Attached files
| file | filename |
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| EX-99.1 - SEPARATION AND SPIN-OFF AGREEMENT - WARNER MEDIA, LLC | ex99-1.htm |
| EX-99.2 - SECOND TAX MATTERS AGREEMENT - WARNER MEDIA, LLC | ex99-2.htm |
| EX-99.4 - PRESS RELEASE - WARNER MEDIA, LLC | ex99-4.htm |
| EX-99.3 - EMPLOYEE MATTERS AGREEMENT - WARNER MEDIA, LLC | ex99-3.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of Earliest Event Reported): November 16, 2009
TIME
WARNER INC.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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1-15062
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13-4099534
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(State
or Other Jurisdiction of
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(Commission
File Number)
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(IRS
Employer
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Incorporation)
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Identification
No.)
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One Time Warner Center, New York, New York
10019
(Address
of Principal Executive Offices) (Zip Code)
212-484-8000
(Registrant’s
Telephone Number, Including Area Code)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item 1.01. Entry
into a Material Definitive Agreement.
On
November 16, 2009, Time Warner Inc., a Delaware corporation (“Time Warner”),
entered into a separation and distribution agreement (the “Separation
Agreement”) with AOL Inc., a Delaware corporation (“AOL”), pursuant to which AOL
will be legally and structurally separated from Time Warner.
Under the
terms of the Separation Agreement, (i) Time Warner and AOL will complete certain
internal restructuring transactions, (ii) Time
Warner and AOL will effect certain transfers of assets and assume certain
liabilities such that substantially all of the assets and liabilities of
AOL LLC, which is currently a wholly-owned subsidiary of AOL that holds,
directly or indirectly, all of the AOL business, will be transferred to and
assumed by AOL (with the exception of AOL
LLC’s guarantees of indebtedness of Time Warner and other non-AOL affiliates of
Time Warner) and will settle or extinguish certain liabilities and other
obligations between Time Warner and AOL, (iii) the ownership of AOL LLC will be
transferred to, and retained by, Time Warner, (iv) subject to certain
exceptions, all agreements and commitments, including most intercompany accounts
payable or accounts receivable, between AOL and Time Warner will terminate
effective as of the date and time of the Spin-off (as defined below), (v) AOL
will obtain releases of all credit support instruments currently provided by or
through Time Warner prior to the Spin-off and, to the extent it cannot obtain
such releases, Time Warner will provide AOL with ongoing credit support until
the earlier of 24 months following the Spin-off and 30 days after AOL obtains
the right to borrow funds under its permanent post-distribution credit facility,
and in exchange for such ongoing credit support, AOL will pay
Time Warner a credit support fee, and (vi) Time Warner will distribute all the
issued and outstanding shares of common stock, par value $0.01 per share, of AOL
(the “AOL Common Stock”) to Time Warner’s stockholders as a pro rata dividend in
a spin-off (the “Spin-off”). Time Warner has the sole and absolute
discretion to determine the terms of, and whether to proceed with, the Spin-off
and may terminate the Separation Agreement at any time prior to the
Spin-off.
Consummation
of the Spin-off is subject to customary closing conditions that must be
satisfied or waived by Time Warner in its sole discretion. These conditions include, among other things, that (i)
the Registration Statement on Form 10 of AOL relating to the registration of the
AOL Common Stock under the Securities Exchange Act of 1934 has been declared
effective by the Securities and Exchange Commission (the “SEC”), (ii) no stop
order of the SEC suspending the effectiveness of the Form 10 is in effect prior
to the Spin-off and (iii) the AOL Common Stock has been authorized for listing
on the New York Stock Exchange (the “NYSE”). The condition relating
to the authorization of the AOL common stock for listing on the NYSE has been
satisfied, and on November 16, 2009, AOL sent a letter to the SEC requesting
that the Form 10 be declared effective.
In
addition to, and concurrently with, the Separation Agreement, Time Warner and
AOL have entered into a second tax matters agreement (the “Tax Matters
Agreement”), and Time Warner, AOL and AOL LLC have entered into an employee
matters agreement (the “Employee Matters Agreement”).
Pursuant
to the Tax Matters Agreement, (i) Time Warner will indemnify AOL for any
liability resulting from AOL’s joint and several liability with Time Warner to
the Internal Revenue Service (the “IRS”) for the consolidated U.S. Federal
income taxes of Time Warner’s consolidated U.S. federal income tax group
relating to the taxable periods in which AOL was part of the group and any
similar liability for U.S. Federal, state or local income taxes that are
determined on a consolidated, combined, unitary or similar basis for each
taxable period in which AOL is included in such consolidated, combined, unitary
or similar group with Time Warner, (ii) AOL will remain responsible for any
foreign income taxes and any income taxes that are not determined on a
consolidated, combined, unitary or similar basis with Time Warner, and (iii) AOL
will indemnify Time Warner for tax liabilities that are attributable to the
failure of certain representations made by AOL or its affiliates to be true when
made or deemed made or to certain other actions or omissions by AOL or its
affiliates in the event that the Spin-off, together with certain related
transactions, results in the recognition, for U.S. Federal income tax purposes,
of gain or loss to Time Warner or its stockholders, except to the extent of cash
received in lieu of fractional shares. Though valid as between the
parties, the Tax Matters Agreement is not binding on the IRS.
2
Pursuant
to the Employee Matters Agreement, subject to certain exceptions, (i) the assets
and liabilities arising out of employee compensation and benefit programs in
which AOL’s employees participated prior to the Spin-off will be transferred
from AOL LLC or Time Warner, as the case may be, to AOL, (ii) vested and certain
unvested account balances under Time Warner’s tax-qualified savings plan that
relate to AOL’s current and former employees will be transferred directly to the
tax-qualified savings plan that AOL will establish, (iii) stock options and
restricted stock units (“RSUs”) granted or awarded to AOL’s employees under Time
Warner’s equity incentive plans will be treated as if the employees were
terminated without cause under the relevant award agreements, (iv) all
performance stock units awarded to AOL’s employees under Time Warner’s equity
incentive plans will be treated under provisions governing a “divisional change
in control” under the relevant award agreements, and (v) AOL’s liability to Time
Warner relating to equity awards held by AOL’s current and former employees will
be settled prior to the Spin-off. Following the Spin-off, AOL will
have no further financial obligations with respect to such awards, other than
(i) with respect to reporting and withholding of taxes on the equity awards
(certain of which taxes will be reimbursed by Time Warner), (ii) to pay dividend
equivalents on Time Warner RSUs (which will be reimbursed by Time Warner), and
(iii) to reimburse Time Warner for certain ongoing administrative
expenses. All obligations pursuant to Time Warner’s nonqualified
deferred compensation plans and other agreements providing for the payment of
deferred compensation by AOL LLC or Time Warner will remain with AOL LLC or Time
Warner, as applicable, following the Spin-off.
The Employee Matters Agreement will also govern the transfer of employees between Time Warner and AOL in connection with the Spin-off and sets forth obligations for certain reimbursements and indemnities between Time Warner and AOL relating to such transfer. In addition, upon the Spin-off, all Time Warner stock options and RSUs held by AOL’s Chief Executive Officer will be converted, with appropriate adjustments, into stock options and RSUs of AOL on substantially the same terms and conditions (including vesting) as were applicable to his Time Warner stock options and RSUs immediately prior to the Spin-off. Specifically, the Employee Matters Agreement provides that AOL’s Chief Executive Officer’s stock options and RSUs will be adjusted in a manner such that the “fair value” and the “intrinsic value” of such awards (each within the meaning of the accounting guidance for equity-based compensation) will be the same immediately before and immediately after the Spin-off.
In
addition, in connection with the Separation Agreement, Time Warner has entered
into additional ancillary agreements, including a transition services agreement
pursuant to which Time Warner will provide AOL with certain services for a
limited time to help with an orderly transition following the Spin-off, an
intellectual property cross-license agreement pursuant to which Time Warner and
AOL will license, subject to certain terms and conditions, all United States or
foreign patent applications or patents owned in whole or in part, as of the date
of the Spin-off, by it or any of its subsidiaries to the other party on a
non-exclusive basis, an IT applications and database agreement pursuant to which
each of Time Warner and AOL will provide to the other software applications that
have been developed internally, a master services agreement for ATDN and hosting
services pursuant to which AOL will continue to provide AOL network and hosting
services to Time Warner and its subsidiaries after the Spin-off in a manner
consistent with the nature, scope and price of services currently provided to
Time Warner and its subsidiaries.
3
The
foregoing descriptions of the Separation Agreement, the Tax Matters Agreement
and the Employee Matters Agreement are qualified in their entirety by reference
to the full text of the Separation Agreement, the Tax Matters Agreement and the
Employee Matters Agreement, which are filed as Exhibit 99.1, Exhibit 99.2 and
Exhibit 99.3, respectively, to this Current Report on Form 8-K and are hereby
incorporated by reference. All stockholders of Time Warner are urged
to read the Separation Agreement, the Tax Matters Agreement and the Employee
Matters Agreement carefully and in their entirety. The descriptions
of the Separation Agreement, the Tax Matters Agreement and the Employee Matters
Agreement have been included to provide you with information regarding their
terms. They are not intended to provide any other factual information
about Time Warner.
Item
8.01. Other Events.
On
November 16, 2009, Time Warner and AOL announced the timing and details
regarding the Spin-off. The Time Warner
board of directors has declared a pro rata dividend of AOL Common
Stock to be made at 11:59 p.m. New York City time on December 9, 2009 to
Time Warner’s stockholders of record as of 5:00 p.m. New York City time on
November 27, 2009 (the “Record Date”). Each Time Warner stockholder
will receive a dividend of one share of AOL Common Stock for every eleven shares
of common stock, par value $0.01 per share, of Time Warner that they hold on the
Record Date.
A copy of
the press release is included as Exhibit 99.4.
Caution
Concerning Forward-Looking Statements
This
Current Report on Form 8-K includes certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include, but are not limited to, statements about the
plans, objectives, expectations and intentions of Time Warner, including the
benefits of the Spin-off and other related transactions involving Time Warner
and AOL and their subsidiaries, and other statements that are not historical
facts. These statements are based on the current expectations and
beliefs of Time Warner’s management, and are subject to uncertainty and changes
in circumstances. Time Warner cautions readers that any
forward-looking information is not a guarantee of future performance and that
actual results may vary materially from those expressed or implied by the
statements herein, due to the conditions to the consummation of the Spin-off and
other related transactions, changes in economic, business, competitive,
technological, strategic or other regulatory factors, as well as factors
affecting the operation of the businesses of Time Warner and
AOL. More detailed information about certain of these and other
factors may be found in filings by Time Warner with the SEC, including its most
recent Annual Report on Form 10-K and its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2009, in each case in the sections entitled “Caution
Concerning Forward-Looking Statements” and “Risk Factors.” Various
factors could cause actual results to differ from those set forth in the
forward-looking statements including, without limitation, the risk that the
anticipated benefits from the Spin-off may not be fully realized or may take
longer to realize than expected. Time Warner is under no obligation
to, and expressly disclaims any obligation to, update or alter the
forward-looking statements contained in this document, whether as a result of
new information, future events or otherwise.
4
Item 9.01. Financial
Statements and Exhibits.
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(d)
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Exhibits
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Exhibit
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Description
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99.1
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Separation
and Distribution Agreement, dated as of November 16, 2009, by and between
Time Warner Inc. and AOL Inc.
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99.2
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Second
Tax Matters Agreement, dated as of November 16, 2009, by and between Time
Warner Inc. and AOL Inc.
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99.3
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Employee
Matters Agreement, dated as of November 16, 2009, by and among Time Warner
Inc., AOL LLC and AOL Inc.
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99.4
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Press
release issued November 16, 2009, by Time Warner Inc. and AOL
Inc.
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5
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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TIME WARNER INC.
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By:
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/s/ Pascal Desroches | ||
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Name:
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Pascal Desroches | ||
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Title:
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Senior Vice President and Controller | ||
Date: November 17, 2009
6
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Exhibit
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Description
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99.1
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Separation
and Distribution Agreement, dated as of November 16, 2009, by and between
Time Warner Inc. and AOL Inc.
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99.2
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Second
Tax Matters Agreement, dated as of November 16, 2009, by and between Time
Warner Inc. and AOL Inc.
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99.3
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Employee
Matters Agreement, dated as of November 16, 2009, by and among Time Warner
Inc., AOL LLC and AOL Inc.
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99.4
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Press
release issued November 16, 2009, by Time Warner Inc. and AOL
Inc.
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7