MARKED TO SHOW CHANGES
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 2001
REGISTRATION NO. 333-54518
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
AOL TIME WARNER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75 ROCKEFELLER PLAZA 13-4099534
(STATE OR OTHER JURISDICTION NEW YORK, NY 10019 I.R.S. EMPLOYER IDENTIFICATION NO.
OF INCORPORATION OR ORGANIZATION) (212) 484-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
AMERICA ONLINE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22000 AOL WAY 54-1322110
(STATE OR OTHER JURISDICTION DULLES, VA 20166 I.R.S. EMPLOYER IDENTIFICATION NO.
OF INCORPORATION OR ORGANIZATION) (703) 265-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
TIME WARNER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75 ROCKEFELLER PLAZA 13-3527249
(STATE OR OTHER JURISDICTION NEW YORK, NY 10019 I.R.S. EMPLOYER IDENTIFICATION NO.
OF INCORPORATION OR ORGANIZATION) (212) 484-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
TIME WARNER COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75 ROCKEFELLER PLAZA 13-1388520
(STATE OR OTHER JURISDICTION NEW YORK, NY 10019 I.R.S. EMPLOYER IDENTIFICATION NO.
OF INCORPORATION OR ORGANIZATION) (212) 484-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
TURNER BROADCASTING SYSTEM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA ONE CNN CENTER 58-0950695
(STATE OR OTHER JURISDICTION ATLANTA, GEORGIA 30303 I.R.S. EMPLOYER IDENTIFICATION NO.
OF INCORPORATION OR ORGANIZATION) (404) 827-1700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GERALD M. LEVIN
CHIEF EXECUTIVE OFFICER
AOL TIME WARNER INC.
75 ROCKEFELLER PLAZA, NEW YORK, NY 10019
(212) 484-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-------------------
Paul T. Cappuccio Copies to: William P. Rogers, Jr.
Executive Vice President, Cravath, Swaine & Moore
General Counsel and Secretary 825 Eighth Avenue
AOL Time Warner Inc. New York, NY 10019
75 Rockefeller Plaza New York, NY (212) 474-1000
10019
(212) 484-8000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement, as determined by
market conditions. If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
-------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
(table and footnotes on next page)
--------------------------------------------------------------------------------
(table and footnotes from previous page)
CALCULATION OF REGISTRATION FEE
-----------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AGGREGATE MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(3) PER UNIT(3) PRICE(2)(3) FEES(3)
Debt Securities(5)...............
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Guarantees of Debt
Securities(4)..................
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Preferred Stock(5)...............
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Series Common Stock..............
-----------------------------------------------------------------------------------------------------
Common Stock.....................
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Warrants.........................
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Total........................ $10,000,000,000 100% $10,000,000,000 (6)
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(1) United States dollars or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies.
(2) The proposed maximum aggregate offering price has been estimated solely to
calculate the registration fee.
(3) Pursuant to General Instruction II.D. of Form S-3 the table lists each of
the classes of securities being registered and the aggregate proceeds to be
raised, but does not specify by each class information as to the amount to
be registered, proposed maximum offering price per unit, and proposed
maximum aggregate offering price.
(4) America Online, Inc. and Time Warner Inc. will fully, irrevocably and
unconditionally guarantee on an unsecured basis the debt securities of AOL
Time Warner Inc. Time Warner Companies, Inc. and Turner Broadcasting System,
Inc. will fully, irrevocably and unconditionally guarantee on an unsecured
basis Time Warner Inc.'s guarantee of the debt securities of AOL Time Warner
Inc. Pursuant to Rule 457(n), no separate fee is required to be paid in
respect of guarantees of the debt securities which are being registered
concurrently.
(5) If any debt securities or preferred stock are issued at an original issue
discount then the amount registered shall include the principal or
liquidation amount of such securities measured, however, by the initial
offering price thereof.
(6) A fee of $1,330,107.57 was previously paid with the original filing of this
registration statement. Pursuant to Rule 429 under the Securities Act, (i)
$3,691,817,161.05 of securities are being carried forward from America
Online Inc.'s registration statement on Form S-3 (File No. 333-79489), and
(ii) $987,752,542.37 of securities are being carried forward from Time
Warner Inc.'s registration statement on Form S-3 (File No. 333-61207). Each
of America Online Inc. and Time Warner Inc. is a co-registrant on this
registration statement. Each of America Online Inc. and Time Warner Inc.
previously paid a fee calculated based on the rate applicable at the time
the prior registration statement was filed. The amount of the fee paid
herewith has been calculated after giving effect to the amount of securities
being carried forward from these prior registration statements.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 26, 2001
PROSPECTUS
$10,000,000,000
AOL TIME WARNER INC.
DEBT SECURITIES
Unconditionally Guaranteed by
America Online, Inc.
and
Time Warner Inc.
PREFERRED STOCK
SERIES COMMON STOCK
COMMON STOCK
WARRANTS
This prospectus contains a general description of the securities which we
may offer for sale. The specific terms of the securities will be contained in
one or more supplements to this prospectus. Read this prospectus and any
supplement carefully before you invest.
The debt securities will be fully, irrevocably and unconditionally
guaranteed on an unsecured basis by each of America Online, Inc. and Time Warner
Inc. Time Warner Companies, Inc. and Turner Broadcasting System, Inc. will
fully, irrevocably and unconditionally guarantee on an unsecured basis Time
Warner Inc.'s guarantee of the debt securities. See 'Description of the Debt
Securities and the Guarantees'.
The common stock of AOL Time Warner Inc. is listed on the New York Stock
Exchange under the trading symbol 'AOL'.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY , 2001.
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... 2
Where You Can Find More Information......................... 3
Statements Regarding Forward-Looking Information............ 5
The Company................................................. 6
Holding Company and Guarantee Structure..................... 9
Ratio of Earnings to Fixed Charges.......................... 10
Use of Proceeds............................................. 12
Description of the Debt Securities and the Guarantees....... 12
Description of the Capital Stock............................ 21
Description of the Warrants................................. 26
Plan of Distribution........................................ 28
Legal Opinions.............................................. 28
Experts..................................................... 28
-------------------
ABOUT THIS PROSPECTUS
To understand the terms of the securities offered by this prospectus, you
should carefully read this prospectus and any prospectus supplement. You should
also read the documents referred to under the heading 'Where You Can Find More
Information' for information on AOL Time Warner Inc. and its financial
statements. AOL Time Warner Inc. has its principal offices at 75 Rockefeller
Plaza, New York, NY 10019 (telephone: 212-484-8000). Certain capitalized terms
used in this summary are defined elsewhere in this prospectus.
AOL Time Warner Inc., a Delaware corporation, which is also referred to as
'our company', 'AOL Time Warner', 'AOL TW', 'us' or 'we', filed a registration
statement with the Securities and Exchange Commission under a 'shelf'
registration procedure. Under this procedure, AOL Time Warner may offer and sell
from time to time, any of the following securities, in one or more series, in
amounts that will provide up to $10,000,000,000, or the equivalent in one or
more foreign currencies, including composite currencies, in initial aggregate
public offering prices:
debt securities,
preferred stock,
series common stock,
common stock and
warrants.
The securities may be sold for U.S. dollars, foreign-denominated currency or
currency units. Amounts payable with respect to any securities may be payable in
U.S. dollars or foreign-denominated currency or currency units as specified in
the prospectus supplement.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
The prospectus supplement may also contain information about any material
United States federal income tax considerations relating to the securities
covered by the prospectus supplement.
We may sell securities to underwriters who will sell the securities to the
public on terms fixed at the time of sale. In addition, the securities may be
sold by us directly or through dealers or agents designated from time to time,
which agents may be affiliates of ours. If we, directly or through agents,
solicit offers to purchase the securities, we reserve the sole right to accept
and, together with our agents, to reject, in whole or in part, any offer.
The prospectus supplement will also contain, with respect to the securities
being sold, the names of any underwriters, dealers or agents, together with the
terms of offering, the compensation of any underwriters and the net proceeds to
us.
2
Any underwriters, dealers or agents participating in the offering may be
deemed 'underwriters' within the meaning of the Securities Act of 1933.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus incorporates documents by reference which are not presented
in or delivered with this prospectus.
All documents filed by AOL Time Warner, America Online, Inc., or 'America
Online', or Time Warner Inc., or 'Time Warner', pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the termination of the offering of the securities, are
incorporated by reference into and are deemed to be a part of this prospectus
from the date of filing of those documents.
You should rely only on the information contained in this document or that
which we have referred you to. We have not authorized anyone to provide you with
any additional information.
The following documents, which have been filed by AOL Time Warner with the
Securities and Exchange Commission (SEC file number 001-15062) are incorporated
by reference into this prospectus:
AOL Time Warner's Joint Proxy Statement-Prospectus included in its
registration statement on Form S-4 (declared effective on May 19, 2000).
AOL Time Warner's Current Report on Form 8-K dated January 11, 2001
(filing date January 12, 2001).
AOL Time Warner's Current Report on Form 8-K/A dated January 11, 2001
(filing date January 26, 2001).
AOL Time Warner's Current Report on Form 8-K dated January 18, 2001
(filing date January 26, 2001).
AOL Time Warner's Current Report on Form 8-K/A dated January 11, 2001
(filing date February 9, 2001).
The following documents, which have been filed by America Online with the
Securities and Exchange Commission (SEC file number 001-12143), are incorporated
by reference into this prospectus:
America Online's Annual Report on Form 10-K for the fiscal year ended
June 30, 2000 (filing date September 22, 2000), as amended by Form 10-K/A
(filing date October 30, 2000).
America Online's Quarterly Report on Form 10-Q, for the quarterly period
ended September 30, 2000 (filing date November 9, 2000), as adjusted by AOL
Time Warner's Current Report on Form 8-K dated January 18, 2001 (filing date
January 26, 2001).
The following documents, which were filed by Time Warner with the Securities
and Exchange Commission (SEC file number 001-12259), are incorporated by
reference into this prospectus:
Time Warner's Annual report on Form 10-K for the year ended
December 31, 1999 (filing date March 30, 2000), as amended by Amendment
No. 1 on Form 10-K/A (filing date June 27, 2000).
Time Warner's Quarterly Reports on Form 10-Q, for the quarterly periods
ended:
March 31, 2000 (filed May 15, 2000) September 30, 2000 (filed November 13, 2000)
June 30, 2000 (filed August 14, 2000)
Time Warner's Current Reports on Form 8-K dated:
January 10, 2000 (filed January 14, 2000) March 31, 2000 (filed March 31, 2000)
January 23, 2000 (filed January 28, 2000) April 12, 2000 (filed April 19, 2000)
February 2, 2000 (filed February 10, 2000) April 19, 2000 (filed April 25, 2000)
January 10, 2000 (filed February 11, 2000) May 22, 2000 (filed May 22, 2000)
March 13, 2000 (filed March 13, 2000) October 5, 2000 (filed October 5, 2000)
3
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this prospectus will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or any other subsequently filed document that is
deemed to be incorporated by reference into this prospectus modifies or
supersedes the statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus to any person, without
charge, upon written or oral request. If exhibits to the documents incorporated
by reference in this prospectus are not themselves specifically incorporated by
reference in this prospectus, then the exhibits will not be provided.
Requests for documents relating to AOL Time Warner or any of the guarantors
should be directed to:
AOL Time Warner Inc., 75 Rockefeller Plaza, New York, New York 10019,
Attention: Shareholder Relations, telephone: (212) 484-6971, e-mail:
aoltimewarnerir@aol.com.
AOL Time Warner files and America Online and Time Warner have filed reports,
proxy statements and other information with the SEC. Copies of these reports,
proxy statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC at:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a website
that contains reports, proxy statements and other information regarding each of
us. The address of the SEC website is http://www.sec.gov.
Reports, proxy statements and other information concerning AOL Time Warner,
America Online and Time Warner may be inspected at:
The New York Stock Exchange
20 Broad Street
New York, New York 10005
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS
PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED INTO THIS PROSPECTUS
BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS.
4
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
The Securities and Exchange Commission encourages companies to disclose
forward-looking information so that investors can better understand a company's
future prospects and make informed investment decisions. This prospectus
contains such 'forward-looking statements' within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements may be made directly
in this prospectus referring to us and they may also be made a part of this
prospectus by reference to other documents filed with the Securities and
Exchange Commission by us, America Online or Time Warner, which is known as
'incorporation by reference.'
Words such as 'anticipate', 'estimate', 'expects', 'projects', 'intends',
'plans', 'believes' and words and terms of similar substance used in connection
with any discussion of future operating or financial performance identify
forward-looking statements. All forward-looking statements are management's
present expectations of future events and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. Actual results may vary materially
from those described in the forward-looking statements due to a variety of
factors. Investors are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this prospectus
or the date of the document incorporated by reference in this prospectus. None
of us, America Online, Time Warner, Time Warner Companies, Inc. and Turner
Broadcasting System, Inc. is under any obligation, and each expressly disclaims
any obligation, to update or alter any forward-looking statements, whether as a
result of new information, future events or otherwise.
AOL Time Warner operates in highly competitive, consumer driven and rapidly
changing Internet, media and entertainment businesses that are dependent on
government regulation and economic, political and social conditions in the
countries in which they operate, consumer demand for their products and
services, technological developments and (particularly in view of technological
changes) protection of their intellectual property rights. AOL Time Warner's
actual results could differ materially from management's expectations because of
changes in such factors and factors affecting the integration of the businesses
of America Online and Time Warner.
For additional information about factors that could cause actual results to
differ materially from those described in the forward-looking statements, please
see the documents that we, America Online and Time Warner have filed with the
SEC, including quarterly reports on Form 10-Q and annual reports on Form 10-K
and our Registration Statement on Form S-4.
All subsequent forward-looking statements attributable to us, America
Online, Time Warner, Time Warner Companies, Inc. or Turner Broadcasting System,
Inc. or any person acting on our or their behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this
section.
5
THE COMPANY
AOL TIME WARNER
We are the world's preeminent Internet-powered media and communications
company, whose industry-leading businesses include interactive services, cable
systems, publishing, music, television networks and filmed entertainment.
AOL Time Warner classifies its business interests into the following
fundamental areas:
interactive services, consisting principally of the development and
operation of branded interactive services such as AOL, CompuServe and
Netscape, branded properties that operate across multiple services and
platforms such as Digital City, Moviefone and MapQuest and interactive
messaging services such as AIM and ICQ;
cable systems, consisting principally of interests in cable television
systems, including Time Warner Cable;
publishing, consisting principally of interests in magazine publishing,
book publishing and direct marketing, including Time, People, Sports
Illustrated, Warner Books and Time Life Inc.;
music, consisting principally of interests in recorded music and music
publishing, including Warner Music Group and its labels Atlantic, Elektra,
London-Sire, Rhino, Warner Bros. Records and Warner Music International;
television networks, consisting principally of interests in cable
television programming and television broadcasting, including WTBS
Superstation, TNT, Cartoon Network, CNN News Group, Home Box Office and the
WB Television Network; and
filmed entertainment, consisting principally of interests in filmed
entertainment and television production, including Warner Bros. and New
Line Cinema.
As a result of the January 2001 merger between America Online and Time
Warner, we are a holding company with two wholly owned subsidiaries, America
Online and Time Warner. The business of our company is the combined businesses
previously conducted by America Online and Time Warner. We combined America
Online's extensive Internet properties, technology and infrastructure with Time
Warner's broad array of media, entertainment and news brands and its
technologically advanced broadband delivery systems to create a new company
capable of enhancing consumers' access to the broadest selection of high quality
content and interactive services.
AMERICA ONLINE AND TIME WARNER
America Online and Time Warner are wholly owned subsidiaries of AOL Time
Warner as a result of their mergers in January 2001 with separate subsidiaries
of AOL Time Warner. America Online is primarily an operating company, although
it conducts a portion of its business through subsidiaries. The primary
activities of America Online include the operation of the interactive online
services businesses of AOL Time Warner. Time Warner is a holding company that
derives its operating income and cash flow from its investments in its
subsidiaries.
TWC AND TBS
Time Warner Companies, Inc., or 'TWC', and Turner Broadcasting System, Inc.,
or 'TBS', are wholly owned subsidiaries of Time Warner as a result of the merger
in 1996 of TWC and TBS with separate subsidiaries of Time Warner. Each of TWC
and TBS is a holding company that derives its operating income and cash flow
primarily from its subsidiaries and investments. The assets of each of TWC and
TBS consist primarily of investments in its consolidated and unconsolidated
subsidiaries. The primary activities of TBS's subsidiaries include the operation
of cable networks and the primary activities of TWC's wholly owned subsidiaries
include the operation of publishing, music and a portion of Time Warner's cable
systems. TWC also owns a 74.49% equity interest in Time Warner Entertainment
Company, L.P., or 'TWE', a limited partnership that owns a majority of Time
Warner's interests in filmed entertainment and cable television systems and a
portion of its interests in television networks.
6
RECIPROCAL GUARANTEES
Time Warner, TWC and TBS Reciprocal Guarantees. In connection with the 1996
merger of TWC and TBS, and in order to simplify the credit structure of Time
Warner, TWC and TBS such that the financial risks associated with investing in
the indebtedness of any one of the three companies were substantially equivalent
to those associated with investing in the indebtedness of any of the other
companies, Time Warner, TWC and TBS entered into a series of reciprocal
guarantees, which are described below.
2001 Reciprocal Guarantees. In connection with the January 2001 merger of
America Online and Time Warner, and in order to simplify the credit structure of
AOL Time Warner, America Online, Time Warner, TWC and TBS such that the
financial risks associated with investing in the indebtedness of any one of the
five companies are substantially equivalent to those associated with investing
in the indebtedness of any of the other companies, AOL Time Warner, America
Online, Time Warner, TWC and TBS in January 2001, entered into a series of
reciprocal guarantees, which are described below.
RECIPROCAL GUARANTEES OF THE INDEBTEDNESS OF TIME WARNER, TWC AND TBS
Time Warner Downstream Guarantee. Beginning in 1996, Time Warner, as primary
obligor and not merely as surety, fully, irrevocably and unconditionally
guaranteed:
the full and punctual payment of principal of and interest on the public
debt of each of TWC and TBS when due, whether at maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of TWC and
TBS under such public debt of TWC and TBS and the indentures relating to
such public debt (including the obligations to the respective trustees) and
the full and punctual performance within applicable grace periods of all
other obligations of TWC and TBS under such public debt and the respective
indentures.
This guarantee by Time Warner is called the 'Time Warner Downstream
Guarantee'.
TWC-TBS Cross and Upstream Guarantees. Beginning in 1997 and 1998, each of
TWC and TBS, as primary obligor and not merely as surety, fully, irrevocably and
unconditionally guaranteed:
the full and punctual payment of principal of and interest on the public
debt of Time Warner and each other when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary
obligations of Time Warner and each other under such public debt and the
indentures relating to such public debt (including the obligations to the
respective trustees) and
the full and punctual performance within applicable grace periods of all
other obligations of Time Warner and each other under such public debt and
the respective indentures.
The guarantees by each of TWC and TBS of the other's public debt are called
the 'TWC-TBS Cross Guarantees', and the guarantee by each of TWC and TBS of Time
Warner's public debt is called the 'TWC-TBS Upstream Guarantee'.
Time Warner Additional Guarantee. Beginning in 1998, Time Warner also fully,
irrevocably and unconditionally guaranteed each of TWC's and TBS's obligations
under the TWC-TBS Cross Guarantees, such guarantee being referred to as the
'Time Warner Additional Guarantee'.
Guarantee Limitation. The maximum aggregate amount of the upstream guarantee
and the cross guarantee by TWC and the maximum aggregate amount of the upstream
guarantee and the cross guarantee by TBS shall not exceed the maximum amount
that can be guaranteed by TWC or TBS, respectively, without rendering such
guarantee voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
JANUARY 2001 RECIPROCAL GUARANTEES OF THE INDEBTEDNESS OF AMERICA ONLINE, TIME
WARNER, TWC AND TBS
AOL TW Group Debt Securities. Prior to the merger of America Online and Time
Warner, America Online had outstanding one series of publicly held convertible
subordinated notes, or the
7
'AOL Convertible Notes', which were convertible at the option of the holder into
shares of America Online common stock. Prior to the merger, Time Warner had
outstanding two series of publicly held debt securities, or the 'Time Warner
Debt Securities'. In addition, two wholly owned subsidiaries of Time Warner, TWC
and TBS, each had a number of outstanding series of publicly held debt
securities, or the 'TW Subsidiary Debt Securities', and, together with the AOL
Convertible Notes, the Time Warner Debt Securities and, when issued, the AOL
Time Warner Debt Securities (as described below) including debt securities
covered by this prospectus, are collectively referred to herein as the 'AOL TW
Group Debt Securities'.
AOL TW Downstream Guarantee. To the extent they were outstanding immediately
prior to the merger between America Online and Time Warner, the AOL Convertible
Notes and the Time Warner Debt Securities remain outstanding after the merger as
securities of America Online and Time Warner, respectively. The TW Subsidiary
Debt Securities also remain outstanding after the merger as securities of TWC
and TBS. In connection with the merger, AOL Time Warner has executed
supplemental indentures to the indentures covering each series of AOL TW Group
Debt Securities, pursuant to which AOL Time Warner has agreed to fully,
irrevocably and unconditionally guarantee, such guarantee being referred to
herein as the 'AOL TW Downstream Guarantee', (a) the obligations of America
Online with respect to the AOL Convertible Notes and (b) the obligations of Time
Warner with respect to (i) the Time Warner Debt Securities, (ii) the Time Warner
Downstream Guarantee and (iii) the Time Warner Additional Guarantee.
America Online Cross Guarantee. America Online has entered into supplemental
indentures that fully, irrevocably and unconditionally guarantee, such guarantee
being referred to herein as the 'America Online Cross Guarantee', the
obligations of Time Warner with respect to (a) the Time Warner Debt Securities,
(b) the Time Warner Downstream Guarantee and (c) the Time Warner Additional
Guarantee.
Time Warner Cross Guarantee. Time Warner has entered into supplemental
indentures that fully, irrevocably and unconditionally guarantee, such guarantee
being referred to herein as the 'Time Warner Cross Guarantee', the obligations
of America Online with respect to the AOL Convertible Notes.
Supplemental TWC-TBS Upstream Guarantee. TWC and TBS have each entered into
supplemental indentures that fully, irrevocably and unconditionally guarantee,
such guarantee being referred to herein as the 'Supplemental TWC-TBS Upstream
Guarantee', the obligations of Time Warner with respect to the Time Warner Cross
Guarantee.
AOL TW Additional Guarantee. AOL Time Warner has additionally guaranteed
each of the America Online and Time Warner Cross Guarantees, such guarantee
being referred to herein as the 'AOL TW Additional Guarantee', upon
substantially the same terms and conditions as the AOL TW Downstream Guarantee.
AOL-TW Upstream Guarantee. As described below and under the 'Description of
the Debt Securities and the Guarantees', America Online and Time Warner will
fully, irrevocably and unconditionally guarantee all debt of AOL Time Warner
covered by this prospectus, and TWC and TBS will fully, irrevocably and
unconditionally guarantee Time Warner's guarantee of such public debt, such
guarantees being referred to herein as the 'AOL-TW Upstream Guarantee'.
Guarantee Limitation. The maximum aggregate amount of the downstream and
additional guarantee by AOL TW, the maximum aggregate amount of the upstream
guarantee and cross guarantee by America Online, the maximum amount of the
upstream guarantee and cross guarantee by Time Warner, the maximum aggregate
amount of the upstream guarantee and the supplemental upstream guarantee by TWC
and the maximum aggregate amount of the upstream guarantee and the supplemental
upstream guarantee by TBS shall not exceed the maximum amount that can be
guaranteed by AOL TW, America Online, Time Warner, TWC or TBS, respectively,
without rendering such guarantee voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
8
[FLOW CHART]
HOLDING COMPANY AND GUARANTEE STRUCTURE
AOL Time Warner
Guarantor under AOL TW Downstream Guarantee
Guarantor under AOL TW Additional Guarantee
American Online
Guarantor under AOL-TW Upstream Guarantee
Guarantor under America Online Cross Guarantee
Time Warner
Guarantor under AOL-TW Upstream Guarantee
Guarantor under the Time Warner Additional Guarantee
Guarantor under the Time Warner Downstram Guarantee
Guarantor under the TWC-TBS Cross Guarantee
TWC
Cuarantor under AOL-TW Upstream Guarantee
Guarantor under the TWC-TBS Upstream Guarantee
Guarantor under the TWC-TBS Cross Guarantee
Guarantor under the Supplemental TWC-TBS Upstream Guarantee
TBS
Guarantor under AOL-TW Upstream Guarantee
Guarantor under the TWC-TBS Upstream Guarantee
Guarantor under TWC-TBS Cross Guarantee
Guarantor under the TWC-TBS Upstream Guarantee
Time Warner General
and
Limited Partners
74.49%
TWE
GLOSSARY
AOL TW ADDITIONAL GUARANTEE: AOL Time Warner's guarantee of
each of America Online's and Time Warner's obligations
under the America Online and Time Warner Cross Guarantees.
AOL TW DOWNSTREAM GUARANTEE: AOL Time Warner's guarantee of
America Online's obligations under the AOL Convertible
Notes and of Time Warner's obligations under the Time
Warner Debt Securities, the TWC-TBS Downstream Guarantee
and the TWC-TBS Additional Guarantee.
AOL-TW UPSTREAM GUARANTEE: America Online's and Time
Warner's guarantee of AOL TW's obligations under its debt
securities and TWC's and TBS's guarantee of Time Warner's
guarantee of the debt securities.
AMERICA ONLINE CROSS GUARANTEE: America Online's guarantee
of Time Warner's obligations under the Time Warner Debt
Securities, the TWC-TBS Downstream Guarantee and the
TWC-TBS Additional Guarantee.
TIME WARNER ADDITIONAL GUARANTEE: Time Warner's guarantee of
TWC's and TBS's obligations under the TWC-TBS Cross
Guarantee.
TIME WARNER DOWNSTREAM GUARANTEE: Time Warner's guarantee of
TWC's and TBS's obligations under the TWC-TBS Cross
Guarantee.
TIME WARNER CROSS GUARANTEE: Time Warner's guarantee of
America Online's obligations under the AOL Convertible
Notes.
SUPPLEMENTAL TWC-TBS UPSTREAM GUARANTEE: Each of TWC's and TBS's
guarantee of Time Warner's obligations under the Time Warner
Cross Guarantee.
TWC-TBS UPSTREAM GUARANTEE: Each of TWC's and TBS's guarantee of
Time Warner's obligations under its Debt Securities.
TWC-TBS CROSS GUARANTEE: Each of TWC and TBC guarantee the
other's obligations under the TW Subsidiary Debt
Securities.
9
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges and the ratio of earnings to combined
fixed charges and preferred dividends for each of AOL Time Warner, America
Online, Time Warner, TWC and TBS are set forth below for the periods indicated.
For periods in which earnings before fixed charges were insufficient to cover
fixed charges (or combined fixed charges and preferred dividends), the dollar
amount of coverage deficiency (in millions), instead of the ratio, is disclosed.
In addition to the historical ratios (or coverage deficiencies), pro forma
ratios of earnings to fixed charges and pro forma ratios of earnings to combined
fixed charges and preferred dividends are presented that give effect to the
merger of America Online and Time Warner as if it occurred at the beginning of
each period. Because America Online and Time Warner have different fiscal years,
and the combined company has adopted the calendar year-end of Time Warner, pro
forma ratios for AOL Time Warner are presented on two different bases as
follows: (1) a June 30 fiscal year basis, which is consistent with America
Online's historical fiscal year-end, and (2) a December 31 calendar year basis,
which is consistent with Time Warner's historical fiscal year-end and that of
AOL Time Warner going forward. Management believes that it is meaningful to
present pro forma financial information based on the calendar year-end of the
combined company to facilitate an analysis of the pro forma effects of the
merger.
Further, as a result of the merger of America Online and Time Warner, the
pro forma ratios of Time Warner, TWC and TBS have each been adjusted to reflect
an allocable portion of AOL Time Warner's new basis of accounting on a pushdown
basis. The historical ratios are reflected at each company's historical cost
basis of accounting.
The pro forma ratios have been derived from, and should be read in
conjunction with, the pro forma consolidated condensed financial statements
including the notes thereto, of AOL Time Warner. Those pro forma consolidated
condensed financial statements are included in AOL Time Warner's Current Report
on Form 8-K/A dated January 11, 2001, which is incorporated herein by reference.
For purposes of computing the ratio of earnings to fixed charges and the
ratio of earnings to combined fixed charges and preferred stock dividends,
earnings were calculated by adding:
(i) pretax income,
(ii) interest expense, including previously capitalized interest
amortized to expense and the portion of rents representative of an interest
factor for AOL Time Warner, America Online, Time Warner, TWC, TBS and their
respective majority-owned subsidiaries,
(iii) AOL Time Warner's, America Online's, Time Warner's, TWC's, and
TBS's respective proportionate share of the items included in (ii) above for
their 50%-owned companies,
(iv) preferred stock dividend requirements of majority-owned companies,
(v) minority interest in the income of majority-owned subsidiaries that
have fixed charges, and
(vi) the amount of undistributed losses of each of AOL Time Warner's,
America Online's, Time Warner's, TWC's and TBS's less than 50%-owned
companies.
Fixed charges consist of:
(i) interest expense, including interest capitalized and the portion of
rents representative of an interest factor for AOL Time Warner, America
Online, Time Warner, TWC, TBS and their respective majority-owned
subsidiaries,
(ii) AOL Time Warner's, America Online's, Time Warner's, TWC's, and
TBS's respective proportionate share of such items for their 50%-owned
companies, and
(iii) preferred stock dividend requirements of majority-owned
subsidiaries.
Combined fixed charges and preferred stock dividends include the fixed
charges mentioned above and the amount of pretax income necessary to cover any
preferred stock dividend requirements of the registrant.
10
Earnings as defined include significant non-cash charges for depreciation
and amortization primarily relating to the amortization of intangible assets
recognized in business combinations accounted for by the purchase method. On a
pro forma basis, based on a preliminary allocation of the purchase price paid in
the merger of America Online and Time Warner, earnings have been reduced by
annual non-cash amortization charges of $6.929 billion for both AOL Time Warner
and Time Warner, $5.580 billion for TWC and $1.687 billion for TBS.
AOL TIME WARNER(a)
PRO FORMA
------------------------------------------------------------
THREE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
SEPTEMBER 30, JUNE 30, SEPTEMBER 30, DECEMBER 31,
2000 2000 2000 1999
---- ---- ---- ----
Ratio of earnings to fixed charges......... $(699) $(1,494) $(2,226) $(411)
Ratio of earnings to combined fixed charges
and preferred dividends.................. $(704) $(1,535) $(2,245) $(499)
---------
(a) AOL Time Warner became the parent of America Online and Time Warner on
January 11, 2001 in connection with the consummation of the merger of
America Online and Time Warner with subsidiaries of AOL Time Warner.
Because America Online is the predecessor of AOL Time Warner, AOL Time
Warner's historical ratios are the same as America Online's historical
ratios, which are presented below.
AMERICA ONLINE
HISTORICAL
----------------------------------------------------
THREE MONTHS
ENDED YEAR ENDED JUNE 30,
SEPTEMBER 30, ------------------------------------
2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges......... 9.0x 10.1x 7.6x $(96) $(166) $(169)
Ratio of earnings to combined fixed charges
and preferred dividends.................. 9.0x 10.1x 7.6x $(96) $(166) $(169)
TIME WARNER
PRO FORMA HISTORICAL
-------------------------------- -------------------------------------------------
NINE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, --------------------------------
2000 1999 2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
Ratio of earnings to
fixed charges......... $(4,045) $(2,043) 1.3x 3.1x 1.5x 1.6x 1.1x 1.1x
Ratio of earnings to
combined fixed charges
and preferred
dividends............. $(4,064) $(2,131) 1.3x 3.0x $(39) 1.3x $(98) 1.0x
TWC
PRO FORMA HISTORICAL
-------------------------------- -------------------------------------------------
NINE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, --------------------------------
2000 1999 2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed
charges..................... $(3,149) $(1,094) 1.4x 3.6x 1.5x 1.6x 1.1x 1.1x
Ratio of earnings to combined
fixed charges and preferred
dividend.................... $(3,149) $(1,094) 1.4x 3.6x 1.5x 1.6x 1.1x 1.0x
11
TBS
PRO FORMA HISTORICAL
----------------------------- --------------------------------------------------------------------
NINE MONTHS NINE MONTHS YEAR ENDED THREE MONTHS | NINE MONTHS
ENDED YEAR ENDED ENDED DECEMBER 31, ENDED | ENDED
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, ------------------ DECEMBER 31, | SEPTEMBER 30,
2000 1999 2000 1999 1998 1997 1996(b) | 1996(b)
---- ---- ---- ---- ---- ---- ------- | -------
|
Ratio of earnings to |
fixed charges........ $(682) $(838) 2.7x 3.5x 2.6x 2.1x 1.6x | $(44)
Ratio of earnings to |
combined fixed |
charges and preferred |
dividends............ $(682) $(838) 2.7x 3.5x 2.6x 2.1x 1.6x | $(44)
HISTORICAL
-------------
YEAR ENDED
DECEMBER 31,
1995(b)
-------------
Ratio of earnings to
fixed charges........ 1.7x
Ratio of earnings to
combined fixed
charges and preferred
dividends............ 1.7x
---------
(b) Time Warner became the parent of TWC and TBS on October 10, 1996, upon the
merger of TWC and TBS with separate subsidiaries of Time Warner (the 'TBS
Merger'). The historical ratios of TBS for all periods after the TBS Merger
have been adjusted to reflect Time Warner's basis of accounting. The
historical ratios of TBS for all periods before the TBS Merger are reflected
at TBS's historical cost basis of accounting.
USE OF PROCEEDS
We will use the net proceeds we receive from the sale of the securities
offered by this prospectus and the accompanying prospectus supplement for
general corporate purposes, unless we specify otherwise in the applicable
prospectus supplement. General corporate purposes may include additions to
working capital, capital expenditures, repayment of debt, the financing of
possible acquisitions and investments or stock repurchases.
DESCRIPTION OF THE DEBT SECURITIES AND THE GUARANTEES
GENERAL
The following description of the terms of the debt securities sets forth
certain general terms and provisions of the debt securities to which any
prospectus supplement may relate. The particular terms of any debt securities
and the extent, if any, to which such general provisions will not apply to such
debt securities will be described in the prospectus supplement relating to such
debt securities.
The debt securities will be issued from time to time in series under an
indenture among us, America Online, Time Warner, TWC, TBS and The Chase
Manhattan Bank, as Trustee. The statements set forth below are brief summaries
of certain provisions contained in the indenture, which summaries do not purport
to be complete and are qualified in their entirety by reference to the
indenture, a form of which is an Exhibit to the registration statement of which
this prospectus is a part. If we issue subordinated debt, it may be issued
either under the same indenture as for senior debt or another indenture in
substantially the same form. Wherever defined terms are used but not defined
herein, such terms shall have the meanings assigned to them in the indenture, it
being intended that such defined terms shall be incorporated herein by
reference.
The indenture does not limit the amount of debt securities which may be
issued thereunder and debt securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by us. Any
such limit applicable to a particular series will be specified in the prospectus
supplement relating to that series.
Reference is made to the prospectus supplement for the following terms of
each series of debt securities in respect to which this prospectus is being
delivered:
the designation, issue date, currency or currency unit of payment if other
than United States dollars and authorized denominations of such debt
securities, if other than US$1,000 and integral multiples;
the aggregate principal amount offered and any limit on any future issues
of additional debt of the same series;
12
the date or dates on which such debt securities will mature (which may be
fixed or extendible);
the rate or rates (or manner of calculation thereof), if any, per annum at
which such debt securities will bear interest;
the dates, if any, on which such interest will be payable;
the terms of any mandatory or optional redemption (including any sinking,
purchase or analogous fund) and any purchase at the option of Holders
(including whether any such purchase may be paid in cash, common stock or
other securities or property);
the terms of any mandatory or optional conversion or exchange provisions;
whether such debt securities are to be issued in the form of Global
Securities and, if so, the identity of the Depository with respect to such
Global Securities;
if the debt securities are to be subordinated in right of payment to any
other securities, the terms of subordination; and
any other specific terms.
Unless otherwise set forth in the prospectus supplement, interest on
outstanding debt securities will be paid to Holders of record on the date, which
is 15 days prior to the date such interest is to be paid, or if not a business
day, the next preceding business day. Unless otherwise specified in the
prospectus supplement, debt securities will be issued in fully registered form
only. Unless otherwise specified in the prospectus supplement, the principal
amount of the debt securities will be payable at the corporate trust office of
the Trustee in New York, New York. The debt securities may be presented for
transfer or exchange at such office unless otherwise specified in the prospectus
supplement, subject to the limitations provided in the indenture, without any
service charge, but we may require payment of a sum sufficient to cover any tax
or other governmental charges payable in connection therewith.
GUARANTEES
Under the Guarantees, each of America Online and Time Warner, as primary
obligor and not merely as surety, will fully, irrevocably and unconditionally
guarantee to each Holder of debt securities and to the Trustee and its
successors and assigns, (1) the full and punctual payment of principal of and
interest on the debt securities when due, whether at maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of ours under the
indenture (including obligations to the Trustee) and the debt securities and
(2) the full and punctual performance within applicable grace periods of all
other obligations of ours under the indenture and the debt securities. Such
Guarantees will constitute guarantees of payment, performance and compliance and
not merely of collection. The obligations of each of America Online and Time
Warner under the indenture will be unconditional irrespective of the absence or
existence of any action to enforce the same, the recovery of any judgment
against us or each other or any waiver or amendment of the provisions of the
indenture or the debt securities to the extent that any such action or similar
action would otherwise constitute a legal or equitable discharge or defense of a
guarantor (except that each such waiver or amendment shall be effective in
accordance with its terms). The obligations of America Online and Time Warner to
make any payments may be satisfied by causing us to make such payments. Each of
America Online and Time Warner further agrees to waive presentment to, demand of
payment from and protest to us and also waives diligence, notice of acceptance
of its Guarantee, presentment, demand for payment, notice of protest for non-
payment, filing a claim if we complete a merger or declare bankruptcy and any
right to require a proceeding first against us. These obligations shall be
unaffected by any failure or policy of the Trustee to exercise any right under
the indenture or under any series of security. If any Holder of any debt
security or the Trustee is required by a court or otherwise to return to us,
America Online or Time Warner, or any custodian, trustee, liquidator or other
similar official acting in relation to any of us, America Online or Time Warner,
any amount paid by any of them to the Trustee or such Holder, the Guarantee of
America Online and the Guarantee of Time Warner, to
13
the extent theretofore discharged, shall be reinstated in full force and effect.
Further, America Online and Time Warner agree to pay any and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder of debt securities in enforcing any of their respective
rights under the Guarantees. The indenture provides that each of the Guarantees
of America Online and Time Warner is limited to the maximum amount that can be
guaranteed by America Online or Time Warner, respectively, without rendering the
relevant Guarantee voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
Additionally, TWC and TBS will fully, irrevocably and unconditionally
guarantee Time Warner's guarantee of the debt securities under substantially the
same terms as the guarantees of America Online and Time Warner of our
indebtedness.
RANKING
The debt securities may be either senior or subordinated in right of payment
to other securities. If subordinated debt securities are offered, the terms of
subordination will be set forth in the related prospectus supplement. The
Guarantees of the senior debt securities will be senior obligations of America
Online, Time Warner, TWC and TBS, as applicable, and will be direct unsecured
obligations of America Online, Time Warner, TWC and TBS, respectively, ranking
equally with all other unsecured and unsubordinated obligations of America
Online, Time Warner, TWC and TBS, respectively. The Guarantees of the
subordinated debt securities will be subordinated obligations of America Online,
Time Warner, TWC and TBS, as applicable and will be direct and unsecured
obligations of America Online, Time Warner, TWC and TBS, respectively, ranking
equally with all other unsecured and subordinated obligations of America Online,
Time Warner, TWC and TBS, respectively. Each of our company, Time Warner, TWC
and TBS is a holding company and the debt securities and the Guarantees will be
effectively subordinated to all existing and future liabilities, including
indebtedness, of the subsidiaries of our company, Time Warner, TWC and TBS,
respectively.
CERTAIN COVENANTS
Limitation on Liens. The indenture provides that neither we nor any Material
Subsidiary of ours shall incur, create, issue, assume, guarantee or otherwise
become liable for any indebtedness for money borrowed that is secured by a lien
on any asset now owned or hereafter acquired by us or it unless we make or cause
to be made effective provisions whereby the debt securities will be secured by
such lien equally and ratably with (or prior to) all other indebtedness thereby
secured so long as any such indebtedness shall be secured. The foregoing
restriction does not apply to the following:
liens existing as of the date of the indenture;
liens created by Subsidiaries of ours to secure indebtedness of such
Subsidiaries to us or to one or more other Subsidiaries of ours;
liens affecting property of a person existing at the time it becomes a
Subsidiary of ours or at the time it merges into or consolidates with us or
a Subsidiary of ours or at the time of a sale, lease or other disposition
of all or substantially all of the properties of such person to us or our
Subsidiaries;
liens on property existing at the time of the acquisition thereof or
incurred to secure payment of all or a part of the purchase price thereof
or to secure indebtedness incurred prior to, at the time of, or within 18
months after the acquisition thereof for the purpose of financing all or
part of the purchase price thereof;
liens on any property to secure all or part of the cost of improvements or
construction thereon or indebtedness incurred to provide funds for such
purpose in a principal amount not exceeding the cost of such improvements
or construction;
14
liens consisting of or relating to the sale, transfer or financing of
motion pictures, video and television programs, sound recordings, books or
rights with respect thereto or with so-called tax shelter groups or other
third-party investors in connection with the financing of such motion
pictures, video and television programming, sound recordings or books in
the ordinary course of business and the granting to us or any of our
Subsidiaries of rights to distribute such motion pictures, video and
television programming, sound recordings or books; provided, however, that
no such lien shall attach to any asset or right of ours or our Subsidiaries
(other than (1) the motion pictures, video and television programming,
sound recordings, books or rights which were sold, transferred to or
financed by the tax shelter group or third-party investors in question or
the proceeds arising therefrom and (2) the stock or equity interests of a
Subsidiary substantially all of the assets of which consist of such motion
pictures, video and television programming, sound recordings, books or
rights and related proceeds);
liens on shares of stock, indebtedness or other securities of a Person that
is not a Subsidiary of ours;
liens on Works which either (1) existed in such Works before the time of
their acquisition and were not created in anticipation thereof, or
(2) were created solely for the purpose of securing obligations to
financiers, producers, distributors, exhibitors, completion guarantors,
inventors, copyright holders, financial institutions or other participants
incurred in the ordinary course of business in connection with the
acquisition, financing, production, completion, distribution or exhibition
of Works;
any lien on the office building and hotel complex located in Atlanta,
Georgia known as the CNN Center Complex, including the parking decks for
such complex (to the extent such parking decks are owned or leased by us or
our Subsidiaries), or any portion thereof and all property rights therein
and the products, revenues and proceeds therefrom created as part of any
mortgage financing or sale-leaseback of the CNN Center Complex;
liens on satellite transponders and all property rights therein and the
products, revenues and proceeds therefrom which secure obligations incurred
in connection with the acquisition, utilization or operation of such
satellite transponders or the refinancing of any such obligations;
restrictions on the Atlanta National League Baseball Club, Inc., Atlanta
Hawks, Ltd and the Atlanta Hockey Club, Inc. and their respective assets
imposed by Major League Baseball or the Commissioner of Baseball, the
National Basketball Association and the National Hockey League,
respectively, including, without limitation, restrictions on the
transferability of our or any of our Subsidiaries' interests therein;
liens on capital leases entered into after the date of the indenture
provided that such liens extend only to the property or assets that are the
subject of such capital leases;
liens resulting from progress payments or partial payments under United
States government contracts or subcontracts;
any extensions, renewal or replacement of any lien referred to in the
foregoing clauses or of any indebtedness secured thereby; provided,
however, that the principal amount of indebtedness secured thereby shall
not exceed the principal amount of indebtedness so secured at the time of
such extension, renewal or replacement, or at the time the lien was issued,
created or assumed or otherwise permitted, and that such extension, renewal
or replacement lien shall be limited to all or part of substantially the
same property which secured the lien extended, renewed or replaced (plus
improvements on such property); and
other liens arising in connection with our indebtedness and our
Subsidiaries' indebtedness in an aggregate principal amount for us and our
Subsidiaries not exceeding at the time such lien is issued, created or
assumed the greater of (A) 15% of the Consolidated Net Worth of our company
and (B) $500 million.
15
Limitation on Consolidation, Merger, Conveyance or Transfer on Certain
Terms. None of us, America Online, Time Warner, TWC or TBS shall consolidate
with or merge into any other Person or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
(1) (a) in the case of our company, the Person formed by such consolidation
or into which our company is merged or the Person which acquires by
conveyance or transfer the properties and assets of our company
substantially as an entirety shall be organized and existing under the
laws of the United States of America or any State or the District of
Columbia, and shall expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest on all the debt securities and the performance of
every covenant of the indenture (as supplemented from time to time) on
the part of our company to be performed or observed; (b) in the case of
America Online, Time Warner, TWC or TBS, the Person formed by such
consolidation or into which America Online, Time Warner, TWC or TBS is
merged or the Person which acquires by conveyance or transfer the
properties and assets of America Online, Time Warner, TWC or TBS
substantially as an entirety shall be either (i) one of us, America
Online, Time Warner, TWC or TBS or (ii) a Person organized and existing
under the laws of the United States of America or any State or the
District of Columbia, and in the case of clause (ii), shall expressly
assume, by supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance of every
covenant of the indenture (as supplemented from time to time) on the
part of America Online, Time Warner, TWC or TBS to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing;
and
(3) we have delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel each stating that such consolidation, merger, conveyance or
transfer and such supplemental indenture comply with this Article and
that all conditions precedent provided for relating to such transaction
have been complied with.
Upon any consolidation or merger, or any conveyance or transfer of the
properties and assets of our company, America Online, Time Warner, TWC or TBS
substantially as an entirety as set forth above, the successor Person formed by
such consolidation or into which our company, America Online, Time Warner, TWC
or TBS is merged or to which such conveyance or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of our
company, America Online, Time Warner, TWC or TBS, as the case may be, under the
indenture with the same effect as if such successor had been named as our
company, America Online, Time Warner, TWC or TBS, as the case may be, in the
indenture. In the event of any such conveyance or transfer, we, America Online,
Time Warner, TWC or TBS, as the case may be, as the predecessor shall be
discharged from all obligations and covenants under the indenture and the debt
securities and may be dissolved, wound up or liquidated at any time thereafter.
Other than the restrictions in the indenture on liens described above, the
indenture and the debt securities do not contain any covenants or other
provisions designed to afford Holders of debt securities protection in the event
of a recapitalization or highly leveraged transaction involving our company.
Any additional covenants of our company, America Online, Time Warner, TWC or
TBS pertaining to a series of debt securities will be set forth in a prospectus
supplement relating to such series of debt securities.
16
CERTAIN DEFINITIONS
The following are certain of the terms defined in the indenture:
'Consolidated Net Worth' means, with respect to us, at the date of any
determination, the consolidated stockholders' or owners' equity of our
company and our Subsidiaries, determined on a consolidated basis in
accordance with GAAP consistently applied.
'GAAP' means generally accepted accounting principles as such principles
are in effect as of the date of the indenture.
'Holder', when used with respect to any security, means a
Securityholder, which means a person in whose name a security is registered
in the Security Register.
'Material Subsidiary' means, with respect to us, any Person that is a
Subsidiary if, at the end of the most recent fiscal quarter of our company,
the aggregate amount, determined in accordance with GAAP consistently
applied, of securities of, loans and advances to, and other investments in,
such Person held by us and our other Subsidiaries exceeded 10% of our
company's Consolidated Net Worth.
'Person' means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
'Security Register' means the register or registers we shall keep or
cause to be kept, in which, we shall provide for the registration of
securities, or of securities of a particular series, and of transfers of
securities or of securities of such series.
'Subsidiary' means, with respect to any Person, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by
such Person, and any partnership, association, joint venture or other entity
in which such Person owns more than 50% of the equity interests or has the
power to elect a majority of the board of directors or other governing body.
'Works' means motion pictures, video, television, interactive or
multi-media programming, audio-visual works, sound recordings, books and
other literary or written material, any software, copyright or other
intellectual property related thereto, acquired directly or indirectly after
the date of the indenture by purchase, business combination, production,
creation or otherwise, any component of the foregoing or rights with respect
thereto, and all improvements thereon, products and proceeds thereof and
revenues derived therefrom.
DEFEASANCE
The indenture provides that we (and to the extent applicable, America
Online, Time Warner, TWC and TBS), at our option,
(a) will be Discharged from any and all obligations in respect of any series
of debt securities (except in each case for certain obligations to
register the transfer or exchange of debt securities, replace stolen,
lost or mutilated debt securities, maintain paying agencies and hold
moneys for payment in trust) or
(b) need not comply with the covenants described above under 'Certain
Covenants' and any other restrictive covenants described in a prospectus
supplement relating to such series of debt securities, and certain
Events of Default (other than those arising out of the failure to pay
interest or principal on the debt securities of a particular series and
certain events of bankruptcy, insolvency and reorganization) will no
longer constitute Events of Default with respect to such series of debt
securities,
in each case if we deposit with the Trustee, in trust, money or the equivalent
in securities of the government which issued the currency in which the debt
securities are denominated or government agencies backed by the full faith and
credit of such government, or a combination thereof, which through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal (including any
mandatory sinking
17
fund payments) of, and interest on, such series on the dates such payments are
due in accordance with the terms of such series.
To exercise any such option, we are required, among other things, to deliver
to the Trustee an opinion of counsel to the effect that
(i) the deposit and related defeasance would not cause the Holders of such
series to recognize income, gain or loss for Federal income tax purposes
and, in the case of a Discharge pursuant to clause (a), accompanied by a
ruling to such effect received from or published by the United States
Internal Revenue Service and
(ii) the creation of the defeasance trust will not violate the Investment
Company Act of 1940, as amended.
In addition, we are required to deliver to the Trustee an Officers'
Certificate stating that such deposit was not made by us with the intent of
preferring the Holders over other creditors of ours or with the intent of
defeating, hindering, delaying or defrauding creditors of our company or others.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The indenture provides that, if an Event of Default specified therein with
respect to any series of debt securities issued thereunder shall have happened
and be continuing, either the Trustee thereunder or the Holders of 25% in
aggregate principal amount of the outstanding debt securities of such series (or
25% in aggregate principal amount of all outstanding debt securities under the
indenture, in the case of certain Events of Default affecting all series of debt
securities under the indenture) may declare the principal of all the debt
securities of such series to be due and payable.
Events of Default in respect of any series are defined in the indenture as
being:
default for 30 days in payment of any interest installment with respect to
such series;
default in payment of principal of, or premium, if any, on, or any sinking
fund or analogous obligation with respect to, debt securities of such
series when due at their stated maturity, by declaration or acceleration,
when called for redemption or otherwise;
default for 90 days after written notice to us (or America Online, Time
Warner, TWC or TBS, if applicable) by the Trustee thereunder or by Holders
of 25% in aggregate principal amount of the outstanding debt securities of
such series in the performance, or breach, of any covenant pertaining to
debt securities of such series;
certain events of bankruptcy, insolvency and reorganization with respect to
us or any Material Subsidiary thereof which is organized under the laws of
the United States or any political sub-division thereof or the entry of an
order ordering the winding up or liquidation of our affairs; and
any Guarantee ceasing to be, or asserted by any guarantor as not being, in
full force and effect, enforceable according to its terms, except to the
extent contemplated by the indenture.
Any additions, deletions or other changes to the Events of Default which
will be applicable to a series of debt securities will be described in the
prospectus supplement relating to such series of debt securities.
The indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to the debt securities of any
series, give to the Holders of the debt securities of such series notice of all
uncured and unwaived defaults known to it; provided, however, that, except in
the case of default in the payment of principal of, premium, if any, or
interest, if any, on any of the debt securities of such series, the Trustee
thereunder will be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interests of the
Holders of the debt securities of such series. The term 'default'
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for the purpose of this provision means any event which is, or after notice or
lapse of time or both would become, an Event of Default with respect to debt
securities of such series.
The indenture contains provisions entitling the Trustee, subject to the duty
of the Trustee during an Event of Default to act with the required standard of
care, to be indemnified by the Holders of the debt securities before proceeding
to exercise any right or power under the indenture at the request of Holders of
the debt securities.
The indenture provides that the Holders of a majority in aggregate principal
amount of the outstanding debt securities of any series may direct the time,
method and place of conducting proceedings for remedies available to the Trustee
or exercising any trust or power conferred on the Trustee in respect of such
series, subject to certain conditions.
In certain cases, the Holders of a majority in principal amount of the
outstanding debt securities of any series may waive, on behalf of the Holders of
all debt securities of such series, any past default or Event of Default with
respect to the debt securities of such series except, among other things, a
default not theretofore cured in payment of the principal of, or premium, if
any, or interest, if any, on any of the debt securities of such series or
payment of any sinking or purchase fund or analogous obligations with respect to
such debt securities.
The indenture includes a covenant that we will file annually with the
Trustee a certificate of no default or specifying any default that exists.
MODIFICATION OF THE INDENTURE
We and the Trustee may, without the consent of the Holders of the debt
securities, enter into indentures supplemental to the indenture for, among
others, one or more of the following purposes:
(1) to evidence the succession of another Person to us, America Online,
Time Warner, TWC or TBS and the assumption by such successor of our
company's, America Online's, Time Warner's, TWC's or TBS's obligations
under the indenture and the debt securities of any series or the
Guarantees relating thereto;
(2) to add to the covenants of our company, America Online, Time Warner,
TWC or TBS, or to surrender any rights or powers of our company,
America Online, Time Warner, TWC or TBS, for the benefit of the Holders
of debt securities of any or all series;
(3) to cure any ambiguity, or correct any inconsistency in the indenture or
to make any other provisions with respect to matters or questions
arising under this indenture;
(4) to add to the indenture any provisions that may be expressly permitted
by the Trust Indenture Act, or 'the Act', excluding the provisions
referred to in Section 316(a)(2) of the Act as in effect at the date as
of which this instrument was executed or any corresponding provision in
any similar federal statute hereafter enacted;
(5) to establish the form or terms of any series of debt securities;
(6) to evidence and provide for the acceptance of any successor Trustee
with respect to one or more series of debt securities or to facilitate
the administration of the trusts thereunder by one or more trustees in
accordance with the indenture;
(7) to provide any additional Events of Default;
(8) to provide for the issuance of debt securities in coupon or as fully
registered form;
(9) to provide for the terms and conditions of converting those debt
securities that are convertible into common stock or another such
similar security; and
(10) to secure any series of debt securities pursuant to the indenture's
limitation on liens.
No supplemental indenture for the purpose identified in clauses (2), (3),
(5) or (7) above may be entered into if to do so would adversely affect the
rights of the Holders of debt securities of any series in any material respect.
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The indenture contains provisions permitting us and the Trustee thereunder,
with the consent of the Holders of a majority in principal amount of the
outstanding debt securities of all series to be affected voting as a single
class, to execute supplemental indentures by adding any provisions to or
changing or eliminating any of the provisions of the indenture or modifying the
rights of the Holders of the debt securities of such series to be affected,
except that no such supplemental indenture may, without the consent of the
Holders of affected debt securities, among other things:
change the fixed maturity of any debt securities, or
reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or
reduce the number of shares of any common stock or other securities to be
delivered by us in respect of a conversion of any convertible debt
securities, or
amend or modify the terms of any of the Guarantees in a manner adverse to
the Holders or reduce the aforesaid percentage of debt securities of any
series the consent of the Holders of which is required for any such
supplemental indenture.
THE TRUSTEE
The Chase Manhattan Bank is the Trustee under the indenture. The Trustee is
a depository for funds and performs other services for, and transacts other
banking business with, us in the normal course of business.
GOVERNING LAW
The indenture will be governed by, and construed in accordance with, the
laws of the State of New York.
GLOBAL SECURITIES
We may issue debt securities through global securities. A global security is
a security, typically held by a depositary, that represents the beneficial
interests of a number of purchasers of the security. If we do issue global
securities, the following procedures will apply.
We will deposit global securities with the depositary identified in the
prospectus supplement. After we issue a global security, the depositary will
credit on its book-entry registration and transfer system the respective
principal amounts of the debt securities represented by the global security to
the accounts of persons that have accounts with the depositary. These account
Holders are known as 'participants'. The underwriters or agents participating in
the distribution of the debt securities will designate the accounts to be
credited. Only a participant or a person that holds an interest through a
participant may be the beneficial owner of a global security. Ownership of
beneficial interests in the global security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
depositary and its participants.
We and the trustee will treat the depositary or its nominee as the sole
owner or Holder of the debt securities represented by a global security. Except
as set forth below, owners of beneficial interests in a global security will not
be entitled to have the debt securities represented by the global security
registered in their names. They also will not receive or be entitled to receive
physical delivery of the debt securities in definitive form and will not be
considered the owners or Holders of the debt securities.
Principal, any premium and any interest payments on debt securities
represented by a global security registered in the name of a depositary or its
nominee will be made to the depositary or its nominee as the registered owner of
the global security. None of us, the trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security or the maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
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We expect that the depositary, upon receipt of any payments, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of the global
security as shown on the depositary's records. We also expect that payments by
participants to owners of beneficial interests in the global security will be
governed by standing instructions and customary practices, as is the case with
the securities held for the accounts of customers registered in 'street names',
and will be the responsibility of the participants.
If the depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by us within ninety days,
we will issue registered securities in exchange for the global security. In
addition, we may at any time in our sole discretion determine not to have any of
the debt securities of a series represented by global securities. In that event,
we will issue debt securities of that series in definitive form in exchange for
the global securities.
DESCRIPTION OF THE CAPITAL STOCK
The following description of the terms of the common stock and the preferred
stock sets forth certain general terms and provisions of the series common stock
and preferred stock to which any prospectus supplement may relate. This section
also summarizes relevant provisions of the Delaware General Corporation Law,
which we refer to as 'Delaware law'. The terms of the AOL Time Warner
certificate of incorporation and by-laws, as well as the terms of Delaware law,
are more detailed than the general information provided below. Therefore, you
should carefully consider the actual provisions of these documents.
AUTHORIZED CAPITAL STOCK
Total Shares. We have the authority to issue a total of 27,550,000,000
shares of capital stock consisting of:
25,000,000,000 shares of common stock, par value $0.01 per share;
1,800,000,000 shares of series common stock, par value $0.01 per share,
which are issuable in series; and
750,000,000 shares of preferred stock, par value $0.10 per share, which are
issuable in series.
Common Stock. Approximately 4,200,000,000 shares of AOL Time Warner common
stock are currently outstanding.
Existing Series Common Stock. Our authorized series common stock consists of
two series, designated as AOL Time Warner series LMC common stock and AOL Time
Warner series LMCN-V common stock, and the authorized number of shares of each
series are:
210,000,000 shares of AOL Time Warner series LMC common stock; and
210,000,000 shares of AOL Time Warner series LMCN-V common stock.
No shares of AOL Time Warner series LMC common stock are currently
outstanding and 171,185,826 shares of AOL Time Warner series LMCN-V common stock
are currently outstanding.
Additional Series of Series Common Stock. We have the authority to issue
additional series of series common stock up to the maximum number of series
common shares authorized. Our board of directors is also authorized to set the
following terms of a series of common stock before issuance:
the designation of the series;
the number of shares to comprise the series;
any voting rights; and
any preferences and relative, participating, optional or other special
rights and any qualifications, limitations or restrictions thereof, of the
shares of such series.
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If we offer shares of a new series of series common stock, the prospectus
supplement will specify the designation and number of shares of that series, and
the voting rights and all other rights, preferences and terms of that series,
including any dividend, redemption, exchange or liquidation rights or
provisions. If we issue additional shares of series common stock they will be
fully paid and non-assessable.
Preferred Stock. We have the authority to issue series of preferred stock up
to the maximum number of preferred shares authorized. Our board of directors is
also authorized to set the following terms of a series of preferred stock before
issuance:
the designation of the series;
the number of shares to comprise the series;
any voting rights; and
any preferences and relative, participating, optional or other special
rights and any qualifications, limitations or restrictions thereof, of the
shares of such series.
The powers, preferences and relative, participating, optional and other
special rights of each series of preferred stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding.
If we offer shares of a new series of preferred stock, the prospectus
supplement will specify the designation and number of shares of that series, and
the voting rights and all other rights, preferences and terms of that series,
including any dividend, redemption, exchange or liquidation rights or
provisions. If we issue additional shares of preferred stock they will be fully
paid and non-assessable.
No shares of AOL Time Warner preferred stock are currently outstanding.
Listing. We list our common stock on the New York Stock Exchange under the
symbol 'AOL'. No other capital stock of ours is listed.
Preemptive Rights. The holders of our common stock, our series common stock
and our preferred stock do not have preemptive rights to purchase or subscribe
for any stock or other securities of ours.
COMMON STOCK
Voting Rights. Each outstanding share of our common stock is entitled to one
vote per share.
Dividends. Holders of our common stock are entitled to receive dividends or
other distributions when and if declared by our board of directors. The right of
our board of directors to declare dividends, however, is subject to any rights
of the holders of any outstanding AOL Time Warner series common stock and AOL
Time Warner preferred stock and the availability of sufficient funds under
Delaware law to pay dividends. For a description of the dividend rights of the
holders of our series common stock, see 'Existing Series Common Stock -- Series
LMC Common Stock -- Cash Dividends' and 'Existing Series Common Stock -- Series
LMCN-V Common Stock -- Cash Dividends.'
Liquidation Rights. In the event of the liquidation of our company, subject
to the rights, if any, of the holders of any outstanding shares of our series
common stock or our preferred stock, the holders of our common stock are
entitled to receive any of our assets available for distribution to our
stockholders ratably in proportion to the number of shares held by them. For a
description of the liquidation rights of holders of our series common stock, see
'Existing Series Common Stock -- Series LMC Common Stock -- Liquidation Rights'
and 'Existing Series Common Stock -- Series LMCN-V Common Stock -- Liquidation
Rights'.
Regulatory Restrictions. Outstanding shares of our common stock may be
redeemed by action of the board of directors to the extent necessary to prevent
the loss of any governmental license or franchise, the holding of which is
conditioned upon stockholders' possessing prescribed qualifications.
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EXISTING SERIES COMMON STOCK
SERIES LMC COMMON STOCK
LMC Formula Number. Shares of our series LMC common stock are attributed a
'formula number' that is used to calculate the dividend, voting, conversion and
liquidation rights for each share of our series LMC common stock. We refer to
this formula number as the 'LMC formula number'. The LMC formula number is
initially set at 1.00, and it is subject to adjustment for stock splits, reverse
stock splits, stock dividends and other similar corporate events affecting our
common stock.
Voting Rights. Each outstanding share of our series LMC common stock is
entitled to a number of votes that is equal to the product of the number of
votes per share that may be cast by holders of our common stock multiplied by
the LMC formula number in effect at the time of the vote.
Holders of our series LMC common stock are entitled to vote on all matters
on which holders of our common stock are entitled to vote. Holders of our series
LMC common stock vote together as one group with holders of our common stock. A
vote of at least two-thirds of the voting power of all shares of our series LMC
common stock that are outstanding is necessary in order to amend, alter or
repeal any of the provisions of our restated certificate of incorporation,
including the certificate of designations relating to our series LMC common
stock, to:
amend, alter or repeal any of the powers, preferences or rights of our
series LMC common stock or series LMCN-V common stock; or
adversely affect the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions, of our series LMC common stock or series
LMCN-V common stock.
In addition, the affirmative vote of holders of shares of our series LMC common
stock representing 100% of the aggregate voting power of the outstanding shares
of our series LMC common stock is required to amend, alter or repeal the
provisions of the certificate of designations that prohibit us from, at our
option, redeeming the shares of our series LMC common stock.
The vote of the holders of shares of our series LMC common stock is not
required for us to:
create any indebtedness;
authorize or issue any class of capital stock that is senior to, or on a
parity with, our series LMC common stock with respect to the payment of
dividends or any other distribution of assets;
approve any amendment to our restated certificate of incorporation that
would increase or decrease the aggregate number of authorized shares of our
series common stock or our common stock; or
authorize any increase or decrease in the number of shares constituting our
series LMC common stock.
Cash Dividends. Holders of our series LMC common stock are entitled to
receive cash dividends when and if declared by our board of directors, but only
to the extent that regularly scheduled cash dividends are declared and paid on
our common stock. When declared, cash dividends on each share of our series LMC
common stock will equal the product of:
the amount of the regularly scheduled cash dividend to be paid on one share
of our common stock; multiplied by
the LMC formula number in effect on the dividend payment date.
Distributions. If we distribute to the holders of our common stock any
assets or property, in each case not including a distribution upon the
liquidation of our company, a regularly scheduled cash dividend or a common
stock dividend that results in an adjustment of the LMC formula number, then we
must at the same time distribute the same assets or property pro rata to the
holders of our series LMC common stock in an amount equal to the amount that the
holders of
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our series LMC common stock would have been entitled to receive had they
converted their shares of our series LMC common stock into shares of our common
stock immediately prior to the record date for the distribution.
Conversion Rights. Holders of our series LMC common stock have the right to
convert each of their shares, at any time, into:
a number of shares of our common stock equal to the LMC formula number in
effect on the conversion date; or
one share of our series LMCN-V common stock.
Each holder of our series LMC common stock may convert shares of our series
LMC common stock into shares of our common stock or our series LMCN-V common
stock only to the extent that the ownership by the converting holder of shares
of our common stock or our series LMCN-V common stock upon conversion would not
violate the federal communications laws.
Conversion Rate Adjustment. If we consolidate or merge with another entity
such that we are not the surviving entity or the transaction results in a change
in our common stock, or if we sell all or substantially all of our property and
assets to another entity, each share of our series LMC common stock is
convertible into the number of shares of capital stock or other property
received by the holder of a number of shares of our common stock into which the
shares of our series LMC common stock could have been converted immediately
before the transaction.
Liquidation Rights. In the event of the liquidation of our company, the
holders of our series LMC common stock are entitled to receive, at the same time
as any distribution to holders of our common stock, an aggregate amount per
share equal to the product of:
the aggregate amount to be distributed per share to holders of our common
stock; and
the LMC formula number in effect on the date of the distribution.
Transfer Restriction. Holders of our series LMC common stock are subject to
a transfer restriction that prevents these holders, without obtaining prior
consent from us, from transferring their shares of our series LMC common stock
to any person other than a 'permitted transferee'. The term 'permitted
transferee' means:
Liberty Media Corporation, which is commonly referred to as 'LMC', and any
affiliate that is controlled by LMC; or
Tele-Communications Inc. and any affiliate that is controlled by
Tele-Communications, so long as Tele-Communications is an affiliate of LMC.
In addition, the transfer restriction provides that any permitted transferee
must agree to be subject to the transfer restriction for subsequent transfers.
The transfer restriction applicable to our series LMC common stock does not
prevent any holder of our series LMC common stock from:
entering into an arrangement providing for the prompt conversion of the
shares of our series LMC common stock into shares of our common stock and
the immediate sale or transfer of our common stock received upon the
conversion of shares of our series LMC common stock; or
pledging shares of our series LMC common stock, so long as the terms of the
pledge provide that, in the event of a foreclosure on the shares of our
series LMC common stock, the foreclosing party delivers the forfeited
series LMC common stock to us for conversion into our common stock.
SERIES LMCN-V COMMON STOCK
LMCN-V Formula Number. Shares of our series LMCN-V common stock are
attributed a formula number that is used to calculate the dividend, voting,
conversion and liquidation rights for each share of our series LMCN-V common
stock. We refer to this formula number as the 'LMCN-V formula number'. The
LMCN-V formula number is initially set at 1.00, and it is
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subject to adjustment for stock splits, reverse stock splits, stock dividends
and other similar corporate events affecting our common stock.
Voting Rights. Holders of our series LMCN-V common stock are entitled to
vote together as one group with holders of our common stock in the election of
directors of our company, and they have the right to cast a number of votes per
share that is equal to:
the product of the number of votes per share that may be cast by holders of
our common stock multiplied by the LMCN-V formula number in effect at the
time of the vote; divided by
100.
A vote of at least two-thirds of the voting power of all shares of our
series LMCN-V common stock that are outstanding is necessary in order to amend,
alter or repeal any of the provisions of our restated certificate of
incorporation, including the certificate of designations relating to our series
LMCN-V common stock, to:
amend, alter or repeal any of the powers, preferences or rights of our
series LMCN-V common stock or series LMC common stock; or
adversely affect the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions, of our series LMCN-V common stock or series
LMC common stock.
In addition, the affirmative vote of holders of shares of our series LMCN-V
common stock representing 100% of the aggregate voting power of the outstanding
shares of our series LMCN-V common stock is required to amend, alter or repeal
the provisions of the certificate of designations that prohibit us from, at our
option, redeeming the shares of our series LMCN-V common stock.
The vote of the holders of shares of our series LMCN-V common stock is not
required for us to:
create any indebtedness;
authorize or issue any class of capital stock that is senior to, or on a
parity with, our series LMCN-V common stock with respect to the payment of
dividends or any other distribution of assets;
approve any amendment to our restated certificate of incorporation that
would increase or decrease the aggregate number of authorized shares of our
series common stock or our common stock; or
authorize any increase or decrease in the number of shares constituting our
series LMCN-V common stock.
Cash Dividends. Holders of our series LMCN-V common stock are entitled to
receive cash dividends when and if declared by our board of directors, but only
to the extent that regularly scheduled cash dividends are declared and paid on
our common stock. When declared, cash dividends on each share of our series
LMCN-V common stock will equal the product of:
the amount of the regularly scheduled cash dividend to be paid on one share
of our common stock; multiplied by
the LMCN-V formula number in effect on the dividend payment date.
Distributions. If we distribute to the holders of our common stock any
assets or property, in each case not including a distribution upon the
liquidation of our company, a regularly scheduled cash dividend or a common
stock dividend that results in an adjustment of the LMCN-V formula number, then
we must at the same time distribute the same assets or property pro rata to the
holders of our series LMCN-V common stock in an amount equal to the amount that
the holders of our series LMCN-V common stock would have been entitled to
receive had they converted their shares of our series LMCN-V common stock into
shares of our common stock immediately prior to the record date for the
distribution.
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Conversion Rights. Holders of our series LMCN-V common stock have the right
to convert each of their shares, at any time, into:
a number of shares of our common stock equal to the LMCN-V formula number
in effect on the conversion date; or
one share of our series LMC common stock.
Each holder of our series LMCN-V common stock may convert shares of our series
LMCN-V common stock into shares of our common stock or our series LMC common
stock only to the extent that the ownership by the converting holder of shares
of our common stock or our series LMC common stock upon conversion would not
violate the federal communications laws.
Conversion Rate Adjustment. If we consolidate or merge with another entity
such that we are not the surviving entity or the transaction results in a change
in our common stock, or if we sell all or substantially all of our property and
assets to another entity, each share of our series LMCN-V common stock is
convertible into the number of shares of capital stock or other property
received by the holder of a number of shares of our common stock into which the
shares of our series LMCN-V common stock could have been converted immediately
before the transaction.
Liquidation Rights. In the event of the liquidation of our company, the
holders of our series LMCN-V common stock are entitled to receive, at the same
time as any distribution to holders of our common stock, an aggregate amount per
share equal to the product of:
the aggregate amount to be distributed per share to holders of our common
stock; and
the LMCN-V formula number in effect on the date of the distribution.
Transfer Restriction. Holders of our series LMCN-V common stock are subject
to a transfer restriction that prevents these holders, without obtaining prior
consent from us, from transferring their shares of our series LMCN-V common
stock to any person other than a 'permitted transferee'. The transfer
restriction applicable to holders of our series LMCN-V common stock is identical
to the transfer restriction applicable to holders of our series LMC common
stock. See 'Series LMC Common Stock -- Transfer Restriction'.
DESCRIPTION OF THE WARRANTS
The following description of the terms of the warrants sets forth certain
general terms and provisions of the warrants to which any prospectus supplement
may relate. We may issue warrants for the purchase of debt securities, preferred
stock, series common stock or common stock. Warrants may be issued independently
or together with debt securities, preferred stock, series common stock or common
stock offered by any prospectus supplement and may be attached to or separate
from any such offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not assume any obligation or relationship
of agency or trust for or with any holders or beneficial owners of warrants. The
following summary of certain provisions of the warrants does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of the warrant agreement that will be filed with the SEC in
connection with the offering of such warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of such debt warrants, including the following:
the title of such debt warrants;
the offering price for such debt warrants, if any;
the aggregate number of such debt warrants;
26
the designation and terms of the debt securities purchasable upon exercise
of such debt warrants;
if applicable, the designation and terms of the debt securities with which
such debt warrants are issued and the number of such debt warrants issued
with each such debt security;
if applicable, the date from and after which such debt warrants and any
debt securities issued therewith will be separately transferable;
the principal amount of debt securities purchasable upon exercise of a debt
warrant and the price at which such principal amount of debt securities may
be purchased upon exercise (which price may be payable in cash, securities,
or other property);
the date on which the right to exercise such debt warrants shall commence
and the date on which such right shall expire;
if applicable, the minimum or maximum amount of such debt warrants that may
be exercised at any one time;
whether the debt warrants represented by the debt warrant certificates or
debt securities that may be issued upon exercise of the debt warrants will
be issued in registered or bearer form;
information with respect to book-entry procedures, if any;
the currency or currency units in which the offering price, if any, and the
exercise price are payable;
if applicable, a discussion of material United States federal income tax
considerations;
the antidilution or adjustment provisions of such debt warrants, if any;
the redemption or call provisions, if any, applicable to such debt
warrants; and
any additional terms of such debt warrants, including terms, procedures,
and limitations relating to the exchange and exercise of such debt
warrants.
STOCK WARRANTS
The prospectus supplement relating to any particular issue of preferred
stock warrants, series common stock warrants or common stock warrants will
describe the terms of such warrants, including the following:
the title of such warrants;
the offering price for such warrants, if any;
the aggregate number of such warrants;
the designation and terms of the common stock, series common stock or
preferred stock purchasable upon exercise of such warrants;
if applicable, the designation and terms of the offered securities with
which such warrants are issued and the number of such warrants issued with
each such offered security;
if applicable, the date from and after which such warrants and any offered
securities issued therewith will be separately transferable;
the number of shares of common stock, series common stock or preferred
stock purchasable upon exercise of a warrant and the price at which such
shares may be purchased upon exercise;
the date on which the right to exercise such warrants shall commence and
the date on which such right shall expire;
if applicable, the minimum or maximum amount of such warrants that may be
exercised at any one time;
the currency or currency units in which the offering price, if any, and the
exercise price are payable;
27
if applicable, a discussion of material United States federal income tax
considerations;
the antidilution provisions of such warrants, if any;
the redemption or call provisions, if any, applicable to such warrants; and
any additional terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
PLAN OF DISTRIBUTION
We may sell the debt securities, preferred stock, series common stock,
common stock or warrants (together referred to as the 'offered securities') to
one or more underwriters or dealers for public offering and sale by them or may
sell the offered securities to investors directly, including through the
Internet, or through agents. The prospectus supplement with respect to the
offered securities offered thereby, describes the terms of the offering of such
offered securities and the method of distribution of the offered securities
offered thereby and identifies any firms acting as underwriters, dealers or
agents in connection therewith.
The offered securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at prices
determined as specified in the prospectus supplement. In connection with the
sale of the offered securities, underwriters, dealers or agents may be deemed to
have received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of the offered
securities for whom they may act as agent. Underwriters may sell the offered
securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as agent. Certain of the
underwriters, dealers or agents who participate in the distribution of the
offered securities may engage in other transactions with, and perform other
services for us, America Online, Time Warner, TWC and TBS in the ordinary course
of business.
Any underwriting compensation paid by us to underwriters or agents in
connection with the offering of the offered securities, and any discounts,
concessions or commissions allowed by underwriters to dealers, are set forth in
the prospectus supplement. Underwriters, dealers and agents participating in the
distribution of the offered securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
the resale of the offered securities may be deemed to be underwriting discounts
and commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
us, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the securities,
including over-allotment, stabilizing and short-covering transactions in such
securities, and the imposition of a penalty bid, in connection with the
offering.
LEGAL OPINIONS
Certain legal matters in connection with the offered securities will be
passed upon for us, America Online, Time Warner, TWC and TBS by Cravath, Swaine
& Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
balance sheet of AOL Time Warner at December 31, 2000 included in AOL Time
Warner's Current Report on Form 8-K/A dated January 11, 2001, as set forth in
their report. We have incorporated by reference the consolidated balance sheet
in this prospectus and elsewhere in the registration statement in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
28
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of America Online for the three years ended June 30, 2000,
included in America Online's Annual Report on Form 10-K for the year ended
June 30, 2000, as amended, as set forth in their report, which is incorporated
by reference in this prospectus and elsewhere in the registration statement.
These consolidated financial statements are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements, schedule and supplementary information of Time Warner, the
consolidated financial statements and schedules of Time Warner Entertainment
Company, L.P. and Warner Communications Inc., and the consolidated financial
statements of American Television and Communications Corporation for the three
years ended December 31, 2000, included in AOL Time Warner's Current Report on
Form 8-K/A dated January 11, 2001, and the consolidated financial statements,
schedule and supplementary information of Time Warner and the consolidated
financial statements and schedule of TWE for the three years ended
December 31, 1999, included in Time Warner's Annual Report on Form 10-K for
the year ended December 31, 1999, as amended, as set forth in their reports,
which are incorporated by reference in this prospectus and elsewhere in the
registration statement. These consolidated financial statements, schedules
and supplementary information are incorporated by reference in reliance on
Ernst & Young LLP's reports, given on their authority as experts in accounting
and auditing.
-------------------
No person is authorized to give any information or to make any
representations other than those contained in this prospectus or any
accompanying prospectus supplement in connection with the offer made by this
prospectus or any prospectus supplement, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by us, America Online, Time Warner, TWC or TBS or by any underwriter, dealer or
agent.
29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by the registrants in connection with
the distribution of the offered securities and the Guarantees.
Securities and Exchange Commission registration fee......... $2,500,000
Trustee's fees.............................................. 50,000
Printing and engraving expenses............................. 200,000
Rating agency fees.......................................... 1,000,000
Accounting fees and expenses................................ 100,000
Legal fees and expenses..................................... 250,000
Miscellaneous expenses...................................... 50,000
----------
Total expenses.......................................... $4,150,000
----------
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
AOL Time Warner. Section 145(a) of the General Corporation Law of the State
of Delaware ('Delaware Corporation Law') provides, in general, that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
because the person is or was a director or officer of the corporation. Such
indemnity may be against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding, if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation and if, with respect to any criminal
action or proceeding, the person did not have reasonable cause to believe the
person's conduct was unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor because the person is or was a director or officer of the corporation,
against any expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145(g) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation against any
liability asserted against the person in any such capacity, or arising out of
the person's status as such, whether or not the corporation would have the power
to indemnify the person against such liability under the provisions of the law.
Article VI of AOL Time Warner's by-laws requires indemnification to the
fullest extent permitted under Delaware law or other applicable law or any
person who is or was a director or officer of AOL Time Warner who is or was
involved or threatened to be made so involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was serving as a director, officer, employee or agent of
AOL Time
II-1
Warner or was serving at the request of AOL Time Warner as a director, officer,
employee or agent of any other enterprise; provided, however, that the foregoing
shall not apply to a director or officer with respect to a proceeding that was
commenced by such director or officer unless under certain circumstances.
Article VI of AOL Time Warner's by-laws authorizes AOL Time Warner to
purchase and maintain insurance on behalf of its directors, officers, employees
and agents. AOL Time Warner's Directors' and Officers' Liability and
Reimbursement Insurance Policy is designed to reimburse each of the registrants
for any payments made pursuant to these indemnification provisions.
The foregoing statements are subject to the detailed provisions of Section
145 of the Delaware Corporation Law and Article VI of the by-laws of AOL Time
Warner.
America Online. Article NINTH of the restated certificate of incorporation
and Article V of the restated by-laws of America Online provide that any person
who was or is a party or is threatened to be a party to, or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, because that person is or was a director or officer, or is or was
serving at the request of America Online as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, will be indemnified and held harmless by America Online to the
fullest extent permitted by Delaware law. The indemnification rights conferred
by America Online are not exclusive of any other right to which persons seeking
indemnification may be entitled under any statute, America Online's restated
certificate of incorporation or restated by-laws, any agreement, vote of
stockholders or disinterested directors or otherwise. America Online is
authorized to purchase and maintain insurance on behalf of its directors and
officers.
In addition, America Online may pay expenses incurred by its directors and
officers in defending a civil or criminal action, suit or proceeding because
they are directors or officers in advance of the final disposition of the
action, suit or proceeding. The payment of expenses will be made only if America
Online receives an undertaking by or on behalf of a director or officer to repay
all amounts advanced if it is ultimately determined that the director or officer
is not entitled to be indemnified by America Online, as authorized by America
Online's restated certificate of incorporation and restated by-laws.
Time Warner. Article VI of the Time Warner by-laws provide for
indemnification, to the fullest extent permitted by Delaware law, of any person
who is or was a director or officer of Time Warner and who is or was involved in
any manner, or who is threatened to be made involved in any manner, in any
threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director, officer, employee or agent of
Time Warner, or is or was serving at the request of Time Warner as a director,
officer, employee or agent of another corporation, or of a partnership, joint
venture, trust or other enterprise; provided, however, that the foregoing shall
not apply to a director or officer with respect to a proceeding that was
commenced by such director or officer unless under certain circumstances. Time
Warner is authorized to purchase and maintain insurance on behalf of its
directors, officers, employees and agents. The indemnification rights conferred
by Time Warner are not exclusive of any other right to which persons seeking
indemnification may be entitled.
In addition, the Time Warner by-laws provide that all reasonable expenses
incurred by or on behalf of a director or officer in connection with any
investigation, claim, action, suit or proceeding will be advanced to the
director or officer by Time Warner upon the request of the director or officer,
which request, if required by law, will include an undertaking by or on behalf
of the director or officer to repay the amounts advanced if ultimately it is
determined that the director or officer was not entitled to be indemnified
against the expenses.
TWC. Article IV of TWC's by-laws require indemnification, to the fullest
extent permitted under Delaware law, of any person who is or was a director or
officer of TWC and who is or was involved, or who is threatened to be made so
involved, in any threatened, pending or completed investigation, claim, action,
suit or proceeding, whether criminal, civil, administrative or
II-2
investigative, by reason of the fact that such person is or was serving as a
director, officer or employee of TWC or any predecessor of TWC or was serving at
the request of TWC as a director, officer or employee of any other enterprise.
The indemnification rights conferred by TWC are not exclusive of any other right
to which persons seeking indemnification may be entitled under any statute. TWC
is authorized to purchase and maintain insurance on behalf of its directors,
officers, employees and agents. In addition, the TWC by-laws provide that all
reasonable expenses incurred by or on behalf of a director or officer in
connection with any investigation, claim, action, suit or proceeding will be
advanced to the director or officer by TWC upon the request of the director or
officer, which request, if required by law, will include an undertaking by or on
behalf of the director or officer to repay the amounts advanced if ultimately it
is determined that the director or officer was not entitled to be indemnified
against the expenses.
TBS. Article VIII of TBS's by-laws provide for indemnification of directors
and officers of TBS in connection with or resulting from any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, in which he or she may become involved by reason of his or her
being or having been a director or officer, or a director or officer of any such
other enterprise. Such indemnification shall be made only in accordance with the
laws of the state of Georgia and subject to the conditions prescribed therein.
As a condition to any such right of indemnification, TBS may require that it
be permitted to participate in the defense through legal counsel designated by
TBS and at the expense of TBS. TBS may purchase and maintain insurance on behalf
of its directors and officers, whether or not TBS would have the power to
indemnify such directors and officers under the laws of the State of Georgia.
Article 9 of TBS's articles of incorporation provides that a director of TBS
will not be personally liable to TBS or its shareholders for monetary damages
for breach of duty of care or other duty as a director, except for liability
(i) for any appropriation, in violation of the director's duties, of any
business opportunity of TBS; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) for
the types of liability set forth in Section 14-2-154 of the Georgia Business
Corporation Code or any successor provision; or (iv) for any transaction from
which the director derived an improper personal benefit; provided, however, that
if further elimination or limitation of the liability of the directors is
provided for or permitted by the Georgia Business Corporation Code or other
applicable law, then the liability of a director shall be eliminated or limited
to the fullest extent permitted by that law.
ITEM 16. EXHIBITS
1.1 -- Form of Underwriting Agreement for Debt Securities.
1.2 -- Form of Underwriting Agreement for Equity Securities.
4.1 -- Form of Indenture relating to senior debt securities
among AOL Time Warner, America Online, Time Warner, TWC,
TBS and The Chase Manhattan Bank, as Trustee.
5 -- Opinion of Cravath, Swaine & Moore.
12.1 -- Statement regarding the computation of the ratio of
earnings to fixed charges of AOL Time Warner.*
12.2 -- Statement regarding the computation of the ratio of
earnings to fixed charges of America Online.*
12.3 -- Statement regarding the computation of the ratio of
earnings to fixed charges of Time Warner.*
12.4 -- Statement regarding the computation of the ratio of
earnings to fixed charges of TWC.*
12.5 -- Statement regarding the computation of the ratio of
earnings to fixed charges of TBS.*
23.1 -- Consents of Ernst & Young LLP, Independent Auditors.
23.2 -- Consent of Counsel (included in Exhibit 5).
24.1 -- Powers of Attorney related to AOL Time Warner.*
24.2 -- Powers of Attorney related to each Registrant, other than
AOL Time Warner (included on the respective signature page
of this Form S-3 and incorporated herein by reference).*
25 -- Statement of Eligibility and Qualification on Form T-1 of
The Chase Manhattan Bank with respect to AOL Time Warner,
America Online, Time Warner, TWC and TBS.*
---------
* Previously filed.
II-3
ITEM 17. UNDERTAKINGS
A. UNDERTAKINGS PURSUANT TO RULE 415
The undersigned registrants hereby undertake:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) ('SS'203.424(b) of this chapter) if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that the undertakings set forth in clauses (a)(i) and
(a)(ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the registrants pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement;
(b) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS
BY REFERENCE
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of any of the
registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described in Item 15 above, or otherwise,
the registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is asserted by such
officer, director or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on February 26, 2001.
AOL TIME WARNER INC.
By: /s/ J. MICHAEL KELLY
...................................
NAME: J. MICHAEL KELLY
TITLE: EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed on February 26, 2001 by
the following persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
* Chief Executive Officer and Director
......................................... (principal executive officer)
(GERALD M. LEVIN)
/s/ J. MICHAEL KELLY Executive Vice President and Chief Financial
......................................... Officer (principal financial officer)
(J. MICHAEL KELLY)
* Vice President and Controller
......................................... (controller or principal accounting
(JAMES W. BARGE) officer)
* Chairman of the Board
.........................................
(STEPHEN M. CASE)
* Co-Chief Operating Officer and Director
.........................................
(RICHARD D. PARSONS)
* Co-Chief Operating Officer and Director
.........................................
(ROBERT W. PITTMAN)
* Vice Chairman of the Board and Senior
......................................... Advisor
(R. E. TURNER)
* Vice Chairman of the Board
.........................................
(KENNETH J. NOVACK)
* Director
.........................................
(DANIEL F. AKERSON)
* Director
.........................................
(JAMES L. BARKSDALE)
* Director
.........................................
(STEPHEN F. BOLLENBACH)
II-5
* Director
.........................................
(FRANK J. CAUFIELD)
* Director
.........................................
(MILES R. GILBURNE)
* Director
.........................................
(CARLA A. HILLS)
* Director
.........................................
(REUBEN MARK)
* Director
.........................................
(MICHAEL A. MILES)
* Director
.........................................
(FRANKLIN D. RAINES)
* Director
.........................................
(FRANCIS T. VINCENT, JR.)
*By /s/ J. MICHAEL KELLY
.........................................
(ATTORNEY IN FACT)
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dulles, State of Virginia, on February 26, 2001.
AMERICA ONLINE, INC.
By: /s/ JOSEPH A. RIPP
..................................
NAME: JOSEPH A. RIPP
TITLE: EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND
TREASURER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed on February 26, 2001 by
the following persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
* Chairman, Chief Executive Officer and
......................................... Director (principal executive officer)
(BARRY M. SCHULER)
/s/ JOSEPH A. RIPP Executive Vice President, Chief Financial
......................................... Officer and Treasurer (principal financial
(JOSEPH A. RIPP) officer and principal accounting officer)
* Director
.........................................
(PAUL T. CAPPUCCIO)
* Director
.........................................
(J. MICHAEL KELLY)
*By /s/ JOSEPH A. RIPP
.........................................
(ATTORNEY IN FACT)
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on February 26, 2001.
TIME WARNER INC.
By: /s/ J. MICHAEL KELLY
..................................
NAME: J. MICHAEL KELLY
TITLE: EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed on February 26, 2001 by
the following persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
* Chief Executive Officer
......................................... (principal executive officer)
(GERALD M. LEVIN)
/s/ J. MICHAEL KELLY Executive Vice President and Chief Financial
......................................... Officer (principal financial officer)
(J. MICHAEL KELLY)
* Vice President and Controller
......................................... (controller or principal accounting
(JAMES W. BARGE) officer)
* Director
.........................................
(PAUL T. CAPPUCCIO)
* Director
.........................................
(SPENCER B. HAYS)
* Director
.........................................
(THOMAS W. MCENERNEY)
*By /s/ J. MICHAEL KELLY
.........................................
(ATTORNEY IN FACT)
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on February 26, 2001.
TIME WARNER COMPANIES, INC.
By: /s/ J. MICHAEL KELLY
..................................
NAME: J. Michael Kelly
TITLE: Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed on February 26, 2001 by
the following persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
* Chief Executive Officer (principal executive
......................................... officer)
(GERALD M. LEVIN)
/s/ J. MICHAEL KELLY Executive Vice President and Chief Financial
......................................... Officer (principal financial officer)
(J. MICHAEL KELLY)
* Vice President and Controller (controller or
......................................... principal accounting officer)
(JAMES W. BARGE)
* Director
.........................................
(PAUL T. CAPPUCCIO)
* Director
.........................................
(RICHARD J. BRESSLER)
* Director
.........................................
(RICHARD D. PARSONS)
*By /s/ J. MICHAEL KELLY
.........................................
(ATTORNEY IN FACT)
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Atlanta, State of Georgia, on February 26, 2001.
TURNER BROADCASTING SYSTEM, INC.
By: /s/ WAYNE H. PACE
..................................
NAME: WAYNE H. PACE
TITLE: EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL
& ADMINISTRATIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed on February 26, 2001 by
the following persons in the capacities indicated.
SIGNATURE TITLE
--------- -----
* Chief Executive Officer, Chairman of the
......................................... Board (principal executive officer)
(TERENCE F. MCGUIRK)
/s/ WAYNE H. PACE Executive Vice President, Chief Financial &
......................................... Administrative Officer, and Director
(WAYNE H. PACE) (principal financial officer)
* Senior Vice President, Controller, and Chief
......................................... Accounting Officer (controller or
(JOHN KAMPFE) principal accounting officer)
* President and Chief Operating Officer, and
......................................... Director
(STEVEN J. HEYER)
* Executive Vice President -- News, and
......................................... Director
(W. THOMAS JOHNSON)
Director
.........................................
(R.E. TURNER)
*By /S/ LOUISE S. SAMS
.........................................
(ATTORNEY IN FACT)
II-10
EXHIBITS
1.1 -- Form of Underwriting Agreement for Debt Securities.
1.2 -- Form of Underwriting Agreement for Equity Securities.
4.1 -- Form of Indenture relating to senior debt securities
among AOL Time Warner, America Online, Time Warner, TWC,
TBS and The Chase Manhattan Bank, as Trustee.
5 -- Opinion of Cravath, Swaine & Moore.
12.1 -- Statement regarding the computation of the ratio of
earnings to fixed charges of AOL Time Warner.*
12.2 -- Statement regarding the computation of the ratio of
earnings to fixed charges of America Online.*
12.3 -- Statement regarding the computation of the ratio of
earnings to fixed charges of Time Warner.*
12.4 -- Statement regarding the computation of the ratio of
earnings to fixed charges of TWC.*
12.5 -- Statement regarding the computation of the ratio of
earnings to fixed charges of TBS.*
23.1 -- Consents of Ernst & Young LLP, Independent Auditors.
23.2 -- Consent of Counsel (included in Exhibit 5).
24.1 -- Powers of Attorney related to AOL Time Warner.*
24.2 -- Powers of Attorney related to each Registrant, other than
AOL Time Warner (included on the respective signature page
of this Form S-3 and incorporated herein by reference).*
25 -- Statement of Eligibility and Qualification on Form T-1 of
The Chase Manhattan Bank with respect to AOL Time Warner,
America Online, Time Warner, TWC and TBS.*
---------
* Previously filed.
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as........................ 'SS'