on any Dividend Payment Date shall be rounded to the nearest cent. 2.2 In case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation and other than a distribution of Common Stock as a result of which an adjustment to the Formula Number is made pursuant to Section 2.4) to the holders of its shares of Common Stock any assets or property, including evidences of indebtedness or securities of the Corporation or of any other Person (including common stock of such Person) or cash (but excluding regularly scheduled cash dividends payable on shares of Common Stock), or in case the Corporation shall at any time distribute (other than a distribution in liquidation of the Corporation) to such holders rights, options or warrants to subscribe for or purchase shares of Common Stock (including shares held in the treasury of the Corporation), or rights, options or warrants to subscribe for or purchase any other security or rights, options or warrants to subscribe for or purchase any assets or property (in each case, whether of the Corporation or otherwise, but other than any distribution of rights to purchase securities of the Corporation if the holder of shares of this Series would otherwise be entitled to receive such rights upon conversion of shares of this Series for Common Stock pursuant to Section 3, provided, however, that if such rights are subsequently redeemed by the Corporation, such redemption shall be treated for purposes of this Section 2.2 as a cash dividend (but not a regularly scheduled cash dividend) on the Common Stock), the Corporation shall simultaneously distribute such assets, property, securities, rights, options or warrants to the holders of shares of this Series on the record date fixed for determining the holders of Common Stock entitled to participate in such distribution (or, if no such record date shall be established, the effective time thereof) in an amount per share of this Series equal to the amount that a holder of one share of this Series would have been entitled to receive had such share of this Series been converted into Common Stock immediately prior to such record date (or effective time). In the event of a distribution to holders of shares of this Series pursuant to this Section 2.2, such holders shall be entitled to receive fractional shares or interests only to the extent that holders of Common Stock are entitled to receive the same. The holders of shares of this Series on the applicable record date (or effective time) shall be entitled to receive in lieu of such fractional shares or interests the same consideration as is payable to holders of Common Stock with respect thereto. If there are no fractional shares or interests payable to holders of Common Stock, the holders of shares of this Series on the applicable record date (or effective time) shall receive in lieu of such fractional shares or interests the fair value thereof as determined by the Board of Directors. 2.3 In the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities or other property receivable by them in any distribution that is subject to Section 2.2, the kind and amount of securities or other property that shall be distributable to the holders of shares of this Series shall be based on (i) the election, if any, made by the holder of record (as of the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of this Series in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable by holders of shares of this Series shall be based on the kind or amount of securities or other property receivable by a plurality of the shares held by the nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section 2.3, the Corporation shall mail a copy thereof to the holders of record of shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of record of shares of this Series to make such an election. 2.4 The Formula Number shall be adjusted from time to time as follows, whether or not any shares of this Series have been issued by the Corporation, for events occurring on or after [ ]:1/ (a) In case the Corporation shall (i) pay a dividend in shares of its Common Stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock or (iv) reclassify (other than by way of a merger or consolidation that is subject to Section 3.6) its shares of Common Stock, then the Formula Number in effect immediately before such event shall be appropriately adjusted so that immediately following such event the holders of shares of this Series shall be entitled to receive upon conversion thereof the kind and amount of shares of Capital Stock of the Corporation that they would have owned or been entitled to receive upon or by reason of such event if such shares of this Series had been converted immediately before the record date (or, if no record date, the effective date) for such event (it being understood that any distribution of cash or Capital Stock (other than Common Stock) that shall accompany a reclassification of the Common Stock, shall be subject to Section 2.2 rather than this Section 2.4(a)). An adjustment made pursuant to this Section 2.4(a) shall become effective retroactively immediately after the record date in the case of a dividend or distribution and shall become effective retroactively immediately after the effective date in the case of a subdivision, combination or reclassification. For the purposes of this Section 2.4(a), in the event that the holders of Common Stock are entitled to make any election with respect to the kind or amount of securities receivable by them in any transaction that is subject to this Section 2.4(a) (including any election that would result in all or a portion of the transaction becoming subject to Section 2.2), the kind and amount of securities that shall be distributable to the holders of shares of this Series shall be based on (i) the election, if any, made by the holder of record (as of - -------------- 1/ Insert the earliest of (x) the date of filing of the Certificate, (y) the date of filing of the certificate for the Series LMCN-V Common Stock or (z) the closing of the Mergers. the date used for determining the holders of Common Stock entitled to make such election) of the largest number of shares of this Series in writing to the Corporation on or prior to the last date on which a holder of Common Stock may make such an election or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities is not the same for each nonelecting holder, then the kind and amount of securities receivable shall be based on the kind or amount of securities receivable by a plurality of nonelecting holders of Common Stock). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election of the type referred to in this Section 2.4(a), the Corporation shall mail a copy thereof to the holders of record of shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of record of shares of this Series to make such an election. (b) The Corporation shall be entitled to make such additional adjustments in the Formula Number, in addition to those required by Section 2.4(a) as shall be necessary in order that any dividend or distribution in Common Stock or any subdivision, reclassification or combination of shares of Common Stock referred to above, shall not be taxable to the holders of Common Stock for United States Federal income tax purposes, so long as such additional adjustments pursuant to this Section 2.4(b) do not decrease the Formula Number. (c) All calculations under this Section 2 and Section 3 shall be made to the nearest cent, one-hundredth of a share or, in the case of the Formula Number, one hundred-thousandth. Notwithstanding any other provision of this Section 2.4, the Corporation shall not be required to make any adjustment of the Formula Number unless such adjustment would require an increase or decrease of at least one percent (1%) of the Formula Number. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment that, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least one percent (1%) of the Formula Number. Any adjustments under this Section 2.4 shall be made successively whenever an event requiring such an adjustment occurs. (d) Promptly after an adjustment in the Formula Number is required, the Corporation shall provide written notice to each of the holders of shares of this Series, which notice shall state the adjusted Formula Number. (e) If a distribution is made in accordance with the provisions of Section 2.2, anything in this Section 2.4 to the contrary notwithstanding, no adjustment pursuant to this Section 2.4 shall be effected by reason of the distribution of such assets, property, securities, rights, options or warrants or the subsequent modification, exercise, expiration or termination of such securities, rights, options or warrants. 3. Conversion at the Option of the Holder. 3.1 Each holder of a share of this Series shall have the right at any time to convert such share of this Series into either: (i) a number of shares of Common Stock per share of this Series equal to the Formula Number in effect on the Conversion Date or (ii) one share of Series LMCN-V Common Stock per share of this Series; provided, however, that such holder may convert shares of this Series only to the extent that the ownership by such holder or its designee of the shares of Common Stock or Series LMCN-V Common Stock issuable upon such conversion would not violate the Communications Laws. 3.2 No adjustments in respect of payments of dividends on shares of this Series surrendered for conversion or any dividend on the Common Stock or Series LMCN-V Common Stock issued upon conversion shall be made upon the conversion of any shares of this Series (it being understood that if the Conversion Date for shares of this Series occurs after the Record Date and prior to the Dividend Payment Date of any such dividend, the holders of record of shares of this Series on such Record Date shall be entitled to receive the dividend payable with respect to such shares on the related Dividend Payment Date pursuant to Section 2.1). 3.3 The Corporation may, but shall not be required to, in connection with any conversion of shares of this Series into shares of Common Stock, issue a fraction of a share of Common Stock, and if the Corporation shall determine not to issue any such fraction, the Corporation shall make a cash payment (rounded to the nearest cent) equal to such fraction multiplied by the Closing Price of the Common Stock on the last Trading Day prior to the Conversion Date. The Corporation shall issue a fraction of a share of Series LMCN-V Common Stock in order to effect a conversion of a fraction of a share of this Series into Series LMCN-V Common Stock. 3.4 Any holder of shares of this Series electing to convert such shares into Common Stock or Series LMCN-V Common Stock shall surrender the certificate or certificates for such shares at the principal executive office of the Corporation (or at such other place as the Corporation may designate by notice to the holders of shares of this Series) during regular business hours, duly endorsed to the Corporation or in blank, or accompanied by instruments of transfer to the Corporation or in blank, or in form satisfactory to the Corporation, and shall give written notice to the Corporation at such office that such holder elects to convert such shares of this Series, which notice shall state whether the shares of this Series delivered for conversion shall be converted into shares of Common Stock or shares of Series LMCN-V Common Stock. If any such certificate or certificates shall have been lost, stolen or destroyed, the holder shall, in lieu of delivering such certificate or certificates, deliver to the Corporation (or such other place) an indemnification agreement and bond satisfactory to the Corporation. The Corporation shall, as soon as practicable (subject to Section 3.8) after such deposit of certificates for shares of this Series or delivery of the indemnification agreement and bond, accompanied by the written notice above prescribed, issue and deliver at such office (or such other place) to the holder for whose account such shares were surrendered, or a designee of such holder, certificates representing either (i) the number of shares of Common Stock and the cash, if any, or (ii) the number of shares of Series LMCN-V Common Stock, as the case may be, to which such holder is entitled upon such conversion. Each share of Common Stock delivered to a holder or its designee as a result of conversion of shares of this Series pursuant to this Section 3 shall be accompanied by any rights associated generally with each other share of Common Stock outstanding as of the Conversion Date. 3.5 Conversion shall be deemed to have been made as of the date (the "Conversion Date") that the certificate or certificates for the shares of this Series to be converted and the written notice prescribed in Section 3.4 are received by the Corporation; and the Person entitled to receive the Common Stock or Series LMCN-V Common Stock issuable upon such conversion shall be treated for all purposes as the holder of record of such Common Stock or Series LMCN-V Common Stock, as the case may be, on such date. The Corporation shall not be required to deliver certificates for shares of Common Stock or Series LMCN-V Common Stock while the stock transfer books for such stock or for this Series are duly closed for any purpose, but certificates for shares of Common Stock or Series LMCN-V Common Stock, as the case may be, shall be delivered as soon as practicable after the opening of such books. 3.6 In the event that on or after [ ]2/, whether or not any shares of this Series have been issued by the Corporation, either (a) any consolidation or merger to which the Corporation is a party, other than a merger or consolidation in which the Corporation is the surviving or continuing corporation and that does not result in any reclassification of, or change (other than a change in par value or from par value to no par value or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (b) any sale or conveyance of all or substantially all of the property and assets of the Corporation, then lawful provision shall be made as part of the terms of such transaction whereby the holder of each share of this Series shall have the right thereafter, during the period such share shall be convertible, to convert such share into the kind and amount of shares of stock or other securities and property receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock into which such shares of this Series could have been converted immediately prior to such consolidation, merger, sale or conveyance, subject to adjustment that shall - -------------- 2/ Insert the earliest of (x) the date of filing of the Certificate, (y) the date of filing of the certificate for the Series LMCN-V Common Stock or (z) the closing of the Mergers. be as nearly equivalent as may be practicable to the adjustments provided for in Section 2.4 and this Section 3 (based on (i) the election, if any, made in writing to the Corporation by the holder of record (as of the date used for determining holders of Common Stock entitled to make such election) of the largest number of shares of this Series on or prior to the last date on which a holder of Common Stock may make an election regarding the kind or amount of securities or other property receivable by such holder in such transaction or (ii) if no such election is timely made, an assumption that such holder failed to exercise any such rights (provided that if the kind or amount of securities or other property is not the same for each nonelecting holder, then the kind and amount of securities or other property receivable shall be based upon the kind and amount of securities or other property receivable by a plurality of the nonelecting holders of Common Stock)). In the event that any of the transactions referred to in clause (a) or (b) of the first sentence of this Section 3.6 involves the distribution of cash or property (other than equity securities) to a holder of Common Stock, lawful provision shall be made as part of the terms of the transaction whereby the holder of each share of this Series on the record date fixed for determining holders of Common Stock entitled to receive such cash or property (or if no such record date is established, the effective date of such transaction) shall be entitled to receive the amount of cash or property that such holder would have been entitled to receive had such holder converted his shares of this Series into Common Stock immediately prior to such record date (or effective date) (based on the election or nonelection made by the holder of record of the largest number of shares of this Series, as provided above). Concurrently with the mailing to holders of Common Stock of any document pursuant to which such holders may make an election regarding the kind or amount of securities or other property that will be receivable by such holders in any transaction described in clause (a) or (b) of the first sentence of this Section 3.6, the Corporation shall mail a copy thereof to the holders of record of the shares of this Series as of the date used for determining the holders of record of Common Stock entitled to such mailing, which document shall be used by the holders of shares of this Series to make such an election. The Corporation shall not enter into any of the transactions referred to in clause (a) or (b) of the first sentence of this Section 3.6 unless effective provision shall be made in the certificate or articles of incorporation or other constituent documents of the Corporation or the entity surviving the consolidation or merger, if other than the Corporation, or the entity acquiring the Corporation's assets, as the case may be, so as to give effect to the provisions set forth in this Section 3.6. The provisions of this Section 3.6 shall apply similarly to successive consolidations, mergers, sales or conveyances. For purposes of this Section 3.6, the term "Corporation" shall refer to the Corporation as constituted immediately prior to the merger, consolidation or other transaction referred to in this Section 3.6. 3.7 The Corporation shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of this Series, such number of its duly authorized shares of Common Stock and Series LMCN-V Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of this Series into shares of Common Stock or Series LMCN-V Common Stock at any time (assuming that, at the time of the computation of such number of shares, all such Common Stock or Series LMCN-V Common Stock would be held by a single holder); provided, however, that nothing contained herein shall preclude the Corporation from satisfying its obligations in respect of the conversion of the shares by delivery of purchased shares of Common Stock or Series LMCN-V Common Stock that are held in the treasury of the Corporation. All shares of Common Stock or Series LMCN-V Common Stock that shall be deliverable upon conversion of the shares of this Series shall be duly and validly issued, fully paid and nonassessable. For purposes of this Section 3, any shares of this Series at any time outstanding shall not include shares held in the treasury of the Corporation. 3.8 In any case in which Section 2.4 shall require that any adjustment be made effective as of or retroactively immediately following a record date, the Corporation may elect to defer (but only for five (5) Trading Days following the occurrence of the event that necessitates the notice referred to in Section 2.4(d)) issuing to the holder of any shares of this Series converted after such record date (i) the shares of Common Stock issuable upon such conversion over and above (ii) the shares of Common Stock issuable upon such conversion on the basis of the Formula Number prior to adjustment; provided, however, that the Corporation shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. 3.9 If any shares of Common Stock or Series LMCN-V Common Stock that would be issuable upon conversion pursuant to this Section 3 require registration with or approval of any governmental authority before such shares may be issued upon conversion (other than any such registration or approval required to avoid a violation of the Communications Laws), the Corporation will in good faith and as expeditiously as possible cause such shares to be duly registered or approved, as the case may be. The Corporation will use commercially reasonable efforts to list the shares of (or depositary shares representing fractional interests in) Common Stock required to be delivered upon conversion of shares of this Series prior to such delivery upon the principal national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. 3.10 The Corporation shall pay any and all issue or other taxes that may be payable in respect of any issue or delivery of shares of Common Stock or Series LMCN-V Common Stock on conversion of shares of this Series pursuant hereto. The Corporation shall not, however, be required to pay any tax that is payable in respect of any transfer involved in the issue or delivery of Common Stock or Series LMCN-V Common Stock in a name other than that in which the shares of this Series so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Corporation the amount of such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. 3.11 In case of (i) the voluntary or involuntary dissolution, liquidation or winding up of the Corporation or (ii) any action triggering an adjustment to the Formula Number pursuant to Section 2.4 or Section 3.6, then, in each case, the Corporation shall cause to be mailed, first-class postage prepaid, to the holders of record of the outstanding shares of this Series, at least fifteen (15) days prior to the applicable record date for any such transaction (or if no record date will be established, the effective date thereof), a notice stating (x) the date, if any, on which a record is to be taken for the purpose of any such transaction (or, if no record date will be established, the date as of which holders of record of Common Stock entitled to participate in such transaction are determined), and (y) the expected effective date thereof. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 3.11. 4. Voting. 4.1 The shares of this Series shall have no voting rights except as expressly provided in this Section 4 or as required by law. 4.2 Except as otherwise required by law, each share of this Series shall be entitled to vote together as one class with the holders of shares of Common Stock upon all matters upon which the holders of shares of Common Stock are entitled to vote. In any such vote, the holders of shares of this Series shall be entitled to a number of votes per share of this Series equal to the product of (i) the Formula Number then in effect multiplied by (ii) the maximum number of votes per share of Common Stock that any holder of shares of Common Stock generally then has with respect to such matter. 4.3 So long as any shares of this Series remain outstanding, unless a greater percentage shall then be required by law, the Corporation shall not, without the affirmative vote of the holders of shares of this Series representing at least 66-2/3% of the aggregate voting power of shares of this Series then outstanding, amend, alter or repeal any of the provisions of the Certificate or the Certificate of Incorporation so as, in any such case, as applicable, to (i) amend, alter or repeal any of the powers, preferences or rights of the Series Common Stock or (ii) adversely affect the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of this Series or the Series LMCN-V Common Stock; provided, however, that no affirmative vote of any shares of this Series shall be required to amend, alter or repeal any of the powers, preferences or rights of any series of Series Common Stock other than this Series and the Series LMCN-V Common Stock. 4.4 So long as any shares of this Series remain outstanding, the Corporation shall not, without the affirmative vote of the holders of shares of this Series representing 100% of the aggregate voting power of shares of this Series then outstanding, amend, alter or repeal the provisions of Section 7.7. 4.5 No consent of holders of shares of this Series shall be required for (i) the creation of any indebtedness of any kind of the Corporation, (ii) the authorization or issuance of any class or series of Parity Stock or Senior Stock, (iii) the approval of any amendment to the Certificate of Incorporation that would increase or decrease the aggregate number of authorized shares of Series Common Stock or Common Stock or (iv) the authorization of any increase or decrease in the number of shares constituting this Series; provided, however, that the number of shares constituting this Series shall not be decreased below the number of such shares then outstanding. 5. Liquidation Rights. 5.1 Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of this Series shall be entitled to receive, contemporaneously with any distribution to holders of shares of Common Stock upon such liquidation, dissolution or winding up, an aggregate amount per share equal to the product of the Formula Number then in effect multiplied by the aggregate amount to be distributed per share to holders of Common Stock. 5.2 Neither the sale, exchange or other conveyance (for cash, shares of stock, securities or other consideration) of all or substantially all the property and assets of the Corporation nor the merger or consolidation of the Corporation into or with any other corporation, or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 5. 6. Transfer Restrictions. 6.1 Without the prior written consent of the Corporation, no holder of shares of this Series shall offer, sell, transfer, pledge, encumber or otherwise dispose of, or agree to offer, sell, transfer, pledge, encumber or otherwise dispose of, any shares of this Series or interests in any shares of this Series except to a Permitted Transferee that shall agree that, prior to such Permitted Transferee ceasing to be a Permitted Transferee, such Permitted Transferee must transfer ownership of any shares of this Series, and all interests therein, held by such Permitted Transferee to any Permitted Transferee. For the avoidance of doubt, the preceding sentence is not intended to prohibit a holder of shares of this Series from entering into, or offering to enter into, (a) any arrangement under which such holder agrees to promptly convert shares of this Series and sell, transfer or otherwise dispose of the Common Stock issuable upon such conversion or (b) any pledge or encumbrance of shares of this Series; provided, however, that the terms of any such pledge or encumbrance must require that, in the event of any sale or foreclosure with respect to shares of this Series, such shares must be delivered immediately to the Corporation for conversion into Common Stock. The provisions of this Section 6.1 shall continue to be in effect with respect to any shares of this Series received by any holder by virtue of merger, consolidation, operation of law or otherwise. 6.2 Certificates for shares of this Series shall bear such legends as the Corporation shall from time to time deem appropriate. 7. Other Provisions. 7.1 All notices from the Corporation to the holders of shares of this Series shall be given by one of the methods specified in Section 7.2. With respect to any notice to a holder of shares of this Series required to be provided hereunder, neither failure to give such notice, nor any defect therein or in the transmission thereof, to any particular holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other holders or affect the legality or validity of any distribution, right, warrant, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up, or the vote upon any such action. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. 7.2 All notices and other communications hereunder shall be deemed given (i) on the first Trading Day following the date received, if delivered personally, (ii) on the Trading Day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and (iii) on the first Trading Day that is at least five days following deposit in the mails, if sent by first class mail to (x) a holder at its last address as it appears on the transfer records or registry for the shares of this Series and (y) the Corporation at the following address (or at such other address as the Corporation shall specify in a notice pursuant to this Section 7.2): TW Inc., 75 Rockefeller Plaza, New York, New York 10019, Attention: General Counsel. 7.3 Any shares of this Series that have been converted or otherwise acquired by the Corporation shall, after such conversion or acquisition, as the case may be, be retired and promptly cancelled and shall become authorized but unissued shares of this Series, unless the Board of Directors determines otherwise. 7.4 The Corporation shall be entitled to recognize the exclusive right of a Person registered on its records as the holder of shares of this Series, and such holder of record shall be deemed the holder of such shares for all purposes. 7.5 All notice periods referred to in the Certificate shall commence on the date of the mailing of the applicable notice. 7.6 Any registered holder of shares of this Series may proceed to protect and enforce its rights by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in the Certificate or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 7.7 The shares of this Series shall not be subject to redemption at the option of the Corporation, including pursuant to Section 5 of Article IV of the Certificate of Incorporation (or any equivalent provision in any further amendment to or restatement of the Certificate of Incorporation). IN WITNESS WHEREOF, TW Inc. has caused this certificate to be signed and attested this [ ] day of [ ], 1996. TW INC., by ________________________ Name: Title: EX-10 8 EXHIBIT 10AD TO SECOND AND RESTATED AGMT EXHIBIT D TO THE SECOND AMENDED AND RESTATED LMC AGREEMENT SSSI Agreement This SSSI Agreement (the "Agreement") is dated as of _________, 1996, and is entered into between TW Inc. (which will be renamed Time Warner Inc.), a Delaware corporation ("Holdco"), Liberty Media Corporation, a Delaware corporation ("LMC"), and Southern Satellite Systems, Inc., a Georgia corporation ("SpinCo"), and, with respect to Section 11(d), Section 11(f) and Section 11(g) only, Satellite Services, Inc., a Delaware corporation ("Satellite"). For purposes of this Agreement, LMC, SpinCo and, with respect to the above referenced Sections, Satellite, on the one hand are, collectively, a "Party" and Holdco on the other hand, individually, is a "Party". References to "Parties" is a collective reference to LMC, SpinCo and with respect to the above referenced Sections, Satellite, on the one hand, and Holdco, on the other. WHEREAS Holdco, LMC and certain subsidiaries of LMC have entered into a Second Amended and Restated LMC Agreement dated as of September 22, 1995 (the "LMC Agreement"), which contemplates the Parties entering into this Agreement; WHEREAS Holdco desires to acquire (a) from SpinCo the Contract Option (as defined in Section 2) and (b) from LMC and its Affiliates (as defined in Section 24) the non-competition agreement contemplated in Section 11(b)(ix); WHEREAS Tele-Communications, Inc., a Delaware corporation ("TCI"), is required pursuant to the FTC Consent Decree (including the FTC Agreement in Principle) (each, as defined in Section 24) to seek from the Internal Revenue Service the Letter Ruling (as defined in Section 24) with respect to the Spin-off (as defined in Section 24) of 100% of the shares of SpinCo; WHEREAS as of the date hereof LMC directly owns all the outstanding common stock, par value $1.00 per share (the "Shares"), of SpinCo, which is engaged primarily in the Business; WHEREAS, in connection with the Spin-off, LMC shall contribute all the capital stock of TCI Turner Preferred, Inc., a Colorado corporation ("TCITP"), to SpinCo, so that, as of immediately prior to the effectiveness of the Spin-off, TCITP will be a wholly owned subsidiary of SpinCo; WHEREAS immediately prior to the Spin-off, TCITP will own, directly or indirectly, all voting securities of Holdco then owned beneficially or of record by LMC or any of its Controlled Affiliates (as defined in the LMC Agreement) and, if LMC is then a Controlled Affiliate of TCI, all voting securities of Holdco then owned beneficially or of record by TCI or any of its Controlled Affiliates, other than the Excluded Shares (as defined in the LMC Agreement); WHEREAS this Agreement is being executed on the date of the closing of Holdco's acquisition of Turner Broadcasting System, Inc., but the Contract Option provided for in Section 2 will not be granted until the Grant Date (as defined in Section 2); and WHEREAS capitalized terms used but not defined in any of the other Sections of this Agreement are defined in Section 24. NOW, THEREFORE, it is agreed as follows: 1. Execution Date. (a) Holdco shall deliver to LMC (or its designee pursuant to Section 15) and SpinCo upon the execution of this Agreement (the "Execution Date"): (i) An opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to LMC and SpinCo, addressed to LMC and SpinCo and dated the Execution Date, to the effect that: (A) Holdco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect. Holdco has all requisite corporate power and authority to execute and deliver this Agreement, the Distribution Contract and the Registration Rights Agreement (as defined in the LMC Agreement) (collectively, the "Relevant Agreements"), to perform its obligations thereunder and to consummate the transactions contemplated hereby and thereby. (B) The execution and delivery by Holdco of the Relevant Agreements, the performance by Holdco of its obligations thereunder and the consummation by Holdco of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action on the part of Holdco. Each of the Relevant Agreements has been duly executed and delivered by a duly authorized officer of Holdco and constitutes the legal, valid and binding obligation of Holdco enforceable against Holdco in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity, and except that the indemnification obligations set forth in Section 8 of the Registration Rights Agreement may be subject to considerations of public policy). (C) The execution, delivery and performance by Holdco of the Relevant Agreements do not conflict with or result in a violation of the General Corporation Law of the State of Delaware, or the certificate of incorporation or by-laws of Holdco. (ii) The duly executed Registration Rights Agreement. (b) On the Execution Date, Holdco shall execute and deliver to SpinCo, and SpinCo shall execute and deliver to Holdco, the Distribution Contract (the "Distribution Contract") in substantially the form of Exhibit 1 hereto. The Distribution Contract shall not become effective until the Contract Option provided for in Section 2 is exercised and closed. 2. Contract Option; Non-Competition Agreement. (a) Subject to and on the terms and conditions set forth in this Agreement (including Section 15(b)), SpinCo hereby agrees to grant to Holdco on the Grant Date the right and option (the "Contract Option"), which may be exercised at any time during the Exercise Period (as defined in Section 2(d)), to cause the effectiveness of the Distribution Contract. The "Grant Date" shall be five business days after the earliest of (i) receipt of the Letter Ruling, (ii) the date on which TCI shall have been advised by the Internal Revenue Service, or TCI shall have notified Holdco in writing that it has determined, that it will not obtain the Letter Ruling and (iii) May 31, 1997, subject however, in the case of clauses (ii) and (iii) to the provisions of Section 15(b). (b) On the Grant Date, Holdco shall deliver: (i) to SpinCo, in respect of the Contract Option, 4,166,667 fully paid and nonassessable shares of Series LMCN-V Common Stock of Holdco, having the terms set forth on Exhibit A to the LMC Agreement ("LMCN-V Common Stock"); (ii) to LMC (or its designee pursuant to Section 15), in respect of LMC's noncompetition agreement with respect to itself and its Affiliates set forth in Section 11(b)(ix), (A) 833,333 fully paid and nonassessable shares of the LMCN-V Common Stock, and (B) $66,666,700 payable, at Holdco's option, in cash or fully paid and nonassessable shares of LMCN-V Common Stock (if the $66,666,700 is paid in LMCN-V Common Stock, the number of shares to be delivered in respect of such amount shall be equal to the quotient obtained by dividing (x) $66,666,700 by (y) the product of the Formula Number (as defined in the terms of the LMCN-V Common Stock) and the Current Market Price of the common stock, par value $0.01 per share, of Holdco (the "Holdco Common Stock") on the Grant Date); and (iii) to LMC and SpinCo an opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to LMC and SpinCo, addressed to LMC and SpinCo to the effect that the shares of LMCN-V Common Stock delivered by Holdco to LMC and SpinCo on such date have been duly authorized and are validly issued, fully paid, nonassessable and are not subject to any preemptive rights. (c) Notwithstanding any other provision of this Agreement, the obligation of Holdco to deliver the consideration provided for in this Section 2 on the Grant Date is absolute, and not subject to any right of setoff or counterclaim that Holdco may have or claim, and no consideration paid or delivered in respect of the Contract Option pursuant to this Section 2 shall be refunded or refundable, nor may any claim be made for the return thereof, in whole or in part, unless Holdco proves in a court of law that LMC and SpinCo did not at the Execution Date have all requisite corporate power to execute, deliver and perform its obligations, as applicable, under this Agreement and the Distribution Contract and such lack of power has not been cured. (d) Holdco may exercise the Contract Option at any time during the period (the "Exercise Period") commencing on and including the Grant Date and ending on and including the Termination Date (as defined in Section 10(a)), by giving written notice of exercise (the "Exercise Notice") to SpinCo pursuant to Section 16. (e) If the Contract Option is exercised, the consideration therefor shall be the amounts payable pursuant to Section 2 of the Distribution Contract. (f) Each Party agrees to be bound by and act in accordance with the payment allocation set forth in Section 2(b) in the preparation and filing of all tax returns and in any proceeding before any tax authority. In the event that such payment allocation is disputed by a taxing authority, the Party receiving notice of the dispute shall promptly notify the other Party hereto of such dispute and keep such other Party informed with respect to all matters concerning such dispute. 3. Closing. The closing (the "Closing") of the exercise of the Contract Option shall occur as soon as practicable after such exercise, but in no event more than five business days following the satisfaction or waiver (to the extent waived by the Party entitled to do so) of the conditions to the Closing described in Sections 5, 6, 7, 8 and 9 (such date for the Closing being referred to as the "Closing Date"). On the Closing Date, the Distribution Contract shall become effective. 4. Representations and Warranties as of Execution Date. (a) Each of LMC and SpinCo represents and warrants to Holdco, and Holdco represents to LMC and SpinCo, as of the Execution Date that: (i) Such party has all requisite corporate power to execute, deliver and perform its obligations under each of the Relevant Agreements to which it is a party and such execution, delivery and performance have been duly authorized by all corporate action on its part required to be taken. (ii) Each of the Relevant Agreements to which it is a party is such party's legal, valid and binding obligation, enforceable in accordance with its terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability. (iii) Neither the execution and delivery by such party of any of the Relevant Agreements to which it is a party, nor the performance of its obligations thereunder: (A) will violate or conflict with, or constitute a breach or default under, (1) the certificate of incorporation or by-laws of such Party, (2) any law, statute, regulation, rule, order or other enactment of any Governmental Entity (as defined in Section 24) applicable to such party, or (3) any agreement or instrument to which such party is a party or by which it is bound or affected, except for any violations, conflicts, breaches or defaults as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created by the Relevant Agreements, and except for any violations, conflicts, breaches or defaults as may be the result of actions taken by Holdco subsequent to effective date of the Distribution Contract, or (B) result in the creation or imposition of any lien or other encumbrance on any of its assets, except for liens or encumbrances as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other party to realize the material benefits intended to be created hereby and thereby. No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Entity or other third party is required to be obtained or made in connection with, as applicable, such party's execution, delivery and performance of the Relevant Agreements to which it is a party, except any thereof the failure of which to be obtained, given or made would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby. (b) LMC and SpinCo represent and warrant to Holdco as of the Execution Date that: (i) Consolidated Return. As of the Execution Date, (A) each of LMC and SpinCo (and, if LMC shall have designated another person to receive the Section 2 payment pursuant to Section 15, such designated person) is a member of the same group of corporations filing a consolidated return for federal income tax purposes as the Liberty Subsidiaries (the "LMC affiliated group") and (B) except in connection with the Spin-off, none of LMC, TCITP, SpinCo or their respective affiliates (other than the holders of the Excluded Shares, as such term is defined in the LMC Agreement) has any current plan or intention (1) to transfer any Holdco equity securities held directly or indirectly by it immediately following the Execution Date (or to be acquired by it pursuant to this Agreement) (any such holder or acquirer, a "Holder") to any person that is not a member of the LMC affiliated group or (2) to cause any Holder to cease to be a member of the LMC affiliated group. (ii) Investment Intent. The shares of LMCN-V Common Stock to be acquired by each of LMC and SpinCo pursuant to Section 2 will be acquired for its own account, for investment and not with a view to the distribution or resale thereof other than as contemplated in connection with the Spin-off or as contemplated by the Registration Rights Agreement (and except that LMC currently intends to transfer the shares of LMCN-V Common Stock that it so acquires to TCITP or a wholly-owned subsidiary of TCITP). Each of LMC and SpinCo understands that such shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities or blue sky laws, by reason of their issuance in a transaction exempt from the registration requirements thereunder and may not be resold unless the subsequent disposition thereof is registered thereunder or is exempt from registration thereunder. (c) Holdco represents and warrants to LMC and SpinCo as of the Execution Date that: (i) The shares of LMCN-V Common Stock to be delivered as payment for the Contract Option and the non-competition agreement in Section 11(b)(ix) will as of their date of issuance be duly authorized and validly issued, fully paid, nonassessable and free of preemptive rights. (ii) Neither the execution and delivery by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement nor the performance of its obligations hereunder and thereunder will result in the creation or imposition of any lien or other encumbrance on the shares of LMCN-V Common Stock to delivered as payment for the Contract Option and the non-competition agreement in Section 11(b)(ix). (d) In addition to the representations and warranties of Holdco set forth in Section 4(c), the following representations and warranties of Time Warner Inc., a Delaware corporation ("Old TW"), are hereby incorporated by reference, with the same effect as if made in this Agreement by Holdco to LMC and SpinCo on and as of the Execution Date: (i) the representations and warranties of Old TW contained in Section 3.02(a) of the Amended and Restated Agreement and Plan of Merger, dated as of September 22, 1995, as amended as of August , 1996 (the "Merger Agreement"), among Old TW, Holdco, Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., under the heading entitled "Organization, Standing and Corporate Power"; (ii) the representations and warranties of Old TW contained in Section 3.02(c) of the Merger Agreement under the heading entitled "Capital Structure"; (iii) the representations and warranties of Old TW contained in Section 3.02(e) of the Merger Agreement under the heading entitled "SEC Documents; Undisclosed Liabilities"; (iv) the representations and warranties of Old TW contained in Section 3.02(g) of the Merger Agreement under the heading entitled "Absence of Certain Changes or Events"; (v) the representations and warranties of Old TW contained in Section 3.02(h) of the Merger Agreement under the heading entitled "Litigation"; (vi) the representations and warranties of Old TW contained in Section 3.02(j) of the Merger Agreement under the heading entitled "Brokers"; and (vii) the representations and warranties of Old TW contained in Section 3.02(k) of the Merger Agreement under the heading entitled "Taxes". 5. Representations and Warranties of Both Parties as of the Closing Date. If the Contract Option is exercised, it shall be a condition to the Closing (for the benefit of SpinCo) that, on and as of the Closing Date, each of the following representations and warranties, if qualified by materiality, shall be true and complete, or, if not so qualified, shall be true and complete in all material respects, with respect to Holdco, and it shall be a condition to the Closing (for the benefit of Holdco) that, on and as of the Closing Date, each of the following representations and warranties, if qualified by materiality, shall be true and complete, or, if not so qualified, shall be true and complete in all material respects, with respect to LMC and SpinCo: (a) Such party is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect. (b) Such party has all requisite corporate power to execute, deliver and perform its obligations under each of the Relevant Agreements to which it is a party, and such execution, delivery and performance have been duly authorized by all corporate action on its part required to be taken. (c) Each of the Relevant Agreements to which it is a party is such party's legal, valid and binding obligation, enforceable in accordance with its terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability. (d) Neither the execution and delivery by such party of each of the Relevant Agreements to which it is a party nor, except as set forth below the applicable party's name on Schedule 5(d) hereto, the performance of its obligations thereunder: (i) will violate or conflict with, or constitute a breach or default under, (A) the certificate of incorporation or by-laws of such party, (B) any law, statute, regulation, rule, order or other enactment of any Governmental Entity applicable to such party, or (C) any agreement or instrument to which such party is a party or by which it is bound or affected, except for any violations, conflicts, breaches or defaults as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created by the Relevant Agreements or (ii) result in the creation or imposition of any lien or other encumbrance on any of its assets, except for liens or encumbrances as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby. No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Entity or other third party is required to be obtained or made in connection with, as applicable, such party's execution, delivery and any of the Relevant Agreements to which it is a party, except as set forth below the applicable party's name on Schedule 5(d) hereto, performance of each of the Relevant Agreements to which it is a party, or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby. Without limiting the rights or obligations of either Party under any provision of this Agreement: (1) if the Contract Option is exercised, each Party shall promptly notify the other Party of any information that should be set forth below such Party's name on Schedule 5(c); (2) upon receipt of any such notice, Schedule 5(c) shall automatically be amended to incorporate such information under the name of such Party; and (3) it shall be a condition to the obligations of each Party to be performed hereunder on the Closing Date that such Party shall be reasonably satisfied with the contents of Schedule 5(c) (as so amended) set forth under the name of the other Party, to the extent such matters are materially different from the matters set forth under the name of such other Party on Schedule 4(a)(iii). 6. (a) Representations and Warranties of SpinCo as of the Closing Date. If the Contract Option is exercised, it shall be a condition to Closing (for the benefit of Holdco) that, on and as of the Closing Date, each of the following representations and warranties of SpinCo, if qualified by materiality, shall be true and complete or, if not so qualified, shall be true and complete in all material respects, except in each case as shall be set forth in a letter (the "Disclosure Letter") from SpinCo to Holdco dated as of a date after the exercise of the Contract Option and not later than the date 10 days prior to the Closing Date: (i) Consents. Except as set forth in Schedule 6(a)(i) to the Disclosure Letter, no consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any governmental entity is required to be obtained or made by or with respect to SpinCo in connection with (A) the execution, delivery and performance of this Agreement or the Distribution Contract by SpinCo or performance by SpinCo of its obligations hereunder or thereunder or (B) the conduct of the business of SpinCo following the Closing hereof, other than (1) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), if applicable, (2) those that may be required solely by reason of Holdco's (as opposed to any other third party's) participation in the transactions contemplated hereby, (3) those that will be obtained by the Closing and (4) those the failure of which to be obtained or made by the Closing would not, individually or in the aggregate, have a Material Adverse Effect. (ii) Financial Statements. (A) Attached to the Disclosure Letter as Schedule 6(a)(ii) are (1) the unaudited consolidated balance sheet of the Business (or, if prior to the Spin-off, of SpinCo) as of the end of the most recent fiscal period or calendar month prior to the date of the Disclosure Letter (the "Balance Sheet"), and (2) the unaudited consolidated statements of operating results and cash flows of the Business (or, if prior to the Spin-off, of SpinCo) for the period ended as of the end of the most recent fiscal period or calendar month prior to the date of the Disclosure Letter (the financial statements described above, the "Financial Statements"). (B) The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied and on that basis fairly present (subject to normal, recurring year-end adjustments) the consolidated financial condition and results of operations of the Business (or of SpinCo) as of the date thereof and for the periods indicated. (C) To the knowledge of SpinCo and, if prior to the Spin-off, LMC, as of the Closing Date, the Business (or, if prior to the Spin-off, SpinCo) does not have any material liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise), that are required by generally accepted accounting principles to be reflected on a consolidated balance sheet, except (1) as disclosed, reflected or reserved against in the Balance Sheet, (2) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet and not in violation of this Agreement and (3) for Taxes. (iii) Assets. Except as set forth in Schedule 6(a)(iii) to the Disclosure Letter, SpinCo owns or has sufficient rights to use under existing leases and license agreements all material properties, rights and assets reasonably necessary for the conduct of the Business as then conducted. (iv) Contracts. Except as set forth in Schedule 6(a)(iv) to the Disclosure Letter: (A) all material agreements, contracts, leases, licenses, commitments or instruments of SpinCo, as of the Closing Date that are reasonably necessary for the conduct of the Business as then conducted (collectively, the "Contracts"), are valid, binding and in full force and effect and, as of the Closing Date, are enforceable by SpinCo in accordance with their terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability; and (B) SpinCo has, as of the Closing Date, performed in all material respects all material obligations required to be performed by it under the Contracts and, as of the Closing Date, is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and no other party to any of the Contracts is to the knowledge of SpinCo, as of the Closing Date (with or without the lapse of time or the giving of notice, or both), in breach or default in any material respect thereunder, except in either such case for any such breach or default resulting from any action or omission by Holdco, Turner Broadcasting System, Inc. ("TBS") or any of their respective Affiliates, including without limitation any change in the programming service known as WTBS on the date of execution of this Agreement. (v) Litigation. Except as set forth in Schedule 6(a)(v) to the Disclosure Letter: (A) there are not, as of the Closing Date, any pending lawsuits or claims with respect to the Business to which SpinCo or, if prior to the Spin-off, LMC has been contacted in writing by counsel for the plaintiff or claimant, against or affecting SpinCo or any of its properties, assets, operations or businesses as to which there is at least a reasonable possibility of adverse determination, that would have, if so determined, individually or in the aggregate, a Material Adverse Effect; (B) to the knowledge of SpinCo and, if prior to the Spin-off, LMC, as of the Closing Date, SpinCo is not a party or subject to or in default under any material judgment, order, injunction or decree of any Governmental Entity applicable to it or any of its material properties or assets, which relates to the Business or could result in a Material Adverse Effect; (C) there is not pending against any other person, as of the Closing Date, any material lawsuit or claim by SpinCo, which relates to the Business or which, if adversely determined, could result in a Material Adverse Effect; and (D) as of the Closing Date, to the knowledge of SpinCo and, if prior to the Spin-off, LMC, there is not any pending investigation of or proceeding by any Governmental Entity which relates to the Business and which if determined adversely could result in a Material Adverse Effect with respect to the Business or SpinCo. (vi) Insurance. SpinCo, through one or more Affiliates, maintains or has the benefit (through TCI, LMC or otherwise) of policies of fire and casualty, liability and other forms of insurance (including self-insurance) in such amounts, with such deductibles and against such risks and losses as are, in its judgment, reasonable for the Business under the circumstances in which it is being conducted. Except as set forth in Schedule 6(a)(vi) to the Disclosure Letter: (A) all such policies are in full force and effect, all premiums due and payable thereon as of the Closing Date have been paid (other than retroactive or retrospective premium adjustments that may be required to be paid with respect to any period ending prior to the Closing Date under comprehensive general liability and workmen's compensation insurance policies), and no notice of cancelation or termination as of the Closing Date has been received with respect to any such policy which has not been replaced prior to the date of such cancelation; and (B) to the knowledge of SpinCo and, if prior to the Spin-off, LMC, its activities and operations with respect to the Business, as of the Closing Date, have been conducted in a manner so as to conform in all material respects to all applicable provisions of such insurance policies, except for any failures so to conform that could not, individually or in the aggregate, have a Material Adverse Effect. (vii) Compliance with Applicable Laws. Except as set forth in Schedule 6(a)(vii), as of the Closing Date, SpinCo has not received any written communication during the past two years from a Governmental Entity that alleges that it or the Business is not in compliance in any material respect with any applicable statutes, laws, ordinances, rules, orders and regulations of any Government Entity, other than any such communications, alleging any failures to be in compliance that, if true, would not, individually or in the aggregate, have a Material Adverse Effect. (viii) Licenses; Permits. Except as set forth in Schedule 6(a)(viii) to the Disclosure Letter, SpinCo possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets with respect to the Business and to carry on the Business as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, would not have a Material Adverse Effect. (ix) Absence of Changes or Events. Except as set forth in Schedule 6(a)(ix) to the Disclosure Letter: (A) since the date of the Balance Sheet, there has not been any material adverse change in the business, assets, condition (financial or otherwise) or results of operations of the Business (or, if prior to the Spin-off, SpinCo); and (B) since the date of the Balance Sheet, the Business has been conducted in the ordinary course (in accordance with the Ordinary Course Guidelines) and in substantially the same manner as previously conducted except for such changes (in accordance with the Ordinary Course Guidelines) in the day-to-day operations of the Business as the management of SpinCo (or, if prior to the Spin-off, LMC and SpinCo), in the good faith exercise of their business judgment, shall from time to time determine to be in the best interests of the Business) and has made commercially reasonable efforts consistent with past practices to preserve the Business' relationships with customers, suppliers and others with whom SpinCo deals in connection with the Business. (b) Certain Representations and Warranties of Holdco as of Closing Date. If the Contract Option is exercised, it shall be a condition to the Closing (for the benefit of SpinCo) that, on and as of the Closing Date, each of the following representations and warranties of Holdco, if qualified by materiality, shall be true and complete, or, if not so qualified, shall be true and complete in all material respects: (i) Neither the execution and delivery by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement nor the performance of its obligations hereunder and thereunder resulted in the creation or imposition of any lien or other encumbrance on the shares of LMCN-V Common Stock delivered by Holdco pursuant to Section 2 as payment for the Contract Option and the non-competition agreement in Section 11(b)(ix). (ii) Old TW and Holdco have, collectively, filed all required reports, schedules, forms, statements and other documents with the Securities and Exchange Commission ("SEC") since December 31, 1993 (as such documents have been amended prior to the Closing Date, the "TW SEC Documents"). As of their respective dates, the TW SEC Documents complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such TW SEC Documents, and none of the TW SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by a later TW SEC Document. Except to the extent that information contained in any TW SEC Document has been revised or superseded by a later TW SEC Document, neither Old TW's Annual Report on Form 10-K for the year ended December 31, 1995, nor any TW SEC Document filed after December 31, 1995, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of Old TW and Holdco included in TW SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Old TW or Holdco, as applicable, and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the TW SEC Documents, neither Holdco nor any subsidiary of Holdco has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a consolidated balance sheet of Holdco and its consolidated subsidiaries or in the notes thereto and which, individually or in the aggregate, could reasonably be expected to have a Parent Material Adverse Effect (as defined in the Merger Agreement). (iii) Except as disclosed in any TW SEC Document, since the date of the most recent audited financial statements included in TW SEC Documents, Holdco has (or, if Holdco shall have not yet filed audited financial statements as part of the TW SEC Documents, each of Old TW and Holdco has) conducted its business only in the ordinary course, and there has not been: (A) any change or effect (or any development that, insofar as can reasonably be foreseen, is likely to result in a change or effect) which, individually or in the aggregate, has had or is likely to have, a Parent Material Adverse Effect; (B) except for regular quarterly dividends not in excess of $0.09 per share of Holdco Common Stock and the stated or required amount of dividends on any series of Parent Preferred Stock (as defined in the Merger Agreement), in each case with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to Holdco Common Stock or any series of Parent Preferred Stock; (C) any split, combination or reclassification of Holdco Common Stock or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for shares of Holdco Common Stock; (D) any damage, destruction or loss, whether or not covered by insurance that has had or is likely to have a Parent Material Adverse Effect; or (E) any change in accounting methods, principles or practices by Holdco or any Material Parent Subsidiary (as defined in the Merger Agreement) materially affecting its assets, liabilities or business, except insofar as may have been required by a change in generally accepted accounting principles. (c) Representations and Warranties of Holdco Incorporated by Reference as of the Closing Date. In addition to the representations and warranties of Holdco set forth in Section 6(b), the following representations and warranties of Old TW are hereby incorporated by reference, with the same effect as if made in this Agreement by Holdco to SpinCo on and as of the Closing Date: (i) the representations and warranties of Old TW contained in Section 3.02(a) of the Merger Agreement under the heading entitled "Organization, Standing and Corporate Power"; and (ii) the representations and warranties of Old TW contained in Section 3.02(j) of the Merger Agreement under the heading entitled "Brokers". and it shall be a condition to the Closing (for the benefit of SpinCo) that each of the representations and warranties so incorporated by reference, if qualified by materiality, shall be true and complete, or if not so qualified, shall be true and complete in all material respects, on and as of the Closing Date. 7. Conditions to the Obligations of Each Party. The obligations of SpinCo and Holdco to consummate the Closing are conditioned upon the satisfaction, prior to or on the Closing Date, of the following conditions: (a) on the Closing Date, no action, proceeding or investigation commenced or brought by any U.S. Federal Government Entity shall be pending, the purpose of which is to set aside or modify in any material respect the authorizations of any of the transactions provided for in this Agreement and the Distribution Contract or to enjoin or prevent consummation of any of such transactions, nor shall any restraining order or preliminary or permanent injunction or other order issued by any court of competent jurisdiction or any other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby be in effect; and (b) the receipt of any required regulatory approvals and authorizations and the making of all filings and the termination of all waiting periods required in connection with the Closing, with the understanding that, if the Contract Option is exercised, SpinCo will use its (or, if prior to the Spin-off, LMC and SpinCo will use their) commercially reasonable efforts to secure any required regulatory approvals and authorizations prior to the Closing; provided, however, that nothing in this Agreement shall require, Holdco or SpinCo (or any of their respective Affiliates) (i) to agree to, approve or otherwise be bound by or satisfy any condition of any kind referred to in the second or third sentences of Section 2.1(d) of the LMC Agreement or (ii) to agree to or enter into or be bound by any settlement or judgment. 8. Conditions to Obligation of Holdco. The obligation of Holdco to consummate the Closing is also subject to the satisfaction, prior to or on the Closing Date, of each of the following additional conditions (unless waived by Holdco): (a) Each of the Parties (other than Holdco) shall have performed in all material respects all its obligations hereunder which are required to be performed prior to the Closing Date. (b) If prior to the Spin-off, Holdco shall have received a certificate from an officer of LMC (i) to the effect that LMC has complied, in all material respects, with all its obligations under this Agreement to be performed on or before the Closing Date, (ii) as to the incumbency of certain officers of LMC, (iii) as to the satisfaction of the conditions to Closing set forth in Section 5 (with respect to the representations and warranties of LMC contained therein) and Section 6(a) and (iv) attaching certified copies of SpinCo's certificate of incorporation and by-laws, as amended through and in effect on the Closing Date, together with all resolutions of LMC's board authorizing the transactions contemplated by this Agreement and the Distribution Contract. (c) If prior to the Spin-off, Holdco shall have received an opinion of counsel to LMC (which counsel may be an employee of LMC and which counsel may be counsel to SpinCo), reasonably acceptable to Holdco, addressed to Holdco and dated the Closing Date, to the effect that: (i) LMC is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. LMC has all requisite corporate power and authority to execute and deliver the Agreement, to perform its obligations thereunder and to consummate the transactions contemplated thereby. (ii) The execution and delivery by LMC of the Agreement, the performance by LMC of its obligations thereunder and the consummation by LMC of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action on the part of LMC. The Agreement has been duly executed and delivered by a duly authorized officer of LMC and constitutes the legal, valid and binding obligation of LMC enforceable against LMC in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity). (iii) The execution, delivery and performance of the Agreement by LMC in accordance therewith does not conflict with or result in a violation of the Delaware Corporation Law or the Certificate of Incorporation or By-laws of LMC. (d) Holdco shall have received a certificate from an officer of SpinCo (i) to the effect that SpinCo has complied, in all material respects, with all its obligations under this Agreement to be performed on or before the Closing Date, (ii) as to the incumbency of certain officers of SpinCo, (iii) as to the satisfaction of the conditions to Closing set forth in Section 5 (with respect to the representations and warranties of SpinCo contained therein) and Section 6(a), and (iv) attaching certified copies of SpinCo's certificate of incorporation and by-laws as amended through and in effect on the Closing Date, together with all resolutions of SpinCo's board of directors authorizing the transactions contemplated by this Agreement and the Distribution Contract. (e) Holdco shall have received an opinion of counsel to SpinCo (which counsel may be an employee of SpinCo and may also be counsel to LMC and/or an employee of LMC), reasonably acceptable to Holdco, addressed to Holdco and dated the Closing Date, to the effect that: (i) SpinCo is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. SpinCo has all requisite corporate power and authority to execute and deliver this Agreement and the Distribution Contract and to perform its obligations hereunder and thereunder. (ii) The execution and delivery by SpinCo of this Agreement and the Distribution Contract and the performance by SpinCo of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate action on the part of SpinCo. Each of this Agreement and the Distribution Contract has been duly executed and delivered by a duly authorized officer of SpinCo and constitutes the legal, valid and binding obligation of SpinCo enforceable against SpinCo in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity). (iii) The execution and delivery of this Agreement and the Distribution Contract by SpinCo, and the performance by SpinCo of its obligations hereunder and thereunder, does not conflict with or result in a violation of the corporate laws of the State of Georgia, or the Certificate of Incorporation or by-laws of SpinCo. (f) The Program and Digitization Agreement (as defined in the LMC Agreement) shall be in full force and effect, subject to satisfaction of the conditions set forth therein. (g) SpinCo shall have received any material third party consents, approvals and authorizations necessary to cause the effectiveness of the Distribution Contract. (h) Subject to Section 15(b), if an Exercise Notice shall have been delivered on or prior to June 1, 1997, Holdco shall have received the Disclosure Letter from SpinCo at least 10 days prior to the scheduled Closing Date and shall be reasonably satisfied with the contents thereof and of all attachments thereto. If an Exercise Notice shall have been delivered by Holdco after June 1, 1997, (i) Holdco shall have received, as contemplated by Section 11(b)(vii), the revised Disclosure Letter from SpinCo at least 10 days prior to the scheduled Closing Date and (ii) Holdco shall be reasonably satisfied with the contents of the revised Disclosure Letter and of all attachments thereto, to the extent (and only to the extent) that such contents and attachments differ in any material respect from the initial Disclosure Letter delivered to Holdco pursuant to Section 11(b)(vii), and provided that the incurrence by SpinCo, TCITP and/or any of their respective subsidiaries of indebtedness for borrowed money, whether or not secured (unless secured in contravention of Section 11(b)(vi)(C)), shall not be a reasonable basis for Holdco's dissatisfaction under this Section 8(h). (i) Subject to Section 15(b), if an Exercise Notice shall have been delivered on or prior to June 1, 1997, Holdco shall be reasonably satisfied with the results of its due diligence investigation provided for in Section 11(b)(ii). 9. Conditions to Obligation of SpinCo. The obligation of SpinCo to consummate the Closing is also subject to the satisfaction, prior to or on the Closing Date, of each of the following conditions (unless waived by SpinCo): (a) Holdco shall have performed in all material respects all its obligations hereunder which are required to be performed prior to the Closing Date. (b) No petition or similar document shall have been filed by or with respect to Holdco under any bankruptcy, insolvency or similar law. (c) SpinCo shall have received an opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to SpinCo, addressed to SpinCo and dated the Closing Date, to the effect that: (i) Holdco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Holdco has all requisite corporate power and authority to perform its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby. (ii) The performance by Holdco of its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement, and the consummation by Holdco of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Holdco. Each of this Agreement, the Distribution Contract and the Registration Rights Agreement constitutes the legal, valid and binding obligation of Holdco enforceable against Holdco in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity, and except that the indemnification obligations set forth in Section 8 of the Registration Rights Agreement may be subject to considerations of public policy). (iii) The performance by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement does not conflict with or result in a violation of the General Corporation Law of the State of Delaware, or the certificate of incorporation or by-laws of Holdco. (d) SpinCo shall have received a certificate from an officer of Holdco (i) to the effect that Holdco has complied, in all material respects, with all its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement, (ii) as to the incumbency of certain officers of Holdco, (iii) as to the satisfaction of the conditions to Closing set forth in Section 5 (with respect to the representations and warranties of Holdco contained therein), Section 6(b) and Section 6(c), (iv) attaching all resolutions of Holdco's board of directors authorizing the transactions contemplated by this Agreement, and (v) any other customary matters as may be reasonably requested by SpinCo. 10. Termination. (a) Subject to the last two sentences of Section 14 with respect to the survival of certain provisions, each of LMC's, SpinCo's and Holdco's rights and obligations under this Agreement (including with respect to the option granted hereunder, whether or not exercised) will terminate on the earliest to occur of the following: (i) if Holdco shall deliver an Exercise Notice on or before June 1, 1997 (subject to extension as provided in Section 15(b)), the earlier of (A) the sixth anniversary of the Execution Date and (B) the conversion of WTBS to a copyright-paid programming service; (ii) if Holdco shall deliver an Exercise Notice after June 1, 1997 (subject to extension as provided in Section 15(b)), but before the sixth anniversary of the Execution Date, 60 days after the date of such Exercise Notice; and (iii) if Holdco shall not theretofore have delivered an Exercise Notice, the earlier of (A) the sixth anniversary of the Execution Date and (B) the conversion of WTBS to a copyright-paid programming service; provided in each case that the Closing has not occurred on or prior to such earliest date (the "Termination Date"). Notwithstanding the foregoing, if (following the delivery of a timely Exercise Notice) as a result of any action or failure to act by any unrelated third party, including any Governmental Entity, the conditions to the Closing have not been satisfied in full on or prior to the Termination Date, the "Termination Date" shall be extended to the earlier of (i) five business days after the date as of which all such conditions have been satisfied in full and (y) the first anniversary of the date of such Exercise Notice. (b) The termination of this Agreement will in no way limit any obligation or liability of any Party based on or arising from a breach or default by such Party prior to such termination with respect to any of its representations, warranties or agreements contained in this Agreement, the Distribution Contract or the Registration Rights Agreement. 11. Covenants. (a) Covenants of Each Party. If the Contract Option is exercised each of SpinCo (or, if prior to the Spin-off, LMC and SpinCo) and Holdco agree to use its commercially reasonable efforts to cause the conditions to the Closing described in Sections 7, 8 and 9 to be satisfied as promptly as practicable following such exercise. (b) Covenants of LMC and SpinCo. (i) Disposition of Shares. During the period from the Execution Date through the earlier to occur of the Grant Date or the Termination Date, LMC shall not transfer or otherwise dispose of any of the Shares (other than a transfer of all, but not less than all, the Shares to any member of the affiliated group (within the meaning of Section 1504(a) of the Code) of which LMC is (at the time of such transfer or disposition) a member; provided that (A) such transferee is, at the time of such transfer or disposition, a Liberty Party (as defined in the LMC Agreement) and (B) the transferee agrees to be bound by this Agreement and the provisions of the Distribution Contract to the same effect as LMC); provided further that LMC shall be entitled to pledge or otherwise hypothecate the Shares in connection with the incurrence of bona fide indebtedness to the extent that the applicable pledgee of the Shares agrees to be bound by the terms of this Agreement. (ii) Access. Subject to Section 15(b), (A) during the period from the Execution Date until and including June 1, 1997, and (B) during the sixty-day period following the delivery of any Exercise Notice (including an Exercise Notice delivered on or prior to June 1, 1997), LMC and SpinCo shall give Holdco and its representatives, employees, counsel and accountants reasonable access, during normal business hours and upon reasonable notice, and subject to, as applicable, LMC's and SpinCo's obligations under any then existing confidentiality or non-disclosure agreements, to the personnel, properties, books and records of the Business to the extent in their possession or control, so that Holdco may confirm the satisfaction of all conditions precedent to its obligations to be performed hereunder on the Closing Date; provided, however, that such access does not unreasonably disrupt the normal operations of LMC or SpinCo. As against Holdco and its representatives, employees, counsel and accountants, each of LMC and SpinCo hereby waives any confidentiality or non-disclosure covenants contained for its benefit in any agreement concerning the Business (including any WTBS service agreements or arrangements) and it agrees to execute any acknowledgements with respect to such waiver as Holdco may reasonably request. Each of LMC and SpinCo agree to use commercially reasonable efforts in good faith to obtain all waivers and consents necessary under any existing confidentiality or non-disclosure agreement to afford full access to Holdco with respect to the Business; provided, however, that nothing in this Agreement shall require LMC or SpinCo (or any of their respective Affiliates) (x) to agree to any material modification or amendment to any agreement between any of them or any such Affiliate and any third party, or any other onerous or burdensome condition or requirement or (y) to make any payment of money or deliver any other consideration to any third party, as a condition to the receipt of any waiver or consent hereunder. On the Execution Date and upon Holdco's delivery of the Exercise Notice, SpinCo shall also give Holdco a list of the WTBS Distributors (as defined in Section 24). During the period from the Execution Date through the earlier to occur of the Closing Date or the Termination Date, if SpinCo proposes to enter into any agreement with a WTBS Distributor or other third party, which agreement will contain a confidentiality or non-disclosure covenant relating to the existence, terms and/or conditions of any material agreement to which it is or will be a party, or any other material matter relating to the Business, SpinCo shall use commercially reasonable efforts in good faith to negotiate a provision in such agreement or covenant to permit it to disclose the matters subject to such confidentiality or non-disclosure agreement to Holdco and its representatives, employees, counsel and accountants; provided, however, that nothing in this Agreement shall require LMC or SpinCo (or any of their respective Affiliates) (x) to agree to any material concession, condition or other provision in any agreement that, in their good faith business judgment, is in any respect materially less favorable to it or the Business than the comparable provision that could have been negotiated by it if this sentence did not apply or (y) to make any payment of money or deliver any other consideration to any third party, as a condition to receipt of any provision permitting any disclosure to Holdco or any such other person. (iii) Ordinary Conduct. During the period from the Execution Date through the earlier to occur of the Closing Date or the Termination Date, SpinCo shall operate the Business in the ordinary course in substantially the same manner as currently conducted except for such changes in the day-to-day operations of the Business as the management of SpinCo (or, if prior to the Spin-off, the management of LMC and SpinCo), in the good faith exercise of their business judgment, shall from time to time determine to be in the best interests of the Business. In that connection, SpinCo shall use its commercially reasonable efforts to preserve the Business' relationships with customers, suppliers and others with whom SpinCo deals with respect to the Business. In addition, SpinCo shall not take any action that could reasonably be expected to materially impair the business, assets and financial condition of the Business at the time of the effectiveness of the Distribution Contract (provided that SpinCo shall be permitted to discontinue the operations of the Business if because of an act of God, significant change in law or other occurrence, it would not be commercially reasonable to continue such operations). In connection, with its obligation to operate in the ordinary course, SpinCo shall not cease to be a private carrier with respect to the Business, as conducted domestically in the U.S., without the prior written consent of Holdco, which shall not unreasonably be withheld or delayed; provided, however, that such consent may be withheld by Holdco in its sole discretion if it determines that such action impairs the availability of the exception under 17 U.S.C. ss.111(a)(3). Holdco agrees that it and its Affiliates will not assist any third party in competing against SpinCo in uplinking the WTBS broadcast signal. (iv) [Reserved.] (v) Insurance. At all times during the period from the Execution Date through the earlier of the Closing Date and the Termination Date, SpinCo shall maintain in full force and effect (through one or more Affiliates or otherwise), insurance policies meeting the requirements of Section 6(a)(vi). (vi) Mergers; Business Transfer; Security Arrangements. (A) SpinCo shall not merge with another corporation or other entity unless SpinCo is the surviving entity in such merger or the surviving entity delivers to Holdco prior to such merger an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract. (B) SpinCo shall not sell, transfer or otherwise dispose of the Business (other than any security interest granted in connection with a SpinCo financing covered by clause (C) below) unless (1) Spinco sells, transfers or otherwise disposes of the Business in its entirety and (2) the entity or person so acquiring the Business prior to such acquisition delivers to Holdco an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract. (C) SpinCo shall not grant or permit to exist any lien or other security interest on the assets of the Business (including the Distribution Contract and its WTBS service agreements) in connection with any SpinCo financing unless the secured party or parties prior to any such grant agree in writing, for the benefit of Holdco, that (1) any foreclosure or sale of the Business shall involve the foreclosure or sale of the Business in its entirety and (2) as a condition to such foreclosure or sale, the entity or person so acquiring the Business shall be required to deliver to Holdco, prior to such acquisition, an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract. (D) In the event that SpinCo or, prior to the Spin-off, LMC receives any proposal with respect to, or determines to enter into any transaction involving, any of the events described in this paragraph (vi), SpinCo and LMC shall promptly notify Holdco thereof. (vii) Disclosure Letter and Closing Schedules. If, subject to Section 15(b), Holdco delivers an Exercise Notice on or prior to June 1, 1997, SpinCo shall as soon as practicable after such delivery (and in any event not later than 10 days prior to the Closing Date) prepare and deliver to Holdco the Disclosure Letter and all required schedules to this Agreement that have not previously been delivered. If Holdco shall have not delivered an Exercise Notice on or prior to June 1, 1997, SpinCo shall as soon as practicable after such date (but in any event not later than June 16, 1997) deliver to Holdco the Disclosure Letter and all required schedules to this Agreement as of such date. If thereafter Holdco delivers an Exercise Notice, Spinco shall as soon as practicable after such delivery (and in any event not later than ten days prior to the Closing Date) prepare and deliver to Holdco a revised Disclosure Letter and all required schedules to this Agreement that have not previously been delivered. (viii) Supplemental Disclosure. SpinCo shall promptly notify Holdco of, and furnish Holdco any information it may reasonably request with respect to, the occurrence to its knowledge of any event or condition or the existence to its knowledge of any fact that causes any of the conditions to Holdco's obligation to cause the effectiveness of the Distribution Contract not to occur; provided, however, that no such notification shall be required with respect to any representation or warranty of LMC or SpinCo hereunder prior to delivery of the Disclosure Letter. (ix) Restricted Activities; SpinCo Obligations. Each of LMC and SpinCo covenants and agrees with Holdco as follows: (A) During the period from the Execution Date through the earlier of the Closing Date and the Termination Date, each of LMC and SpinCo shall not (and each shall cause its Affiliates not to) engage in the Business, other than through SpinCo. (B) If the Closing Date occurs, during the period from the Closing Date through the fifth anniversary of the termination of the last service agreement between SpinCo and any MVPD (as defined in Section 24), LMC shall not, and shall cause its Affiliates not to, engage in the Business (other than through SpinCo). If the Closing Date occurs, during the period from the Closing Date through the Termination Date (as defined in the Distribution Contract) LMC shall not, directly or indirectly (including through any Affiliate), solicit any MVPD to terminate carriage of the WTBS programming service (including the programming of the broadcast television SuperStation known on the Execution Date as WTBS and any cable programming network established as the successor thereto) or, except as contemplated by the Distribution Contract, to terminate any service agreement with SpinCo with respect to such programming service; provided, however, that the provisions of this sentence shall not apply with respect to any MVPD that enters into a WTBS programming agreement with Holdco. By way of example, and without limiting the generality of the foregoing, it is understood that the offering of WTBS as a distant broadcast signal (other than through SpinCo) violates the restrictions of this subparagraph (B). Anything contained herein to the contrary notwithstanding, Holdco acknowledges (I) that LMC and its Affiliates represent numerous programming services that are marketed, distributed and sold to MVPDs on a continuous basis, in competition with WTBS and other programming services, (II) that due to limited channel capacity, an MVPD must often terminate an existing programming service carried by such MVPD in order to carry a new programming service, and (III) that activities conducted by LMC and its Affiliates in connection with the marketing of programming services that compete with WTBS shall not be construed to violate LMC's covenant in this Section, even if an MVPD terminates carriage of WTBS to carry a programming service marketed by LMC or any of its Affiliates, unless LMC or such Affiliate shall have urged or induced such MVPD to drop WTBS. (C) If the Closing Date occurs prior to the consummation of the Spin-off, then, so long as SpinCo is LMC's Controlled Affiliate (as defined in the LMC Agreement), LMC shall cause SpinCo to comply with its obligations under this Agreement and the Distribution Contract, including the provisions of Section 3 thereof. (D) If the Closing Date occurs, then prior to and after consummation of the Spin-off, LMC shall provide Holdco and its representatives reasonable access, on a basis comparable to the access provided by SpinCo pursuant to Section 2(d) of the Distribution Contract, to any records of LMC relating to the Business prior to the Spin-off to confirm amounts payable to SpinCo after the Closing Date pursuant to the Distribution Contract. (c) Confidentiality. Until the Closing Date (or if the Closing does not occur, until the second anniversary of the Termination Date) Holdco agrees to use the same efforts that it uses with respect to its own confidential and proprietary information to retain in strict confidence all proprietary and confidential information concerning the Business or SpinCo which is conveyed to it by LMC, SpinCo or any of their Affiliates, or any representative of LMC, SpinCo or any of their Affiliates ("Confidential Information"). Notwithstanding the foregoing, the term "Confidential Information" does not include: (i) information which is, at the time of its disclosure to Holdco or any Affiliate of Holdco or their respective representatives, already in Holdco's, its Affiliates' or their representatives' possession (without violation, to Holdco's knowledge, of any legally enforceable confidentiality agreement with LMC, SpinCo or any of their Affiliates relating to such information), (ii) information which is or becomes available to the public other than as a result of a disclosure by Holdco or any Affiliate of Holdco or their respective representatives, (iii) information which was or becomes available to Holdco or any Affiliate of Holdco or their respective representatives on a non-confidential basis from a source other than LMC, SpinCo, any of their Affiliates or their respective representatives (provided that information contained in any agreement with respect to the Business obtained solely as a result of the confidentiality waiver in Section 11(b)(ii) shall not be considered to be obtained on a non-confidential basis); provided that such source was not known by Holdco to be bound by the terms of a legally enforceable confidentiality agreement with LMC, SpinCo or any of their Affiliates relating to such information, (iv) information which is information that is independently developed by Holdco or its Affiliates or their respective representatives or (v) any oral information, unless such information is stated to be proprietary and confidential at the time of disclosure and such statement and information is summarized in writing within 30 days after such disclosure. In the event that Holdco, any of its Affiliates or any of their respective representatives is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose any Confidential Information, it is agreed that Holdco will provide SpinCo and, prior to the Spin-off, LMC with prompt notice of any such request or requirement (written if practical) so that LMC and/or SpinCo may seek at its own expense an appropriate protective order or waive Holdco's compliance with the provisions of this Section 11(c). If, failing the entry of a protective order or the receipt of a waiver hereunder, Holdco, any of its Affiliates or any of their respective representatives is, in the opinion of its counsel, compelled to disclose any Confidential Information, Holdco or such Affiliate or representative may disclose that portion of any Confidential Information which its counsel advises that it is compelled to disclose and will upon written request and at the expense of LMC and/or SpinCo use reasonable efforts to cooperate in LMC's and/or SpinCo's efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded to that portion of such Confidential Information which is being disclosed. Holdco will use the Confidential Information only in connection with its due diligence review of the Business and SpinCo, as contemplated by this Agreement and will not otherwise use it in its business or disclose it to others, except to its employees, representatives and Affiliates (and their employees and representatives) who require such Confidential Information to perform their duties in connection with, or exercise Holdco's rights under, this Agreement and agree not to disclose or use such Confidential Information except as provided herein. Holdco agrees that it shall be responsible for any breach of this Section 11(c) by such persons. In the event that the Closing does not occur under this Agreement, Holdco shall, at its option, either (i) return all Confidential Information provided or made available to it hereunder relating to the Business and SpinCo, whether in written, computer-readable or other form, together with all copies thereof in the possession of Holdco or (ii) destroy all such Confidential Information and certify such destruction to LMC and SpinCo; provided, however, that Holdco's sole obligation with respect to the disposition of any internal notes, memoranda or other materials prepared by it that incorporate any Confidential Information shall be to redact or otherwise expunge all such Confidential Information from such materials. (d) Covenant by Satellite Relating to Carriage of WTBS. During the period from the Execution Date through the earlier of the Closing Date and the Termination Date, provided that Holdco or any Managed Subsidiary of Holdco then owns the programming service currently known as "WTBS" (as it may be renamed in the future) ("WTBS"), Satellite shall cause each of its affiliates (as such term is defined in Section 1(a) of Satellite's existing affiliation agreement, dated as of July 15, 1992, with The Cartoon Network, Inc., a copy of the pertinent provisions of which was attached to a letter dated as of October 2, 1995, from Baker & Botts, L.L.P., counsel to LMC, to Peter R. Haje, the general counsel of Holdco) (and each affiliate of any other intermediary (as contemplated by the second sentence of the definition of "Business" in Section 24(b))) that carries WTBS, and each other entity to which Satellite (or such other intermediary) provides (or arranges for the provision of) the WTBS signal, to carry the WTBS signal transmitted by SpinCo (provided that SpinCo is able to transmit such signal), it being understood that nothing in this Agreement shall prohibit any such affiliate or other person or entity from deleting carriage of the WTBS signal transmitted by SpinCo, provided that upon such deletion such affiliate or other person or entity does not carry the WTBS signal from any other source (it being understood that nothing in this Section 11(d) shall limit the effects of the "HITS" provisions of the Program and Digitization Agreement with respect to the carriage of the WTBS signal, or the rights and obligations of the parties thereunder, when those provisions become effective in accordance with their terms). (e) Acknowledgement by SpinCo and LMC. Each of SpinCo and LMC acknowledges and agrees for itself and each of its Affiliates that, from and after the closing of the Mergers (as defined in the LMC Agreement), (i) Holdco intends to (and may) communicate directly with MVPDs (including MVPDs that are WTBS Distributors) regarding the transformation of WTBS into a copyright-paid, satellite delivered, twenty-four-hour-per-day cable television programming service and (ii) Holdco intends to (and may) communicate with WTBS Distributors about (x) the terms of a new WTBS distribution contract or arrangement directly with Holdco or any of its Managed Subsidiaries (conditioned on transformation of WTBS to such a copyright-paid service) and (y) the possible termination of their existing contracts or arrangements with SpinCo (upon transformation of WTBS to a copyright-paid service), and Holdco intends to (and may) enter into agreements with WTBS Distributors with respect to the foregoing (conditioned upon the transformation of WTBS to a copyright-paid service), all without creating any liability to SpinCo, LMC or any of their respective Affiliates. Neither Spinco, LMC nor any of their respective Affiliates will discourage any MVPD from engaging in any such conversations or negotiations with Holdco or its Affiliates with respect to the converted WTBS program service or discourage any MVPD from entering into any such contracts or arrangements with respect to the converted WTBS program service. (f) Holdco's Right to Assign Program and Digitization Agreement to Managed Subsidiaries. LMC, SpinCo and Satellite hereby acknowledge and agree that, from and after the closing of the Mergers (as defined in the LMC Agreement), the rights (but not the obligations) of TBS under the Program and Digitization Agreement attached hereto as Exhibit 2 (the "Program and Digitization Agreement"), between TBS and Satellite with respect to the carriage of the copyright-paid WTBS service may be assigned to any Managed Subsidiary, provided that any such assignment shall terminate if the assignee ceases to be a Managed Subsidiary. This Section 11(f) shall survive the exercise of the Contract Option and any termination of this Agreement. (g) Non-Exclusive Right to Digitize, Compress and Reuplink. Reference is made to the "HITS" provisions of the Program and Digitization Agreement. The Parties hereby consent to any action taken by Satellite during the term of this Agreement that would be permitted by such provisions of the Program and Digitization Agreement, as if such agreement were then in effect with respect to WTBS prior to its conversion to a copyright-paid service and (i) all references therein to "TBS" referred to SpinCo, (ii) all references therein to "TBS services" referred to WTBS, and (iii) the reference in the third line to "licensed by TBS" meant "authorized by SpinCo pursuant to contractual relationships". In that connection, and on the same basis, Satellite shall comply with the obligations required to be performed by Satellite in such "HITS" provisions. 12. [Reserved.] 13. [Reserved.] 14. Survival. The representations, warranties and agreements of the Parties in this Agreement and in the other documents and instruments to be delivered by any Party pursuant to this Agreement will continue in full force and effect from the time made or deemed to have been made until the Closing, whereupon such representations, warranties and agreements shall terminate. Notwithstanding any other provision of this Agreement, the tax representations and warranties in Section 4(b)(i), and the representations and warranties of Holdco contained in Sections 4(c)(i) and (ii) and Sections 6(b)(i) and (ii) shall survive the Execution Date, the Closing and the termination of this Agreement pursuant to Section 10 and shall continue in full force and effect indefinitely. In addition, the provisions of Section 2(f) and Section 11(b)(ix) shall survive the Execution Date, the Closing and the termination of this Agreement pursuant to Section 10 and shall survive in accordance with their terms. 15. Parties Obligated and Benefited; LMC's Right to Designate Recipient; Other Transaction. (a) Subject to the limitations set forth below, this Agreement will be binding upon the Parties and their respective assigns and successors in interest and will inure solely to the benefit of the Parties and their respective assigns and successors in interest, and no other person will be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party will assign any of its rights or delegate any of its duties under this Agreement or the Distribution Contract, except: (i) LMC may assign (without the consent of Holdco) any of its rights (including, without limitation, the right to receive the Section 2 payment for the non-competition agreement in Section 11(b)(ix) to any person that, at the time of such assignment (and, in the case of any such person designated to receive such payment, at the payment date), is (A) a Liberty Party (as defined in the LMC Agreement) and (B) a member of the affiliated group (within the meaning of Section 1504(a) of the Code) of which LMC is (at such time) a member; (ii) by operation of law; and (iii) with respect to any merger of SpinCo or sale or disposition of the Business, in each case, permitted under Section 11(b)(vi). (b) If, as contemplated by Section 2, the Letter Ruling shall have not been obtained by May 31, 1997 or TCI shall have been advised or have determined that it will not obtain the Letter Ruling (or, that it will not obtain the Letter Ruling unless TCI and the other parties thereto agree to changes in the transactions contemplated by the LMC Agreement and the Additional Agreements (as defined in the LMC Agreement) or any other conditions imposed as a prerequisite by the Internal Revenue Service), the Parties agree that (i) notwithstanding the provisions of Section 2, the Grant Date shall be postponed for 30 days during which period the Parties shall mutually endeavor in good faith to negotiate the consummation of a transaction that is more tax efficient to both Parties and (ii) the references to June 1, 1997, in this Agreement (including as they relate to the definition of the Termination Date, Holdco's delivery of an Exercise Notice, Holdco's conditions to Closing, Holdco's access to the Business and SpinCo's delivery of the Disclosure Letter and related schedules) shall be automatically extended to the date, if later than June 1, 1997, that is five days after the termination of the discussions contemplated by this Section 15(b). 16. Notices. Any notice, request, demand, waiver or other communication required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given only if delivered in person or by first class, postage prepaid, registered or certified mail, or sent by courier or, if receipt is confirmed, by telecopier: If to Holdco: Time Warner Inc. 75 Rockefeller Plaza New York, New York 10019 Attention: President with a copy similarly addressed to the attention of General Counsel with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: William P. Rogers, Jr., Esq. If to LMC: Liberty Media Corporation 8101 East Prentice Avenue Suite 500 Englewood, Colorado 80111 Attention: President with copies (which shall not constitute notice) to: Stephen M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Towers II 5619 DTC Parkway Englewood, Colorado 80111-3000 and Baker & Botts, L.L.P. 599 Lexington Avenue Suite 2800 New York, New York 10022 Attention: Elizabeth Markowski, Esq. If to SpinCo: Southern Satellite Systems, Inc. 8101 East Prentice Avenue Suite 500 Englewood, Colorado 80111 Attention: President with copies (which shall not constitute notice) to: Stephen M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Towers II 5619 DTC Parkway Englewood, Colorado 80111-3000 (but only prior to the Spin-off) and Baker & Botts, L.L.P. 599 Lexington Avenue Suite 2800 New York, New York 10022 Attention: Elizabeth Markowski, Esq. Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section 16. All notices will be deemed to have been received on the date of delivery or on the fifth business day after mailing in accordance with this Section, except that any notice of a change of address will be effective only upon actual receipt. 17. Waiver. This Agreement or any of its provisions may not be waived except in writing. The failure of any Party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion. 18. Interpretation. The section captions of this Agreement are for convenience only and do not constitute a part of this Agreement. When a reference is made in this Agreement to a Section or Exhibit such reference shall be to a Section of, or an Exhibit to, this Agreement, unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". 19. Choice of Law. This Agreement and the rights of the Parties under it will be governed by and construed in all respects in accordance with the laws of the State of New York applicable to contracts made and performed wholly therein. 20. Time. If the last day permitted for the timing of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a business day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding business day. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute a single instrument. 22. Entire Agreement. This Agreement (including all Exhibits and Schedules attached to this Agreement, the Distribution Contract, the Registration Rights Agreement, the LMC Agreement and the agreements referenced herein and therein, each of which shall be deemed to constitute a part of this Agreement) contains the entire agreement of the Parties, and supersedes all prior oral or written agreements and understandings with respect to the subject matter hereof. This Agreement may not be amended or modified except by a writing signed by the Parties. 23. Severability. Any term or provision of this Agreement which is held to be invalid or unenforceable in any jurisdiction, as to such jurisdiction, will be ineffective only to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of the Agreement in any other jurisdiction, and in the event any provision of this Agreement is held to be invalid or unenforceable in any jurisdiction, such provision will be reformed with respect to, and enforced as fully as possible in, such jurisdiction, consistent (to the extent possible) with the purposes and intents of the parties expressed herein. 24. Certain Definitions. As used in this Agreement, the following terms have the corresponding meanings: (a) An "Affiliate" of a person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; (b) "Business" means the business of uplinking and distributing to MVPDs the signal of the television station broadcasting on the date hereof in Atlanta, Georgia under the call letters WTBS, and any successor over-the-air television station in Atlanta, Georgia that broadcasts substantially similar programming as WTBS following its conversion to a copyright-paid programming service (as such converted service may be renamed); provided that the Business shall refer to the business of uplinking and distributing only one such broadcast television station at any one time. Anything contained herein to the contrary notwithstanding, neither (i) the existence of an agreement between SpinCo or any unrelated third party and any intermediary (such as Satellite and/or Netlink USA) pursuant to which such intermediary arranges for the WTBS signal transmitted by SpinCo or such unrelated third party to be received by an "affiliate" of such intermediary as defined in Section 11(d) of this Agreement (or an analogous definition, if the intermediary is not Satellite), and any other person to whom such intermediary is authorized to arrange for the transmission of such signal, as contemplated by Section 11(d), nor (ii) any activities by any intermediary of the type contemplated by Section 11(g) hereof, shall in itself (A) cause such an intermediary to be construed as engaging in the "Business" as defined herein or (B) cause such an intermediary to be in violation of the restrictions of Section 4 pursuant to the last sentence of the first paragraph thereof; (c) "Current Market Price", as of any date, means the average of the daily closing prices for the shares of the Holdco Common Stock for the 20 trading day period ending on the full trading day immediately prior to the date in question, appropriately adjusted to take into account any stock dividends, splits, reverse splits, combinations and the like, the ex-dividend date or effective date for which occurs during (but after the first day of) such 20 trading day period. The closing price for each trading day shall be the last reported sale price on such day (or if no such reported sale takes place on such day, the average of the reported closing bid and asked prices) of the Holdco Common Stock (regular way) as shown on the Composite Tape of the New York Stock Exchange; (d) "FTC Agreement in Principle" means the Agreement in Principle with FTC Staff re: Consent Order dated July 16, 1996, entered into by the Federal Trade Commission, Holdco and TCI; (e) "FTC Consent Decree" means the Agreement Containing Consent Order (including the FTC Agreement in Principle, the "ACCO") dated as of August , 1996, with the Federal Trade Commission, together with the Order issued in connection with the ACCO; (f) "Governmental Entity" means a court, administrative agency or commission or other governmental authority or instrumentality; (g) "Holdco Common Stock" means the Common Stock, $.01 par value, of Holdco; (h) "Letter Ruling" means a letter ruling from the Internal Revenue Service (i) to the effect that, at the time thereof, the Spin-off shall constitute a tax free distribution under Section 355 of the Internal Revenue Code of 1986, as amended, and (ii) that is otherwise acceptable to Holdco and TCI; (i) "Liberty Subsidiaries" means TCI Turner Preferred, Inc., Liberty Broadcasting, Inc., United Cable Turner Investment, Inc. and Communication Capital Corp.; (j) "Managed Subsidiary" means, as to Holdco, an Affiliate of Holdco (i) in which Holdco has, directly or indirectly, a majority ownership interest and (ii) as to which Holdco has day-to-day management control, specifically including, without limitation, as of the date hereof, Time Warner Entertainment Company L.P. and Time Warner Entertainment Advance Newhouse Partnership; (k) "Material Adverse Effect" means, as to any person, a material adverse effect on the business, assets, financial condition or results of operations of such person and its consolidated subsidiaries, taken as a whole, or on the ability of such person to perform its obligations under any of the Relevant Agreements to which it is a party; (l) "MVPDs" means all cable, MMDS, LMDS, TVRO, DBS, video dial tone and/or other distributors of multichannel video programming by any means; (m) "Ordinary Course Guidelines" means the general guidelines with respect to the operation of the Business of SpinCo as set forth on Exhibit 3 hereto; (n) "Spin-off" means the distribution by TCI of 100% of the capital stock of SpinCo to holders of record of TCI's Tele-Communications, Inc. Series A Liberty Media Group Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock; (o) "Taxing Authority" shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. (p) "Tax" shall mean any Federal, state, local and foreign taxes and assessments, including all interest penalties and additions imposed with respect to such amounts; and (q) "WTBS Distributors" means those persons and entities with whom SpinCo has an affiliate agreement or other arrangement or agreement for the distribution of WTBS. 25. Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the States of Colorado, Delaware or New York, or in Delaware or Colorado state court (in addition to any other remedy to which they are entitled at law or in equity). In addition, each of the Parties hereto (a) hereby consents and submits itself to the non-exclusive personal jurisdiction of any Federal court located in the States of Colorado, Delaware and New York or any Delaware or Colorado state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. 26. No Unauthorized Transfer of Control. Nothing in this Agreement or the Distribution Contract shall, nor shall be construed to, constitute a transfer of control of the licenses held by SpinCo and its subsidiaries without prior approval by the Federal Communications Commission ("FCC") of the transfer of all such licenses issued by the FCC to SpinCo and its subsidiaries. SpinCo shall at all times retain full, exclusive and absolute control of the licensed facilities as well as ultimate responsibility for the operation of the FCC licensed facilities pursuant to all applicable rules and policies of the FCC and the Communications Act of 1934, as the foregoing may be superseded or amended. 27. Continuation as Passive Carrier. SpinCo is and will continue to be a passive carrier, and nothing in this Agreement or the Distribution Contract shall, nor shall be construed to, require SpinCo to operate with respect to carriage of the WTBS signal other than as a passive carrier pursuant to 17 U.S.C. ss. 111(a)(3) and as a satellite carrier pursuant to 17 U.S.C. ss. 119(a), prior to the Converted WTBS, as defined in Section 18 of the Distribution Contract. IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first written above. TW INC., By -------------------------- Name: Title: LIBERTY MEDIA CORPORATION, By -------------------------- Name: Title: SOUTHERN SATELLITE SYSTEMS, INC. By -------------------------- Name: Title: With respect to Section 11(d), Section 11(f) and Section 11(g) only: SATELLITE SERVICES, INC., By -------------------------- Name: Title: EX-10 9 EXHIBIT AD-1 TO THE SSSI AGREEMENT [CS&M Draft--8/8/96] EXHIBIT 1 TO THE SSSI AGREEMENT DISTRIBUTION CONTRACT This Distribution Contract (the "Agreement") is dated as of _________, 1996, and is entered into between TW Inc. (which will be renamed Time Warner Inc.), a Delaware corporation ("Holdco"), and Southern Satellite Systems, Inc. ("SpinCo"). For purposes of this Agreement, each of SpinCo, on the one hand, and Holdco, on the other hand, is a "Party", and SpinCo and Holdco are sometimes referred to collectively herein as "Parties". WHEREAS Holdco, Liberty Media Corporation, a Delaware corporation ("LMC"), and Satellite Services, Inc., a Delaware corporation ("Satellite") (with respect to certain sections thereof only), have entered into an SSSI Agreement dated as of _________, 1996 (the "SSSI Agreement"), which contemplates the execution of this Agreement; WHEREAS pursuant to the SSSI Agreement, Holdco acquired the right, upon the closing of the exercise of the option granted to Holdco therein, to cause the Effective Date to occur under this Agreement, whereupon the Parties will be bound to perform their respective obligations provided for herein; WHEREAS Tele-Communications, Inc., a Delaware corporation ("TCI"), is required pursuant to the FTC Consent Decree (including the FTC Agreement in Principle) to seek from the Internal Revenue Service the Letter Ruling (as defined in Section 18) with respect to the Spin-off (as defined in Section 18) of 100% of the shares of SpinCo; WHEREAS on the date hereof SpinCo is engaged primarily in the Business and is a wholly owned subsidiary of LMC; WHEREAS, in connection with the Spin-off, LMC shall contribute all the capital stock of TCI Turner Preferred, Inc., a Colorado corporation ("TCITP"), to SpinCo, so that, as of immediately prior to the effectiveness of the Spin-off, TCITP will be a wholly owned subsidiary of SpinCo; and WHEREAS in connection with this Agreement and the SSSI Agreement, SpinCo and any transferee of the Business in accordance with the terms of this Agreement has or will agree to the non-competition provisions of Section 4 hereof. NOW, THEREFORE, in consideration for good and valuable consideration, which is hereby acknowledged by each Party, it is agreed as follows: 1. Effective Date; Definitions. The Parties agree that this Agreement shall automatically become effective on the Closing Date (as defined in the SSSI Agreement) upon the closing of the exercise of the Contract Option under the SSSI Agreement in accordance with the provisions thereof (such date being the "Effective Date"). Capitalized terms used, but not defined, in any other Sections of this Agreement are defined in Section 18. 2. Contract Payments. (a) Aggregate Payments. Subject to paragraphs (b) and (c) below, Holdco shall make payments to SpinCo in an amount sufficient to ensure that on or after the Effective Date, the sum of (A) aggregate Net Cash Flow for the Business subsequent to the Effective Date and (B) all payments received by SpinCo from Holdco in respect of its obligations under this Agreement have a present value as of the Effective Date of $213,333,333. Unless agreed otherwise, all payments made under this Section 2 shall be made by wire transfer to an account designated in writing by SpinCo on or prior to the Effective Date and from time to time thereafter. The calculation of the present value of all amounts paid or payable under this Section 2 shall be determined in accordance with paragraph (d) below. The obligation of Holdco to make the payments provided for in this Section 2 shall not be subject to any right of setoff or counterclaim that Holdco may have or claim not arising under this Agreement. (b) Minimum Quarterly Payments. Subject to paragraph (c), until the aggregate amounts required pursuant to paragraph (a) above have been received by SpinCo, Holdco agrees to make minimum quarterly payments to SpinCo in an amount sufficient to ensure that, with respect to each of SpinCo's fiscal quarters ending after the Effective Date, the sum of (A) aggregate Net Cash Flow for the Business in respect of such fiscal quarter and (B) Holdco's payments hereunder in respect of such fiscal quarter equals $7,681,000. Notwithstanding the foregoing, (i) in respect of the first such fiscal quarter, Holdco shall be obligated to make only a pro rata minimum quarterly payment in respect thereof (determined based on the number of days occurring after the Effective Date in a quarter of 91 days); (ii) Holdco's obligation to make any such quarterly minimum payment in respect of each such fiscal quarter shall be reduced (but not below zero) if SpinCo shall have received (A) aggregate payments from Holdco under this Agreement and (B) aggregate Net Cash Flow for the Business in respect of all prior fiscal quarters ending after the Effective Date (other than the most recently completed fiscal quarter), which when added together (the sum of clauses A and B being the "Received Amount") have a present value as of the Effective Date greater than the aggregate present value as of the Effective Date of a series of quarterly payments of $7,681,000 (or, in respect of the initial partial fiscal quarter, the required portion thereof), for each fiscal quarter ending after the Effective Date (other than the most recently completed fiscal quarter) (such aggregate amount being the "Required Amount"); and (iii) Holdco shall in no event be obligated to make any payment pursuant to the foregoing quarterly minimum payment requirement that would result in the present value as of the Effective Date of the sum of (A) the aggregate payments received by SpinCo from Holdco under this Agreement (including any prepayments) and (B) the aggregate Net Cash Flow for the Business in respect of all prior fiscal years ending after the Effective Date, exceeding $213,333,333. The amount of the reduction provided for in clause (ii) of the preceding sentence shall equal the amount having a present value as of the Effective Date equal to the excess of the Required Amount over the Received Amount. The minimum payment contemplated by this paragraph (b) for any quarter shall be due and payable as follows: (X) For each of the first three quarters in each fiscal year (or, in respect of any partial fiscal year, each quarter of such partial fiscal year other than the last full or partial quarter thereof), such minimum quarterly payment shall be paid by Holdco to SpinCo promptly (but in no event later than 30 days) after SpinCo's delivery to Holdco of (A) the unaudited consolidated financial statements for such fiscal quarter (or partial fiscal quarter) (each of which shall include a consolidated income statement, balance sheet and statement of cash flows) for SpinCo and the Business and (b) an Officers' Certificate signed by the Chief Financial Officer and President of SpinCo certifying as to the accuracy of such financial statements (subject to normal, recurring year-end adjustments) and the preparation thereof in accordance with GAAP (except as permitted by Form 10-Q of the Securities and Exchange Commission) consistent with prior years and setting forth in reasonable detail the calculation of (1) the minimum amount payable in respect of the immediately ended prior fiscal quarter (or portion thereof) pursuant to this paragraph (b), (2) Holdco's remaining payment obligations under this Agreement after giving effect to such minimum quarterly payment, assuming, in each case, SpinCo's receipt of such minimum quarterly payment on the 30th day following the delivery to Holdco of the items required by this sentence and (3) SpinCo's and the Business' selling, general and administrative ("SG&A") expenses for the immediately preceding fiscal quarter (or partial fiscal quarter) as determined in accordance with Section 19. (Y) For the last quarter in each fiscal year (or partial fiscal year), such minimum quarterly payment shall be paid by Holdco to SpinCo promptly (but in no event later than 30 days) after SpinCo's delivery to Holdco of (A) for the fiscal year (or partial fiscal year) then ended, audited consolidated financial statements for each of SpinCo and the Business (each of which shall include a balance sheet as at the end of such fiscal year and a consolidated income statement and statement of cash flows for such period); (B) an Officers' Certificate signed by the Chief Financial Officer and President of SpinCo certifying as to the accuracy of such financial statements and the preparation thereof in accordance with GAAP consistent with prior years and setting forth in reasonable detail the calculation of (1) the minimum amount payable in respect of the immediately ended prior fiscal quarter (or partial fiscal quarter) and each fiscal quarter (or, if applicable, partial fiscal quarter) within the immediately preceding fiscal year and the aggregate minimum amount payable in respect of such fiscal year, (2) Holdco's remaining payment obligations (on a present value basis) under this Agreement after giving effect to such quarterly payments assuming, in each case, SpinCo's receipt of such quarterly minimum payment on the 30th day following the delivery to Holdco of the items required by this sentence and (3) SpinCo's and the Business' SG&A expenses for the immediately preceding fiscal quarter (or partial fiscal quarter), for each fiscal quarter (or, if applicable, partial fiscal quarter) within the immediately preceding fiscal year and for such fiscal year; and (C) a certificate of SpinCo's independent auditors as to the accuracy of the calculations set forth in the foregoing Officers' Certificate. It is understood that for purposes of satisfying the obligations in clauses (B)(1) and (3) above with respect to any quarter in any fiscal year (other than the last fiscal quarter), SpinCo may, in good faith, attach the Officers' Certificate, together with the related calculations of Net Cash Flow and SG&A expenses, previously delivered by SpinCo pursuant to subparagraph (X) above in satisfaction of its obligations with respect to any such prior fiscal quarter under this subparagraph (Y). Notwithstanding the foregoing, if, for any fiscal year (or partial fiscal year) ending after the Effective Date, Holdco disagrees with SpinCo's calculation of any minimum payments in respect of any quarter or the aggregate quarterly minimum payments in respect of such fiscal year (or partial fiscal year), then, within 30 days after the receipt of the documents provided for in clause (Y) of the immediately preceding paragraph, Holdco shall notify SpinCo of its disagreement and supply SpinCo its calculation in reasonable detail of the amount of any such quarterly minimum payment or such aggregate quarterly minimum payments. SpinCo and Holdco will in good faith endeavor to determine the proper amount of such payments during the five-day period following SpinCo's receipt of such notice. If SpinCo and Holdco are unable to resolve such dispute during such five-day period (i) Holdco shall promptly pay that portion of the aggregate minimum quarterly payments (to the extent not already paid) as to which there is no dispute and (ii) SpinCo and Holdco shall promptly (but in any event within five days after SpinCo's receipt of such notice) appoint an independent firm of nationally recognized public accountants to determine the proper amount of each quarterly minimum payment and the aggregate quarterly minimum payments in respect of the immediately ended prior fiscal year (or partial fiscal year) (it being understood that any such determination shall not require the audit of any interim period in respect of such immediately ended prior fiscal year (or partial fiscal year)). Such independent accounting firm shall be mutually agreeable to Holdco and SpinCo and shall not be auditors to either Holdco or SpinCo. If Holdco and SpinCo fail to agree on an accounting firm, such firm shall be selected by Holdco's and SpinCo's respective accounting firms. Following the determination by the independent accounting firm so selected of each quarterly minimum payment and the aggregate quarterly minimum payments for the immediately preceding fiscal year, Holdco shall within five days pay to SpinCo that portion, if any, of the aggregate quarterly minimum payments in respect of the immediately ended prior fiscal year (or partial fiscal year) required to be paid by Holdco. If the amount of such aggregate payments as determined by the independent accounting firm exceeds by 3% or more the aggregate payments as determined by Holdco, Holdco shall pay interest on the amount required to be paid by Holdco pursuant to the immediately preceding sentence at an annual rate equal to the discount rate provided in paragraph (d) below for the period from the date on which such payment was otherwise required to be paid pursuant to this Section 2(b) through the date of payment. The fees and expenses of any independent accounting firm engaged pursuant to this paragraph shall be borne equally by Holdco and SpinCo. Nothing in this paragraph (b) shall preclude Holdco from prepaying any amounts owed under this Section 2 (which prepayments Holdco may make in whole at one time or in part from time to time). (c) Effective Date Audit; Annual Audit. (i) SpinCo shall close its books and records relating to the Business as of the end of the Effective Date and LMC and SpinCo shall cause there to be conducted an audit in accordance with generally accepted auditing standards of the Business' consolidated financial statements (which shall include a consolidated income statement, balance sheet and statement of cash flows) for (A) the period commencing on, but not including, the Effective Date to the end of SpinCo's first fiscal year after the Effective Date and (B) each fiscal year thereafter. Such audit shall be conducted by a firm of nationally recognized public accountants selected by SpinCo and reasonably acceptable to Holdco. (ii) Without affecting the applicability of Section 3(e) and Section 8, if (A) SpinCo shall merge with another entity and it shall not be the surviving entity or (B) SpinCo shall sell or transfer the Business, the surviving entity or acquiror of the Business shall be required to maintain separate accounts and audits for the Business. In addition, on and after the effective date of any such merger or acquisition, in lieu of the SpinCo financial statements delivered pursuant to paragraph (b) above in connection with any minimum payment, (x) the surviving entity or acquiror of the Business shall deliver comparable audited financial statements for itself, together with the required financial statements for the Business, and (y) the accompanying Officers' Certificate shall be signed by the Chief Financial Officer and President of the surviving entity or the acquiror of the Business and shall make the required certification with respect to the financial statements of the surviving entity or the acquiror of the Business. (d) Present Value Calculation. To the extent not otherwise specified above, for purposes of calculating the present value of all amounts paid or payable by Holdco under this Agreement, the following shall apply: (i) Net Cash Flow for the Business in respect of any period (or portion thereof) shall be deemed to have been received at the middle of such period; (ii) payments by Holdco shall be credited on the date Holdco delivers such payment to SpinCo; and (iii) all actual payments by Holdco hereunder, and all calculations of Net Cash Flow used to determine the required amounts of such payments, will be discounted to the Effective Date at a discount rate equal to 10% per annum assuming quarterly interest periods. (e) Fiscal Year; GAAP. SpinCo shall not change its fiscal year or its accounting principles (unless required by GAAP) without the prior written consent of Holdco, which consent will not be unreasonably withheld or delayed. If Holdco shall agree to any such change in SpinCo's fiscal year or accounting principles, the Parties will enter into an appropriate amendment of this Agreement to appropriately reflect such change. 3. Agreements of SpinCo. (a) WTBS Distribution Related Covenants. (i) WTBS Distribution. SpinCo shall, to the extent requested by Holdco, uplink the Converted WTBS programming service (or, if requested by Holdco and to the extent allowable under the Communications Act of 1934 (the "Communications Act") and the Copyright Act of 1976 (the Copyright Act"), the WTBS programming service prior to Conversion) to (A) all cable, MMDS, LMDS, TVRO, DBS, video dial tone and/or other distributors of multichannel video programming by any means (collectively, "MVPDs") with which it has service agreements or arrangements and (B) any MVPDs that enter into programming agreements or arrangements directly with Holdco or a Managed Subsidiary. In addition, Holdco and SpinCo shall mutually cooperate and each shall use its commercially reasonable best efforts to ensure the uninterrupted delivery of, and quality of, the Converted WTBS signal (or, if applicable, the non-Converted WTBS signal) to be delivered to such MVPDs. In connection with SpinCo's obligations under clause (B) above, if the Spin-off occurs on or before the later of the Effective Date and the one-year anniversary of the Execution Date (as defined in the SSSI Agreement), Holdco agrees to use SpinCo as its principal means of uplinking the Converted WTBS service through the fifth anniversary of the Spin-off. (ii) Holdco Negotiation of MVPD Agreements; Modification of SpinCo MVPD Agreements. SpinCo understands and acknowledges that Holdco intends to, and shall be permitted to, negotiate with MVPDs in order to conclude programming agreements or arrangements directly between Holdco and the MVPD covering the Converted WTBS service; SpinCo will participate in any such negotiations if, as and when reasonably requested by Holdco (and not otherwise); and SpinCo will consent to the termination or modification of any existing service agreement or arrangement between SpinCo and any MVPD upon the joint request of Holdco and the MVPD (including any such modification to add Holdco as a party to any such MVPD agreement or arrangement) and it will waive (to the extent it may lawfully do so) performance by an MVPD of any provision of a service agreement upon the reasonable request of Holdco. In no event will SpinCo solicit any MVPD (i) to replace the Converted WTBS program service (or, if the non-Converted WTBS signal may be distributed by SpinCo under the Communications Act and Copyright Act, non-Converted WTBS) with another program service or (ii) except as provided in this subparagraph (a)(ii), terminate its carriage of Converted WTBS (or, if applicable, non-Converted WTBS). (iii) SpinCo Enforcement of MVPD Agreements. SpinCo shall advise Holdco of all matters pertaining to the compliance with its WTBS service agreements or arrangements by the MVPDs with which it has WTBS service agreements or arrangements, consistent with any confidentiality agreement binding on SpinCo. If restricted by any such confidentiality agreement, SpinCo shall seek a waiver or consent as to such matters as contemplated by (d) below. Subject to clause (ii) of this Section 3(a), SpinCo shall enforce all of its rights under its service agreements with MVPDs, including any provisions requiring the MVPD to take the WTBS service exclusively from SpinCo and distribute it to specified tiers of service; provided that SpinCo will provide Holdco written notice of any material alleged breach by an MVPD of a service agreement known to it and reasonable advance written notice of any proposed action by SpinCo to enforce any such service agreement, and will delay any such enforcement action for such period as may be reasonably requested by Holdco. (iv) Renewal. If requested by Holdco, SpinCo shall actively seek to renew all MVPD service agreements on terms approved by Holdco. (v) Limitation on Certain Activities. Unless otherwise requested by Holdco, SpinCo shall not (A) seek to enter into new service agreements for the WTBS service or (B) except as provided in (iv) above, seek to renew, amend or extend any existing service agreement covering the WTBS service except at the request of Holdco; provided that SpinCo may require that any agreement so renewed be terminable by SpinCo following the termination of this Agreement. (vi) Conduct of Business. Subject to the provisions of subparagraphs (i) through (v) above in each of the following instances, SpinCo shall conduct the Business in the ordinary course with a view to maximizing its cash flow from operations and, in that connection, (A) SpinCo shall use its commercially reasonable efforts to maintain its relationships with customers, suppliers and others with whom it deals in connection with the Business and (B) SpinCo shall not take any action that could reasonably be expected to materially impair the Business or SpinCo's business, assets and financial condition on a consolidated basis taken as a whole. In connection with its obligation to maximize the cash flow of the Business, without Holdco's prior consent, SpinCo shall not change the conduct of its operations relating to the Business in a manner that is inconsistent with the manner in which the Business was conducted on the Effective Date. (b) Assignment of Transponder Lease. SpinCo hereby assigns to Holdco its existing transponder sublease on the Galaxy V Satellite and any replacement transponder lease or sublease relating to WTBS, such assignment to become effective upon the termination of this Agreement, subject to (i) Holdco having satisfied and discharged in full its obligations under Section 2(a), (ii) the receipt of any required third party and/or governmental consents to such assignment, (iii) the occurrence of the Termination Date, (iv) the making of all governmental filings and the expiration of any governmental waiting periods in connection with such assignment and (v) Holdco assuming all obligations under such lease from and after the effective date of such assignment. SpinCo in good faith shall use commercially reasonable efforts to obtain any such required consents and shall make all filings and execute such other documents as may be reasonably necessary to effect the foregoing assignment. In addition, if, at the time that such assignment becomes effective, SpinCo is using the vertical blanking interval and/or side band of the satellite feed on such transponder in connection with SpinCo's uplinking business not relating to the Business, Holdco will negotiate with SpinCo in good faith to agree on the terms on which SpinCo could continue to use such portions of the transponder frequency on a transitional basis following the effectiveness of such assignment so long as any such agreement will not have a material adverse effect on the Business' assets, financial condition or results of operation. (c) Access. SpinCo shall give Holdco and its representatives, employees, counsel and accountants reasonable access, during normal business hours and upon reasonable notice, and subject to the obligations of SpinCo under any then existing confidentiality or nondisclosure agreements, to the personnel, properties, books and records of SpinCo, so that Holdco may confirm the matters contemplated by Section 2 hereof, the satisfaction of SpinCo's obligations to be performed hereunder and the satisfaction by any MVPD of its obligations under any WTBS agreement or arrangement with SpinCo; provided, however, that such access does not unreasonably disrupt the normal operations of SpinCo. SpinCo agrees to use commercially reasonable efforts in good faith to obtain all waivers and consents necessary under any existing confidentiality or nondisclosure agreement to afford full access to Holdco; provided, however, that nothing in this Agreement shall require SpinCo (or any of its Affiliates) to make any payment of money or deliver any other consideration to any third party, as a condition to the receipt of any waiver. As against Holdco, its Affiliates and its representatives, employees, counsel and accountants, SpinCo hereby waives any confidentiality or nondisclosure covenants contained for its benefit in any agreement concerning the Business (including its WTBS service agreements or arrangements with MVPDs) and SpinCo agrees to execute any acknowledgements with respect to such waiver as Holdco may reasonably request. Except as permitted under Section 3(a), SpinCo shall not enter into any agreement with respect to the Business (including any agreement with an MVPD) which contains a confidentiality or non-disclosure covenant relating to the existence, terms and/or conditions of any material agreement to which it is or will be a party, or any other material matter, unless such agreement or covenant permits it to disclose the matters subject to such confidentiality or non-disclosure agreement to Holdco and its representatives, employees, counsel and accountants. Except to the extent that such books and records reasonably relate to the Business or are reasonably required to determine any amounts paid or payable under this Agreement, Holdco shall not have access to the books and records of SpinCo relating to any business other than the Business acquired or entered into after the date of the Spin-off. (d) Insurance. At all times during the period from the Effective Date through the Termination Date, SpinCo shall maintain in full force and effect with respect to the Business, through one or more Affiliates or otherwise, the benefit of policies of fire and casualty, liability and other forms of insurance (including self-insurance) in such amounts, with such deductibles and against such risks and losses as in effect prior to the Effective Date, or as Holdco shall otherwise reasonably request in writing. (e) Mergers; Business Transfer; Security Arrangements. (i) SpinCo shall not merge with another corporation or other entity unless it is the surviving entity in such merger or the surviving entity delivers to Holdco prior to such merger an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement (including the provisions of Section 4). (ii) SpinCo shall not sell, transfer or otherwise dispose of the Business (other than any security interest granted in connection with a SpinCo financing covered by paragraph (iii) below) unless (i) SpinCo sells, transfers or otherwise disposes of the Business in its entirety and (ii) the entity or person so acquiring the Business prior to such acquisition delivers to Holdco an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement (including the provisions of Section 4). (iii) SpinCo shall not grant or permit to exist any lien or other security interest on the assets of the Business (including the Distribution Contract and the MVPD agreements) in connection with any SpinCo financing unless the secured party or parties prior to any such grant agree in writing, for the benefit of Holdco, that (A) any foreclosure or sale of the Business shall involve the foreclosure or sale of the Business in its entirety and (B) as a condition to such foreclosure or sale, the entity or person so acquiring the Business shall be required to deliver to Holdco, prior to such acquisition, an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement (including the provisions of Section 4). (iv) In the event that SpinCo receives any proposal with respect to, or determines to enter into any transaction involving, any of the events described in this paragraph (e), SpinCo shall promptly notify Holdco thereof. (f) No Unauthorized Transfer of Control. Nothing in this Agreement or in the SSSI Agreement shall, nor shall be construed to, constitute a transfer of control of the licenses held by SpinCo and its subsidiaries without prior approval by the Federal Communications Commission ("FCC") of the transfer of all such licenses issued by the FCC to SpinCo and its subsidiaries. SpinCo shall at all times, notwithstanding any other provisions of this Agreement, retain full, exclusive and absolute control of the licensed facilities as well as ultimate responsibility for the operation of the FCC licensed facilities as required by all applicable rules and policies of the FCC and the Communications Act of 1934, as the foregoing may be superseded or amended. (g) Continuation as Passive Carrier. SpinCo is and will continue to be a passive carrier, and nothing in this Agreement or the SSSI Agreement shall be construed to, require SpinCo to operate with respect to carriage of the WTBS signal other than as a passive carrier pursuant to 17 U.S.C. Section 111(a)(3) and as a satellite carrier pursuant to 17 U.S.C. Section 119(a), prior to the Conversion of WTBS. 4. Restricted Activities. SpinCo hereby covenants and agrees that during the period from the Effective Date through the fifth anniversary of the termination of the last service agreement between SpinCo and any MVPD with respect to the carriage of WTBS, it shall not (and shall cause its Affiliates not to) (a) engage in the Business, other than as expressly contemplated by this Agreement, or (b) solicit any MVPD to terminate carriage of the WTBS programming service (including the programming of the broadcast television SuperStation known on the Effective Date as WTBS and any cable programming network established as the successor thereto) or, except as permitted by this Agreement, to terminate any service agreement with SpinCo with respect to such programming service. In addition, for purposes of the foregoing and without limiting the generality thereof, it is understood that the offering of WTBS as a distant broadcast signal (other than through SpinCo) violates the restrictions of this Section 4. Anything contained herein to the contrary notwithstanding, Holdco acknowledges (I) that on the Execution Date (as defined in the SSSI Agreement) LMC and its Affiliates represent numerous programming services that are marketed, distributed and sold to MVPDs on a continuous basis, in competition with WTBS and other programming services, (II) that due to limited channel capacity, an MVPD may terminate an existing programming service carried by such MVPD in order to carry a new programming service, and (III) that activities conducted by LMC and its Affiliates in connection with the marketing of programming services that compete with WTBS shall not be construed to violate SpinCo's covenant in this Section as it relates to the conduct of SpinCo's Affiliates, even if an MVPD terminates carriage of WTBS to carry a programming service marketed by LMC or any of its Affiliates, unless LMC or any Affiliate shall have urged or induced such MVPD to drop WTBS. 5. SpinCo Payment of Net Cash Flow; Holdco Payment of Negative Net Cash Flow. (a) If Holdco shall have satisfied and discharged in full its obligations under Section 2(a), then, with respect to each fiscal quarter thereafter occurring during the term of this Agreement, (i) SpinCo shall pay to Holdco, on the date on which it delivers the financial statements referred to in paragraph (b) below to Holdco, the Business' Net Cash Flow, if positive, for such fiscal quarter and (ii) Holdco shall pay to SpinCo, within five business days after the delivery of such financials, the amount, if any, by which the Business' Net Cash Flow for such fiscal quarter is negative. Unless agreed otherwise, all payments made under this Section 5 shall be made by wire transfer to an account designated in writing by Holdco or SpinCo, as applicable, on or prior to the Effective Date and from time to time thereafter. For purposes of calculating Net Cash Flow under this Section 5 for any fiscal quarter, any amounts credited to SpinCo under Section 2(a) shall be excluded from such calculation. In addition, if Holdco or SpinCo shall fail to pay any amounts due hereunder on the date required for payment, interest shall be due on such amounts from the required date of payment to the actual date of payment at a per annum interest rate of 10%. (b) (i) For each fiscal quarter (other than the last fiscal quarter of any fiscal year) after Holdco shall have satisfied and discharged in full its obligations under Section 2(a), SpinCo shall deliver promptly (but in no event later than 45 days after the end of such fiscal quarter) (A) the unaudited consolidated financial statements for each of SpinCo and the Business for such fiscal quarter (each of which shall include a consolidated income statement, balance sheet and statement of cash flows) and (B) an Officers' Certificate signed by the Chief Financial Officer and President of SpinCo certifying as to the accuracy of such financial statements (subject to normal, recurring year-end adjustments) and the preparation thereof in accordance with GAAP (except as permitted by Form 10-Q of the Securities and Exchange Commission) consistent with prior years and setting forth in reasonable detail the calculation of (1) the Business' Net Cash Flow (positive or negative) for the prior fiscal quarter and (2) SpinCo's and the Business' SG&A expenses for the immediately preceding fiscal quarter as determined in accordance with Section 19. (ii) For the last quarter in each fiscal year after Holdco shall have satisfied and discharged in full its obligations under Section 2(a), SpinCo shall deliver promptly (but in no event later than 90 days after the end of such fiscal year) (A) for the fiscal year then ended, audited consolidated financial statements for each of SpinCo and the Business (each of which shall include a balance sheet as at the end of such fiscal year and a consolidated income statement and statement of cash flows for such period); (B) an Officers' Certificate signed by the Chief Financial Officer and President of SpinCo certifying as to the accuracy of such financial statements and the preparation thereof in accordance with GAAP consistent with prior years and setting forth in reasonable detail the calculation of the Business' Net Cash Flow (positive or negative) in respect of (1) the immediately ended prior fiscal quarter and each fiscal quarter within the immediately preceding fiscal year and the aggregate Net Cash Flow in respect of such fiscal year and (2) SpinCo's and the Business' SG&A expenses for the immediately preceding fiscal quarter, for each fiscal quarter within the immediately preceding fiscal year and for such fiscal year; and (C) a certificate of SpinCo's independent auditors as to the accuracy of the calculations set forth in the foregoing Officers' Certificate. It is understood that for purposes of satisfying the obligations in clauses (B)(1) and (2) above with respect to any quarter in any fiscal year (other than the last fiscal quarter), SpinCo may, in good faith, attach the Officers' Certificate, together with the related calculations of Net Cash Flow and SG&A expenses, previously delivered by SpinCo pursuant to subparagraph (b)(i) above in satisfaction of its obligations with respect to any such prior fiscal quarter. The amount of any payment required to be made by SpinCo or Holdco in respect of such fiscal quarter shall be adjusted to appropriately reflect the cumulative Net Cash Flow (positive or negative) for the immediately preceding fiscal year. (c) Notwithstanding the foregoing, if, for any fiscal year after Holdco shall have satisfied and discharged in full its obligations under Section 2(a), Holdco disagrees with SpinCo's calculation of the Net Cash Flow in respect of such fiscal year or any fiscal quarter within such fiscal year, then, within 30 days after the receipt of the documents provided for in paragraph (b)(ii), Holdco shall notify SpinCo of its disagreement and supply SpinCo its calculation in reasonable detail of the amount of any such disputed Net Cash Flow. SpinCo and Holdco will in good faith endeavor to determine the proper amount of any such disputed Net Cash Flow during the five-day period following SpinCo's receipt of such notice. If SpinCo and Holdco are unable to resolve such dispute during such five-day period they agree that (i) Holdco or SpinCo, as applicable, shall promptly pay to the other that portion of the Net Cash Flow required to be paid by them (to the extent not already paid) as to which there is no dispute and (ii) SpinCo and Holdco shall promptly (but in any event within five days after SpinCo's receipt of such notice) appoint an independent firm of nationally recognized public accountants to determine the proper amount of the Net Cash Flow in respect of the immediately ended prior fiscal year and for each quarter within such fiscal year (it being understood that any such determination shall not require the audit of any interim period in respect of such immediately ended prior fiscal year (or partial fiscal year)). Such independent accounting firm shall be mutually agreeable to Holdco and SpinCo and shall not be auditors to either Holdco or SpinCo. If Holdco and SpinCo fail to agree on an accounting firm, such firm shall be selected by Holdco's and SpinCo's respective accounting firms. Following the determination by the independent accounting firm so selected of the Net Cash Flow in respect of the immediately preceding fiscal year and for each quarter within such fiscal year, SpinCo or Holdco, as applicable, shall within five days pay to the other that portion, if any, of the aggregate Net Cash Flow, in respect of the immediately ended prior fiscal year required to be paid by it to the other Party. If the amount of such aggregate Net Cash Flow as determined by the independent accounting firm exceeds by 3% or more of the aggregate Net Cash Flow as determined by Holdco, Holdco shall pay interest on the amount, if any, required to be paid by it pursuant to the immediately preceding sentence at an annual rate equal to the rate set forth in Section 2(d)(iii). The fees and expenses of any independent accounting firm engaged pursuant to this paragraph shall be borne equally by Holdco and SpinCo. (d) Other than in accordance with Section 2(e), SpinCo shall not change its fiscal year or accounting principles. 6. Holdco's Right to Assign to Managed Subsidiaries. SpinCo hereby acknowledges and agrees that the rights of Holdco under this Agreement may be assigned to any Holdco Managed Subsidiary, provided that any such assignment shall terminate if the assignee ceases to be a Managed Subsidiary and provided further that no such assignment shall relieve Holdco of its obligations hereunder. 7. Termination. (a) Subject to the last sentence of Section 8 as to the survival of certain provisions, the rights and obligations of Holdco and SpinCo under this Agreement will terminate upon not less than 30 days' prior written notice by Holdco to SpinCo, provided that at such time (i) Holdco shall have satisfied and discharged in full its obligations under Section 2(a) hereof and (ii) Holdco shall not have any continuing obligations under Section 3(a)(i) (the date of such termination, or any termination pursuant to paragraphs (b) or (c) below, being the "Termination Date"). (b) Subject to the last sentence of Section 8 as to the survival of certain provisions, the rights and obligations of Holdco and SpinCo under this Agreement will terminate upon not less than 30 days' prior written notice by SpinCo to Holdco, provided that at such time SpinCo shall have satisfied and discharged its obligations under this Agreement and the last WTBS programming agreement between SpinCo and any MVPD shall have expired or terminated without any breach by SpinCo of its obligations hereunder, including Sections 3 and 4. (c) Subject to the last sentence of Section 8 as to the survival of certain provisions, the Distribution Contract will terminate on the later of (i) the 12th anniversary of the Effective Date and (ii) the expiration date of SpinCo's longest WTBS distribution agreement in effect on the Effective Date (excluding any distribution agreement with Holdco or its Affiliates or Satellite or with any MVPD with fewer than 20,000 subscribers; and without giving effect to any renewals or extensions to the duration of any such distribution agreements that are exercisable solely at the option of the relevant MVPD). (d) The termination of this Agreement will in no way limit any obligation or liability of any Party based on or arising from a breach or default by such Party prior to such termination with respect to any of its agreements contained in this Agreement. 8. Survival. The representations, warranties and agreements of the Parties in this Agreement and in the other documents and instruments to be delivered by any party pursuant to this Agreement will continue in full force and effect from the time made or deemed to have been made until the Termination Date, whereupon such representations, warranties and agreements shall terminate. Notwithstanding any other provision of this Agreement, the obligations of SpinCo and its Affiliates under Section 4 shall survive through the fifth anniversary of the termination of the last service agreement between SpinCo and any MVPD. 9. Parties Obligated and Benefited. Subject to the limitations set forth below, this Agreement will be binding upon the Parties and their respective assigns and successors in interest and will inure solely to the benefit of the Parties and their respective assigns and successors in interest, and no other person will be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party will assign any of its rights or delegate any of its duties under this Agreement, except by operation of law and except with respect to any merger of SpinCo or sale or disposition of the Business, in each case, permitted under Section 4. 10. Notices. Any notice, request, demand, waiver or other communication required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given only if delivered in person or by first-class, postage prepaid, registered or certified mail, or sent by courier or, if receipt is confirmed, by telecopier: If to Holdco: Time Warner Inc. 75 Rockefeller Plaza New York, New York 10019 Attention: President with a copy similarly addressed to the attention of General Counsel with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: William P. Rogers, Jr., Esq. If to SpinCo: Southern Satellite Systems, Inc. 8101 East Prentice Avenue Suite 500 Englewood, Colorado 80111 Attention: President with copies (which shall not constitute notice) to: Stephen M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Towers II 5619 DTC Parkway Englewood, Colorado 80111-3000 (but only prior to the Spin-off) and Baker & Botts, L.L.P. 599 Lexington Avenue Suite 2800 New York, New York 10022 Attention: Elizabeth Markowski, Esq. Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section 10. All notices will be deemed to have been received on the date of delivery or on the fifth business day after mailing in accordance with this Section, except that any notice of a change of address will be effective only upon actual receipt. 11. Waiver. This Agreement or any of its provisions may not be waived except in writing. The failure of any Party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion. 12. Interpretation. The section captions of this Agreement are for convenience only and do not constitute a part of this Agreement. When a reference is made in this Agreement to a Section or Exhibit such reference shall be to a Section of, or an Exhibit to, this Agreement, unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". 13. Choice of Law. This Agreement and the rights of the Parties under it will be governed by and construed in all respects in accordance with the laws of the State of New York applicable to contracts made and performed wholly therein. 14. Time. If the last day permitted for the timing of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a business day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding business day. 15. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute a single instrument. 16. Entire Agreement. This Agreement (including all Exhibits and Schedules attached to this Agreement, the Distribution Contract and the agreements referenced herein and therein, each of which shall be deemed to constitute a part of this Agreement) contains the entire agreement of the Parties, and supersedes all prior oral or written agreements and understandings with respect to the subject matter hereof. This Agreement may not be amended or modified except by a writing signed by the Parties. 17. Severability. Any term or provision of this Agreement which is held to be invalid or unenforceable in any jurisdiction, as to such jurisdiction, will be ineffective only to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of the Agreement in any other jurisdiction, and in the event any provision of this Agreement is held to be invalid or unenforceable in any jurisdiction, such provision will be reformed with respect to, and enforced as fully as possible in, such jurisdiction, consistent (to the extent possible) with the purposes and intents of the parties expressed herein. 18. Certain Definitions. As used in this Agreement, the following terms have the corresponding meanings: (a) An "Affiliate" of a person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; (b) "Business" means the business of uplinking and distributing to MVPDs the signal of the television station broadcasting on the date hereof in Atlanta, Georgia under the call letters WTBS, and any successor over-the-air television station in Atlanta, Georgia that broadcasts substantially similar programming as WTBS following its conversion to a copyright-paid programming service (as such converted service may be renamed); provided that the Business shall refer to the business of uplinking and distributing only one such broadcast television station at any one time. Anything contained herein to the contrary notwithstanding, neither (i) the existence of an agreement between SpinCo or any unrelated third party and any intermediary (such as Satellite) pursuant to which such intermediary arranges for the WTBS signal transmitted by SpinCo or such unrelated third party to be received by an "affiliate" of such intermediary as defined in Section 11(d) of the SSSI Agreement (or an analogous definition, if the intermediary is not Satellite), and any other person to whom such intermediary is authorized to arrange for the transmission of such signal, as contemplated by Section 11(d) of the SSSI Agreement, nor (ii) any digitization activities by any intermediary of the type contemplated by the "HITS" provisions of the Program and Digitization Agreement (as defined in the LMC Agreement), shall in itself (A) cause such an intermediary to be construed as engaging in the "Business" as defined herein or (B) cause such an intermediary to be in violation of the restrictions of Section 4 pursuant to the last sentence of the first paragraph thereof; (c) "FTC Agreement in Principle" means the Agreement in Principle with FTC Staff re: Consent Order dated July 16, 1996, entered into by the Federal Trade Commission, Holdco and TCI; (d) "FTC Consent Decree" means the Agreement Containing Consent Order (including the related FTC Agreement in Principle, the "ACCO") dated as of August , 1996, with the Federal Trade Commission, together with the Order issued in connection with the ACCO; (e) "GAAP" means generally accepted accounting principles in the United States as in effect from time to time; (f) "Letter Ruling" means a private letter ruling from the Internal Revenue Service (a) to the effect that, at the time thereof, the Spin-off shall constitute a tax-free distribution under Section 355 of the Internal Revenue Code of 1986, as amended, and (b) that is otherwise acceptable to Holdco and TCI; (g) "Managed Subsidiary" means, as to Holdco, an Affiliate of Holdco (i) in which Holdco has, directly or indirectly, a majority ownership interest and (ii) as to which Holdco has day-to-day management control, specifically including, without limitation, as of the date hereof, Time Warner Entertainment Company L.P. and Time Warner Entertainment/Advance Newhouse Partnership; (h) "Net Cash Flow" means, for any period, (i) net earnings, (ii) plus depreciation and amortization, (iii) plus non-cash charges reflecting increases in long- term liabilities and decreases (or write downs) in long-term assets, (iv) minus non-cash items of income reflecting decreases in long-term liabilities and increases (or write ups) in long-term assets, (v) plus interest expense, (vi) minus interest income, (vii) plus income tax expense, (viii) minus income tax benefits, (ix) minus capital expended for property and equipment (consistent with past practices and in accordance with the provisions of this Agreement), (x) plus proceeds from the sale of capital assets, (xi) minus cash payments under capitalized leases (consistent with past practices and entered into in accordance with the provisions of this Agreement), (xii) minus cash payments not reflected in net income for which a reserve has been established (exclusive of reserves for working capital items), determined in each case for the Business and for the applicable period, without duplication, in accordance with GAAP, consistently applied. For the avoidance of doubt, it is understood that the net earnings of the Business as used in the calculation of "Net Cash Flow", will reflect, without duplication, direct selling, general and administrative ("SG&A") expenses of the Business (however provided) and the portion of SpinCo's aggregate SG&A expenses allocated to the Business, in each case, in accordance with the provisions of Section 19; (i) "Spin-off" means the distribution by TCI of 100% of the capital stock of SpinCo to holders of record of TCI's Tele-Communications, Inc. Series A Liberty Media Group Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock; (j) "Services Agreement" means, collectively all service agreements entered into between SpinCo and TCI and/or LMC and/or one or more affiliates of either in connection with the Spin-off or this Agreement that provide for administrative and/or other services to be provided to SpinCo by TCI and/or LMC and/or one or more of their respective affiliates; and (k) "WTBS" means the television station popularly known as TBS SuperStation and includes any cable programming service which may be a successor to WTBS. "Converted WTBS" means WTBS once converted to a copyright-paid cable programming service. For purposes of this Agreement, the terms "Conversion" and "Convert" shall have the correlative meanings thereto. 19. Allocation of SG&A Expenses of SpinCo. (a) SG&A expenses incurred by SpinCo for any period, including without limitation under the Services Agreement, shall be allocated, in good faith, to the Business for purposes of determining the Net Cash Flow of the Business for such period as follows: (i) SG&A expenses incurred by SpinCo for services performed by any person (including, without limitation, employees of SpinCo) that were performed in whole or in part for the benefit of the Business shall be allocated to the Business based on the actual benefit to the Business relative to the aggregate benefit to SpinCo, at the actual cost of such services to SpinCo. (ii) SG&A expenses incurred by SpinCo for services performed by any person (including, without limitation, employees of SpinCo) that were performed solely for the benefit of any business other than the Business (including without limitation the business of holding, acquiring and/or selling Holdco stock or other investment securities, evaluating or pursuing other business opportunities or any other activity intended to produce revenue, income or gain) shall not be allocated to the Business. (iii) SG&A expenses (including amounts under any Services Agreement) in any period that cannot be attributed directly to any specific services shall be allocated to the Business in the same proportion that the revenues of the Business bear to the aggregate revenues of SpinCo and its consolidated subsidiaries, determined in accordance with GAAP, for the relevant period; provided, however, that (i) no portion of the expense of managing SpinCo's investment in Holdco, or of evaluating, negotiating, acquiring or disposing of any business or assets (other than the Business and its assets) or of entering into new businesses shall be allocated to the Business and (ii) the amount of SG&A expenses allocated on the basis of SpinCo's revenues in any fiscal year shall not exceed $800,000. (b) For purposes of determining the Net Cash Flow of the Business, the aggregate amount payable by SpinCo under any Services Agreement for services rendered to SpinCo thereunder shall not exceed the amount that SpinCo reasonably would pay for comparable services under an arrangement entered into on an arms'-length basis with an unrelated third party. 20. Capital Expenditures. (a) In connection with the Business, SpinCo shall not, without the prior written consent of Holdco, which consent will not unreasonably be withheld or delayed, (i) incur any capital expenditures except in the ordinary course of business, consistent with past practice or (ii) incur capital expenditures (excluding capital expenditures funded with insurance proceeds) in excess of $150,000 during any fiscal year. Attached hereto as Exhibit 1 is a schedule of the amount and nature of historical capital expenditures related to the Business for fiscal years 1994 and 1995. At the Effective Date, SpinCo will update Exhibit 1 to include the amount and nature of capital expenditures related to the Business for each full fiscal year after fiscal year 1995 ended prior to the Effective Date. (b) In connection with the Business, SpinCo shall not without the prior written consent of Holdco, which will not unreasonably be withheld or delayed, enter into any capitalized lease, except in connection with the acquisition of capital property or equipment that could be purchased by the Business pursuant to paragraph (a) above. 21. Enforcement. (a) The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the States of Colorado, Delaware or New York or in Delaware or Colorado state court (in addition to any other remedy to which they are entitled at law or in equity). In addition, each of the Parties hereto (a) hereby consents and submits itself to the non-exclusive personal jurisdiction of any Federal court located in the States of Colorado, Delaware and New York or any Delaware or Colorado state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. (b) Nothing in this Agreement shall be construed to require either party to violate any law or regulation or to breach any contractual obligation. SpinCo agrees that it will not enter into any contract, the purpose or effect of which is to circumvent the obligations of SpinCo contained in this Agreement (including, without limitation, Section 3 hereof). 22. Copyright License; Indemnification. (a) To the extent required by SpinCo to perform its obligations under this Agreement, Holdco hereby grants to SpinCo a non-exclusive, non-transferable, royalty-free license (or sublicense, as applicable), for the term of this Agreement, to distribute the signal of WTBS and Converted WTBS pursuant to and in accordance with the provisions of this Agreement (including Section 3), in the United States (including the 50 states, District of Columbia, and all territories and possessions thereof), to the full extent that Holdco (or any Managed Subsidiary of Holdco) holds the copyrights in the programming transmitted by such signal, or has the right to grant to SpinCo such a license or sublicense pursuant to any licenses or other agreements with the holders of any such copyrights. (b) Holdco hereby agrees to indemnify SpinCo and hold SpinCo harmless from and against any and all losses, costs, damages and expenses (including without limitation attorneys' fees and settlement costs) relating to or resulting from any claim that the distribution by SpinCo of the signal of WTBS and Converted WTBS as contemplated hereby infringes the copyright of any person, if such claim of copyright infringement is based in whole or in part on the claim that this Agreement, or the actions of Holdco hereunder, cause SpinCo to be ineligible for any passive carrier exemption under United States copyright law. IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered on the date first written above. TW INC. By: Name: Title: SOUTHERN SATELLITE SYSTEMS, INC. By: Name: Title: EX-10 10 EXHIBIT 10 AE TO SECOND AMENDED AND RESTATED AGMT EXHIBIT E TO SECOND AMENDED AND RESTATED LMC AGREEMENT LMC REGISTRATION RIGHTS AGREEMENT, dated as of [ ], among TW INC., a Delaware corporation, which will be renamed "Time Warner Inc." ("Holdco"), and the Holders (as defined below). WHEREAS, in connection with the Amended and Restated Agreement and Plan of Merger, dated as of September 22, 1995, as amended by Amendment No. 1 thereto dated as of August ___, 1996 (the "Merger Agreement"), among Holdco, Time Warner Inc., Time Warner Acquisition Corp., TW Acquisition Corp., and Turner Broadcasting System, Inc., a Georgia corporation, each initial Holder will receive shares of Common Stock (as defined below); and WHEREAS, in connection with the Merger Agreement, Holdco, Liberty Media Corporation and certain of the other initial Holders have entered into the LMC Agreement (as hereinafter defined); and WHEREAS this is the Registration Rights Agreement provided for by the LMC Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Advice" shall have the meaning set forth in Section 5 hereof. "Affiliate" means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Affiliated Holder" means any Holder that is an affiliate of Holdco within the meaning of Rule 144 under the Securities Act. For the purposes of this definition, in determining whether or not any Holder is an affiliate of Holdco within the meaning of such Rule 144, any limitation on the voting or other rights of such Holder with respect to Registrable Shares owned by such Holder arising under the FTC Consent Decree shall not be considered and Registrable Shares issuable upon conversion of Holdco LMC Common Stock owned by such Holder shall be deemed to have been issued. "Business Day" means any day that is not a Saturday, a Sunday or a legal holiday on which banking institutions in the State of New York are not required to be open. "Capital Stock" means, with respect to any person, any and all shares, interests, participations or other equivalents (however designated) of corporate stock issued by such person, including each class of common stock and preferred stock of such person. "Common Stock" means the Common Stock, par value $.01 per share, of Holdco (i) issued to any of the initial Holders pursuant to the Merger Agreement, (ii) issued to any of the initial Holders pursuant to the Contribution and Exchange Agreement, (iii) issuable upon conversion of any Holdco LMC Common Stock for which the shares of Common Stock referred to in clause (i) and clause (ii) above may be exchanged pursuant to the LMC Agreement, (iv) issuable upon conversion of any Holdco LMC Common Stock issued pursuant to the SSSI Agreement, (v) issued to any Turner Stockholder (as such term is defined in the First Refusal Agreement) and acquired by any Holder pursuant to the First Refusal Agreement, or (vi) issuable upon conversion of any Holdco LMC Common Stock for which any Common Stock, Voting Holdco LMC Common Stock or LMCN-V Common Stock referred in clauses (i) through (v) above may be exchanged from time to time, and any other shares of capital stock or other securities of Holdco into which such shares of Common Stock shall be reclassified or changed, including by reason of a merger, consolidation, reorganization or recapitalization; provided, however, that in the case of any Demand Registration pursuant to Section 2(a)(ii) hereof, "Common Stock" shall include all Common Stock, and any other shares of capital stock or other securities of Holdco into which such shares of Common Stock shall be reclassified or changed, including by reason of a merger, consolidation, reorganization or recapitalization, held at the time of such Demand Registration by any Holder that is a Liberty Party or SpinCo Party or issuable upon conversion of any Holdco LMC Common Stock held at the time of such Demand Registration by any Holder that is a Liberty Party or SpinCo Party. If the Common Stock has been reclassified or changed, or if Holdco pays a dividend or makes a distribution on the Common Stock in shares of capital stock, or subdivides (or combines) its outstanding shares of Common Stock into a greater (or smaller) number of shares of Common Stock, a share of Common Stock shall be deemed to be such number of shares of stock and amount of other securities to which a holder of a share of Common Stock outstanding immediately prior to such change, reclassification, exchange, dividend, distribution, subdivision or combination would be entitled. "Contribution and Exchange Agreement" has the meaning set forth in the LMC Agreement. "Delay Period" shall have the meaning set forth in Section 2(d) hereof. "Demand Notice" shall have the meaning set forth in Section 2(a) hereof. "Demand Registration" shall have the meaning set forth in Section 2(b) hereof. "Effectiveness Period" shall have the meaning set forth in Section 2(d) hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "First Refusal Agreement" has the meaning set forth in the LMC Agreement. "FTC Consent Decree" has the meaning set forth in the LMC Agreement. "Hold Back Period" shall have the meaning set forth in Section 4 hereof. "Holdco" shall have the meaning set forth in the introductory clauses hereof. "Holdco LMC Common Stock" means the Voting Holdco LMC Common Stock and the LMCN-V Common Stock. "Holder" means a person who owns Registrable Shares or Holdco LMC Common Stock that is convertible into Registrable Shares and is either (i) named on the signature pages hereof as a Holder, or (ii) a person who has agreed to be bound by the terms of this Agreement as if such person were a Holder and is (A) a person to whom a Holder has transferred Registrable Shares pursuant to Rule "4(1-1/2)" (or any similar private transfer exemption), (B) upon the death of any Holder, the executor of the estate of such Holder or any of such Holder's heirs, devisees, legatees or assigns, (C) upon the disability of any Holder, any guardian or conservator of such Holder or (D) an Affiliate of a Holder to which a Holder has transferred any Common Stock or Holdco LMC Common Stock. "Interruption Period" shall have the meaning set forth in Section 5 hereof. "Liberty Party" has the meaning set forth in the LMC Agreement. "LMC Agreement" means the Second Amended and Restated LMC Agreement dated as of September 22, 1995, among Holdco, Time Warner Inc., Liberty Media Corporation and certain subsidiaries of Liberty Media Corporation. "LMCN-V Common Stock" shall mean the Series LMCN-V Common Stock of Holdco. "Merger Agreement" shall have the meaning set forth in the introductory clauses hereof. "person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Piggyback Registration" shall have the meaning set forth in Section 3 hereof. "Prospectus" means the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus. "Registrable Shares" means shares of Common Stock unless (i) they have been effectively registered under Section 5 of the Securities Act and disposed of pursuant to an effective Registration Statement, (ii) such securities can be freely sold and transferred without restriction under Rule 145 or any other restrictions under the Securities Act or (iii) such securities have been transferred pursuant to Rule 144 under the Securities Act or any successor rule such that, after any such transfer referred to in this clause (iii), such securities may be freely transferred without restriction under the Securities Act. "Registration" means registration under the Securities Act of an offering of Registrable Shares pursuant to a Demand Registration or a Piggyback Registration. "Registration Period" shall have the meaning set forth in Section 2(a) hereof. "Registration Statement" means any registration statement of Holdco under the Securities Act that covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Shelf Registration" shall have the meaning set forth in Section 2(b) hereof. "SpinCo Party" has the meaning set forth in the LMC Agreement. "SSSI Agreement" has the meaning set forth in the LMC Agreement. "underwritten registration or underwritten offering" means a registration under the Securities Act pursuant to which securities of Holdco are offered and sold by Holdco in a public offering through one or more underwriters. "Voting Holdco LMC Common Stock" shall mean the Series LMC Common Stock of Holdco. SECTION 2. Demand Registration. (a) (i) The Holders of not less than a majority of the Registrable Shares then held by all Holders shall have the right, during the period (the "Registration Period") commencing on the date of this Agreement and ending as to each Holder on the later of (x) the third anniversary of the date of this Agreement and (y) if such Holder is an Affiliated Holder, the date such Holder shall cease to be an Affiliated Holder, by written notice (the "Demand Notice") given to Holdco, to request Holdco to register under and in accordance with the provisions of the Securities Act all or any portion of the Registrable Shares designated by such Holders; provided, however, that the aggregate number of Registrable Shares requested to be registered pursuant to any Demand Notice and pursuant to any related Demand Notices received pursuant to the following sentence shall be at least 4,000,000 or the remaining Registrable Shares, if less. For purposes of this Agreement, a Holder shall be deemed to hold as of any relevant date all Registrable Shares issuable upon conversion of any Holdco LMC Common Stock then held by such Holder. Upon receipt of any such Demand Notice, Holdco shall promptly notify all other Holders of the receipt of such Demand Notice and allow them the opportunity to include Registrable Shares held by them in the proposed registration by submitting their own Demand Notice. In connection with any Demand Registration in which more than one Holder participates, in the event that such Demand Registration involves an underwritten offering and the managing underwriter or underwriters participating in such offering advise in writing the Holders of Registrable Shares to be included in such offering that the total number of Registrable Shares to be included in such offering exceeds the amount that can be sold in (or during the time of) such offering without delaying or jeopardizing the success of such offering (including the price per share of the Registrable Shares to be sold), then the amount of Registrable Shares to be offered for the account of such Holders shall be reduced pro rata on the basis of the number of Registrable Shares requested to be registered by each such Holder or on such other basis as the Holders may agree. The Holders as a group shall be entitled to three Demand Registrations pursuant to this Section 2(a)(i). Any Demand Registration that does not become effective or is not maintained for the period (whether or not continuous) specified in Section 2(c) (or such shorter period as shall terminate when all the Registrable Shares covered by such Demand Registration have been sold pursuant thereto) shall not reduce the number of Demand Registrations available to the Holders hereunder. (ii) If, at any time during the Registration Period or thereafter, a Prohibited Effect (as defined in the LMC Agreement) shall occur which would give rise to an obligation of Holdco to compensate the Liberty Parties or SpinCo Parties pursuant to Section 4.3 of the LMC Agreement, any Holders that are Liberty Parties or SpinCo Parties shall be immediately entitled to a Demand Registration, exercisable at any time that such Prohibited Effect shall have occurred and be continuing, whether or not a Demand Registration would then be available pursuant to clause (i) of this Section 2(a). (b) Holdco, within 45 days of the date on which Holdco receives a Demand Notice given by Holders in accordance with Section 2(a) hereof, shall file with the SEC, and Holdco shall thereafter use its best efforts to cause to be declared effective, a Registration Statement on the appropriate form for the registration and sale, in accordance with the intended method or methods of distribution, of the total number of Registrable Shares specified by the Holders in such Demand Notice, which may include a "shelf" registration (a "Shelf Registration") pursuant to Rule 415 under the Securities Act (a "Demand Registration"). (c) Holdco shall use commercially reasonable efforts to keep each Registration Statement filed pursuant to this Section 2 continuously effective and usable for the resale of the Registrable Shares covered thereby (i)(A) in the case of a Registration that is not a Shelf Registration, for a period of 120 days from the date on which the SEC declares such Registration Statement effective and (B) in the case of a Shelf Registration, for a period of two years from the date on which the SEC declares such Registration Statement effective (or such shorter period of time as shall be applicable to such Shelf Registration pursuant to the next two sentences) or (ii) until all the Registrable Shares covered by such Registration Statement have been sold pursuant to such Registration Statement, if earlier, in either case, as such period may be extended pursuant to this Section 2. Notwithstanding clause (i)(B) of the preceding sentence, if Holdco in good faith determines that the number of Registrable Shares to be included in any Shelf Registration would have a material adverse effect on the public market price of Holdco's Common Stock, par value $.01 per share, Holdco may, within 5 days after receipt of the Demand Notice relating thereto, notify the Holders of such determination, stating the basis for such determination. Upon receipt of any such notice, the Holders and Holdco will discuss in good faith the basis for a mutually acceptable compromise, which may include (1) a reduction in the period provided for in clause (i)(B) of this Section 2(c), (2) a reduction in the number of Registrable Shares included in such Shelf Registration, or (3) a combination of the foregoing, as Holdco and Holders of a majority of the Registrable Shares shall agree; provided, however, that if Holdco and such Holders are unable to agree on such a mutually acceptable compromise within 10 days after Holdco delivers such notice, the period provided for in clause (i)(B) shall be reduced to 180 days; and provided further that there shall be no reduction in the number of Registrable Shares included in such Shelf Registration without the consent of the Holders of a majority of the Registrable Shares. (d) Holdco shall be entitled to postpone the filing of any Registration Statement otherwise required to be prepared and filed by Holdco pursuant to this Section 2, or suspend the use of any effective Registration Statement under this Section 2, for a reasonable period of time, but not in excess of 90 days (a "Delay Period"), if any executive officer of Holdco determines in good faith that in such executive officer's reasonable judgment the registration and distribution of the Registrable Shares covered or to be covered by such Registration Statement would materially interfere with any pending financing, acquisition or corporate reorganization or other corporate development involving Holdco or any of its subsidiaries or would require premature disclosure thereof and promptly gives the Holders written notice of such determination, containing a general statement of the reasons for such postponement and an approximation of the anticipated delay; provided, however, that (i) the aggregate number of days included in all Delay Periods and Hold Back Periods during any consecutive 12 months shall not exceed 180 days and (ii) a period of at least 60 days shall elapse between the termination of any Delay Period or Hold Back Period and the commencement of the immediately succeeding Delay Period or Hold Back Period. Holdco shall promptly notify the Holders of the expiration of any Delay Period. If Holdco shall so postpone the filing of a Registration Statement, the Holders of Registrable Shares to be registered shall have the right to withdraw the request for registration by giving written notice from the Holders of a majority of the Registrable Shares that were to be registered to Holdco within 45 days after receipt of the notice of postponement or, if earlier, the termination of such Delay Period (and, in the event of such withdrawal, such request shall not be counted for purposes of determining the number of requests for registration to which the Holders of Registrable Shares are entitled pursuant to this Section 2). The time period for which Holdco is required to maintain the effectiveness of any Registration Statement shall be extended by the aggregate number of days of all Delay Periods, all Hold Back Periods and all Interruption Periods occurring during such Registration and such period and any extension thereof is hereinafter referred to as the "Effectiveness Period". (e) In the case of a proposed firm commitment underwritten offering pursuant to a Demand Registration, Holdco may include other Holdco securities in the related Registration Statement, if of the same type as the Registrable Shares covered by such Registration Statement, for the account of other security holders, if any, who have piggyback registration rights with respect thereto, on the same terms and conditions as the Registrable Shares. Holdco shall give the managing underwriter or underwriters participating in such offering written notice of its intent to include any such Holdco securities in such Registration within 10 days of receipt of the initial Demand Notice applicable to such Registration. Notwithstanding the foregoing, if the managing underwriter or underwriters participating in such offering conclude that the total amount of Holdco securities proposed to be included in such Demand Registration exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of such offering (including the price per share of the Registrable Shares to be sold), then the amount of securities to be offered for the account of all holders other than the Holders shall be reduced (to zero if necessary) to an amount recommended by such managing underwriter or underwriters before any reduction in the number of Registrable Shares proposed to be offered by the Holders. (f) Holders of a majority in number of the Registrable Shares to be included in a Registration Statement pursuant to this Section 2 may, at any time prior to the effective date of the Registration Statement relating to such Registration, revoke such request by providing a written notice to Holdco revoking such request. The Holders of Registrable Shares who revoke such request shall reimburse Holdco for all its out-of-pocket expenses incurred in the preparation, filing and processing of the Registration Statement; provided, however, that, if such revocation was based on Holdco's failure to comply in any material respect with its obligations hereunder or if such revocation results from a material adverse change in the operating results, financial condition or business of Holdco of which the Holders were not aware at the time of delivery of a Demand Notice pursuant to Section 2(a), such reimbursement shall not be required. SECTION 3. Piggyback Registration. (a) Right to Piggyback. If at any time during the Registration Period Holdco proposes to file a registration statement under the Securities Act with respect to a public offering of securities of the same type as the Registrable Shares pursuant to a firm commitment underwritten offering solely for cash for its own account (other than a registration statement (i) on Form S-8 or any successor forms thereto, or (ii) filed solely in connection with a dividend reinvestment plan or employee benefit plan covering officers or directors of Holdco or its Affiliates), then Holdco shall give written notice of such proposed filing to the Holders at least 15 days before the anticipated filing date. Such notice shall offer the Holders the opportunity to register such amount of Registrable Shares as they may request (a "Piggyback Registration"). Subject to Section 3(b) hereof, Holdco shall include in each such Piggyback Registration all Registrable Shares with respect to which Holdco has received written requests for inclusion therein within 10 days after notice has been given to the Holders. Each Holder shall be permitted to withdraw all or any portion of the Registrable Shares of such Holder from a Piggyback Registration at any time prior to the effective date of such Piggyback Registration; provided, however, that if such withdrawal occurs after the filing of the Registration Statement with respect to such Piggyback Registration and Holdco does not exercise its right to abandon the Registration Statement under Section 3(c), the withdrawing Holders shall reimburse Holdco for the portion of the SEC registration fee payable with respect to the Registrable Shares so withdrawn and all other registration expenses allocable to such Registrable Shares of the types described in clauses (i), (ii) and (vii) of Section 6 hereof. (b) Priority on Piggyback Registrations. Holdco shall permit the Holders to include all such Registrable Shares on the same terms and conditions as any similar securities, if any, of Holdco included therein. Notwithstanding the foregoing, if Holdco or the managing underwriter or underwriters participating in such offering advise the Holders in writing that the total amount of securities requested to be included in such Piggyback Registration exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of the offering (including the price per share of the securities to be sold), then the amount of securities to be offered for the account of the Holders and other holders of securities who have piggyback registration rights with respect thereto shall be reduced (to zero if necessary) pro rata on the basis of the number of common stock equivalents requested to be registered by each such Holder or holder participating in such offering. (c) Right To Abandon. Nothing in this Section 3 shall create any liability on the part of Holdco to the Holders if Holdco in its sole discretion should decide not to file a registration statement proposed to be filed pursuant to Section 3(a) hereof or to withdraw such registration statement subsequent to its filing, regardless of any action whatsoever that a Holder may have taken, whether as a result of the issuance by Holdco of any notice hereunder or otherwise. SECTION 4. Holdback Agreement. If (i) during the Effectiveness Period, Holdco shall file a registration statement (other than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) with respect to an issuance by Holdco of Common Stock or similar securities or securities convertible into, or exchangeable or exercisable for, such securities and (ii) with reasonable prior notice, Holdco (in the case of a non-underwritten public offering by Holdco pursuant to such registration statement) advises the Holders in writing that a public sale or distribution of such Registrable Shares would materially adversely affect such offering or the managing underwriter or underwriters (in the case of an underwritten public offering by Holdco pursuant to such registration statement) advises Holdco in writing (in which case Holdco shall notify the Holders) that a public sale or distribution of Registrable Shares would materially adversely impact such offering, then each Holder shall, to the extent not inconsistent with applicable law, refrain from effecting any public sale or distribution of Registrable Shares pursuant to any then effective Shelf Registration during the ten days prior to, and during the 90-day period beginning on, the effective date of such registration statement or such shorter period as may be requested by such underwriters (each such period, a "Hold Back Period"), and any public sale by a Holder of Registrable Shares during such Hold Back Period shall be made in accordance with the volume limitations set forth in Rule 144(e) under the Securities Act (determined without regard for Rule 144(k)). Notwithstanding the foregoing, a Holder shall not be obligated to refrain from effecting an underwritten public offering of Registrable Shares during a Hold Back period if, at least five Business Days prior to receiving the notice from Holdco contemplated by clause (ii) above, the Holder shall have notified Holdco of its current intention to effect an underwritten public offering of Registrable Shares (with a view to consummating such an offering within 45 days after the date of such notice) pursuant to a then effective Shelf Registration during such Hold Back Period. SECTION 5. Registration Procedures. In connection with the registration obligations of Holdco pursuant to and in accordance with Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), Holdco shall use commercially reasonable efforts to effect such registration to permit the sale of such Registrable Shares in accordance with the intended method or methods of disposition thereof, and pursuant thereto Holdco shall as expeditiously as possible (but subject to Sections 2 and 3 hereof): (a) prepare and file with the SEC a Registration Statement for the sale of the Registrable Shares on any form for which Holdco then qualifies and which counsel for Holdco shall deem appropriate in accordance with the intended method or methods of distribution specified by the Holders thereof, and, subject to Holdco's right to terminate or abandon a Piggyback Registration pursuant to Section 3(c) hereof, use commercially reasonable efforts to cause such Registration Statement to become effective and remain effective as provided herein; (b) prepare and file with the SEC such amendments (including post-effective amendments) to such Registration Statement, and such supplements to the related Prospectus, as may be required by the rules, regulations or instructions applicable to such Registration Statement under the Securities Act during the applicable period in accordance with the intended methods of disposition specified by the Holders of the Registrable Shares covered by such Registration Statement, make generally available earnings statements satisfying the provisions of Section 11(a) of the Securities Act (provided that Holdco shall be deemed to have complied with this clause if it has complied with Rule 158 under the Securities Act), and cause the related Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act; provided, however, that before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act), Holdco shall furnish to the Holders of Registrable Shares covered by such Registration Statement and their counsel for review and comment, copies of all documents required to be filed; (c) notify the Holders of any Registrable Shares covered by such Registration Statement promptly and (if requested) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the related Prospectus or for additional information regarding such Holders, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Holdco of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (v) of the happening of any event that requires the making of any changes in such Registration Statement, Prospectus or documents incorporated or deemed to be incorporated therein by reference so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (d) use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any Registrable Shares for sale in any jurisdiction in the United States; (e) furnish to the Holder of any Registrable Shares covered by such Registration Statement, each counsel for such Holders and each managing underwriter, if any, without charge, one conformed copy of such Registration Statement, as declared effective by the SEC, and of each post-effective amendment thereto, in each case including financial statements and schedules and all exhibits and reports incorporated or deemed to be incorporated therein by reference; and deliver, without charge, such number of copies of the preliminary prospectus, any amended preliminary prospectus, each final Prospectus and any post-effective amendment or supplement thereto, as such Holder may reasonably request in order to facilitate the disposition of the Registrable Shares of such Holder covered by such Registration Statement in conformity with the requirements of the Securities Act; (f) prior to any public offering of Registrable Shares covered by such Registration Statement, use commercially reasonable efforts to register or qualify such Registrable Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Holders of such Registrable Shares shall reasonably request in writing; provided, however, that Holdco shall in no event be required to qualify generally to do business as a foreign corporation or as a dealer in any jurisdiction where it is not at the time so qualified or to execute or file a general consent to service of process in any such jurisdiction where it has not theretofore done so or to take any action that would subject it to general service of process or taxation in any such jurisdiction where it is not then subject; (g) upon the occurrence of any event contemplated by paragraph 5(c)(v) above, prepare a supplement or post-effective amendment to such Registration Statement or the related Prospectus or any document incorporated or deemed to be incorporated therein by reference and file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares being sold thereunder (including upon the termination of any Delay Period), such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (h) use commercially reasonable efforts to cause all Registrable Shares covered by such Registration Statement to be listed on each securities exchange or automated interdealer quotation system, if any, on which similar securities issued by Holdco are then listed or quoted; (i) on or before the effective date of such Registration Statement, provide the transfer agent of Holdco for the Registrable Shares with printed certificates for the Registrable Shares covered by such Registration Statement, which are in a form eligible for deposit with The Depository Trust Company; (j) if such offering is an underwritten offering, make available for inspection by any Holder of Registrable Shares included in such Registration Statement, any underwriter participating in any offering pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the "Inspectors"), all financial and other records and other information, pertinent corporate documents and properties of any of Holdco and its subsidiaries and affiliates (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibilities; provided, however, that the Records that Holdco determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement reasonably satisfactory to Holdco (which shall permit the disclosure of such Records in such Registration Statement or the related Prospectus if necessary to avoid or correct a material misstatement in or material omission from such Registration Statement or Prospectus) or either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided further, however, that (A) any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors and Holdco and (B) with respect to any release of Records pursuant to subclause (ii), each Holder of Registrable Shares agrees that it shall, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to Holdco so that Holdco, at Holdco's expense, may undertake appropriate action to prevent disclosure of such Records; and (k) if such offering is an underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other appropriate and reasonable actions requested by the Holders of a majority of the Registrable Shares being sold in connection therewith (including those reasonably requested by the managing underwriters) in order to expedite or facilitate the disposition of such Registrable Shares, and in such connection, (i) use commercially reasonable efforts to obtain opinions of counsel to Holdco and updated thereof (which counsel and opinion (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters and counsel to the Holders of the Registrable Shares being sold), addressed to each selling Holder of Registrable Shares covered by such Registration Statement and each of the underwriters as to the matters customarily covered in opinions and requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (ii) use commercially reasonable efforts to obtain "cold comfort" letters and updates thereof from the independent certified public accounts of Holdco (and, if necessary, any other independent certified public accountants of any subsidiary of Holdco or of any business acquired by Holdco for which financial statements and financial data are, or are required to be, included in the Registration Statment), addressed to each selling Holder of Registrable Shares covered by the Registration Statment (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession in which case such letters shall be addressed to the extent permissible in a manner permitting such Holder to rely thereon) and each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, (iii) if requested and if an underwriting agreement is entered into, provide indemnification provisions and procedures substantially to the effect set forth in Section 8 hereto with respect to all parties to be indemnified pursuant to said Section. The above shall be done at each closing under such underwriting or similar agreement, or as to the extent required thereunder. Holdco may request in writing each Holder of Registrable Shares covered by a Registration Statement to furnish such information regarding such Holder and such Holder's intended method of disposition of such Registrable Shares as is required by the form of such Registration Statement, applicable law or the SEC. If any such information is not furnished within a reasonable period of time after receipt of such request, Holdco may exclude such Holder's Registrable Shares from such Registration Statement. Each Holder of Registrable Shares covered by a Registration Statement agrees that, upon receipt of any notice from Holdco of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, that such Holder shall forthwith discontinue disposition of any Registrable Shares covered by such Registration Statement or the related Prospectus until receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(g) hereof, or until such Holder is advised in writing (the "Advice") by Holdco that the use of the applicable Prospectus may be resumed, and has received copies of any amended or supplemented Prospectus or any additional or supplemental filings which are incorporated, or deemed to be incorporated, by reference in such Prospectus (such period during which disposition is discontinued being an "Interruption Period") and, if requested by Holdco, the Holder shall deliver to Holdco (at the expense of Holdco) all copies then in its possession, other than permanent file copies then in such holder's possession, of the Prospectus covering such Registrable Shares at the time of receipt of such request. Each Holder of Registrable Shares covered by a Registration Statement further agrees not to utilize any material other than the applicable current preliminary prospectus or Prospectus in connection with the offering of such Registrable Shares. SECTION 6. Registration Expenses. Whether or not any Registration Statement is filed or becomes effective, Holdco shall pay all costs, fees and expenses incident to Holdco's performance of or compliance with this Agreement, including (i) all registration and filing fees, including NASD filing fees and any applicable stock exchange or interdealer quotation system listing fees, (ii) all fees and expenses of compliance with securities or Blue Sky laws, including reasonable fees and disbursements of counsel in connection therewith, (iii) printing and photocopying expenses (including expenses of printing certificates for Registrable Shares and of printing prospectuses if the printing of prospectuses is requested by the Holders or the managing underwriter, if any), (iv) messenger, telephone and delivery expenses, (v) fees and disbursements of counsel for Holdco, (vi) fees and disbursements of all independent certified public accountants of Holdco (including expenses of any "cold comfort" letters required in connection with this Agreement) and all other persons retained by Holdco in connection with such Registration Statement, (vii) fees and disbursements of one counsel, other than Holdco's counsel, selected by Holders of a majority of the Registrable Shares being registered, to represent all such Holders, (viii) fees and disbursements of underwriters customarily paid by the issuers or sellers of securities and (ix) all other costs, fees and expenses incident to Holdco's performance or compliance with this Agreement. Notwithstanding the foregoing, the fees and expenses of any persons retained by any Holder, other than one counsel for all such Holders, and any discounts, commissions or brokers' fees or fees of similar securities industry professionals and any transfer taxes relating to the disposition of the Registrable Shares by a Holder, will be payable by such Holder and Holdco will have no obligation to pay any such amounts. SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b) hereof, any Holder shall have the right, by written notice, to request that any Demand Registration provide for an underwritten offering. (b) In the case of any underwritten offering pursuant to a Demand Registration, the Holders of a majority of the Registrable Shares to be disposed of in connection therewith shall select the institution or institutions that shall manage or lead such offering, which institution or institutions shall be reasonably satisfactory to Holdco. In the case of any underwritten offering pursuant to a Piggyback Registration, Holdco shall select the institution or institutions that shall manage or lead such offering. No Holder shall be entitled to participate in an underwritten offering unless and until such Holder has entered into an underwriting or other agreement with such institution or institutions for such offering in such form as Holdco, the Holders of a majority of the Registrable Shares included in any Demand Registration and such institution or institutions shall mutually determine. SECTION 8. Indemnification. (a) Indemnification by Holdco. Holdco shall, without limitation as to time, indemnify and hold harmless, to the full extent permitted by law, each Holder of Registrable Shares whose Registrable Shares are covered by a Registration Statement or Prospectus, the officers, directors and agents and employees of each of them, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling person, to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgment, costs (including, without limitation, costs of preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in such Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are based upon information furnished in writing to Holdco by or on behalf of such Holder expressly for use therein; provided, however, that Holdco shall not be liable to any such Holder to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if (i) having previously been furnished by or on behalf of Holdco with copies of the Prospectus, such Holder failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale of Registrable Shares by such Holder to the person asserting the claim from which such Losses arise and (ii) the Prospectus would have corrected in all material respects such untrue statement or alleged untrue statement or such omission or alleged omission; and provided further, however, that Holdco shall not be liable in any such case to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission in the Prospectus, if (x) such untrue statement or alleged untrue statement, omission or alleged omission is corrected in all material respects in an amendment or supplement to the Prospectus and (y) having previously been furnished by or on behalf of Holdco with copies of the Prospectus as so amended or supplemented, such Holder thereafter fails to deliver such Prospectus as so amended or supplemented, prior to or concurrently with the sale of Registrable Shares. (b) Indemnification by Holder of Registrable Shares. In connection with any Registration Statement in which a Holder is participating, such Holder shall indemnify, to the full extent permitted by law, Holdco, its directors, officers, agents or employees, each Person who controls Holdco (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and the directors, officers, agents or employees of such controlling Persons, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in such Registration Statement or the related Prospectus or any amendment or supplement thereto, or any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue or alleged untrue statement or omission or alleged omission is based upon any information furnished in writing by or on behalf of such Holder to Holdco expressly for use in such Registration Statement or Prospectus; provided, however, that such Holder shall not be liable in any such case (i) to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Prospectus used by any person (other than such Holder or an Affiliate of such Holder) after such time as such Holder advised Holdco of the need for a correction thereof or (ii) in an amount that exceeds the net proceeds received by such Holder from the sale of Registrable Shares pursuant to such Registration Statement. (c) Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnity hereunder (an "indemnified party"), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been prejudiced by such delay or failure. The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or proceeding, to assume, at the indemnifying party's expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such indemnified party; provided, however, that (i) an indemnified party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless: (1) the indemnifying party agrees to pay such fees and expenses; (2) the indemnifying party fails promptly to assume the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such indemnified party; or (3) the named parties to any proceeding (including impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it that are inconsistent with those available to the indemnifying party or that a conflict of interest is likely to exist among such indemnified party and any other indemnified parties (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party); and (ii) subject to clause (3) above, the indemnifying party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the indemnifying party, such indemnified party shall not be subject to any liability for any settlement made without its consent. The indemnifying party shall not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder. (d) Contribution. If the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any Losses (other than in accordance with its terms), then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 8(d). Notwithstanding the provision of this Section 8(d), an indemnifying party that is a Holder shall not be required to contribute any amount which is in excess of the amount by which the total proceeds received by such Holder from the sale of the Registrable Shares sold by such Holder (net of all underwriting discounts and commissions) exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. SECTION 9. Miscellaneous. (a) Termination. This Agreement and the obligations of Holdco and the Holders hereunder (other than Section 8 hereof) shall terminate on the first date on which no Registrable Shares remain outstanding. (a) Notices. All notices or communications hereunder shall be in writing (including telecopy or similar writing), addressed as follows: If to Holdco, to it at: 75 Rockefeller Plaza New York, New York 10019 Telecopier no.: (212) 956-7281 Attention: General Counsel With a copy (which shall not constitute notice) to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: Richard Hall, Esq. Telecopier no.: (212) 474-3700 If to a Holder, to it at: c/o Liberty Media Corporation 8101 East Prentice Avenue Suite 500 Englewood, Colorado 80111 Telecopier No. (303) 721-5415 Attention: President With a copy (which shall not constitute notice) to each of: Steve M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Tower II 5619 DTC Parkway Englewood, CO 80111-3000 Telecopier No.: (303) 488-3245 Baker & Botts, L.L.P. 599 Lexington Avenue New York, New York 10022-6030 Attention: Elizabeth Markowski, Esq. Telecopier no.: (212) 705-5125 Any such notice or communication shall be deemed given (i) when made, if made by hand delivery, (ii) upon transmission, if sent by confirmed telecopier, (iii) one business day after being deposited with a next-day courier, postage prepaid, or (iv) three business days after being sent certified or registered mail, return receipt requested, postage prepaid, in each case addressed as above (or to such other address or to such other telecopier number as such party may designate in writing from time to time). (c) Separability. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. (d) Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, devisees, legatees, legal representatives, successors and assigns. (e) Entire Agreement. This Agreement, the Merger Agreement, the LMC Agreement and the agreements referred to herein and therein together represent the entire agreement of the parties with respect to the subject matter hereof and supersede any and all prior contracts, arrangements or understandings between the parties hereto with respect to such subject matter. (f) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless Holdco has obtained the written consent of Holders of at least a majority in number of the Registrable Shares then outstanding. (g) Publicity. No public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior consent of the other parties, except to the extent that such party is advised by counsel that such release or announcement is necessary or advisable under applicable law or the rules or regulations of any securities exchange, in which case the party required to make the release or announcement shall to the extent practicable provide the other party with an opportunity to review and comment on such release or announcement in advance of its issuance. (h) Expenses. Whether or not the transactions contemplated hereby are consummated, except as otherwise provided herein, all costs and expenses incurred in connection with the execution of this Agreement shall be paid by the party incurring such costs or expenses, except as otherwise set forth herein. (i) Interpretation. The headings of the articles and sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. The definitions in Section 1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The words "herein", "hereof" and "hereunder" and words of similar import refer to this Agreement in its entirety and not to any part hereof unless the context shall otherwise require. All references herein to Sections shall be deemed references to Sections of this Agreement unless the context shall otherwise require. Unless otherwise expressly provided herein or unless the context shall otherwise require, any references as of any time to any agreement (including this Agreement) or other contract, instrument or document or to any statute or regulation or any specific section or other provision thereof are to it as amended and supplemented through such time (and, in the case of a statute or regulation or specific section or other provision thereof, to any successor of such statute, regulation, section or other provision). Unless otherwise expressly provided herein or unless the context shall otherwise require, any provision of this Agreement using a defined term (by way of example and without limitation, such as "Affiliate") which is based on a specified characteristic, qualification, feature, relationship or status shall, as of any time, refer only to such Persons who have the specified characteristic, qualification, feature, relationship or status as of that particular time. (j) Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be one and the same agreement, and shall become effective when counterparts have been signed by each of the parties and delivered to each other party. (k) Governing Law. This Agreement shall be construed, interpreted, and governed in accordance with the internal laws of New York. (l) Calculation of Time Periods. Except as otherwise indicated, all periods of time referred to herein shall include all Saturdays, Sundays and holidays; provided, however, that if the date to perform the act or give any notice with respect to this Agreement shall fall on a day other than a Business Day, such act or notice may be timely performed or given if performed or given on the next succeeding Business Day. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above. TW INC. By: Name: Title: LIBERTY MEDIA CORPORATION By: Name: Title: TCI TURNER PREFERRED, INC. By: Name: Title: LIBERTY BROADCASTING, INC. By: Name: Title: COMMUNICATION CAPITAL CORP. By: Name: Title: SOUTHERN SATELLITE SYSTEMS, INC. By: Name: Title: EX-10 11 EXHIBIT 10 AF TO SECOND AMENDED AND RESTATED AGMT EXHIBIT F TO SECOND AMENDED AND RESTATED LMC AGREEMENT RIGHTS PLAN AMENDMENTS "Acquiring Person" shall mean, as of any time, any Person who or which, alone or together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of more than 15% of the Common Shares outstanding as of such time, other than (a) the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any of its Subsidiaries, or any Person holding Common Shares for or pursuant to the terms of any such employee benefit plan, or (b) any Person who or which, alone or together with one or more of its Affiliates or Associates, becomes or became the Beneficial Owner of more than 15% of the Common Shares outstanding as of such time pursuant to a Qualifying Offer. Notwithstanding the foregoing, the term "Acquiring Person" shall not include any Person who or which as of any time becomes the Beneficial Owner of more than 15% of the Common Shares outstanding as of such time (i) solely as the result of a change in the number of Common Shares outstanding since the most recent preceding date on which such Person acquired Beneficial Ownership of any Common Shares or (ii) solely as the result of the acquisition by such Person or one or more of its Affiliates or Associates of Beneficial Ownership of additional Common Shares if such acquisition was made in the good faith belief that such acquisition would not cause either the number of Common Shares beneficially owned by such Person, together with its Affiliates and Associates, to exceed 15% of the Common Shares outstanding at the time of such acquisition or otherwise cause a Distribution Date or the adjustment provided in Section 11(a) to occur and such good faith belief was based on the good faith reliance on information contained in publicly filed reports or documents of the Company which were inaccurate or out-of-date or (iii) solely as the result of the acquisition of beneficial ownership of any Common Shares by any of such Person's Affiliates or Associates who or which are not Controlled Related Parties of such Person or (iv) solely as the result of any transaction or event pursuant to which any Person who or which beneficially owns any Common Shares and was not previously an Affiliate or Associate of such Person becomes an Affiliate or Associate of such Person or (v) solely as the result of the acquisition by such Person or one or more of its Affiliates or Associates of Beneficial Ownership of additional Common Shares if such acquisition was made in the good faith belief that such acquisition would not cause the number of Common Shares beneficially owned by such Person, together with its Affiliates and Associates, to exceed 15% of the Common Shares outstanding at the time of such acquisition or otherwise cause a Distribution Date or the adjustment provided in Section 11(a) to occur and such good faith belief was based on the good faith reliance on inaccurate or out-of-date information concerning the number of Common Shares beneficially owned by any Affiliates or Associates of such Person who or which are not Controlled Related Parties of such Person; provided, however, that in the case of any of clauses (i) through (v), the percentage of the Common Shares outstanding represented by the number of Common Shares beneficially owned by such Person is reduced to 15% or less within the applicable cure period. For purposes of the immediately preceding sentence, the "applicable cure period" shall be the period commencing on (and including) the date that such Person becomes aware that the number of Common Shares beneficially owned by such Person exceeds 15% of the Common Shares outstanding (except that if such Person has separately agreed in writing with the Company to notify the Company once such Person becomes aware of such fact, the cure period shall commence on (and include) the date of receipt by such Person of written notice from the Company that the number of Common Shares beneficially owned by such Person exceeds, as of the date such notice is given, 15% of the Common Shares outstanding as of such date) and ending upon the Close of Business on (i) the fifth Business Day after such date in the case of any Person described in clause (i) or (ii) of the immediately preceding sentence or (ii) the tenth Business Day after such date in the case of any Person described in clause (iii), (iv) or (v) of the immediately preceding sentence; provided, however, that if such reduction would require the disposition by such Person or any of its Affiliates or Associates of any Common Shares and such Person notifies the Company in writing that, in such Person's good faith belief, such disposition within such period could not reasonably be accomplished without violation of applicable law or could reasonably be accomplished only for consideration or on terms materially disadvantageous as compared to the consideration or terms on which such disposition could be accomplished during some longer period of time, then such period shall be extended for such time as the directors of the Company whose approval would be required to redeem the Rights under Section 24 shall reasonably deem to be required in order to prevent such violation of applicable law or shall reasonably deem to be sufficient to minimize such disadvantageous effect (as the case may be), subject to the condition that such Person shall during the cure period, as extended (or until such earlier time at which such Person, together with its Affiliates and Associates, otherwise ceases to beneficially own more than 15% of the outstanding Common Shares), diligently and in good faith proceed to effect the required disposition as expeditiously as reasonably practicable and comply with any arrangements regarding the voting of a number of Common Shares beneficially owned by such Person, together with its Affiliates and Associates, equal to the number so required to be disposed of pending completion of such disposition as such directors of the Company shall request (including arrangements not to vote such number of Common Shares or only to vote such number of Common Shares in a manner approved by such directors of the Company). For purposes of this definition, the determination of whether any Person (other than a director of the Company, in his or her capacity as a director of the Company) acted in "good faith" shall be conclusively determined in good faith by those directors of the Company whose approval would be required to redeem the Rights under Section 24. A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own", and shall be deemed to have "Beneficial Ownership" of, any securities: (i) which such Person or any of such Person's Affiliates or Associates is deemed to 'beneficially own' within the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Rights Agreement; (ii) which such Person or any of such Person's Affiliates or Associates has: (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed under this clause (A) to be the Beneficial Owner of, or to beneficially own, or to have Beneficial Ownership of, any securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder; or (B) the right to vote pursuant to any agreement, arrangement or understanding (written or oral); provided, however, that a Person shall not be deemed under this clause (B) to be the Beneficial Owner of, or to beneficially own, any security if (1) the agreement, arrangement or understanding (written or oral) to vote such security arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and (2) the beneficial ownership of such security is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (written or oral) for the purpose of acquiring, holding, voting or disposing of any Common Shares, any other securities of the Company generally entitled to vote together with the Common Shares or any rights, warrants, options or other securities exercisable or exchangeable for, or convertible into, Common Shares or other securities of the Company generally entitled to vote together with the Common Shares. A Person shall also be deemed to be the "Beneficial Owner" of, and to "beneficially own", and to have "Beneficial Ownership" of, Common Shares of the Company if such Person is the Beneficial Owner of, or beneficially owns, or has Beneficial Ownership of (as the case may be), any other securities of the Company (whether or not convertible into or exchangeable for Common Shares) generally entitled to vote together with the Common Shares. If the preceding sentence is applicable in any case, such Person shall be deemed by virtue of Beneficial Ownership of such other securities to be the "Beneficial Owner" of, and to "beneficially own", and to have "Beneficial Ownership" of, that number of Common Shares of the Company equal to the greater of (x) the number of votes entitled to be cast in respect of such other securities upon any matter being voted upon by the holders of Common Shares and the holders of such other securities, voting together as a single class, and (y) if applicable, the number of Common Shares of the Company issuable upon conversion in full into, or exchange in full for, Common Shares of the Company of such other securities. In the event any Common Shares are subject to a voting trust approved by the directors of the Company whose approval would be required to redeem the Rights under Section 24, then (x) the trustee or trustees under such voting trust shall be deemed not to be the "Beneficial Owner" of any such Common Shares and (y) each beneficiary of such voting trust shall be deemed to be the "Beneficial Owner" of all such Common Shares. Notwithstanding the foregoing, (a) no Person ordinarily engaged in business as an underwriter of securities shall be deemed to be the "Beneficial Owner" of, to "beneficially own", or to have any "Beneficial Ownership" of, any securities acquired in a bona fide firm commitment underwriting pursuant to an underwriting agreement with the Company; and (b) no Person shall be deemed to be the "Beneficial Owner" of, to "beneficially own", or to have any "Beneficial Ownership" of, any securities by reason of such Person or any of such Person's Affiliates or Associates having the right to acquire (whether such right is exercisable immediately or only after the passage of time) such securities pursuant to a right of first refusal, right of first offer or similar agreement, arrangement or understanding (written or oral) granted by another Person (the "subject Person") (I) that does not provide any direct or indirect limitations or restrictions on the ability of the subject Person to exercise (or refrain from exercising) any voting rights associated with such securities or contain any other agreement, arrangement or understanding with respect to such voting rights, (II) that does not contain any incentive for the subject Person to support or oppose any particular Business Combination or otherwise to exercise (or refrain from exercising) any voting rights associated with such securities in a manner advantageous to such Person or any of such Person's Affiliates or Associates and (III) prior written notice of which shall have been given to the Company. "Common Shares outstanding" or "outstanding Common Shares" when used in this Section 1 in the definition of "Acquiring Person" and when used in Section 3(b), with respect to any Person who is, as of any time, the Beneficial Owner of, beneficially owns, or has Beneficial Ownership of, any specified percentage of "Common Shares outstanding" or "outstanding Common Shares", shall mean the sum of (i) all Common Shares and any other securities generally entitled to vote together with the Common Shares (in the case of such other securities, counted as a number of Common Shares equal to the greater of (x) the number of votes entitled to be cast in respect of such other securities upon any matter being voted upon by the holders of Common Shares and the holders of such other voting securities, voting together as a single class and (y), if applicable, the number of Common Shares issuable upon conversion in full into, or exchangeable in full for, Common Shares of such other securities) actually issued as of such time, except Common Shares or such other securities, if any, then owned by the Company or any Subsidiary of the Company which, under the laws of the jurisdiction of incorporation of the Company, could not then be voted at a meeting of the holders of Common Shares called for the purpose of electing directors of the Company plus (ii) the maximum aggregate number of Common Shares and such other securities which would be issued upon the exercise in full of all then outstanding options, warrants and rights, however denominated (but in each case only if issued by the Company or any of its Subsidiaries, and excluding the Rights and excluding any securities included in clause (i) of this calculation), to subscribe for, purchase or otherwise acquire any Common Shares or such other securities, and the conversion into, or exchange for, Common Shares or such other securities in full of all then outstanding securities of the Company or any of its Subsidiaries that are convertible into or exchangeable for Common Shares or such other securities (excluding any securities included in clause (i) of this calculation), in each case with or without payment of additional consideration in cash or property, whether or not such options, warrants, rights or securities are then exercisable, convertible or exchangeable, as the case may be, regardless of whether or not any of such Common Shares or such other securities would be deemed to be outstanding under generally accepted accounting principles for purposes of determining book value or net income per share and regardless of whether or not any of such Common Shares or such other securities would be deemed to be outstanding under paragraph (d)(1)(i) of Rule 13d-3 of the General Rules and Regulations under the Exchange Act (either as in effect on the date of this Rights Agreement or as subsequently amended) or under any other rule, regulation or statute for the purpose of computing the percentage of Common Shares outstanding owned by any particular Person as of any time or for any other purpose. "Controlled Related Party" means, when used with respect to any specified Person, each Affiliate or Associate of such Person if such Person possesses, directly or indirectly, by or through stock ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons, the power to direct decisions regarding the acquisition, disposition or voting by such Affiliate or Associate of Common Shares or rights to acquire or vote Common Shares. EX-10 12 EXHIBIT 10 AI TO SECOND AND RESTATED AGMT EXHIBIT I TO SECOND AMENDED AND RESTATED LMC AGREEMENT CONTRIBUTION AND EXCHANGE AGREEMENT dated as of September 22, 1995, among TIME WARNER INC., a Delaware corporation ("TW Parent"), TW INC., a Delaware corporation and direct wholly-owned subsidiary of TW Parent ("Holdco"), LIBERTY MEDIA CORPORATION, a Delaware corporation ("LMC Parent"), TCI TURNER PREFERRED, INC., a Colorado corporation ("TCITP"), and LIBERTY BROADCASTING, INC., an Oregon corporation and direct wholly-owned subsidiary of TCITP ("LBI"). Recitals A. Reference is made to that certain Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, and as amended by Amendment No. 1 thereto dated as of August 8, 1996 (the "Merger Agreement"), among TW Parent, Holdco, Time Warner Acquisition Corp., a Delaware corporation and direct wholly-owned subsidiary of Holdco ("Delaware Sub"), TW Acquisition Corp., a Georgia corporation and direct wholly- owned subsidiary of Holdco ("Georgia Sub"), and Turner Broadcasting System, Inc., a Georgia corporation ("TBS"). B. The Merger Agreement provides for the merger of Delaware Sub into TW Parent (the "TW Merger") and the simultaneous merger of Georgia Sub into TBS (the "TBS Merger" and, collectively with the TW Merger, the "Mergers"), in a transaction in which the outstanding capital stock of TW Parent and TBS, respectively, will be converted into capital stock of Holdco, and each of TW Parent and TBS will become a direct wholly-owned subsidiary of Holdco. The Mergers are intended to qualify as tax-free exchanges pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"). C. Reference is also made to that certain Second Amended and Restated LMC Agreement dated as of September 22, 1995 (the "LMC Agreement"), among TW Parent, Holdco, LMC Parent, TCITP and certain subsidiaries of TCITP named therein (TCITP and such subsidiaries, collectively, the "Shareholders"). TCITP is a direct wholly-owned subsidiary of LMC Parent. The LMC Agreement provides for, among other things, the Shareholders to vote all shares of TBS capital stock owned by the Shareholders in favor of the TBS Merger. D. In order to induce LMC Parent, TCITP and the other Shareholders to enter into the LMC Agreement, TW Parent and Holdco have agreed to enter into this Agreement, which provides for, among other things, the Contribution Election and the Contribution described herein. E. The TBS Merger is also subject to the condition that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have expired. In connection therewith, TW Parent, TBS, Tele-Communications, Inc., a Delaware corporation ("TCI"), and LMC Parent have entered into an Agreement Containing Consent Order (the "ACCO") dated as of August , 1996, with the Federal Trade Commission (the "FTC"), which contemplates the issuance of an Order (the ACCO, together with such Order and the Interim Agreement attached as Appendix I to the ACCO, in each case as the same may be amended or modified from time to time hereafter, the "FTC Consent Decree"). F. This Agreement is the Contribution and Exchange Agreement contemplated by the LMC Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.1 Certain Definitions. As used in this Agreement, the following terms have the corresponding meanings: "Additional Agreements" means the LMC Agreement, the Registration Rights Agreement, the First Refusal Agreement, the Distribution Contract, the SSSI Agreement, the Rights Amendment (if entered into), the SportSouth Agreement, the Sunshine Agreement and the Program and Digitization Agreement. "Affiliate", when used with respect to a specified person, means any other person that directly or indirectly Controls, is Controlled by or is under common Control with such first person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. Prior to the Effective Time, no Liberty Party shall be deemed to be an Affiliate of TW Parent, Holdco or any of their respective subsidiaries and neither TW Parent, Holdco nor any of their respective Affiliates shall be deemed to be an Affiliate of any Liberty Party. Prior to the Effective Time, neither TW Parent nor any of its Affiliates nor TCI, LMC Parent nor any of their respective Affiliates shall be deemed to be an Affiliate of TBS or any of its subsidiaries. "Agreement" means this Contribution and Exchange Agreement, including all Schedules hereto. "Change in Control Event" means any of the following events: (i) any person becomes an Acquiring Person (as defined in the Rights Agreement as in effect on September 22, 1995, as if amended in accordance with the Rights Amendment), including any person that would otherwise be excluded from the definition of Acquiring Person in the Rights Agreement by virtue of the acquisition of shares pursuant to a Qualifying Offer (as defined in the Rights Agreement as in effect on September 22, 1995, as if amended in accordance with the Rights Amendment) and regardless of whether the Rights Agreement continues to be in effect or is so amended, (ii) TW Parent enters into any agreement (other than the Elective Merger Agreement, the Merger Agreement or any amendment thereto) providing for a merger or consolidation of TW Parent into any other person, a binding share exchange, or a merger of TW Parent with any other person in which the shares of capital stock of TW Parent are exchanged for or converted into the right to receive anything other than shares of the common stock, par value $1.00 per share, of TW Parent, or (iii) prior to the closing of the Mergers, Holdco ceases to be a wholly owned subsidiary of TW Parent or enters into any agreement (other than the Merger Agreement or any amendment thereto) that would result in Holdco ceasing to be a wholly-owned subsidiary of TW Parent. "Closing Date" means the date on which the Mergers are consummated, pursuant to Section 1.02 of the Merger Agreement. "Communications Laws" means the Communications Act of 1934 (as amended and supplemented from time to time and any successor statute or statutes regulating telecommunications companies) and the rules and regulations (and interpretations thereof and determinations with respect thereto) promulgated, issued or adopted from time to time by the FCC. All references herein to the Communications Laws shall include as of any relevant date in question the Communications Laws as then in effect (including any Communications Law or part thereof the effectiveness of which is then stayed) and as then formally proposed by the FCC by publication in the Federal Register or promulgated with a delayed effective date. "Consideration" means consideration that is identical in form and value to the aggregate consideration that UCTI would have been entitled to receive in the TBS Merger, pursuant to the Merger Agreement, in respect of all shares of capital stock of TBS held of record by UCTI at the Effective Time, if the Contribution Election had not been made and UCTI had not delivered timely notice of an intent to demand appraisal rights pursuant to any applicable statute. "Contract" means any agreement, contract, commitment, indenture, lease, license, instrument, note, bond, security, undertaking, promise, covenant or legally binding arrangement or understanding. "Contributed Assets" means all the issued and outstanding shares of capital stock of UCTI. "Control", as to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person (whether through ownership of securities, partnership interests or other ownership interests, by contract, by participation or involvement in the board of directors, management committee or other management structure of such person, or otherwise). The terms "Controlled," "Controlling" and similar variations (whether or not capitalized) have correlative meanings. "Distribution Contract" means the Distribution Contract, substantially in the form of Exhibit 1 to the SSSI Agreement, to be entered into by Holdco, SpinCo and Satellite at or prior to the Closing (but will not become effective until the "Closing" under the SSSI Agreement). "Effective Time" means the time at which the Mergers become effective pursuant to the Merger Agreement and applicable state law. "FCC" means the Federal Communications Commission and any successor agency or other agency charged with the administration of any Communications Law. "Final Determination" means (i) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals by either party to the action have been exhausted (it being understood that for purposes of this definition, the term "allowable appeals" means an appeal taken or required to be taken under the contest provisions with respect to the applicable indemnification obligation and permitted by applicable law) or the time for filing such appeal has expired, (ii) a closing agreement entered into under Section 7121 of the Code (or comparable state or local law) or any other binding settlement agreement entered into in connection with an administrative or judicial proceeding (including any settlement entered into in accordance with the contest provisions with respect to the applicable indemnification obligation hereunder) or (iii) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto. "First Refusal Agreement" means the Stockholders' Agreement substantially in the form of Exhibit B to the LMC Agreement, to be entered into by Holdco, TCITP, LBI, SpinCo and certain other shareholders of TBS at or prior to the Closing. "Holdco Common Stock" means the common stock, par value $.01 per share, of Holdco to be issued in the Mergers, and in the event of any reclassification, recapitalization or other change in the Holdco Common Stock, or in the event of any consolidation or merger of Holdco with or into another person affecting the Holdco Common Stock, such capital stock or other securities to which a holder of Holdco Common Stock would be entitled upon the occurrence of such event. "Horizontal Rule" means the rule promulgated by the FCC that is set forth at 47 C.F.R. 76.503 on September 22, 1995. "Judgment" means any order, judgment, writ, decree, injunction, award or other determination, decision or ruling of any court, any other Governmental Entity or any arbitrator. "LBI Consideration" means that portion of the Consideration that bears the same proportion to the entire Consideration as the number of shares of UCTI Capital Stock owned by LBI bears to the total number of shares of UCTI Capital Stock outstanding, in each case as of the Effective Time, determined, if the Consideration consists of consideration of more than one form, on a pro rata basis for all forms of consideration constituting the Consideration. "Liberty Party" means LMC Parent and each Affiliate of LMC Parent that is controlled by LMC Parent from time to time and, for so long as LMC Parent is an Affiliate of TCI that is controlled by TCI, also means TCI and each Affiliate of TCI that is controlled by TCI. "Liberty Subsidiaries" means TCITP, UCTI, LBI and Communication Capital Corp. "LMC Group" means TCITP and all corporations that would join with TCITP in the filing of a consolidated return for federal income tax purposes, other than UCTI. "LMCN-V Common Stock" means the Series LMCN-V Common Stock of Holdco, having the terms set forth on Exhibit A to the LMC Agreement. "person" has the meaning ascribed to such term in the Merger Agreement and includes any Governmental Entity. "Program and Digitization Agreement" means the letter agreement, dated as of ____________, 1996, between Satellite and TBS with respect to, among other things, the carriage by Satellite of certain programming services of TBS and Satellite's non-exclusive right to digitize, compress and reuplink certain programming services of TBS. "Registration Rights Agreement" means the LMC Registration Rights Agreement substantially in the form of Exhibit E to the LMC Agreement to be entered into by Holdco, LMC Parent, TCITP and certain subsidiaries of TCITP at or prior to the Closing. "Requirement of Law", when used with respect to any person, means any law, statute, code, rule, regulation or Judgment, and any interpretation of or determination with respect to any of the foregoing, of any court or other Governmental Entity applicable to or binding upon such person, or to which such person, any of its assets or any business conducted by it is subject, whether now existing or at any time hereafter enacted, promulgated, issued, entered or otherwise becoming effective. "Rights Agreement" means the Rights Agreement dated as of January 20, 1994, between TW Parent and Chemical Bank, as Rights Agent. "Rights Amendment" means those certain amendments to the Rights Agreement described in Exhibit F to the Original LMC Agreement. "Satellite" means Satellite Services, Inc., a Delaware corporation. "SpinCo" means Southern Satellite Systems, Inc., a Georgia corporation, and any successor thereto by operation of law. "Spin-off" means the distribution by TCI of 100% of the capital stock of SpinCo to holders of record of TCI's Tele-Communications, Inc. Series A Liberty Media Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock. "SportSouth Agreement" means that certain Stock Purchase Agreement dated as of September 22, 1995, between TBS and LMC Southeast Sports, Inc., and the Exhibits and Schedules thereto, a copy of which is annexed as Exhibit G to the LMC Agreement. "SSSI Agreement" means the SSSI Agreement substantially in the form of Exhibit D to the LMC Agreement to be entered into by Holdco and LMC Parent, SpinCo and Satellite (with respect to certain provisions thereof) at or prior to the Closing. A "subsidiary" of any person means another person, an amount of the voting securities or other voting ownership or voting partnership interests of which sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned, directly or indirectly, by such first person and/or one or more subsidiaries of such first person. "Sunshine Agreement" means that certain agreement substantially in the form of Exhibit H to the LMC Agreement, to be entered into by Time Warner Entertainment Company, L.P., and Liberty Sports, Inc., at or prior to the Closing. A "Takeover Proposal" shall be pending if any bona fide tender or exchange offer for the TW Parent Common Stock shall have been commenced or publicly announced and not terminated or withdrawn, if consummation of such offer in accordance with its terms would result in a Change in Control Event. A tender offer will not be deemed to be bona fide that is not fully financed unless it is made or guaranteed by a person whose senior debt securities have investment grade ratings in one of the four highest investment grade categories. "Tax Returns" mean all Federal, state, local and foreign tax returns, declarations, statements, reports, schedules, forms and information returns and any amended tax return relating to Taxes. "Taxes" mean all Federal, state, local and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto. "TBS Class C Preferred Stock" means the Class C Preferred Stock, par value $.125 per share, of TBS. "TBS Stock Agreements" means, individually and collectively, (a) the Investors Agreement dated as of June 3, 1987, among TBS and the original holders of the TBS Class C Preferred Stock; (b) the Shareholders' Agreement dated as of June 3, 1987, as amended by the First Amendment dated as of April 15, 1988, among TBS, R.E. Turner, III, and the original holders of the TBS Class C Preferred Stock; (c) the Voting Agreement dated as of June 3, 1987, among certain holders of TBS Class C Preferred Stock and (d) the Agreement dated as of June 3, 1987, among TW Parent, TCITP and certain other holders of TBS Class C Preferred Stock. "TCI" means Tele-Communications, Inc., a Delaware corporation. "TCITP Consideration" means that portion of the Consideration that bears the same proportion to the entire Consideration as the number of shares of UCTI Capital Stock owned by TCITP bears to the total number of shares of UCTI Capital Stock outstanding, in each case as of the Effective Time, determined, if the Consideration consists of consideration of more than one form, on a pro rata basis for all forms of consideration constituting the Consideration. "TW Parent Common Stock" means the common stock, par value $1.00 per share, of TW Parent on September 22, 1995, and in the event of any reclassification, recapitalization or other change in the TW Parent Common Stock, or in the event of any consolidation or merger of TW Parent with or into another person affecting the TW Parent Common Stock, such capital stock or other securities to which a holder of TW Parent Common Stock would be entitled upon the occurrence of such event. "UCTI" means United Cable Turner Investment Inc., a Colorado corporation. "Voting Holdco LMC Common Stock" means the Series LMC Common Stock of Holdco, having the terms set forth on Exhibit C to the LMC Agreement. 1.2 Additional Definitions. The following additional terms have the meaning ascribed thereto in the Section indicated below next to such term: Defined Term Section Defined In Closing 2.2 Code Recital B contest rights 3.4(a) Contribution 2.1 Contribution Election 2.1 Delaware Sub Recital A Georgia Sub Recital A Governmental Entity 4.1(d) Holdco Preamble HSR Act 4.1(d) Liens 4.1(b) LBI Preamble LMC Agreement Recital C LMC Parent Recital C Material TW Parent Subsidiary 4.2(a) Merger Agreement Recital A Mergers Recital B Proprietary Information 5.3 Representatives 5.3 Scheduled Closing Date 2.5 SEC 4.2(a) Shareholders Recital C Straddle Period 3.1(c) Tax Indemnified Party 3.4(e) Tax Indemnifying Party 3.4(e) TBS Recital A TBS Merger Recital B TBS Shares 4.1(b) TCITP Preamble TW Material Adverse Effect 4.2(a) TW Merger Recital B TW Parent Preamble TW Parent Subsidiary 4.2(a) TWE 4.2(a) UCTI Capital Stock 4.1(c) UCTI Material Adverse Effect 4.1(a) UCTI Stock Transfer 3.7 1.3 Terms Generally. The definitions in Sections 1.1 and 1.2 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The words "herein", "hereof" and "hereunder" and words of similar import refer to this Agreement (including Schedules) in its entirety and not to any part hereof unless the context shall otherwise require. All references herein to Articles, Sections and Schedules shall be deemed references to Articles and Sections of, and Schedules to, this Agreement unless the context shall otherwise require. Unless the context shall otherwise require, any references to any agreement or other instrument or statute or regulation are to it as amended and supplemented from time to time (and, in the case of a statute or regulation, to any successor provisions). Any reference in this Agreement to a "day" or number of "days" (without the explicit qualification of "business") shall be interpreted as a reference to a calendar day or number of calendar days. If any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a business day, then such action or notice shall be deferred until, or may be taken or given on, the next business day. ARTICLE II THE CONTRIBUTION 2.1 Right to Make Contribution. LMC Parent shall have the right and option, exercisable by notice given to TW Parent and Holdco at least ten business days prior to the Scheduled Closing Date (the "Contribution Election"), to cause TCITP and LBI to contribute the Contributed Assets to Holdco in exchange for the Consideration (the "Contribution"). The Contribution is intended to qualify as a tax-free exchange pursuant to Section 351 of the Code, upon and subject to the terms and conditions of this Agreement. 2.2 Closing. If LMC Parent makes the Contribution Election, the closing of the Contribution (the "Closing") will take place on the Closing Date, concurrently with the consummation of the Mergers. 2.3 Exchange of Certificates. At the Closing, (a) LMC Parent shall cause TCITP to deliver to Holdco one or more stock certificates representing in the aggregate all the Contributed Assets held of record by TCITP, and shall cause LBI to deliver to Holdco one or more stock certificates representing in the aggregate all the Contributed Assets held of record by LBI, in each case duly endorsed for transfer or accompanied by stock powers duly endorsed for transfer, and (b) Holdco shall deliver to TCITP and LBI, respectively, (i) one or more stock certificates, duly executed and registered in the name of TCITP, representing in the aggregate the TCITP Consideration and (ii) one or more certificates, duly executed and registered in the name of LBI, representing in the aggregate the LBI Consideration. Until surrendered as contemplated by this Article II, the Contributed Assets shall be deemed from and after the Effective Time to represent only the right to receive the Consideration. The Consideration issued and paid in accordance with this Article II shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the Contributed Assets. No interest will be paid or will accrue on any cash payable in lieu of any fractional shares constituting part of the Consideration. 2.4 Effectiveness of the Contribution. The Contribution shall be effective, and all deliveries pursuant to Section 2.3 shall be conclusively deemed to have occurred, concurrently with the effectiveness of the Mergers at the Effective Time. 2.5 Scheduled Closing Date; Changes in Election. TW Parent shall give LMC Parent notice of the date on which the closing of the Mergers is scheduled to occur (the "Scheduled Closing Date"), at least 20 days prior thereto, and shall give LMC Parent such prior notice of any changes in the Scheduled Closing Date as shall be reasonable under the circumstances. LMC Parent shall have the right to revoke its election pursuant to Section 2.1 at any time prior to three business days prior to the Effective Time. 2.6 Assignment and Delegation of this Agreement. Concurrently with the effectiveness of the Spin-off, LMC Parent shall assign and delegate to SpinCo, and SpinCo shall assume from LMC Parent, all rights and obligations of LMC Parent under this Agreement as of the date thereof, and SpinCo will from and after such date be bound by, and entitled to the benefit of this Agreement, with the same effect as if SpinCo had been an original party and signatory to this Agreement, in lieu of LMC Parent, and as if the representations and warranties of LMC Parent made herein, and the obligations of LMC Parent contained herein to be performed on and after the date of the Spin-off, were in each case the representations, warranties and obligations of SpinCo. In that connection, on the date of the Spin-off, SpinCo shall execute and deliver to each of the other parties hereto a counterpart of this Agreement, and SpinCo and each of the other parties hereto shall execute and deliver to LMC Parent an unconditional release of all obligations of LMC Parent hereunder (whether or not known or suspected), in such form as LMC Parent and its counsel shall reasonably request. Without limiting the generality of any of the foregoing, on the date of the Spin-off, upon delivery to the other parties hereto of the counterpart to this Agreement referred to in the immediately preceding sentence, SpinCo shall be deemed to make the representation and warranty set forth in Section 4.1(d), for the benefit of LMC Parent and each other party hereto, as of such date and as if all references therein to LMC Parent, TCITP and LBI referred instead to SpinCo. ARTICLE III CERTAIN POST-CLOSING COVENANTS 3.1 Obligation of TCITP to Indemnify; TCI Guarantee. (a) TCITP hereby assumes and shall be liable for, and shall indemnify and hold UCTI, Holdco and the Affiliates of Holdco harmless from and against, (i) all liability for Taxes of UCTI for taxable years or portions thereof ending on or prior to the Closing Date (including any Straddle Period pursuant to Section 3.1(c)), (ii) all liability (as a result of Treasury Regulation Section 1.1502-6(a) or otherwise) for Taxes of any person other than UCTI with which prior to the Closing Date UCTI joins or has ever joined (or is or ever has been required to join) in filing any consolidated, combined, unitary or aggregate Tax Return, and (iii) subject to the representations, warranties, covenants and agreements of Holdco and TW Parent set forth in Section 3.7, all liability for Taxes of UCTI arising as a result of the Contribution, in each case on an after-Tax basis. TCI hereby unconditionally and irrevocably guarantees all obligations and liabilities assumed by TCITP pursuant to this Section 3.1(a) (subject, in the case of the obligations and liabilities assumed by TCITP for Taxes of UCTI arising as a result of the Contribution, to the representations, warranties, covenants and agreements of Holdco and TW Parent set forth in Section 3.7). (b) All Taxes of UCTI for which TCITP is not required to indemnify UCTI, Holdco and the Affiliates of Holdco pursuant to Section 3.1(a) shall be the obligation of UCTI, and UCTI shall be liable for, and shall indemnify and hold the members of the LMC Group harmless from and against, all such liabilities, on an after-Tax basis. (c) For purposes of this Agreement, each Tax liability for a taxable year that includes, but does not end on, the Closing Date (a "Straddle Period") shall be allocated, based upon a "closing of books," between the period ending on the Closing Date and the period beginning the day after the Closing Date, as if each such period were a taxable year. 3.2 Refunds. Any refunds of Taxes or any credit against Taxes of UCTI, Holdco and the Affiliates of Holdco with respect to taxable years or portions thereof ending on or prior to the Closing Date (when and to the extent applied by UCTI against any Tax liability that TCITP has not assumed pursuant to Section 3.1(a), resulting in a tax benefit to UCTI that it otherwise would not have realized in the absence of such credit) (including any interest relating to any such refunds or credits) shall be for the account of TCITP, and are hereby and shall be assigned to TCITP, and any other refunds of Taxes or credits against Taxes of UCTI shall be for the account of Holdco. Any refunds or credits with respect to Straddle Periods shall be allocated under the principles set forth in Section 3.1(c). Holdco shall forward to, or reimburse TCITP for, any such refunds or credits and interest due TCITP, promptly after receipt thereof, and TCITP shall forward to Holdco any such refunds or credits and interest due Holdco, promptly after receipt thereof. In either case, the party entitled to such refund or credit shall reimburse the other party to the extent of any net Tax cost imposed on such other party in connection with the receipt of such refund or credit. Each party hereto shall cooperate with the other party as reasonably requested in making such filings as may be necessary and appropriate to seek any such refunds or credits. 3.3 Final Returns. TCITP shall prepare or cause to be prepared any Tax Returns to be filed that relate to any period ending on or prior to the Closing Date. All such Tax Returns shall be prepared in a manner consistent with prior years. TCITP and Holdco shall jointly prepare and control any Tax Return of UCTI for Straddle Periods in a manner consistent with prior years. Each party shall promptly respond to all reasonable requests by the other party for information necessary to prepare and file any such Tax Returns. 3.4 Conduct of Audits and Disputes. (a) Contest Rights. A party who has "contest rights" with respect to an asserted Tax liability, Tax refund claim or Tax credit claim shall have the right (but not the obligation), at its own expense, to negotiate, settle or contest such asserted Tax liability, refund claim or credit claim, in its own name or in the name of the other party or its Affiliates, as appropriate, all in accordance with the terms of this Section 3.4. Such contest rights shall include, but not be limited to, (i) the determinations (x) whether any action shall initially be by way of judicial or administrative proceedings, or both, (y) whether any such asserted Tax liability shall be contested by resisting payment thereof or by paying the same and seeking a refund thereof and (z) if judicial action is undertaken, the court or other judicial body before which such action shall be commenced and (ii) the right to control any such proceedings or actions. (b) Claims Controlled by TCITP. Subject to paragraphs (d), (e) and (f) of this Section 3.4, TCITP (and not UCTI) shall have contest rights with respect to any asserted Tax liability, refund claim or credit claim of UCTI to the extent that TCITP is required to indemnify against such asserted Tax liability pursuant to Section 3.1(a) or is entitled to such refund or credit pursuant to Section 3.2. Holdco shall have the right to participate in and be consulted with respect to any such contest undertaken by TCITP. TCITP shall not settle any Tax liability, refund claim or credit claim without the prior written consent of Holdco, which consent shall not be unreasonably withheld. (c) Claims Controlled by Holdco. Subject to paragraphs (d), (e) and (f) of this Section 3.4, Holdco (and not TCITP) shall have contest rights with respect to any asserted Tax liability, refund claim or credit claim of UCTI to the extent that UCTI is required to indemnify against such asserted Tax liability pursuant to Section 3.1(b) or is entitled to such refund or credit pursuant to Section 3.2. TCITP and its Affiliates shall have the right to participate in and be consulted with respect to any such contest undertaken by Holdco. Holdco shall not settle any Tax liability, refund claim or credit claim without the written consent of TCITP, which consent shall not be unreasonably withheld. (d) Contests Involving Multiple Issues. If any contest shall involve issues with respect to which both TCITP and Holdco have contest rights hereunder, the parties will cooperate in any such contest, and will endeavor to permit each party to control the contest of issues for which it has contest rights. In the event there is a disagreement among the parties over matters (such as choice of forum) relating to issues the contest of which are controlled by more than one party, such disagreement shall be resolved in favor of the party who controls the contest of the issues therein which, in the aggregate, would result in the largest Tax liability if resolved unfavorably or the largest Tax refund if resolved favorably. (e) Notice; Cooperation. If UCTI, Holdco, any Affiliate of Holdco or any member of the LMC Group (in either case the "Tax Indemnified Party") receives any written communication from a taxing authority regarding any actual or proposed assessment, official inquiry or proceeding that could give rise to an official determination with respect to any asserted Tax liability or refund claim for any period for which TCITP or UCTI, respectively (the "Tax Indemnifying Party"), may be liable (in the case of a liability) or may be entitled (in the case of a refund claim) pursuant to this Agreement, such Tax Indemnified Party (i) shall within 30 days of receipt of such written communication so notify such Tax Indemnifying Party in writing, (ii) shall request in such notice that such Tax Indemnifying Party notify it in writing if it intends to exercise its contest rights hereunder, and (iii) shall, prior to and for at least 30 days after so notifying such Tax Indemnifying Party (or, if less, within a period ending 5 days, including any extension, prior to the date on which the Tax Indemnified Party is required to take action pursuant to such written communication), refrain from making any payment of any Tax claimed and forebear from any settlement negotiations or compromises with respect to such proposed adjustment. The Tax Indemnifying Party agrees to notify the Tax Indemnified Party in writing within such 30 day period if it intends to exercise its contest rights hereunder with respect to the asserted Tax liability, refund claim or credit claim. The parties hereto agree to cooperate with each other in connection with any examination process with respect to any asserted Tax liability, refund claim or credit claim and shall make available on a reasonable basis to each other any personnel, books, records or other documents necessary or appropriate for participation in such process. (f) Payment. If, with respect to any asserted Tax liability that is the subject of an indemnification obligation hereunder, the party with contest rights with respect to such Tax liability elects not to contest such asserted Tax liability or elects to contest such asserted Tax liability by causing the Tax Indemnified Party to pay the deficiency asserted and then seek a refund thereof, the Tax Indemnifying Party shall advance the amount of the Tax liability so asserted to such Tax Indemnified Party to the extent that the Indemnified Party is required to pay such contested amount. Otherwise, such Tax Indemnifying Party shall pay the amount of any indemnification obligation (net of any payment made pursuant to the preceding sentence) to such Tax Indemnified Party no later than 5 days after any Final Determination with respect to the Tax giving rise to such indemnity obligation. (g) Obligations of Tax Indemnified Party. The failure of a Tax Indemnified Party to comply with any of its obligations under this Section 3.4 shall not relieve any Tax Indemnifying Party or any other party of its indemnity obligations hereunder, except to the extent (and only to the extent) that such Tax Indemnifying Party or other party is actually prejudiced by such failure. 3.5 Carrybacks. No losses or credits of UCTI arising in taxable years beginning after the Closing Date may be carried back to taxable years ending on or prior to the Closing Date, except to the extent required by law. 3.6 LMC Agreement; Covered TW Securities. If the Contribution Election is made, then upon the Closing, (a) LBI shall automatically and without further action become a party to the LMC Agreement, as a Shareholder (as such term is defined therein), with the same effect as if LBI were an original party thereto and were named as a Shareholder therein, and shall be deemed to have made the appropriate representations, warranties, covenants and agreements contained therein, and (b) all shares of Holdco Common Stock or other securities of Holdco issued to LBI and TCITP as Consideration hereunder (and all shares of Voting Holdco LMC Common Stock and/or LMCN-V Common Stock for which such shares may be exchanged pursuant to Section 4.1 of the LMC Agreement (directly or indirectly and in one or more exchanges)) shall constitute Covered TW Securities for all purposes of the LMC Agreement (in addition to and not in lieu of the Holdco Common Stock to be received in the TBS Merger and Voting Holdco LMC Common Stock and/or LMCN-V Common Stock exchanged therefor). If the Contribution Election is made, then upon the Closing, the LMC Agreement shall be amended to the effect of this Section 3.6 without further action by the parties to the LMC Agreement. 3.7 No Liquidation. As of the Closing Date, TW Parent and Holdco hereby represent, warrant, covenant and agree with LMC Parent, TCITP and LBI, for the benefit of all members of any LMC Group, that neither TW Parent nor Holdco has, as of the Closing Date, any plan or intention to liquidate or dissolve UCTI or to sell or otherwise transfer or dispose of (or agree to sell or otherwise transfer or dispose of) any capital stock of UCTI, or any securities exercisable or exchangeable for, or convertible into, capital stock of UCTI, or any interest therein, (a "UCTI Stock Transfer") and Holdco shall not, and TW Parent shall not permit Holdco to, liquidate or dissolve UCTI for at least two years following the Closing. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of LMC Parent, TCITP and LBI. Each of LMC Parent, TCITP and LBI represents and warrants to TW Parent and Holdco as follows: (a) Organization, Standing and Corporate Power. UCTI is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to carry on its business as now being conducted. UCTI is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of any property makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) has not had and is not reasonably likely to have a material adverse effect on the business, properties, assets, results of operations or financial condition of UCTI (a "UCTI Material Adverse Effect"). UCTI has delivered to TW Parent complete and correct copies of UCTI's Articles of Incorporation and By-laws, in each case as amended to September 22, 1995. UCTI is not in violation of any provision of its Articles of Incorporation or By-laws, except to the extent that any such violations would not, individually or in the aggregate, have a UCTI Material Adverse Effect. UCTI does not have any subsidiaries. (b) Ownership of TBS Shares. UCTI owns 5,820,452 shares of TBS Class C Preferred Stock (the "TBS Shares"), free and clear of all pledges, claims, liens, charges, encumbrances, security interests, options and restrictions of any kind or nature whatsoever (collectively, "Liens") and the TBS Shares are not subject, other than pursuant to this Agreement and the TBS Stock Agreements, to any Contract restricting or otherwise relating to the disposition, transfer, voting rights or dividend rights of the TBS Shares. Except for the TBS Shares, UCTI does not own, directly or indirectly, any capital stock, general or limited partnership interest or other ownership interest of any kind in any corporation, partnership, limited liability company, joint venture or other person. (c) Capital Structure. The authorized capital stock of UCTI consists of 30,000 shares of common stock, par value $.01 per share ("UCTI Capital Stock"), of which 20,119.4 shares are outstanding. All the outstanding shares of UCTI Capital Stock are validly issued, fully paid and nonassessable. TCITP is the record owner of 10,000 shares of UCTI Capital Stock (approximately 50.297% of the total number of such shares outstanding) and LBI is the record owner of 10,119.4 shares of UCTI Capital Stock (approximately 49.703% of the total number of such shares outstanding), which shares are in each case owned free and clear of any Liens. Except for the UCTI Capital Stock owned of record by TCITP and LBI, there are no shares of capital stock or other voting securities of UCTI issued, reserved for issuance or outstanding. There are no options, warrants, calls, rights, commitments, agreements, arrangements, undertakings or other Contracts of any kind to which UCTI is a party or by which it is bound relating to any issued or unissued capital stock of UCTI, or obligating UCTI to issue, transfer, grant or sell any shares of capital stock of, or other equity interests in, or securities convertible into or exchangeable for any capital stock or other equity interests in, UCTI or obligating UCTI to issue, grant, extend or enter into any such option, warrant, call, right, commitment, agreement, arrangement or undertaking. There are not outstanding any contractual obligations of UCTI to repurchase, redeem or otherwise acquire any shares of capital stock of UCTI, or to make any investment (in the form of a loan, capital contribution or otherwise) in any other person. (d) Authority; Noncontravention. Each of LMC Parent, TCITP and LBI has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions provided for herein. The execution and delivery of this Agreement by LMC Parent, TCITP and LBI and the consummation by them of the transactions provided for herein have been duly authorized by all necessary corporate action on the part of LMC Parent, TCITP and LBI. This Agreement has been duly executed and delivered by LMC Parent, TCITP and LBI and constitutes a valid and binding obligation of each such party, enforceable against each such party in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). The execution and delivery of this Agreement by LMC Parent, TCITP and LBI do not, and the performance by them of their respective obligations hereunder and the consummation of the transactions provided for herein will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of LMC Parent, TCITP, LBI, UCTI or any of their subsidiaries under, (i) the Articles of Incorporation or By-laws of LMC Parent or TCITP or the comparable organizational documents of LBI, UCTI or any other subsidiary of LMC Parent or TCITP, (ii) any Contract to which LMC Parent, TCITP, LBI, UCTI or any other subsidiary of LMC Parent or TCITP is a party or by which any of them or their respective properties or assets are bound, other than the TBS Stock Agreements, as to which no representation is being made, or (iii) subject to the governmental filings and other matters referred to in the following sentence and in Sections 3.01(d) and 3.02(d) of the Merger Agreement, any Requirement of Law applicable to LMC Parent, TCITP, LBI, UCTI or any other subsidiary of LMC Parent or TCITP or their respective properties or assets, other than the Horizontal Rule, as to which no representation is being made, and other than, in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a UCTI Material Adverse Effect, (y) prevent LMC Parent, TCITP or LBI from performing its obligations under this Agreement in any material respect or (z) prevent or delay in any material respect the consummation of any of the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any Federal, state or local government or any court, administrative agency or commission or other governmental authority or agency, domestic or foreign, including the European Union (a "Governmental Entity"), is required by or with respect to LMC Parent, TCITP or LBI in connection with the execution and delivery by them of this Agreement or the consummation by them of the transactions provided for herein, except for (i) the filing of notification and report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and initial acceptance by the FTC of the FTC Consent Decree for public comment, (ii) such filings with, and orders of, the FCC as may be required under the Communications Laws in connection with the transactions contemplated by this Agreement and the Merger Agreement, (iii) the filing with the SEC of such reports under Section 13 of the Exchange Act as may be required in connection with this Agreement, the Merger Agreement and the transactions contemplated hereby and thereby, (iv) such filings with, and orders of, cable franchising authorities as may be required in connection with this Agreement, the Merger Agreement and the transactions contemplated hereby and thereby and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not prevent or delay in any material respect the consummation of any of the transactions contemplated by this Agreement and the Merger Agreement or otherwise prevent LMC Parent, TCITP or LBI from performing its obligations under this Agreement in any material respect or have, individually or in the aggregate, a UCTI Material Adverse Effect. (e) Assets and Liabilities. Except for the TBS Shares, UCTI does not have any assets or liabilities of any nature (whether accrued, absolute, contingent or otherwise), other than assets not required by generally accepted accounting principles to be set forth on a balance sheet of UCTI or in the notes thereto. (f) Litigation. Except as disclosed on Schedule 4.1(f), there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of LMC Parent, TCITP, threatened against or affecting LMC Parent, TCITP or LBI (and LMC Parent is not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected (i) to have a UCTI Material Adverse Effect, (ii) to prevent LMC Parent, TCITP or LBI from performing its obligations under this Agreement or (iii) to prevent or delay the consummation of any of the transactions contemplated by this Agreement, and there is no Judgment outstanding against LMC Parent, TCITP or LBI having, or which could reasonably be expected to have in the future, a UCTI Material Adverse Effect. Except as disclosed on Schedule 4.1(f), there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of LMC Parent, threatened against or affecting UCTI (and LMC Parent is not aware of any basis for any such suit, action or proceeding). (g) Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of LMC Parent, or LBI or any Affiliate of LMC Parent, TCITP or LBI. (h) Taxes. (i) UCTI has timely filed (or has had timely filed on its behalf) or will file or cause to be timely filed, all material Tax Returns required by applicable law to be filed by it prior to or as of the Closing Date, including any Tax Return of any affiliated or combined group that includes or had included UCTI. All such Tax Returns are, or will be at the time of filing, true, complete and correct in all material respects. (ii) UCTI and each affiliated or combined group that includes or had included UCTI have paid (or have had paid on their behalf), or where payment is not yet due, have established (or have had established on their behalf and for their sole benefit and recourse), or will establish or cause to be established on or before the Closing Date, an adequate accrual for the payment of, all material Taxes due with respect to any period (including any Straddle Period pursuant to Section 3.01(c)) ending prior to or as of the Closing Date. (iii) As of the Closing Date, UCTI will not have any continuing obligation to LMC Parent, TCITP or LBI (or to any other person) with respect to any Taxes. (i) Compliance with Laws. UCTI has not violated or failed to comply with any Requirement of Law, except for violations and failures to comply that could not, individually or in the aggregate, reasonably be expected to result in a UCTI Material Adverse Effect. (j) Consolidated Return. As of the Effective Time, (A) each of LMC Parent and SpinCo (and, if LMC Parent shall have designated another person to receive LMCN-V Common Stock pursuant to the SSSI Agreement, such designated person) is a member of the same group of corporations filing a consolidated return for federal income tax purposes as the Liberty Subsidiaries (the "LMC Affiliated Group"), and (B) except in connection with the Spin-off (as defined in the SSSI Agreement), none of LMC Parent, TCITP, SpinCo or their respective affiliates (other than the holders of the Excluded Shares, as such term is defined in the LMC Agreement) has any current plan or intention (i) to transfer any Holdco equity securities held directly or indirectly by it immediately following the Closing Date (or to be acquired by it pursuant to the SSSI Agreement) (any such holder or acquirer, a "Holder") to any person that is not a member of the LMC Affiliated Group or (ii) to cause any Holder to cease to be a member of the LMC Affiliated Group. (k) ERISA Compliance. Except as would not have a UCTI Material Adverse Effect, (i) all employee benefit plans or programs maintained for the benefit of the current or former employees or directors of UCTI that are sponsored, maintained or contributed to by UCTI or with respect to which UCTI may have any liability, including any such plan that is an "employee benefit plan" as defined in Section 3(3) or ERISA, are in compliance with all applicable requirements of law, including ERISA and the Code, and (ii) UCTI does not have any liabilities or obligations with respect to any such employee benefit plans or programs, whether accrued, contingent or otherwise, nor to the knowledge of the executive officers of LMC Parent are any such liabilities or obligations expected to be incurred. 4.2 Representations and Warranties of TW Parent and Holdco. Each of TW Parent and Holdco represents and warrants to LMC Parent, TCITP and LBI as follows: (a) Organization, Standing and Corporate Power. Each of TW Parent, Holdco and each of the Material TW Parent Subsidiaries (as defined below) is a corporation, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite power and authority to carry on its business as now being conducted. Each of TW Parent and TW Parent's subsidiaries (each, a "TW Parent Subsidiary") is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a material adverse effect on the business, properties, assets, condition (financial or otherwise), results of operations or prospects of TW Parent and the TW Parent Subsidiaries, taken as a whole (a "TW Material Adverse Effect"). TW Parent has delivered to LMC Parent complete and correct copies of its Restated Certificate of Incorporation and By-laws and the certificates of incorporation and by-laws or comparable organizational documents of the Material TW Parent Subsidiaries, in each case as amended to September 22, 1995. Neither TW Parent nor Holdco is in violation of any provision of its Restated Certificate of Incorporation or By-laws and no Material TW Parent Subsidiary is in violation of any provision of its certificate of incorporation, by-laws or comparable organizational documents, except, in the case of the Material TW Parent Subsidiaries, to the extent that such violations would not, individually or in the aggregate, have a TW Material Adverse Effect. Time Warner Entertainment Company, L.P. ("TWE"), and each TW Parent Subsidiary that constitutes a significant subsidiary of TW Parent within the meaning of Rule 1-02 of Regulation S-X of the rules and regulations promulgated by the Securities and Exchange Commission ("SEC") (determined without regard to paragraph (3) of the definition thereof) is referred to herein as a "Material TW Parent Subsidiary". (b) Authority; Noncontravention. TW Parent and Holdco have all requisite corporate power and authority to enter into this Agreement and to consummate, subject to the stockholder vote described in Section 4.2(d), the Mergers, the Contribution and each of the other transactions provided for in this Agreement. The execution and delivery of this Agreement by TW Parent and Holdco and the consummation by them of the Mergers, the Contribution and each of the other transactions provided for herein have been duly authorized by all necessary corporate action on the part of TW Parent and Holdco, subject to the stockholder vote described in Section 4.2(d). This Agreement has been duly executed and delivered by TW Parent and Holdco and constitutes a valid and binding obligation of each TW Parent and Holdco, enforceable against each such party in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). Except as set forth in Schedule 4.2(b), the execution and delivery of this Agreement by TW Parent and Holdco and the consummation by them of the Mergers, the Contribution and each of the other transactions provided for in this Agreement and compliance with the provisions hereof will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of TW Parent or any TW Parent Subsidiary under, (i) the Restated Certificate of Incorporation or By-laws of TW Parent or the comparable organizational documents of any TW Parent Subsidiary, (ii) any Contract to which TW Parent or any TW Parent Subsidiary is a party or by which any of them or their respective properties or assets are bound, other than the TBS Stock Agreements, as to which no representation is being made, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Requirement of Law applicable to TW Parent or any other TW Parent Subsidiary or their respective properties or assets, other than the Horizontal Rule, as to which no representation is being made, and other than, in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (x) have a TW Material Adverse Effect, (y) prevent TW Parent or Holdco from performing its respective obligations under this Agreement in any material respect or (z) prevent or delay in any material respect the consummation of the Mergers or any of the transactions provided for in this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to TW Parent or Holdco in connection with the execution and delivery of this Agreement by TW Parent and Holdco or the consummation by them of the Mergers and each of the transactions provided for in this Agreement, except for (i) the filing of notification and report forms under the HSR Act and initial acceptance by the FTC of the FTC Consent Decree for public comment, (ii) such filings with, and orders of, the FCC under the Communications Laws as may be required in connection with the transactions contemplated by this Agreement and the Merger Agreement, (iii) the filing with the SEC of such reports under Sections 13 and 16(a) of the Exchange Act as may be required in connection with this Agreement, the Merger Agreement and the transactions contemplated hereby and thereby, (iv) such filings with, and orders of, cable franchising authorities as may be required in connection with this Agreement, the Merger Agreement and the transactions contemplated hereby and thereby and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not prevent or delay in any material respect the consummation of any of the transactions contemplated by this Agreement and the Merger Agreement or otherwise prevent TW Parent or Holdco from performing its obligations under this Agreement or the Merger Agreement in any material respect or have, individually or in the aggregate, a TW Material Adverse Effect. (c) Litigation. Except as disclosed in any required report, schedule, form, statement or other document filed with the SEC since December 31, 1992, or in Schedule 4.2(c), there is no suit, action or proceeding (including any proceeding by or before the FCC) pending or, to the knowledge of TW Parent, threatened against or affecting TW Parent or any of the TW Parent Subsidiaries (and TW Parent is not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected to prevent TW Parent from performing its obligations under this Agreement in any material respect. As of the date of this Agreement, except as disclosed in any required report, schedule, form, statement or other document filed with the SEC since December 31, 1992, or in Schedule 4.2(c), there is no suit, action or proceeding pending, or, to the knowledge of TW Parent, threatened, against TW Parent or any of the TW Parent Subsidiaries (and TW Parent is not aware of any basis for any such suit, action or proceeding) that, individually or in the aggregate, could reasonably be expected to prevent or delay in any material respect the consummation of any of the transactions contemplated by this Agreement or the Merger Agreement. (d) Voting Requirements. The adoption of the Merger Agreement by the holders of a majority in voting power of the outstanding TW Parent Common Stock and the outstanding voting preferred stock, par value $1.00 per share, of TW Parent, voting together as a single class, is the only vote of the holders of any class or series of TW Parent's capital stock necessary to approve this Agreement, the Merger Agreement, the Additional Agreements and the transactions contemplated hereby and thereby. (e) Brokers. No broker, investment banker, financial advisor or other person, other than Morgan Stanley & Co Incorporated, the fees and expenses of which will be paid by TW Parent, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of TW Parent or any Affiliate of TW Parent. (f) Holdco Charter. Holdco has delivered to LMC Parent complete and correct copies of its Certificate of Incorporation and By-laws and the Holdco Rights Plan, if any, in each case as amended to September 22, 1995, including all certificates of designation. No amendments to any of the foregoing have been authorized, approved or adopted and there is no commitment, arrangement or understanding by Holdco to effect any such amendment, except as provided in the Merger Agreement. All shares of capital stock of Holdco that may be issued pursuant to this Agreement will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. ARTICLE V CERTAIN COVENANTS 5.1 Conduct of Business. (a) Business of UCTI. On the Closing Date: (i) UCTI will own the TBS Shares, free and clear of all Liens, other adverse claims or voting or other rights of third parties other than the TBS Stock Agreements and other than any claims or rights of TW Parent, Holdco and their respective subsidiaries under this Agreement, the Merger Agreement or any Additional Agreement; (ii) UCTI will not have any liabilities or obligations, other than any liabilities or obligations under this Agreement, the Merger Agreement, any Additional Agreements to which it is a party and the TBS Stock Agreements; (iii) UCTI will not have any employees; and (iv) UCTI will not have any material properties or assets, other than the TBS Shares, and will not be engaged in the conduct of any business or other activities, other than the ownership, directly or indirectly, of TBS Shares. (b) Assumption; Indemnification. Prior to or at the Closing (i) LMC Parent, TCITP and/or LBI shall assume all liabilities and obligations of UCTI, (ii) LMC Parent, TCITP and LBI shall agree to indemnify TW Parent, Holdco and any subsidiaries of TW Parent or Holdco and the respective officers, employees, stockholders, agents, and representatives of each of the foregoing against, and shall hold them harmless from, any loss, liability, claim, damage or expense arising from any liability or obligation of UCTI other than those relating to the business of UCTI subsequent to the Closing or otherwise first arising or accruing after the Closing, and (iii) UCTI shall transfer to LMC Parent, TCITP and/or LBI all assets of UCTI other than the TBS Shares, in each case pursuant to agreements in form and substance satisfactory to TW Parent. (c) Certain Actions by UCTI. During the period from September 22, 1995, to the Closing, UCTI shall not (i) issue any securities (or rights to acquire securities), (ii) incur any obligation other than any obligation to be assumed by TCITP and/or LBI on or prior to the Closing Date; (iii) make any Tax election or settle or compromise any Tax liability or refund or (iv) amend its certificate of incorporation or by-laws in any respect, without in any such case the prior approval of TW Parent, which will not be unreasonably withheld or delayed. (d) Advice of Changes. TCITP and TW Parent shall promptly advise the other orally and in writing of any change or event having, or which, insofar as can reasonably be foreseen, would have, a UCTI Material Adverse Effect or a TW Material Adverse Effect, as applicable. 5.2 Access to Information. During the period from the making of the Contribution Election through the Closing Date, UCTI shall afford to TW Parent and its officers, employees, accountants, counsel, financial advisors and other representatives reasonable access during normal business hours to all properties, books, contracts, commitments, personnel and records of UCTI, and shall furnish promptly to TW Parent such information concerning its business, properties and personnel as TW Parent may reasonably request. 5.3 Confidentiality. TW Parent and Holdco shall, and shall cause their affiliates, directors, officers, employees, agents and controlling persons (collectively, "Representatives") to, (i) keep confidential all Proprietary Information of UCTI and its Affiliates disclosed pursuant to Section 5.2 and not disclose or reveal any such Proprietary Information (as defined below) to any person other than those Representatives of TW Parent and Holdco who are participating in effecting the transactions contemplated hereby or who otherwise need to know such Proprietary Information, (ii) use such Proprietary Information only in connection with consummating the transactions contemplated hereby and enforcing TW Parent's and Holdco's rights hereunder, and (iii) not use Proprietary Information in any manner detrimental to LMC Parent, TCITP or its Affiliates. In the event that TW Parent, Holdco or any Representative is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any Proprietary Information, TW Parent shall provide LMC Parent or TCITP with prompt notice of such request to enable LMC Parent or TCITP to seek an appropriate protective order. TW Parent's and Holdco's obligations hereunder with respect to Proprietary Information that (i) is disclosed to a third party with LMC Parent's written approval, (ii) is required to be produced under order of a court of competent jurisdiction or other similar requirements of a governmental agency, or (iii) is required to be disclosed by applicable law or regulation, will, subject in the case of clauses (ii) and (iii) to TW Parent's and Holdco's compliance with the preceding sentence, cease to the extent of the disclosure so consented to or required, except to the extent otherwise provided by the terms of such consent or covered by a protective order. If TW Parent and Holdco use a degree of care to prevent disclosure of the Proprietary Information that is at least as great as the care they normally take to preserve their own information of a similar nature, then they shall not be liable for any disclosure that occurs despite the exercise of that degree of care, and in no event shall TW Parent or Holdco be liable for any indirect, punitive, special or consequential damages under this Section 5.3. In the event this Agreement is terminated, TW Parent and Holdco shall, if so requested by LMC Parent, promptly return or destroy all of the Proprietary Information, including all copies, reproductions, summaries, analyses or extracts thereof or based thereon in the possession of TW Parent, Holdco or their Representatives; provided, however, that TW Parent and Holdco shall not be required to return or cause to be returned summaries, analyses or extracts prepared by either of them or their Representatives, but shall destroy (or cause to be destroyed) the same upon request of LMC Parent. For purposes of this Section 5.3, "Proprietary Information" means all proprietary or confidential information that is furnished to TW Parent or its Representatives, pursuant to Section 5.2, regardless of the manner in which it is furnished. "Proprietary Information" does not include, however, information which (a) has been or in the future is published or now or in the future is otherwise in the public domain through no fault of TW Parent, Holdco or any of their Representatives, (b) was available to TW Parent or Holdco on a non-confidential basis prior to its disclosure pursuant to Section 5.2, (c) becomes available to TW Parent or Holdco on a non-confidential basis from a person other than LMC Parent or its Representatives who is not otherwise bound by a confidentiality agreement with LMC Parent or its Representatives, and is not otherwise prohibited from transmitting the information to TW Parent or Holdco, or (d) is independently developed by TW Parent or Holdco through persons who have not had, either directly or indirectly, access to or knowledge of such information. Notwithstanding any other terms of this Section 5.3, after the Closing, the terms of this Section 5.3 shall not apply to any Proprietary Information, to the extent such Proprietary Information relates to the TBS Shares or to the business or assets of TBS or UCTI. 5.4 Reasonable Efforts; Notification. (a) If LMC Parent makes the Contribution Election, upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use reasonable efforts (i) to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with each other in good faith in doing, all things necessary, to obtain, in the most expeditious manner practicable, all actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings with Governmental Entities in each case as may be necessary for the consummation of the Contribution and the other transactions contemplated by this Agreement or to avoid an action or proceeding by any Governmental Entity, and (ii) to defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed; provided, however, that nothing in this Section 5.4 shall require any such person (i) to agree to, approve, or otherwise be bound by or satisfy any condition of the kind referred to in Section 2.1(d) of the LMC Agreement, (ii) to agree to enter into or be bound by any settlement or judgment (other than the FTC Consent Decree) or (iii) subject to Section 4.1 of the LMC Agreement, to agree to any change to the terms of this Agreement or any of the other Additional Agreements. (b) Between September 22, 1995 and the Closing, each party will give prompt written notice to the other party of: (i) any information that indicates that any of its representations or warranties contained herein was not true and correct as of September 22, 1995, or will not be true and correct at and as of the Closing, with the same force and effect as if made at and as of the Closing (except for changes permitted or contemplated by this Agreement), (ii) the occurrence of any event that will result, or has a reasonable prospect of resulting, in the failure of any condition specified in Article VI hereof to be satisfied, (iii) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement or that such transactions otherwise may violate the rights of or confer remedies upon such third party and (iv) any notice of, or other communication relating to, any litigation referred to in Sections 6.2(c) or any order or judgment entered or rendered therein. 5.5 Public Announcements. TW Parent and Holdco, on the one hand, and LMC Parent, TCITP and LBI, on the other hand, will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange or pursuant to applicable requirements of any national securities association. 5.6 Fees and Expenses. All fees and expenses incurred in connection with the Contribution, this Agreement and the other transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Contribution is consummated. 5.7 Stock Exchange Listing. Holdco shall use reasonable efforts to cause all shares of Holdco Common Stock to be issued as Consideration hereunder (or issuable in exchange for or upon conversion of any Voting Holdco LMC Common Stock or LMCN-V Common Stock issued to any Liberty Party pursuant to this Agreement or any Additional Agreement) to be approved for listing on the New York Stock Exchange, subject to official notice of issuance, prior to the Closing Date. 5.8 Tax Treatment. If the Contribution Election is made, each of TW Parent, on the one hand, and LMC Parent, TCITP and LBI, on the other hand, shall use commercially reasonable efforts to cause the Contribution to qualify as a tax-free exchange under Section 351 of the Code. 5.9 Transfer and Real Property Transfer Gains Taxes. TW Parent (and not TBS or any Liberty Party) shall be responsible for any liabilities, without deduction or withholding from any amount payable to any Liberty Party pursuant to this Agreement or to the TBS stockholders pursuant to the Merger Agreement, arising under any New York State Real Estate Transfer Tax, New York State Tax on Gains Derived from certain Real Property Transfers, New York City Real Property Transfer Tax, New York State Stock Transfer Tax and any similar Taxes imposed by any other city or State of the United States (and any penalties and interest with respect to such Taxes), to the extent any such Taxes are attributable to the transfer of Contributed Assets and become payable in connection with the transactions contemplated by this Agreement and the Merger Agreement, on behalf of the Liberty Parties. Except as otherwise required by law, the Liberty Parties shall not take a position on any Tax Return that is inconsistent with the values and allocations established by Holdco, UCTI or any Affiliates of Holdco on any Tax Returns relating to such Taxes. ARTICLE VI CONDITIONS PRECEDENT 6.1 Conditions to Each Party's Obligation To Effect Contribution. The respective obligation of each party to consummate the Contribution is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Antitrust. The waiting periods (and any extensions thereof) applicable to the transactions contemplated by this Agreement under the HSR Act shall have been terminated or shall have expired and the FTC shall have initially accepted the FTC Consent Decree for public comment. (b) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Mergers, the Contribution or any other material transaction contemplated by this Agreement or the Merger Agreement shall be in effect; provided, however, that, subject to the proviso in Section 5.4(a), each of the parties shall have used its commercially reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible, any such injunction or other order that may be entered. (c) Consummation of the Mergers. The Mergers shall be consummated and become effective concurrently with the consummation and effectiveness of the Contribution. 6.2 Conditions to Obligations of Holdco. The obligation of Holdco to consummate the Contribution is further subject to the satisfaction or waiver by Holdco on or prior to the Closing Date of the following conditions: (a) Representations and Warranties. The representations and warranties of LMC Parent, TCITP and LBI set forth in this Agreement that are qualified as to materiality shall be true and correct, and the representations and warranties of LMC Parent, TCITP and LBI set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except to the extent any such representation or warranty expressly relates to an earlier date (in which case as of such date), and Holdco shall have received a certificate to such effect signed on behalf of LMC Parent, TCITP and LBI by the chief executive officer (or a senior vice president) and the chief financial officer of LMC Parent. (b) Performance of Obligations. LMC Parent, TCITP and LBI shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and Holdco shall have received a certificate to such effect signed on behalf of LMC Parent, TCITP and LBI by the chief executive officer (or a senior vice president) and the chief financial officer of LMC Parent. (c) No Litigation. There shall not be pending any suit, action or proceeding by any Governmental Entity (i) seeking to restrain or prohibit the consummation of the Contribution or any other transaction contemplated by this Agreement or seeking to obtain from Holdco, TW Parent or any of their subsidiaries any damages that are material in relation to UCTI, (ii) seeking to prohibit or limit the ownership by Holdco or any of its subsidiaries (including UCTI) of the Contributed Assets or the ownership by Holdco or any of its subsidiaries (including UCTI) of the TBS Shares, or seeking to compel Holdco or any of its subsidiaries (including UCTI) to dispose of or hold separate any material portion of the Contributed Assets or the TBS Shares, (iii) seeking to impose limitations on the ability of Holdco or any of its subsidiaries (including UCTI) to acquire or hold, or exercise full rights of ownership of the Contributed Assets or any TBS Shares, including the right to vote or cause the vote of such TBS Shares on all matters properly presented to the stockholders of TBS, or (iv) which otherwise is reasonably likely to have a UCTI Material Adverse Effect or a TW Material Adverse Effect. 6.3 Right of LMC Parent to Withdraw Contribution Election. The obligations of LMC Parent, TCITP and LBI to consummate the Contribution are further subject to the right of LMC Parent to withdraw the Contribution Election at any time prior to three business days prior to the Effective Time. ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 7.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written consent of TW Parent and LMC Parent; (b) by LMC Parent, at any time prior to three business days prior to the Effective Time, by written notice to TW Parent and Holdco; and (c) by TW Parent: (i) if the Merger Agreement has been terminated; or (ii) if the Mergers shall not have been consummated on or before September 30, 1996, unless the failure to consummate the Mergers is the result of a wilful and material breach of this Agreement by TW Parent; or (iii) if any condition set forth in Section 6.1 or Section 6.2, is not satisfied and not capable of being satisfied prior to the end of the period referred to in Section 7.1(c)(ii). This Agreement will automatically terminate upon the consummation of the TBS Merger, if no Contribution Election shall theretofore have been timely made hereunder. 7.2 Effect of Termination. In the event of any termination of this Agreement by either LMC Parent or TW Parent as provided in Section 7.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of TW Parent, LMC Parent, TCITP or LBI, other than the provisions of Sections 4.1(g), 4.2(e), 5.3 and 5.6, this Section 7.2 and Article VIII and except to the extent that such termination results from the wilful and material breach by a party of any of its representations, warranties, covenants or other agreements set forth in this Agreement. The Termination of this Agreement shall not affect the enforceability of, the obligations under or the terms of any other agreements relating to or entered into in connection with the Mergers. 7.3 Amendment. This Agreement may be amended by the parties at any time, but only by an instrument in writing signed on behalf of each of the parties. 7.4 Extension; Waiver. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. ARTICLE VIII GENERAL PROVISIONS 8.1 Non-survival of Representations and Warranties. Subject to the next sentence, none of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. Notwithstanding the previous sentence or any other provision of this Agreement, the representation and warranty provided in Section 4.1(j) shall survive the Effective Time and shall continue in full force and effect indefinitely. This Section 8.1 shall not limit any covenant or agreement which by its terms contemplates performance after the Effective Time (including those set forth in Article III and Section 5.1(b)). 8.2 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be sufficient if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address, for a party, as shall be specified by like notice): (a) if to TW Parent or Holdco, to Time Warner Inc. 75 Rockefeller Plaza New York, New York 10019 Attention: President with a copy similarly addressed to the attention of General Counsel with a copy to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Attention: Richard Hall, Esq. (b) to LMC Parent, TCITP or LBI, to Liberty Media Corporation Terrace Towers II 5619 DTC Parkway Englewood, Colorado 80111-3000 Attention: President with copies to: Stephen M. Brett, Esq. General Counsel Tele-Communications, Inc. Terrace Towers II 5619 DTC Parkway Englewood, Colorado 80111-3000 and Baker & Botts, L.L.P. 599 Lexington Avenue New York, New York 10022 Attention: Elizabeth M. Markowski, Esq. 8.3 Descriptive Headings. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 8.4 Counterparts. This Agreement may be executed in two or more counterparts and on separate counterparts, each of which shall be an original instrument and all of which together shall constitute one and the same agreement. 8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement and the Additional Agreements (including the documents referred to herein and therein) (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement and (b) except for the provisions of Article III of this Agreement, are not intended to confer upon any person other than the parties hereto and thereto and, on and after the date of Spin-off, SpinCo, any rights or remedies. 8.6 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts among Delaware corporations made and to be performed wholly in the State of Delaware, except to the extent the laws of the State of Colorado are mandatorily applicable. 8.7 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except as provided in Section 2.6. 8.8 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Delaware or in Delaware state court (in addition to any other remedy to which they are entitled at law or in equity). In addition, each of the parties hereto (a) hereby consents and submits itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal court sitting in the State of Delaware or a Delaware state court. 8.9 Waivers. Except as provided in this Agreement or any waiver pursuant to Section 7.4, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. The waiver by any party hereto of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder. IN WITNESS WHEREOF, TW Parent, Holdco, TCITP and LBI have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. TIME WARNER INC. By Name: Title: TW INC. By Name: Title: TCI TURNER PREFERRED, INC. By Name: Title: LIBERTY MEDIA CORPORATION By Name: Title: LIBERTY BROADCASTING, INC. By Name: Title: Acknowledged and agreed by TELE-COMMUNICATIONS, INC. (for purposes of Section 3.1(a) only) By Name: Title: The undersigned hereby agree to the amendment of the LMC Agreement as provided in Section 3.6, above. TIME WARNER INC. TCI TURNER PREFERRED, INC. By: By: Name: Name: Title: Title: TW INC. COMMUNICATION CAPITAL CORP. By: By: Name: Name: Title: Title: LIBERTY MEDIA CORPORATION UNITED CABLE TURNER INVESTMENT INC. By: By: Name: Name: Title: Title: To the extent necessary to approve the amendment, only TELE-COMMUNICATIONS, INC. By: Name: Title: To be executed on and as of the date of the Spin-off, as provided in Section 2.6: SOUTHERN SATELLITE SYSTEMS, INC. By: Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----