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):
February 6, 1995
TIME WARNER INC.
(Exact name of registrant as specified in its charter)
Delaware 1-8637 13-1388520
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 Rockefeller Plaza, New York, NY 10019
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(Address of principal executive offices) (zip code)
(212) 484-8000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>2
Item 5. Other Events.
On February 6, 1995, Time Warner Inc. ("Time
Warner") entered into the following related agreements:
(i) an Agreement and Plan of Merger (the "Cablevision Merger
Agreement") with Cablevision Industries Corporation
("Cablevision"), Alan Gerry, the majority stockholder of
Cablevision, and TW CVI Acquisition Corp. ("Merger Sub"), a
direct, wholly owned subsidiary of Time Warner, (ii) an
Agreement and Plan of Merger (the "CPI Merger Agreement")
with Cablevision Properties, Inc. ("CPI") and Alan Gerry, the
owner of all the capital stock of CPI, (iii) an Agreement and
Plan of Merger (the "CMP Merger Agreement" and, together with
the Cablevision Merger Agreement and the CPI Merger
Agreement, the "Merger Agreements") with Cablevision
Management Corporation of Philadelphia ("CMP and, together
with CPI, the "Merger Gerry Companies") and Alan Gerry, the
owner of all the capital stock of CMP, (iv) a Purchase
Agreement (the "Purchase Agreement") with Cablevision
Industries of Delaware, Inc. ("CID"), ARA Cablevision Inc.
("ARA" and, together with CID, the "Direct Holders"),
Cablevision Industries Limited Partnership ("CILP"),
Cablevision Industries of Saratoga Associates ("CISA"),
Cablevision of Fairhaven/Acushnet ("CFA"), Cablevision
Industries of Middle Florida, Inc. ("CIMF"), Cablevision
Industries of Florida, Inc. ("CIF" and, together with CILP,
CISA, CFA and CIMF, the "Purchase Gerry Companies") and Alan
Gerry, the sole beneficial owner of all the equity interests
in each Purchase Gerry Company, and (v) a Supplemental
Agreement (the "Supplemental Agreement") with Cablevision,
the Merger Gerry Companies, the Purchase Gerry Companies, the
Direct Holders, Alan Gerry and Merger Sub.
Pursuant to the Merger Agreements and the Purchase
Agreement, (i) a wholly owned subsidiary of Time Warner will
merge with and into Cablevision and each Merger Gerry
Company, each of which merged company will become a direct,
wholly owned subsidiary of Time Warner, (ii) Time Warner and
certain of its subsidiaries will purchase the equity
interests in certain Purchase Gerry Companies, each of which
Purchase Gerry Company will become a subsidiary of Time
Warner, and (iii) Time Warner and certain of its subsidiaries
will purchase the assets of the other Purchase Gerry
Companies. The aggregate consideration for the acquisition
of Cablevision, the Merger Gerry Companies and the Purchase
Gerry Companies (collectively, the "Cablevision Companies")
will be 2,500,000 shares of common stock of Time Warner,
3,250,000 shares each of two newly designated series of
<PAGE>3
convertible preferred stock of Time Warner (the "Preferred
Stock"), and the assumption of the liabilities of the
Cablevision Companies, including an aggregate of
approximately $2,000,000,000 of indebtedness. The Merger
Agreements and the Purchase Agreement provide for adjustments
to the consideration to the extent that indebtedness,
negative working capital and related liabilities of the
Cablevision Companies exceed $2,057,625,000 on the closing
date.
Each series of Preferred Stock will have a
liquidation value of $100 per share, and together such series
will be convertible at any time into an aggregate of
approximately 13,540,000 shares of common stock of Time
Warner (equivalent to a conversion price of $48 per share).
One series of Preferred Stock will pay cash dividends for the
first four years at an annual rate of $3.75 per share.
Thereafter, dividends on such series will be payable in an
amount equal to dividends paid on the shares of common stock
into which the Preferred Stock of such series may be
converted. Time Warner will have the right after four years
to exchange such series of Preferred Stock for common stock
at the stated conversion price plus accrued and unpaid
dividends. Five years after the closing, Time Warner will
have the right to redeem such series of Preferred Stock for
cash at a redemption price equal to the liquidation value
plus accrued and unpaid dividends. The second series of
Preferred Stock will be identical to the first, except that
dividends will be paid at an annual rate of $3.75 per share
for five years (rather than four), and such series will be
exchangeable by Time Warner into common stock of Time Warner
after five years (rather than four).
The closing of the transactions is subject to
customary conditions for transactions of this type, including
certain regulatory approvals, as specified in the
Supplemental Agreement.
The Cablevision Companies own and operate cable
television systems serving approximately 1.3 million
subscribers principally in New York, North Carolina, Florida,
California's San Fernando Valley and Columbia, South
Carolina.
<PAGE>4
Item 7. Exhibits
2(a) Agreement and Plan of Merger dated as of
February 6, 1995, among Cablevision Industries
Corporation, Alan Gerry, Time Warner Inc. and TW
CVI Acquisition Sub.
2(b) Agreement and Plan of Merger dated as of
February 6, 1995, among Cablevision Properties,
Inc., Alan Gerry and Time Warner Inc.
2(c) Agreement and Plan of Merger dated as of
February 6, 1995, among Cablevision Management
Corporation of Philadelphia, Alan Gerry and Time
Warner Inc.
2(d) Purchase Agreement dated as of February 6, 1995,
among Alan Gerry, Cablevision Industries of
Delaware, Inc., ARA Cablevision Inc., Cablevision
Industries Limited Partnership, Cablevision
Industries of Saratoga Associates, Cablevision of
Fairhaven/Acushnet, Cablevision Industries of
Middle Florida, Inc., Cablevision Industries of
Florida, Inc. and Time Warner Inc.
2(e) Supplemental Agreement dated as of February 6,
1995, including Annex A thereto, among Cablevision
Industries Corporation, Cablevision Industries of
Delaware, Inc., ARA Cablevision Inc., Cablevision
Industries Limited Partnership, Cablevision
Industries of Saratoga Associates, Cablevision of
Fairhaven/Acushnet, Cablevision Industries of
Middle Florida, Inc., Cablevision Industries of
Florida, Inc., Alan Gerry, Time Warner Inc. and TW
CVI Acquisition Sub.
<PAGE>5
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of
New York, on February 13, 1995.
TIME WARNER INC.
By: /s/ Peter R. Haje
--------------------------------
Name: Peter R. Haje
Title: Executive Vice President
<PAGE>6
EXHIBIT INDEX
Exhibit No. Description of Exhibit
2(a) Agreement and Plan of Merger dated as
of February 6, 1995, among Cablevision
Industries Corporation, Alan Gerry,
Time Warner Inc. and TW CVI Acquisition
Sub.
2(b) Agreement and Plan of Merger dated as
of February 6, 1995, among Cablevision
Properties, Inc., Alan Gerry and Time
Warner Inc.
2(c) Agreement and Plan of Merger dated as
of February 6, 1995, among Cablevision
Management Corporation of Philadelphia,
Alan Gerry and Time Warner Inc.
2(d) Purchase Agreement dated as of
February 6, 1995, among Alan Gerry,
Cablevision Industries of Delaware,
Inc., ARA Cablevision Inc., Cablevision
Industries Limited Partnership,
Cablevision Industries of Saratoga
Associates, Cablevision of
Fairhaven/Acushnet, Cablevision
Industries of Middle Florida, Inc.,
Cablevision Industries of Florida, Inc.
and Time Warner Inc.
<PAGE>7
Exhibit No. Description of Exhibit
2(e) Supplemental Agreement dated as of
February 6, 1995, including Annex A
thereto, among Cablevision Industries
Corporation, Cablevision Industries of
Delaware, Inc., ARA Cablevision Inc.,
Cablevision Industries Limited
Partnership, Cablevision Industries of
Saratoga Associates, Cablevision of
Fairhaven/Acushnet, Cablevision
Industries of Middle Florida, Inc.,
Cablevision Industries of Florida,
Inc., Alan Gerry, Time Warner Inc. and
TW CVI Acquisition Sub.
Exhibit 2(a)
=========================================================
AGREEMENT AND PLAN OF MERGER
Dated as of February 6, 1995,
Among
CABLEVISION INDUSTRIES CORPORATION,
ALAN GERRY,
TIME WARNER INC.
And
TW CVI ACQUISITION CORP.
============================================================
<PAGE>2
AGREEMENT AND PLAN OF MERGER dated as of
February 6, 1995, among CABLEVISION
INDUSTRIES CORPORATION, a Delaware corpora-
tion (the "Company"), ALAN GERRY, an
individual residing at Loomis Road, Liberty,
New York (the "Principal Stockholder"), TIME
WARNER INC., a Delaware corporation
("Parent") and TW CVI ACQUISITION CORP., a
Delaware corporation and a wholly owned
subsidiary of Parent ("Sub").
WHEREAS the respective Boards of Directors of the
Company, Parent and Sub have approved the merger of Sub with
and into the Company, upon the terms and subject to the
conditions set forth in this Agreement (the "Company
Merger"), whereby each issued and outstanding share of
Common Stock, par value $0.01 per share, of the Company not
owned directly or indirectly by the Company or any
subsidiary of the Company (the "Company Common Stock"), will
be converted into the right to receive the Merger
Consideration;
WHEREAS concurrently with the execution and
delivery hereof, each of Cablevision Properties, Inc., a
Delaware corporation ("CPI") and Cablevision Management
Corporation of Philadelphia, a Delaware corporation ("CMP")
is entering into a Merger Agreement with the Principal
Stockholder and Parent, pursuant to which upon the terms and
subject to the conditions set forth therein, CPI Acquisition
Sub will be merged into CPI and CMP Acquisition Sub will be
merged into CMP and the Principal Stockholder will receive
for each share of common stock of CPI or CMP, as applicable,
the Merger Consideration (as defined in the relevant Merger
Agreement); and
WHEREAS concurrently with the execution and
delivery hereof, the Principal Stockholder, certain
subsidiaries of the Principal Stockholder that are Purchase
Gerry Companies and Direct Holders and Parent are entering
into a Purchase Agreement dated as of February 6, 1995,
pursuant to which upon the terms and subject to the
conditions set forth therein, the Principal Stockholder has
agreed to sell and Parent has agreed to purchase all of the
equity interests in, or the assets of and assume the related
liabilities of, each of the Purchase Gerry Companies;
<PAGE>3
WHEREAS concurrently with the execution and
delivery hereof, the Company, the Direct Holders, the Gerry
Companies, the Principal Stockholder, Parent and Sub are
entering into the Supplemental Agreement dated as of
February 6, 1995, pursuant to which the Company, the Direct
Holders, the Gerry Companies, the Principal Stockholder,
Parent and Sub are making certain representations,
warranties, covenants and agreements in connection with the
Merger, the Purchase and the other Transactions and also are
prescribing various conditions to the Merger, the Purchase
and the other Transactions; and
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization
within the meaning of Section 368(a) of the Code;
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements of the parties
hereto contained in the Acquisition Documents, the parties
agree as follows:
ARTICLE I
Definitions and Interpretation
Capitalized terms used herein and not defined
herein have the meanings given such terms in Annex A to the
Supplemental Agreement, and the rules of interpretation set
forth in such Annex A are applicable hereto.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the Delaware General Corporation Law (the
"DGCL"), Sub shall be merged with and into the Company at
the Effective Time. Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights
and obligations of Sub in accordance with the DGCL.
<PAGE>4
SECTION 2.02. Effective Time. At the time of the
Closing, or as soon as practicable thereafter, the Surviving
Corporation shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective
at the Effective Time.
SECTION 2.03. Effects of the Merger. The Merger
shall have the effects set forth in Section 259 of the DGCL.
ARTICLE III
The Surviving Corporation
SECTION 3.01. Certificate of Incorporation and
By-laws. (a) The certificate of incorporation of Sub as in
effect immediately prior to the Effective Time shall become
the certificate of incorporation of the Surviving
Corporation at the Effective Time (except that such
certificate of incorporation may be amended at the Effective
Time to change the name of the Surviving Corporation), until
thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Sub as in effect immediately
prior to the Effective Time shall become the By-laws of the
Surviving Corporation at the Effective Time, until
thereafter changed or amended as provided therein or by
applicable law.
SECTION 3.02. Directors. The directors of Sub
immediately prior to the Effective Time shall become the
directors of the Surviving Corporation at the Effective
Time, until the earlier of their resignation or removal or
until their respective successors are duly elected and
qualified, as the case may be.
SECTION 3.03. Officers. The officers of Sub
immediately prior to the Effective Time shall become the
officers of the Surviving Corporation at the Effective Time,
until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified,
as the case may be.
<PAGE>5
ARTICLE IV
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Merger Consideration;
Exchange of Certificates
SECTION 4.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the
capital stock of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each share
of Common Stock, par value $0.01 per share, of the Company
owned directly or indirectly by the Company or any
subsidiary of the Company immediately prior to the Effective
Time shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Subject
to Sections 4.01(d) and 4.06, each share of Company Common
Stock outstanding immediately prior to the Effective Time
shall be converted into the right to receive (i) a number of
fully paid and nonassessable shares of Parent Common Stock
equal to the Parent Common Share Number divided by the total
number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (the "Company Common
Share Number"), (ii) a number of fully paid and non-
assessable shares of Parent Series E Preferred Stock equal
to 3,250,000 divided by the Company Common Share Number and
(iii) a number of fully paid and nonassessable shares of
Parent Series F Preferred Stock equal to the Series F Share
Number divided by the Company Common Share Number. The term
"Merger Consideration" shall refer to the securities
issuable pursuant to clauses (i), (ii) and (iii) of the
immediately preceding sentence, together with any assets or
securities payable by Parent pursuant to Section 4.06(a)
hereof; and the amount of any such assets or securities that
are payable per share of Company Common Stock as part of the
Merger Consideration shall be determined on the basis of the
amount of any such assets or property that would have been
payable per share of Parent Series E Stock, Parent Series F
<PAGE>6
Stock or Parent Common Stock, as applicable, had such
securities been outstanding at the relevant record and
payment dates for the distribution of such assets or
securities. As of the Effective Time, all shares of Company
Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to
exist, and, subject to Section 4.01(d), each holder of a
certificate representing any such share of Company Common
Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration. The
"Parent Common Share Number" shall equal 457,075, as such
number shall be further adjusted pursuant to
Section 4.02(b), after first giving effect to any
adjustments to the Parent Common Share Number and Common
Valuation Number required by transactions covered by
Section 4.06(b). The "Series F Share Number" shall equal
3,250,000, as such number shall be adjusted pursuant to
Section 4.02.
(d) Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock outstanding
immediately prior to the Effective Time held by a
Stockholder (if any) who is entitled to demand, and who
properly demands, appraisal for such shares in accordance
with Section 262 of the DGCL ("Dissenting Shares") shall not
be converted into a right to receive the Merger
Consideration unless such Stockholder fails to perfect or
otherwise loses such Stockholder's right to appraisal, if
any. If, after the Effective Time, such Stockholder fails
to perfect or loses any such right to appraisal, such shares
shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger
Consideration pursuant to paragraph (c) of this Section
4.01. The Company shall give prompt notice to Parent of any
demands received by the Company for appraisal of shares of
Company Common Stock, and Parent shall have the right to
participate in all negotiations and proceedings with respect
to such demands; provided, however, the Company (and, after
the Effective Time, the Stockholders' Representative) shall
have the right to direct all negotiations and proceedings
with respect to such demands, both prior to and after the
Effective Time, including the right to make all decisions
relating to payments with respect to, settlements or offers
to settle any such demands. After the Effective Time,
Parent shall not, except with the prior written consent of
the Stockholders' Representative, make any payment with
respect to, or settle or offer to settle, any such demands.
<PAGE>7
SECTION 4.02. Adjustment to Series F Share Number
and Parent Common Share Number. (a) The Series F Share
Number shall be adjusted in accordance with this
Section 4.02 if the Adjustment Amount exceeds $1,616,025,200
(as adjusted pursuant to Section 4.06(c), the "Threshold")
or the Threshold exceeds the Adjustment Amount.
(i) In the event that the Adjustment Amount
exceeds the Threshold, the Series F Share Number shall
equal 3,250,000 less an amount equal to (A) the lesser
of such excess and $75,000,000, divided by (B) the
Series F Valuation Number (the result being rounded to
the nearest whole number, with 0.5 being rounded to the
next highest number).
(ii) In the event that the Threshold exceeds
the Adjustment Amount, the Series F Share Number shall
equal 3,250,000 plus an amount equal to (A) the lesser
of such excess and $75,000,000, divided by (B) the
Series F Valuation Number (the result being rounded to
the nearest whole number, with 0.5 being rounded to the
next highest number).
(b) The Parent Common Share Number shall be
adjusted or the Series F Share Number shall be further
adjusted, in either case in accordance with this
Section 4.02(b), if the Adjustment Amount exceeds the
Threshold by more than $75,000,000 or the Threshold exceeds
the Adjustment Amount by more than $75,000,000.
(i) In the event that the Adjustment Amount
exceeds the Threshold by more than $75,000,000, (A) the
Series F Share Number determined pursuant to
Section 4.02(a) shall be reduced by an amount equal to
(I) the amount by which the Adjustment Amount exceeds
the sum of (x) the Threshold and (y) $75,000,000 (the
"Negative Second Level Adjustment") (or any portion
thereof selected by Parent), divided by (II) the Series
F Valuation Number and (B) the Parent Common Share
Number shall equal 457,075 less an amount equal to
(I) the Negative Second Level Adjustment (or any
portion thereof selected by Parent, but without
duplication of the portion thereof, if any, adjusted
for in the immediately preceding clause (A)), divided
by (II) the Common Valuation Number (in either case,
the result being rounded to the nearest whole number,
with 0.5 being rounded to the next highest number).
<PAGE>8
(ii) In the event that the Threshold exceeds
the Adjustment Amount by more than $75,000,000, (A) the
Series F Share Number determined pursuant to
Section 4.02(a) shall be increased by an amount equal
to (I) the amount by which the Threshold exceeds the
sum of (x) the Adjustment Amount and (y) $75,000,000
(the "Positive Second Level Adjustment") (or any
portion thereof selected by Parent), divided by
(II) the Series F Valuation Number and (B) the Parent
Common Share Number shall equal 457,075, plus an amount
equal to (I) the Positive Second Level Adjustment (or
any portion thereof selected by Parent, but without
duplication of the portion thereof, if any, adjusted
for in the immediately preceding clause (A)), divided
by (II) the Common Valuation Number (in either case,
the result being rounded to the nearest whole number,
with 0.5 being rounded to the next highest number).
(c) The "Adjustment Amount" shall be an amount
equal to, without duplication, (A) the aggregate amount of
Closing Indebtedness and Other Liabilities of the Company,
plus (B) the amount of the Working Capital Deficit of the
Company, if any, or minus (C) the amount of the Working
Capital Balance of the Company, if any, plus (D) the amount
of the Allocable Capital Expenditure Deficiency of the
Company, if any, or minus (E) the amount of the Allocable
Capital Expenditure Excess of the Company, if any, plus
(F) the aggregate amount of Severance and Incentive
Liabilities of the Company.
SECTION 4.03. Estimated Adjustment Amount;
Initial Calculation of Merger Consideration. Not later than
five business days prior to the Closing, the Company shall
deliver to Parent an estimate of the Adjustment Amount (the
"Estimated Adjustment Amount") of the Company, including
therewith estimated Closing Indebtedness and Other
Liabilities ("Estimated Closing Indebtedness and Other
Liabilities") of the Company, estimated Working Capital
Deficit or estimated Working Capital Balance ("Estimated
Working Capital Deficit or Balance") of the Company,
estimated Capital Expenditure Deficiency of the Company or
estimated Capital Expenditure Excess of the Company (the
"Estimated Capital Expenditure Deficiency or Excess") and
estimated Severance and Incentive Liabilities ("Estimated
Severance and Incentive Liabilities") of the Company, and
the Series F Share Number shall be calculated pursuant to
Section 4.02 as if the Estimated Adjustment Amount were the
Adjustment Amount (the "Estimated Series F Share Number")
<PAGE>9
and the Parent Common Share Number shall be calculated
pursuant to Section 4.02 as if the Estimated Adjustment
Amount were the Adjustment Amount (the "Estimated Parent
Common Share Number"). As of the Closing, the aggregate
Merger Consideration in respect of all shares of Company
Common Stock shall be deemed to comprise (i) a number of
shares of Parent Common Stock equal to the Estimated Parent
Common Share Number, (ii) 3,250,000 shares of Parent
Series E Preferred Stock and (iii) a number of shares of
Parent Series F Preferred Stock equal to the Estimated
Series F Share Number, together with any assets or
securities payable by Parent pursuant to Section 4.06(a)
hereof; and each share of Company Common Stock shall be
deemed to be converted into (x) a number of shares of Parent
Common Stock equal to the Estimated Parent Common Share
Number divided by the Company Common Share Number,
(y) 3,250,000 shares of Parent Series E Preferred Stock
divided by the Company Common Share Number and (z) a number
of shares of Parent Series F Preferred Stock equal to the
Estimated Series F Share Number divided by the Company
Common Share Number, together with any assets or securities
payable by Parent pursuant to Section 4.06(a) hereof. After
the Closing, the Merger Consideration (as determined
pursuant to this Section 4.03) shall be subject to
adjustment in accordance with Sections 4.05 and 4.06.
SECTION 4.04. Exchange of Certificates; Delivery
of Parent Stock; Escrow Arrangements. (a) At the Closing,
Parent shall issue and deliver to the Stockholders'
Representative, upon surrender of each certificate (a
"Certificate") that immediately prior to the Effective Time
represents outstanding shares of Company Common Stock, the
portion of the Merger Consideration (as determined pursuant
to Section 4.03) that is issuable in respect of the shares
of Company Common Stock represented by such Certificate.
Each Certificate so surrendered pursuant to the preceding
sentence shall forthwith be canceled. Delivery of
Certificates for cancellation shall be made by the
Stockholders' Representative on behalf of the Stockholders;
and delivery of the Merger Consideration in respect of all
shares of Company Common Stock outstanding immediately prior
to the Effective Time shall be delivered to the
Stockholders' Representative for the benefit of the
Stockholders (and the Merger Consideration so delivered
shall be deemed to have been delivered to the Stockholders).
For purposes of this Section 4.04, the Escrowed Shares
deposited into escrow pursuant to Section 4.04(h) hereof and
held in escrow pursuant to the terms of the Escrow Agreement
<PAGE>10
shall be deemed to have been delivered to the Stockholders'
Representative.
(b) In the event of a transfer of ownership of
Company Common Stock that is not registered in the transfer
records of the Company, the Merger Consideration issuable in
respect of such shares may be issued to a Person other than
the Person in whose name any Certificate so surrendered is
registered, provided that such Certificate is properly
endorsed or otherwise in proper form for transfer and the
Person requesting such payment shall pay any transfer or
other taxes required by reason of the issuance of such
Merger Consideration to a Person other than the registered
holder of such Certificate or establish to the satisfaction
of Parent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 4.04, each
Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such
surrender the portion of the Merger Consideration that is
issuable in respect of each share of Company Common Stock
that was represented by such Certificate prior to the
Effective Time, together with any dividends or distributions
with respect to any such shares of capital stock of Parent
constituting Merger Consideration for which the record date
is after the Effective Time. Subject to the effect of
applicable laws, following surrender of any such
Certificate, Parent shall deliver to the Stockholders'
Representative, for the benefit of such Person, the portion
of the Merger Consideration issued in exchange therefor,
without interest, together with (x) at the time of such
surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid
with respect to such whole shares of any class of capital
stock of Parent constituting Merger Consideration and (y) at
the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of capital
stock of Parent constituting Merger Consideration.
(c) No dividends or other distributions declared
or made after the Effective Time with respect to shares of
any class of capital stock of Parent constituting Merger
Consideration with a record date after the Effective Time
shall be paid to the holder of any unsurrendered
Certificate, or to the Stockholders' Representative for the
benefit of such holder, with respect to the applicable
shares of capital stock of Parent constituting Merger
<PAGE>11
Consideration represented thereby until the holder of record
of such Certificate, or the Stockholders' Representative on
behalf of such holder, shall surrender such Certificate.
(d) All shares of capital stock of Parent
constituting Merger Consideration issued or issuable upon
the surrender for exchange of Certificates in accordance
with the terms of this Article IV shall be deemed to have
been issued and paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore
represented by such Certificates, and there shall be no
further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates
are presented to the Surviving Corporation or Parent for any
reason, they shall be canceled and exchanged as provided in
this Article IV.
(e) Neither Parent nor the Company shall be
liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) If any Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost,
stolen or destroyed, and the delivery to Parent of an
indemnification agreement and bond satisfactory to Parent,
will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration (and any dividend or
distribution with respect thereto pursuant to
Section 4.04(b)) issuable or deliverable in respect thereof
as determined in accordance with the terms of this
Agreement.
(g) No certificates or scrip representing
fractional shares of capital stock of Parent shall be issued
to any Stockholder (or to the Stockholders' Representative
for the benefit of a Stockholder) upon the surrender for
exchange of certificates of Company Common Stock, the number
of shares of each class of capital stock of Parent to be
issued pursuant to the Merger to each Stockholder (after
consolidating all Certificates to be surrendered by such
Stockholder) being rounded up or down, as the case may be,
to the nearest whole share (with one-half of a share being
rounded to the next highest number).
<PAGE>12
(h) At the Closing, Parent shall, on behalf of
the Stockholders, deposit into escrow, in accordance with
the terms of the Escrow Agreement, an aggregate number of
shares of Parent Series F Preferred Stock and/or Parent
Common Stock (collectively, the "Escrowed Shares"), as
determined by Parent taking into consideration the Estimated
Adjustment Amount, which together shall have a value (based
on the Series F Valuation Number and the Common Valuation
Number) of $3,926,918. The allocation among Stockholders of
such shares of Parent Series F Preferred Stock and, if
applicable, Parent Common Stock, shall be determined
pursuant to Section 4.04(i).
(i) The Principal Stockholder shall be entitled
to determine the allocation, as among the Stockholders, of
the shares of Parent Series F Preferred Stock and, if
applicable, Parent Common Stock that are to be deposited
into escrow pursuant to the Escrow Agreement, and unless
otherwise specified shall be deemed to have determined that
all such shares shall be from among those issuable to the
Principal Stockholder.
SECTION 4.05. Reconciliation of Adjustment
Amount; Adjustment of Merger Consideration. (a) Within
90 days after the Closing Date, Parent shall prepare and
deliver to the Stockholders' Representative, a statement
(the "Statement") setting forth Parent's determination of
the Adjustment Amount, including Closing Indebtedness and
Other Liabilities, the Working Capital Deficit or Working
Capital Balance, the Capital Expenditure Deficiency or
Capital Expenditure Excess and the Severance and Incentive
Liabilities, in each case of the Company, and the
calculation of the Series F Share Number and the Parent
Common Share Number in accordance with Section 4.02. During
the 30-day period following delivery of the Statement to the
Stockholders' Representative and his representatives, Parent
shall provide the Stockholders' Representative and his
Representatives with access during normal business hours to
any books, records, working papers or other information
reasonably necessary or useful in the preparation of the
Statement and the calculation of the Adjustment Amount to
enable the Stockholders' Representative or his
Representatives (as defined in Section 5.01 of the
Supplemental Agreement) to verify the accuracy of the
Statement. The Statement shall become final and binding
upon all parties hereto on the thirtieth day following
delivery thereof to the Stockholders' Representative unless
the Stockholders' Representative gives written notice of
<PAGE>13
disagreement with the Statement (a "Notice of Disagreement")
to Parent prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature of any
disagreement so asserted and relate solely to the
preparation of the Statement and the calculation of the
Adjustment Amount, the Series F Share Number and the Parent
Common Share Number, in each case in accordance with
Section 4.02.
(b) If a Notice of Disagreement is received by
Parent in a timely manner, then the Statement (as revised in
accordance with clause (c) or (d) below) shall become final
and binding upon the parties hereto on the earlier of
(i) the date the Stockholders' Representative and Parent
resolve in writing any differences they may have with
respect to any matter specified in the Notice of
Disagreement or (ii) the date any disputed matters are
finally resolved in writing by the Arbitrator (as defined
below). During the 30-day period following the delivery of
a Notice of Disagreement, Parent and the Stockholders'
Representative shall seek in good faith to resolve in
writing any differences which they may have with respect to
any matter specified in the Notice of Disagreement and each
shall provide the other (and their respective
representatives) with reasonable access to any books,
records, working papers or other information reasonably
necessary or useful in the preparation or calculation of
(u) the Estimated Adjustment Amount, including Estimated
Closing Indebtedness and Other Liabilities, the Estimated
Working Capital Deficit or Balance, the Estimated Capital
Expenditure Deficiency or Excess and the Estimated Severance
Incentive Liabilities, in each case of the Company, (v) the
Adjustment Amount, including Closing Indebtedness and Other
Liabilities, the Working Capital Deficit or Working Capital
Balance, the Capital Expenditure Deficiency or Capital
Expenditure Excess and the Severance and Incentive
Liabilities, in each case of the Company, (w) the Series F
Share Number and the Parent Common Share Number, (x) the
Statement, (y) any Notice of Disagreement or (z) otherwise
with respect to any thereof. At the end of such 30-day
period if there has been no resolution of the matters
specified in the Notice of Disagreement, Parent and the
Stockholders' Representative shall submit to an arbitrator
(the "Arbitrator") for review and resolution any and all
matters arising under this Section which remain in dispute.
The Arbitrator shall be Price Waterhouse, or if such firm is
unable or unwilling to act, such other nationally recognized
independent public accounting firm as shall be agreed upon
<PAGE>14
by Parent and the Stockholders' Representative in writing.
The Arbitrator shall render a written decision resolving the
matters submitted to the Arbitrator within 30 days following
submission thereto. The cost of any arbitration (including
the fees of the Arbitrator) pursuant to this Section shall
be borne 50% by Parent and 50% by the Stockholders.
(c) If the Adjustment Amount is higher or lower
than the Estimated Adjustment Amount, the Series F Share
Number and the Parent Common Share Number shall be finally
adjusted pursuant to Section 4.02. If the Series F Share
Number or the Parent Common Share Number, in each case as so
finally adjusted, is greater than the Estimated Series F
Share Number or the Estimated Parent Common Share Number,
respectively, Parent shall, within 15 days after the
Statement becomes final and binding upon the parties, issue
and deliver to the Stockholders' Representative, for the
benefit of the Stockholders, an aggregate number of shares,
rounded to the nearest whole share, of Series F Preferred
Stock and an aggregate number of shares, rounded to the
nearest whole share, of Parent Common Stock (collectively,
the "Additional Parent Shares") (in each case with one-half
of a share being rounded to the next highest number) equal
to (i) the excess of the Series F Share Number as so finally
determined, over the Estimated Series F Share Number and
(ii) the excess of the Parent Common Share Number as so
finally determined, over the Estimated Parent Common Share
Number. The Additional Parent Shares shall be allocated to
each Stockholder pro rata on the basis of the ratio (the
"Allocation Ratios") that (x) with respect to additional
shares of Parent Series F Preferred Stock, (i) the number of
shares of Parent Series F Preferred Stock issued and
delivered to such Stockholder at the Closing with respect to
such Stockholder's shares of Company Common Stock bears to
(ii) the total number of shares of Parent Series F Preferred
Stock issued and delivered to all the Stockholders at the
Closing and (y) with respect to additional shares of Parent
Common Stock (i) the number of shares of Parent Common Stock
issued and delivered to such Stockholder at the Closing with
respect to such Stockholder's shares of Company Common Stock
bears to (ii) the total number of Parent Common Stock issued
and delivered to all Stockholders at the Closing.
(d) If the Series F Share Number or the Parent
Common Share Number, in each case as so finally adjusted, is
less than the Estimated Series F Share Number or the
Estimated Parent Common Share Number, respectively, Parent
shall be entitled to receive, within 15 days after the
<PAGE>15
Statement becomes final and binding upon the parties, an
aggregate number of shares, rounded to the nearest whole
share, of Parent Series F Preferred Stock, and an aggregate
number of shares, rounded to the nearest whole share, of
Parent Common Stock (collectively, the "Returned Parent
Shares") (in each case with one-half of a share being
rounded to the next highest number), equal to (i) the excess
of the Estimated Series F Share Number over the Series F
Share Number as so finally determined and (ii) the excess of
the Estimated Parent Common Share Number over the Parent
Common Share Number as so finally determined. The number of
Returned Parent Shares to be returned to Parent by each
Stockholder shall be calculated pro rata on the basis of the
Allocation Ratios. The obligation to deliver Returned
Parent Shares shall be satisfied, first, out of the Escrowed
Shares, and second, out of other shares held by the
Stockholders.
SECTION 4.06. Participation Rights and Additional
Adjustments; Adjustments to Threshold. (a) Without
limiting the conditions precedent to the obligations of the
Company and the Principal Stockholder hereunder, in the
event that (i) Parent makes a distribution of the type that
would require a distribution to holders of Parent Preferred
Stock pursuant to Section 2.3 or 3.7 of the Parent Series E
Certificate or the Parent Series F Certificate (a
"Distribution"), and (ii) the record date or (if there shall
not be a record date) effective date for the Distribution
shall occur on or after the date hereof and prior to the
Effective Time, Parent shall, at the Effective Time (or if
the date for payment of the Distribution is after the
Effective Time, on the date of payment) pay to the Persons
who become record holders of Parent Stock at the Effective
Time the amounts and kinds of assets or capital stock or
other securities that such Persons would have been entitled
to receive had such Persons been record holders of such
Parent Stock on the relevant record date or effective date
for the Distribution (taking into account (and giving effect
to) any right of election set forth in such Sections).
(b) Without limiting the conditions precedent to
the obligations of the Company and the Principal Stockholder
hereunder, the Parent Common Share Number shall be adjusted
from time to time after the date hereof and prior to the
Effective Time for events described in paragraphs 3.6 and
3.7 of the Parent Series E Certificate and Parent Series F
Certificate as if (i) the references therein to the term
"Conversion Rate" were instead references to the Common
<PAGE>16
Share Number as in effect at the time (provided that the
Conversion Price shall be appropriately adjusted by the
parties) and (ii) the references therein to "Series E Stock"
and "Series F Stock" were instead to Company Common Stock
(taking into account (and giving effect to) any right of
election set forth in such Section, including any right of
election that would give such holders a right to receive a
distribution (which distribution shall be treated as a
Distribution for purposes of Section 4.06(a) hereof).
(c) The Threshold shall be reduced in the event
the Principal Stockholder designates as Excluded Assets any
System or Systems (or portions thereof) owned by the Company
or its subsidiaries as of the date of this Agreement
pursuant to Section 5.25 of the Supplemental Agreement by an
amount equal to the Excluded Systems Amount. The "Excluded
Systems Amount" shall equal 13.5 multiplied by the aggregate
amount of operating cash flow of the Company or its
subsidiaries for the fiscal year immediately preceding the
Effective Time that is attributable to each System (or
portion thereof) so designated (it being understood that
such operating cash flow shall be as so determined in
preparing the Company's audited financial statements for
such fiscal year).
SECTION 4.07. Stockholders' Representative. Each
holder of Company Common Stock, by approval of the Merger by
the requisite vote of the Stockholders, designates Philip
Dropkin or such other Person as designated by the Principal
Stockholder to be the representative of each such
Stockholder (the "Stockholders' Representative") for
purposes of this Agreement.
ARTICLE V
Conditions Precedent
The respective obligation of each party to effect
the Merger and the other transactions contemplated hereby is
<PAGE>17
subject to the satisfaction or waiver (by the parties for
whose benefit the condition is imposed) on or prior to the
Closing Date of the conditions set forth in Article VI of
the Supplemental Agreement.
ARTICLE VI
Termination, Amendment and Waiver
The Merger Agreement may be terminated or amended
or the parties may extend the time for the performance of
any of the obligations or other acts of the other parties,
waive any inaccuracies in the representations and warranties
contained in or in any document delivered pursuant to this
Agreement or waive compliance with any of the agreements or
conditions contained in this Agreement, in each case as
provided in Article VIII of the Supplemental Agreement.
ARTICLE VII
Governing Law
This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof, except to
the extent that the laws of the State of Delaware are
mandatorily applicable to the Merger.
<PAGE>18
IN WITNESS WHEREOF, the Company, the Principal
Stockholder, Parent and Sub have caused this Agreement to be
signed by their respective duly authorized officers (or, in
the case of the Principal Stockholder, has signed this
Agreement), all as of the date first written above.
CABLEVISION INDUSTRIES CORPORATION,
by /s/
--------------------------
Name:
Title:
/s/ Alan Gerry
------------------------------
Alan Gerry
TIME WARNER INC.,
by /s/
--------------------------
Name:
Title:
TW CVI ACQUISITION CORP.,
by /s/
--------------------------
Name:
Title:
Exhibit 2(b)
============================================================
AGREEMENT AND PLAN OF MERGER
Dated as of February 6, 1995,
Among
CABLEVISION PROPERTIES, INC.,
ALAN GERRY,
And
TIME WARNER INC.
============================================================
<PAGE>2
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Interpretation . . . . . . . . . . 2
ARTICLE II
The Merger
SECTION 2.01. The Merger . . . . . . . . . . . . 2
SECTION 2.02. Effective Time . . . . . . . . . . 2
SECTION 2.03. Effects of the CPI Merger . . . . . 3
ARTICLE III
The CPI Surviving Corporation
SECTION 3.01. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . 3
SECTION 3.02. Directors . . . . . . . . . . . . . 3
SECTION 3.03. Officers . . . . . . . . . . . . . 3
ARTICLE IV
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Merger Consideration;
Exchange of Certificates
SECTION 4.01. Effect on Capital Stock . . . . . . 4
SECTION 4.02. Adjustment to the Parent Common
Share Number . . . . . . . . . . 5
SECTION 4.03. Estimated Adjustment Amount; Initial
Calculation of Merger Consideration 6
SECTION 4.04. Exchange of Certificates; Delivery
of Parent Stock; Escrow
Arrangements . . . . . . . . . . 6
SECTION 4.05. Reconciliation of Adjustment Amount;
Adjustment of Merger
Consideration . . . . . . . . . . 9
<PAGE>3
2
SECTION 4.06 Participation Rights and Additional
Adjustments; Adjustments to
Threshold . . . . . . . . . . . . 12
SECTION 4.07 Stockholders' Representative . . . 13
ARTICLE V
Conditions Precedent . . . . . . . . . . . . . . 13
ARTICLE VI
Termination, Amendment and Waiver . . . . . . . . 14
ARTICLE VII
Governing Law . . . . . . . . . . . . . . . . . . 14
<PAGE>4
1
AGREEMENT AND PLAN OF MERGER dated as of
February 6, 1995, among CABLEVISION PROPERTIES,
INC., a Delaware corporation ("CPI"), ALAN GERRY,
an individual residing at Loomis Road, Liberty,
New York (the "Principal Stockholder") and TIME
WARNER INC., a Delaware corporation ("Parent").
WHEREAS the respective Boards of Directors of CPI and
Parent have approved the merger of CPI Acquisition Sub with
and into CPI, upon the terms and subject to the conditions
set forth in this Agreement (the "CPI Merger"), whereby each
issued and outstanding share of Common Stock of CPI not
owned directly or indirectly by CPI or any subsidiary of CPI
(the "CPI Common Stock"), will be converted into the right
to receive the Merger Consideration;
WHEREAS concurrently with the execution and delivery
hereof, each of Cablevision Industries Corporation (the
"Company") and Cablevision Management Corporation of
Philadelphia ("CMP") is entering into a Merger Agreement
with the Principal Stockholder and Parent, pursuant to which
upon the terms and subject to the conditions set forth
therein, TW CVI Acquisition Corp. will be merged into the
Company and CMP Acquisition Sub will be merged into CMP and
the Principal Stockholder will receive for each share of
common stock of the Company or CMP, as applicable, the
Merger Consideration (as defined in the relevant Merger
Agreement); and
WHEREAS concurrently with the execution and delivery
hereof, the Principal Stockholder, certain subsidiaries of
the Principal Stockholder that are Purchase Gerry Companies
and the Direct Holders and Parent are entering into a
Purchase Agreement dated as of February 6, 1995, pursuant to
which upon the terms and subject to the conditions set forth
therein, the Principal Stockholder has agreed to sell and
Parent has agreed to purchase all of the equity interests
in, or the assets of and assume the related liabilities of,
each of the Purchase Gerry Companies;
WHEREAS concurrently with the execution and delivery
hereof, the Company, the Direct Holders, the Gerry
Companies, the Principal Stockholder, Parent and Sub are
entering into the Supplemental Agreement dated as of
February 6, 1995, pursuant to which the Company, the Direct
<PAGE>5
2
Holders, the Gerry Companies, the Principal Stockholder,
Parent and Sub are making certain representations,
warranties, covenants and agreements in connection with the
Mergers, the Purchase and the other Transactions and also
are prescribing various conditions to the Mergers, the
Purchase and the other Transactions; and
WHEREAS, for Federal income tax purposes, it is
intended that the CPI Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the
Code;
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements of the parties
hereto contained in the Acquisition Documents, the parties
agree as follows:
ARTICLE I
Definitions and Interpretation
Capitalized terms used herein and not defined herein
have the meanings given such terms in Annex A to the
Supplemental Agreement, and the rules of interpretation set
forth in such Annex A are applicable hereto.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in
accordance with DGCL, CPI Acquisition Sub shall be merged
with and into CPI at the Effective Time. Following the CPI
Merger, the separate corporate existence of CPI Acquisition
Sub shall cease and CPI shall continue as the surviving cor-
poration (the "CPI Surviving Corporation") and shall succeed
to and assume all the rights and obligations of CPI
Acquisition Sub in accordance with the DGCL. Parent shall
cause CPI Acquisition Sub to be formed as a wholly owned
subsidiary of Parent prior to the Closing Date.
SECTION 2.02. Effective Time. At the time of the
Closing, or as soon as practicable thereafter, CPI Surviving
Corporation shall file a certificate of merger or other
<PAGE>6
3
appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings
required under the DGCL. The CPI Merger shall become
effective at the Effective Time.
SECTION 2.03. Effects of the CPI Merger. The CPI
Merger shall have the effects set forth in Section 259 of
the DGCL.
ARTICLE III
the CPI Surviving Corporation
SECTION 3.01. Certificate of Incorporation and
By-laws. (a) The certificate of incorporation of CPI
Acquisition Sub as in effect immediately prior to the
Effective Time shall become the certificate of incorporation
of the CPI Surviving Corporation at the Effective Time
(except that such certificate of incorporation may be
amended at the Effective Time to change the name of the CPI
Surviving Corporation), until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of CPI Acquisition Sub as in effect
immediately prior to the Effective Time shall become the
By-laws of the CPI Surviving Corporation at the Effective
Time, until thereafter changed or amended as provided
therein or by applicable law.
SECTION 3.02. Directors. The directors of CPI
Acquisition Sub immediately prior to the Effective Time
shall become the directors of the CPI Surviving Corporation
at the Effective Time, until the earlier of their resigna-
tion or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 3.03. Officers. The officers of CPI
Acquisition Sub immediately prior to the Effective Time
shall become the officers of the CPI Surviving Corporation
at the Effective Time, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
<PAGE>7
4
ARTICLE IV
Effect of the CPI Merger on the Capital Stock of the
Constituent Corporations; Merger Consideration;
Exchange of Certificates
SECTION 4.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the CPI Merger and without any
action on the part of the holder of any shares of CPI Common
Stock or any shares of capital stock of CPI Acquisition Sub:
(a) Capital Stock of CPI Acquisition Sub. Each share
of the capital stock of CPI Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
CPI Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of
Common Stock of CPI owned directly or indirectly by CPI or
any subsidiary of CPI immediately prior to the Effective
Time shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of CPI Common Stock. Subject to
Section 4.06, each share of CPI Common Stock outstanding
immediately prior to the Effective Time shall be converted
into the right to receive a number of fully paid and
nonassessable shares of Parent Common Stock equal to the
Parent Common Share Number divided by the total number of
shares of CPI Common Stock outstanding immediately prior to
the Effective Time (the "CPI Common Share Number"). The
term "Merger Consideration" shall refer to the securities
issuable pursuant to the immediately preceding sentence,
together with any assets or securities payable by Parent
pursuant to Section 4.06(a) hereof; and the amount of any
such assets or securities that are payable per share of CPI
Common Stock as part of the Merger Consideration shall be
determined on the basis of the amount of any such assets or
property that would have been payable per share of Parent
Common Stock had such securities been outstanding at the
relevant record and payment dates for the distribution of
such assets or securities. As of the Effective Time, all
shares of CPI Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate repre-
senting any such share of CPI Common Stock shall cease to
have any rights with respect thereto, except the right to
<PAGE>8
5
receive the Merger Consideration. The "Parent Common Share
Number" shall equal 1,210,100, as such number shall be
further adjusted pursuant to Section 4.02(b), after first
giving effect to any adjustments to the Parent Common Share
Number and Common Valuation Number required by transactions
covered by Section 4.06(b).
SECTION 4.02. Adjustment to the Parent Common Share
Number. (a) The Parent Common Share Number shall be
adjusted in accordance with this Section 4.02 if the
Adjustment Amount exceeds the Threshold or the Threshold
exceeds the Adjustment Amount. The "Threshold" shall be the
portion of the Threshold of CILP that is allocable to CPI.
Subject to adjustment in accordance with Section 4.06(c),
the Threshold of CILP shall be $197,338,000 and the portion
thereof allocable to CPI shall be $10,713,000.
(i) In the event that the Adjustment Amount
exceeds the Threshold, the Parent Common Share Number
shall equal 1,210,100 less an amount equal to such excess
divided by the Common Valuation Number (the result being
rounded to the nearest whole number, with 0.5 being
rounded to the next highest number).
(ii) In the event that the Threshold exceeds the
Adjustment Amount, the Parent Common Share Number shall
equal 1,210,100 plus an amount equal to such excess
divided by the Common Valuation Number (the result being
rounded to the nearest whole number, with 0.5 being
rounded to the next highest number).
(b) The Adjustment Amount of CPI shall be equal to the
portion of the Adjustment Amount of CILP allocable to the
Equity Interest of CPI in CILP, determined as follows:
(i) If the Adjustment Amount of CILP is $163,000,000
or greater, the Adjustment Amount of CIP shall
equal $10,713,000 plus 58.5% of the excess, if
any, of the Adjustment Amount of CILP over
$163,000,000; and
(ii) If the Adjustment Amount of CILP is less than
$163,000,000, the Adjustment Amount shall equal
$10,713,000 less 58.5% of the amount by which
$163,000,000 exceeds the Adjustment Amount of
CILP.
<PAGE>9
6
The Adjustment Amount of CILP shall be equal to, without
duplication, (A) the aggregate amount of Closing
Indebtedness and Other Liabilities of CILP, plus (B) the
amount of the Working Capital Deficit of CILP, if any, or
minus (C) the amount of the Working Capital Balance of CILP,
if any, plus (D) the amount of the Allocable Capital
Expenditure Deficiency of CILP, if any, or minus (E) the
amount of the Allocable Capital Expenditure Excess of CILP,
if any, plus (F) the aggregate amount of Severance and
Incentive Liabilities of CILP.
SECTION 4.03. Estimated Adjustment Amount; Initial
Calculation of Merger Consideration. Not later than five
business days prior to the Closing, CPI shall deliver to
Parent an estimate of the Adjustment Amount (the "Estimated
Adjustment Amount") of CPI, including therewith estimated
Closing Indebtedness and Other Liabilities ("Estimated
Closing Indebtedness and Other Liabilities") of CPI,
estimated Working Capital Deficit or estimated Working
Capital Balance ("Estimated Working Capital Deficit or
Balance") of CPI, estimated Capital Expenditure Deficiency
of CPI or estimated Capital Expenditure Excess of CPI (the
"Estimated Capital Expenditure Deficiency or Excess") and
estimated Severance and Incentive Liabilities ("Estimated
Severance and Incentive Liabilities") of CPI, and the Parent
Common Share Number shall be calculated pursuant to
Section 4.02 as if the Estimated Adjustment Amount were the
Adjustment Amount (the "Estimated Parent Common Share
Number"). As of the Closing, the aggregate Merger
Consideration in respect of all shares of CPI Common Stock
shall be deemed to comprise a number of shares of Parent
Common Stock equal to the Estimated Parent Common Share
Number, together with any assets or securities payable by
Parent pursuant to Section 4.06(a) hereof; and each share of
CPI Common Stock shall be deemed to be converted into a
number of shares of Parent Common Stock equal to the
Estimated Parent Common Share Number divided by the CPI
Common Share Number, together with any assets or securities
payable by Parent pursuant to Section 4.06(a) hereof. After
the Closing, the Merger Consideration (as determined
pursuant to this Section 4.03) shall be subject to
adjustment in accordance with Sections 4.05 and 4.06.
SECTION 4.04. Exchange of Certificates; Delivery of
Parent Stock; Escrow Arrangements. (a) At the Closing,
Parent shall issue and deliver to the Stockholders'
Representative, upon surrender of each certificate (a
"Certificate") that immediately prior to the Effective Time
<PAGE>10
7
represents outstanding shares of CPI Common Stock, the
portion of the Merger Consideration (as determined pursuant
to Section 4.03) that is issuable in respect of the shares
of CPI Common Stock represented by such Certificate. Each
Certificate so surrendered pursuant to the preceding
sentence shall forthwith be canceled. Delivery of
Certificates for cancellation shall be made by the
Stockholders' Representative on behalf of the CPI
Stockholders; and delivery of the Merger Consideration in
respect of all shares of CPI Common Stock outstanding
immediately prior to the Effective Time shall be delivered
to the Stockholders' Representative for the benefit of the
CPI Stockholders (and the Merger Consideration so delivered
shall be deemed to have been delivered to the CPI
Stockholders). For purposes of this Section 4.04, the
Escrowed Shares deposited into escrow pursuant to
Section 4.04(h) hereof and held in escrow pursuant to the
terms of the Escrow Agreement shall be deemed to have been
delivered to the Stockholders' Representative.
(b) In the event of a transfer of ownership of CPI
Common Stock that is not registered in the transfer records
of CPI, the Merger Consideration issuable in respect of such
shares may be issued to a Person other than the Person in
whose name any Certificate so surrendered is registered,
provided that such Certificate is properly endorsed or
otherwise in proper form for transfer and the Person
requesting such payment shall pay any transfer or other
taxes required by reason of the issuance of such Merger
Consideration to a Person other than the registered holder
of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 4.04, each
Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such
surrender the portion of the Merger Consideration that is
issuable in respect of each share of CPI Common Stock that
was represented by such Certificate prior to the Effective
Time, together with any dividends or distributions with
respect to any such shares of capital stock of Parent
constituting Merger Consideration for which the record date
is after the Effective Time. Subject to the effect of
applicable laws, following surrender of any such
Certificate, Parent shall deliver to the Stockholders'
Representative, for the benefit of such Person, the portion
of the Merger Consideration issued in exchange therefor,
without interest, together with (x) at the time of such
surrender, the amount of dividends or other distributions
<PAGE>11
8
with a record date after the Effective Time theretofore paid
with respect to such whole shares of any class of capital
stock of Parent constituting Merger Consideration and (y) at
the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of capital
stock of Parent constituting Merger Consideration.
(c) No dividends or other distributions declared or
made after the Effective Time with respect to shares of any
class of capital stock of Parent constituting Merger
Consideration with a record date after the Effective Time
shall be paid to the holder of any unsurrendered
Certificate, or to the Stockholders' Representative for the
benefit of such holder, with respect to the applicable
shares of capital stock of Parent constituting Merger
Consideration represented thereby until the holder of record
of such Certificate, or the Stockholders' Representative on
behalf of such holder, shall surrender such Certificate.
(d) All shares of capital stock of Parent constituting
Merger Consideration issued or issuable upon the surrender
for exchange of Certificates in accordance with the terms of
this Article IV shall be deemed to have been issued and paid
in full satisfaction of all rights pertaining to the shares
of CPI Common Stock theretofore represented by such
Certificates, and there shall be no further registration of
transfers on the stock transfer books of the CPI Surviving
Corporation of the shares of CPI Common Stock which were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
CPI Surviving Corporation or Parent for any reason, they
shall be canceled and exchanged as provided in this
Article IV.
(e) Neither Parent nor CPI shall be liable to any
Person in respect of any Merger Consideration delivered to a
public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) If any Certificates shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen
or destroyed, and the delivery to Parent of an
indemnification agreement and bond satisfactory to Parent,
will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration (and any dividend or
<PAGE>12
9
distribution with respect thereto pursuant to
Section 4.04(b)) issuable or deliverable in respect thereof
as determined in accordance with the terms of this
Agreement.
(g) No certificates or scrip representing fractional
shares of capital stock of Parent shall be issued to any CPI
Stockholder (or to the Stockholders' Representative for the
benefit of a CPI Stockholder) upon the surrender for
exchange of certificates of CPI Common Stock, the number of
shares of each class of capital stock of Parent to be issued
pursuant to the CPI Merger to each CPI Stockholder (after
consolidating all Certificates to be surrendered by such CPI
Stockholder) being rounded up or down, as the case may be,
to the nearest whole share (with one-half of a share being
rounded to the next highest number).
(h) At the Closing, Parent shall, on behalf of the CPI
Stockholders, deposit into escrow, in accordance with the
terms of the Escrow Agreement, an aggregate number of shares
of shares of Parent Common Stock (collectively, the
"Escrowed Shares") which together shall have a value (based
on the Common Valuation Number) of $26,032. The allocation
among CPI Stockholders of such shares of Parent Common
Stock, shall be determined pursuant to Section 4.04(i).
(i) The Principal Stockholder shall be entitled to
determine the allocation, as among the CPI Stockholders, of
the shares of Parent Common Stock that are to be deposited
into escrow pursuant to the Escrow Agreement, and unless
otherwise specified shall be deemed to have determined that
all such shares shall be from among those issuable to the
Principal Stockholder.
SECTION 4.05. Reconciliation of Adjustment Amount;
Adjustment of Merger Consideration. (a) Within 90 days
after the Closing Date, Parent shall prepare and deliver to
the Stockholders' Representative, a statement (the
"Statement") setting forth Parent's determination of the
Adjustment Amount, including Closing Indebtedness and Other
Liabilities, the Working Capital Deficit or Working Capital
Balance, the Capital Expenditure Deficiency or Capital
Expenditure Excess and the Severance and Incentive
Liabilities, in each case of CPI, and the calculation of the
Parent Common Share Number in accordance with Section 4.02.
During the 30-day period following delivery of the Statement
<PAGE>13
10
to the Stockholders' Representative and his representatives,
Parent shall provide the Stockholders' Representative and
his Representatives with access during normal business hours
to any books, records, working papers or other information
reasonably necessary or useful in the preparation of the
Statement and the calculation of the Adjustment Amount to
enable the Stockholders' Representative or his
Representatives (as defined in Section 5.01 of the
Supplemental Agreement) to verify the accuracy of the
Statement. The Statement shall become final and binding
upon all parties hereto on the thirtieth day following
delivery thereof to the Stockholders' Representative unless
the Stockholders' Representative gives written notice of
disagreement with the Statement (a "Notice of Disagreement")
to Parent prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature of any
disagreement so asserted and relate solely to the
preparation of the Statement and the calculation of the
Adjustment Amount, the Parent Common Share Number in
accordance with Section 4.02.
(b) If a Notice of Disagreement is received by Parent
in a timely manner, then the Statement (as revised in
accordance with clause (c) or (d) below) shall become final
and binding upon the parties hereto on the earlier of
(i) the date the Stockholders' Representative and Parent
resolve in writing any differences they may have with
respect to any matter specified in the Notice of
Disagreement or (ii) the date any disputed matters are
finally resolved in writing by the Arbitrator (as defined
below). During the 30-day period following the delivery of
a Notice of Disagreement, Parent and the Stockholders'
Representative shall seek in good faith to resolve in
writing any differences which they may have with respect to
any matter specified in the Notice of Disagreement and each
shall provide the other (and their respective
representatives) with reasonable access to any books,
records, working papers or other information reasonably
necessary or useful in the preparation or calculation of
(u) the Estimated Adjustment Amount, including Estimated
Closing Indebtedness and Other Liabilities, the Estimated
Working Capital Deficit or Balance, the Estimated Capital
Expenditure Deficiency or Excess and the Estimated Severance
Incentive Liabilities, in each case of CPI, (v) the
Adjustment Amount, including Closing Indebtedness and Other
Liabilities, the Working Capital Deficit or Working Capital
Balance, the Capital Expenditure Deficiency or Capital
Expenditure Excess and the Severance and Incentive
<PAGE>14
11
Liabilities, in each case of CPI, (w) the Parent Common
Share Number, (x) the Statement, (y) any Notice of
Disagreement or (z) otherwise with respect to any thereof.
At the end of such 30-day period if there has been no
resolution of the matters specified in the Notice of
Disagreement, Parent and the Stockholders' Representative
shall submit to an arbitrator (the "Arbitrator") for review
and resolution any and all matters arising under this
Section which remain in dispute. The Arbitrator shall be
Price Waterhouse, or if such firm is unable or unwilling to
act, such other nationally recognized independent public
accounting firm as shall be agreed upon by Parent and the
Stockholders' Representative in writing. The Arbitrator
shall render a written decision resolving the matters
submitted to the Arbitrator within 30 days following
submission thereto. The cost of any arbitration (including
the fees of the Arbitrator) pursuant to this Section shall
be borne 50% by Parent and 50% by the CPI Stockholders.
(c) If the Adjustment Amount is higher or lower than
the Estimated Adjustment Amount, the Parent Common Share
Number shall be finally adjusted pursuant to Section 4.02.
If the Parent Common Share Number, in each case as so
finally adjusted, is greater than the Estimated Parent
Common Share Number, respectively, Parent shall, within
15 days after the Statement becomes final and binding upon
the parties, issue and deliver to the Stockholders'
Representative, for the benefit of the CPI Stockholders, an
aggregate number of shares, rounded to the nearest whole
share, of Parent Common Stock (collectively, the "Additional
Parent Shares") (in each case with one-half of a share being
rounded to the next highest number) equal to the excess of
the Parent Common Share Number as so finally determined,
over the Estimated Parent Common Share Number. The
Additional Parent Shares shall be allocated to each CPI
Stockholder pro rata on the basis of the ratio (the
"Allocation Ratios") that the number of shares of Parent
Common Stock issued and delivered to such Stockholder at the
Closing with respect to such Stockholder's shares of CPI
Common Stock bears to the total number of Parent Common
Stock issued and delivered to all Stockholders at the
Closing.
(d) If the Parent Common Share Number as so finally
adjusted is less than the Estimated Parent Common Share
Number, Parent shall be entitled to receive, within 15 days
after the Statement becomes final and binding upon the
parties, an aggregate number of shares, rounded to the
<PAGE>15
12
nearest whole share, of Parent Common Stock (collectively,
the "Returned Parent Shares") (in each case with one-half of
a share being rounded to the next highest number), equal to
the excess of the Estimated Parent Common Share Number over
the Parent Common Share Number as so finally determined.
The number of Returned Parent Shares to be returned to
Parent by each CPI Stockholder shall be calculated pro rata
on the basis of the Allocation Ratios. The obligation to
deliver Returned Parent Shares shall be satisfied, first,
out of the Escrowed Shares, and second, out of other shares
held by the CPI Stockholders.
SECTION 4.06. Participation Rights and Additional
Adjustments; Adjustments to Threshold. (a) Without
limiting the conditions precedent to the obligations of CPI
and the Principal Stockholder hereunder, in the event that
(i) Parent makes a distribution of the type that would
require a distribution to holders of Parent Preferred Stock
pursuant to Section 2.3 or 3.7 of the Parent Series E
Certificate or the Parent Series F Certificate (a
"Distribution"), and (ii) the record date or (if there shall
not be a record date) effective date for the Distribution
shall occur on or after the date hereof and prior to the
Effective Time, Parent shall, at the Effective Time (or if
the date for payment of the Distribution is after the
Effective Time, on the date of payment) pay to the Persons
who become record holders of Parent Common Stock at the
Effective Time the amounts and kinds of assets or capital
stock or other securities that such Persons would have been
entitled to receive had such Persons been record holders of
such Parent Common Stock on the relevant record date or
effective date for the Distribution (taking into account
(and giving effect to) any right of election set forth in
such Sections).
(b) Without limiting the conditions precedent to the
obligations of CPI and the Principal Stockholder hereunder,
the Parent Common Share Number shall be adjusted from time
to time after the date hereof and prior to the Effective
Time for events described in paragraphs 3.6 and 3.7 of the
Parent Series E Certificate and Parent Series F Certificate
as if the references therein to the term "Conversion Rate"
were instead references to the Common Share Number as in
effect at the time (provided that the Conversion Price shall
be appropriately adjusted by the parties) and the references
therein to "Series E Stock" and "Series F Stock" were
instead to CPI Common Stock (taking into account (and giving
effect to) any right of election set forth in such Section,
<PAGE>16
13
including any right of election that would give such holders
a right to receive a distribution (which distribution shall
be treated as a Distribution for purposes of Section 4.06(a)
hereof).
(c) The Threshold of CILP shall be reduced in the
event the Principal Stockholder designates as Excluded
Assets any System or Systems (or portions thereof) owned by
CILP as of the date of this Agreement pursuant to
Section 5.25 of the Supplemental Agreement by an amount
equal to the Excluded Systems Amount. The "Excluded Systems
Amount" shall equal 13.5 multiplied by the aggregate amount
of operating cash flow of the CILP for the fiscal year
immediately preceding the Effective Time that is
attributable to each System (or portion thereof) so
designated (it being understood that such operating cash
flow shall be as so determined in preparing the Company's
audited financial statements for such fiscal year). The
portion of the Threshold of CILP that is allocable to CPI
shall be appropriately adjusted taking into account (and
without duplication of) the adjustment to the portion of the
Threshold of CILP allocable to CID.
SECTION 4.07. Stockholders' Representative. Each
holder of CPI Common Stock, by approval of the CPI Merger by
the requisite vote of the CPI Stockholders, designates
Philip Dropkin or such other Person as designated by the
Principal Stockholder to be the representative of each such
CPI Stockholder (the "Stockholders' Representative") for
purposes of this Agreement.
ARTICLE V
Conditions Precedent
The respective obligation of each party to effect the
CPI Merger and the other transactions contemplated hereby is
<PAGE>17
14
subject to the satisfaction or waiver (by the parties for
whose benefit the condition is imposed) on or prior to the
Closing Date of the conditions set forth in Article VI of
the Supplemental Agreement.
ARTICLE VI
Termination, Amendment and Waiver
This Agreement may be terminated or amended or the
parties may extend the time for the performance of any of
the obligations or other acts of the other parties, waive
any inaccuracies in the representations and warranties
contained in or in any document delivered pursuant to this
Agreement or waive compliance with any of the agreements or
conditions contained in this Agreement, in each case as
provided in Article VIII of the Supplemental Agreement.
ARTICLE VII
Governing Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof, except to
the extent that the laws of the State of Delaware are
mandatorily applicable to the CPI Merger.
<PAGE>18
15
IN WITNESS WHEREOF, CPI, the Principal Stockholder and
Parent have caused this Agreement to be signed by their
respective duly authorized officers (or, in the case of the
Principal Stockholder, has signed this Agreement), all as of
the date first written above.
CABLEVISION PROPERTIES, INC.
by /s/
---------------------------
Name:
Title:
/s/ Alan Gerry
______________________________
Alan Gerry
TIME WARNER INC.,
by /s/
--------------------------
Name:
Title:
Exhibit 2(c)
============================================================
AGREEMENT AND PLAN OF MERGER
Dated as of February 6, 1995,
Among
CABLEVISION MANAGEMENT CORPORATION OF PHILADELPHIA,
ALAN GERRY,
And
TIME WARNER INC.
============================================================
<PAGE>2
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Interpretation . . . . . . . . . . 2
ARTICLE II
The Merger
SECTION 2.01. The Merger . . . . . . . . . . . . 2
SECTION 2.02. Effective Time . . . . . . . . . . 2
SECTION 2.03. Effects of the CMP Merger . . . . . 3
ARTICLE III
The CMP Surviving Corporation
SECTION 3.01. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . 3
SECTION 3.02. Directors . . . . . . . . . . . . . 3
SECTION 3.03. Officers . . . . . . . . . . . . . 3
ARTICLE IV
Effect of the CMP Merger on the Capital Stock of the
Constituent Corporations; Merger Consideration;
Exchange of Certificates
SECTION 4.01. Effect on Capital Stock . . . . . . 4
SECTION 4.02. Adjustment to the Parent Common
Share Number . . . . . . . . . . 5
SECTION 4.03. Estimated Adjustment Amount; Initial
Calculation of Merger Consideration 5
SECTION 4.04. Exchange of Certificates; Delivery
of Parent Stock; Escrow
Arrangements . . . . . . . . . . 6
SECTION 4.05. Reconciliation of Adjustment Amount;
Adjustment of Merger Consideration 9
SECTION 4.06 Participation Rights and Additional
Adjustments; Adjustments to
Threshold . . . . . . . . . . . . 11
SECTION 4.07 Stockholders' Representative . . . 12
<PAGE>3
ARTICLE V
Conditions Precedent . . . . . . . . . . . . . . 12
ARTICLE VI
Termination, Amendment and Waiver . . . . . . . . 13
ARTICLE VII
Governing Law . . . . . . . . . . . . . . . . . . 13
<PAGE>4
1
AGREEMENT AND PLAN OF MERGER dated as of
February 6, 1995, among CABLEVISION
MANAGEMENT CORPORATION OF PHILADELPHIA, a
Delaware corporation ("CMP"), ALAN GERRY, an
individual residing at Loomis Road, Liberty,
New York (the "Principal Stockholder") and
TIME WARNER INC., a Delaware corporation
("Parent").
WHEREAS the respective Boards of Directors of CMP
and Parent have approved the merger of CMP Acquisition Sub
with and into CMP, upon the terms and subject to the
conditions set forth in this Agreement (the "CMP Merger"),
whereby each issued and outstanding share of Common Stock of
CMP not owned directly or indirectly by CMP or any
subsidiary of CMP (the "CMP Common Stock"), will be
converted into the right to receive the Merger
Consideration;
WHEREAS concurrently with the execution and
delivery hereof, each of Cablevision Properties, Inc.
("CPI") and Cablevision Industries Corporation (the
"Company") is entering into a Merger Agreement with the
Principal Stockholder and Parent, pursuant to which upon the
terms and subject to the conditions set forth therein, TW
CVI Acquisition Corp. will be merged into the Company and
CPI Acquisition Sub will be merged into CPI and the
Principal Stockholder will receive for each share of common
stock of the Company or CPI, as applicable, the Merger
Consideration (as defined in the relevant Merger Agreement);
and
WHEREAS concurrently with the execution and
delivery hereof, the Principal Stockholder, certain
subsidiaries of the Principal Stockholder that are Purchase
Gerry Companies, the Direct Holders and Parent are entering
into a Purchase Agreement dated as of February 6, 1995,
pursuant to which upon the terms and subject to the
conditions set forth therein, the Principal Stockholder has
agreed to sell and Parent has agreed to purchase all of the
equity interests in, or the assets of and assume the related
liabilities of, each of the Purchase Gerry Companies;
WHEREAS concurrently with the execution and
delivery hereof, the Company, the Direct Holders, the Gerry
Companies, the Principal Stockholder, Parent and Sub are
entering into the Supplemental Agreement dated as of
<PAGE>5
2
February 6, 1995, pursuant to which the Company, the Direct
Holders, the Gerry Companies, the Principal Stockholder,
Parent and Sub are making certain representations,
warranties, covenants and agreements in connection with the
Mergers, the Purchase and the other Transactions and also
are prescribing various conditions to the Mergers, the
Purchase and the other Transactions; and
WHEREAS, for Federal income tax purposes, it is
intended that the CMP Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the
Code;
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements of the parties
hereto contained in the Acquisition Documents, the parties
agree as follows:
ARTICLE I
Definitions and Interpretation
Capitalized terms used herein and not defined
herein have the meanings given such terms in Annex A to the
Supplemental Agreement, and the rules of interpretation set
forth in such Annex A are applicable hereto.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with DGCL, CMP Acquisition Sub shall be merged
with and into CMP at the Effective Time. Following the CMP
Merger, the separate corporate existence of CMP Acquisition
Sub shall cease and CMP shall continue as the surviving cor-
poration (the "CMP Surviving Corporation") and shall succeed
to and assume all the rights and obligations of CMP
Acquisition Sub in accordance with the DGCL. Parent shall
cause CMP Acquisition Sub to be formed as a wholly-owned
subsidiary of Parent prior to the Closing Date.
SECTION 2.02. Effective Time. At the time of the
Closing, or as soon as practicable thereafter, CMP Surviving
<PAGE>6
3
Corporation shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings
required under the DGCL. The CMP Merger shall become
effective at the Effective Time.
SECTION 2.03. Effects of the CMP Merger. The CMP
Merger shall have the effects set forth in Section 259 of
the DGCL.
ARTICLE III
the CMP Surviving Corporation
SECTION 3.01. Certificate of Incorporation and
By-laws. (a) The certificate of incorporation of CMP
Acquisition Sub as in effect immediately prior to the
Effective Time shall become the certificate of incorporation
of the CMP Surviving Corporation at the Effective Time
(except that such certificate of incorporation may be
amended at the Effective Time to change the name of the CMP
Surviving Corporation), until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of CMP Acquisition Sub as in
effect immediately prior to the Effective Time shall become
the By-laws of the CMP Surviving Corporation at the
Effective Time, until thereafter changed or amended as
provided therein or by applicable law.
SECTION 3.02. Directors. The directors of CMP
Acquisition Sub immediately prior to the Effective Time
shall become the directors of the CMP Surviving Corporation
at the Effective Time, until the earlier of their resigna-
tion or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 3.03. Officers. The officers of CMP
Acquisition Sub immediately prior to the Effective Time
shall become the officers of the CMP Surviving Corporation
at the Effective Time, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
<PAGE>7
4
ARTICLE IV
Effect of the CMP Merger on the Capital Stock of the
Constituent Corporations; Merger Consideration;
Exchange of Certificates
SECTION 4.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the CMP Merger and without any
action on the part of the holder of any shares of CMP Common
Stock or any shares of capital stock of CMP Acquisition Sub:
(a) Capital Stock of CMP Acquisition Sub. Each
share of the capital stock of CMP Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
CMP Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share
of Common Stock of CMP owned directly or indirectly by CMP
or any subsidiary of CMP immediately prior to the Effective
Time shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of CMP Common Stock. Subject to
Section 4.06, each share of CMP Common Stock outstanding
immediately prior to the Effective Time shall be converted
into the right to receive a number of fully paid and
nonassessable shares of Parent Common Stock equal to the
Parent Common Share Number divided by the total number of
shares of CMP Common Stock outstanding immediately prior to
the Effective Time (the "CMP Common Share Number"). The
term "Merger Consideration" shall refer to the securities
issuable pursuant to the immediately preceding sentence,
together with any assets or securities payable by Parent
pursuant to Section 4.06(a) hereof; and the amount of any
such assets or securities that are payable per share of CMP
Common Stock as part of the Merger Consideration shall be
determined on the basis of the amount of any such assets or
property that would have been payable per share of Parent
Common Stock had such securities been outstanding at the
relevant record and payment dates for the distribution of
such assets or securities. As of the Effective Time, all
shares of CMP Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate repre-
senting any such share of CMP Common Stock shall cease to
have any rights with respect thereto, except the right to
<PAGE>8
5
receive the Merger Consideration. The "Parent Common Share
Number" shall equal 571,350, as such number shall be further
adjusted pursuant to Section 4.02(b), after first giving
effect to any adjustments to the Parent Common Share Number
and Common Valuation Number required by transactions covered
by Section 4.06(b).
SECTION 4.02. Adjustment to the Parent Common
Share Number. (a) The Parent Common Share Number shall be
adjusted in accordance with this Section 4.02 if the
Adjustment Amount exceeds $0 (as adjusted pursuant to
Section 4.06(c), the "Threshold") or the Threshold exceeds
the Adjustment Amount.
(i) In the event that the Adjustment Amount
exceeds the Threshold, the Parent Common Share Number
shall equal 571,350 less an amount equal to such excess
divided by the Common Valuation Number (the result
being rounded to the nearest whole number, with 0.5
being rounded to the next highest number).
(ii) In the event that the Threshold exceeds
the Adjustment Amount, the Parent Common Share Number
shall equal 571,350 plus an amount equal to such excess
divided by the Common Valuation Number (the result
being rounded to the nearest whole number, with 0.5
being rounded to the next highest number).
(b) The "Adjustment Amount" shall be an amount
equal to, without duplication, (A) the aggregate amount of
Closing Indebtedness and Other Liabilities of CMP, plus
(B) the amount of the Working Capital Deficit of CMP, if
any, or minus (C) the amount of the Working Capital Balance
of CMP, if any, plus (D) the amount of the Allocable Capital
Expenditure Deficiency of CMP, if any, or minus (E) the
amount of the Allocable Capital Expenditure Excess of CMP,
if any, plus (F) the aggregate amount of Severance and
Incentive Liabilities of CMP.
SECTION 4.03. Estimated Adjustment Amount;
Initial Calculation of Merger Consideration. Not later than
five business days prior to the Closing, CMP shall deliver
to Parent an estimate of the Adjustment Amount (the
"Estimated Adjustment Amount") of CMP, including therewith
estimated Closing Indebtedness and Other Liabilities
("Estimated Closing Indebtedness and Other Liabilities") of
CMP, estimated Working Capital Deficit or estimated Working
Capital Balance ("Estimated Working Capital Deficit or
<PAGE>9
6
Balance") of CMP, estimated Capital Expenditure Deficiency
of CMP or estimated Capital Expenditure Excess of CMP (the
"Estimated Capital Expenditure Deficiency or Excess") and
estimated Severance and Incentive Liabilities ("Estimated
Severance and Incentive Liabilities") of CMP, and the Parent
Common Share Number shall be calculated pursuant to
Section 4.02 as if the Estimated Adjustment Amount were the
Adjustment Amount (the "Estimated Parent Common Share
Number"). As of the Closing, the aggregate Merger
Consideration in respect of all shares of CMP Common Stock
shall be deemed to comprise a number of shares of Parent
Common Stock equal to the Estimated Parent Common Share
Number, together with any assets or securities payable by
Parent pursuant to Section 4.06(a) hereof; and each share of
CMP Common Stock shall be deemed to be converted into a
number of shares of Parent Common Stock equal to the
Estimated Parent Common Share Number divided by the CMP
Common Share Number, together with any assets or securities
payable by Parent pursuant to Section 4.06(a) hereof. After
the Closing, the Merger Consideration (as determined
pursuant to this Section 4.03) shall be subject to
adjustment in accordance with Sections 4.05 and 4.06.
SECTION 4.04. Exchange of Certificates; Delivery
of Parent Stock; Escrow Arrangements. (a) At the Closing,
Parent shall issue and deliver to the Stockholders'
Representative, upon surrender of each certificate (a
"Certificate") that immediately prior to the Effective Time
represents outstanding shares of CMP Common Stock, the
portion of the Merger Consideration (as determined pursuant
to Section 4.03) that is issuable in respect of the shares
of CMP Common Stock represented by such Certificate. Each
Certificate so surrendered pursuant to the preceding
sentence shall forthwith be canceled. Delivery of
Certificates for cancellation shall be made by the
Stockholders' Representative on behalf of the CMP
Stockholders; and delivery of the Merger Consideration in
respect of all shares of CMP Common Stock outstanding
immediately prior to the Effective Time shall be delivered
to the Stockholders' Representative for the benefit of the
CMP Stockholders (and the Merger Consideration so delivered
shall be deemed to have been delivered to the CMP
Stockholders). For purposes of this Section 4.04, the
Escrowed Shares deposited into escrow pursuant to
Section 4.04(h) hereof and held in escrow pursuant to the
terms of the Escrow Agreement shall be deemed to have been
delivered to the Stockholders' Representative.
<PAGE>10
7
(b) In the event of a transfer of ownership of
CMP Common Stock that is not registered in the transfer
records of CMP, the Merger Consideration issuable in respect
of such shares may be issued to a Person other than the
Person in whose name any Certificate so surrendered is
registered, provided that such Certificate is properly
endorsed or otherwise in proper form for transfer and the
Person requesting such payment shall pay any transfer or
other taxes required by reason of the issuance of such
Merger Consideration to a Person other than the registered
holder of such Certificate or establish to the satisfaction
of Parent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 4.04, each
Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such
surrender the portion of the Merger Consideration that is
issuable in respect of each share of CMP Common Stock that
was represented by such Certificate prior to the Effective
Time, together with any dividends or distributions with
respect to any such shares of capital stock of Parent
constituting Merger Consideration for which the record date
is after the Effective Time. Subject to the effect of
applicable laws, following surrender of any such
Certificate, Parent shall deliver to the Stockholders'
Representative, for the benefit of such Person, the portion
of the Merger Consideration issued in exchange therefor,
without interest, together with (x) at the time of such
surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid
with respect to such whole shares of any class of capital
stock of Parent constituting Merger Consideration and (y) at
the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of capital
stock of Parent constituting Merger Consideration.
(c) No dividends or other distributions declared
or made after the Effective Time with respect to shares of
any class of capital stock of Parent constituting Merger
Consideration with a record date after the Effective Time
shall be paid to the holder of any unsurrendered
Certificate, or to the Stockholders' Representative for the
benefit of such holder, with respect to the applicable
shares of capital stock of Parent constituting Merger
Consideration represented thereby until the holder of record
of such Certificate, or the Stockholders' Representative on
behalf of such holder, shall surrender such Certificate.
<PAGE>11
8
(d) All shares of capital stock of Parent
constituting Merger Consideration issued or issuable upon
the surrender for exchange of Certificates in accordance
with the terms of this Article IV shall be deemed to have
been issued and paid in full satisfaction of all rights
pertaining to the shares of CMP Common Stock theretofore
represented by such Certificates, and there shall be no
further registration of transfers on the stock transfer
books of the CMP Surviving Corporation of the shares of CMP
Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates
are presented to the CMP Surviving Corporation or Parent for
any reason, they shall be canceled and exchanged as provided
in this Article IV.
(e) Neither Parent nor CMP shall be liable to any
Person in respect of any Merger Consideration delivered to a
public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) If any Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost,
stolen or destroyed, and the delivery to Parent of an
indemnification agreement and bond satisfactory to Parent,
will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration (and any dividend or
distribution with respect thereto pursuant to
Section 4.04(b)) issuable or deliverable in respect thereof
as determined in accordance with the terms of this
Agreement.
(g) No certificates or scrip representing
fractional shares of capital stock of Parent shall be issued
to any CMP Stockholder (or to the Stockholders'
Representative for the benefit of a CMP Stockholder) upon
the surrender for exchange of certificates of CMP Common
Stock, the number of shares of each class of capital stock
of Parent to be issued pursuant to the CMP Merger to each
CMP Stockholder (after consolidating all Certificates to be
surrendered by such CMP Stockholder) being rounded up or
down, as the case may be, to the nearest whole share (with
one-half of a share being rounded to the next highest
number).
(h) At the Closing, Parent shall, on behalf of
the CMP Stockholders, deposit into escrow, in accordance
with the terms of the Escrow Agreement, one share of Parent
<PAGE>12
9
Common Stock (the "Escrowed Share"). The allocation among
CMP Stockholders of such share of Parent Common Stock shall
be determined pursuant to Section 4.04(i).
(i) The Principal Stockholder shall be entitled
to determine the allocation, as among the CMP Stockholders,
of the share of Parent Common Stock that is to be deposited
into escrow pursuant to the Escrow Agreement, and unless
otherwise specified shall be deemed to have determined that
all such shares shall be from among those issuable to the
Principal Stockholder.
SECTION 4.05. Reconciliation of Adjustment
Amount; Adjustment of Merger Consideration. (a) Within
90 days after the Closing Date, Parent shall prepare and
deliver to the Stockholders' Representative, a statement
(the "Statement") setting forth Parent's determination of
the Adjustment Amount, including Closing Indebtedness and
Other Liabilities, the Working Capital Deficit or Working
Capital Balance, the Capital Expenditure Deficiency or
Capital Expenditure Excess and the Severance and Incentive
Liabilities, in each case of CMP, and the calculation of the
Parent Common Share Number in accordance with Section 4.02.
During the 30-day period following delivery of the Statement
to the Stockholders' Representative and his representatives,
Parent shall provide the Stockholders' Representative and
his Representatives with access during normal business hours
to any books, records, working papers or other information
reasonably necessary or useful in the preparation of the
Statement and the calculation of the Adjustment Amount to
enable the Stockholders' Representative or his
Representatives (as defined in Section 5.01 of the
Supplemental Agreement) to verify the accuracy of the
Statement. The Statement shall become final and binding
upon all parties hereto on the thirtieth day following
delivery thereof to the Stockholders' Representative unless
the Stockholders' Representative gives written notice of
disagreement with the Statement (a "Notice of Disagreement")
to Parent prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature of any
disagreement so asserted and relate solely to the
preparation of the Statement and the calculation of the
Adjustment Amount, the Parent Common Share Number in
accordance with Section 4.02.
(b) If a Notice of Disagreement is received by
Parent in a timely manner, then the Statement (as revised in
accordance with clause (c) or (d) below) shall become final
<PAGE>13
10
and binding upon the parties hereto on the earlier of
(i) the date the Stockholders' Representative and Parent
resolve in writing any differences they may have with
respect to any matter specified in the Notice of
Disagreement or (ii) the date any disputed matters are
finally resolved in writing by the Arbitrator (as defined
below). During the 30-day period following the delivery of
a Notice of Disagreement, Parent and the Stockholders'
Representative shall seek in good faith to resolve in
writing any differences which they may have with respect to
any matter specified in the Notice of Disagreement and each
shall provide the other (and their respective
representatives) with reasonable access to any books,
records, working papers or other information reasonably
necessary or useful in the preparation or calculation of
(u) the Estimated Adjustment Amount, including Estimated
Closing Indebtedness and Other Liabilities, the Estimated
Working Capital Deficit or Balance, the Estimated Capital
Expenditure Deficiency or Excess and the Estimated Severance
Incentive Liabilities, in each case of CMP, (v) the
Adjustment Amount, including Closing Indebtedness and Other
Liabilities, the Working Capital Deficit or Working Capital
Balance, the Capital Expenditure Deficiency or Capital
Expenditure Excess and the Severance and Incentive
Liabilities, in each case of CMP, (w) the Parent Common
Share Number, (x) the Statement, (y) any Notice of
Disagreement or (z) otherwise with respect to any thereof.
At the end of such 30-day period if there has been no
resolution of the matters specified in the Notice of
Disagreement, Parent and the Stockholders' Representative
shall submit to an arbitrator (the "Arbitrator") for review
and resolution any and all matters arising under this
Section which remain in dispute. The Arbitrator shall be
Price Waterhouse, or if such firm is unable or unwilling to
act, such other nationally recognized independent public
accounting firm as shall be agreed upon by Parent and the
Stockholders' Representative in writing. The Arbitrator
shall render a written decision resolving the matters
submitted to the Arbitrator within 30 days following
submission thereto. The cost of any arbitration (including
the fees of the Arbitrator) pursuant to this Section shall
be borne 50% by Parent and 50% by the CMP Stockholders.
(c) If the Adjustment Amount is higher or lower
than the Estimated Adjustment Amount, the Parent Common
Share Number shall be finally adjusted pursuant to
Section 4.02. If the Parent Common Share Number, in each
case as so finally adjusted, is greater than the Estimated
<PAGE>14
11
Parent Common Share Number, respectively, Parent shall,
within 15 days after the Statement becomes final and binding
upon the parties, issue and deliver to the Stockholders'
Representative, for the benefit of the CMP Stockholders, an
aggregate number of shares, rounded to the nearest whole
share, of Parent Common Stock (collectively, the "Additional
Parent Shares") (in each case with one-half of a share being
rounded to the next highest number) equal to the excess of
the Parent Common Share Number as so finally determined,
over the Estimated Parent Common Share Number. The
Additional Parent Shares shall be allocated to each CMP
Stockholder pro rata on the basis of the ratio (the
"Allocation Ratios") that the number of shares of Parent
Common Stock issued and delivered to such Stockholder at the
Closing with respect to such Stockholder's shares of CMP
Common Stock bears to the total number of Parent Common
Stock issued and delivered to all Stockholders at the
Closing.
(d) If the Parent Common Share Number as so
finally adjusted is less than the Estimated Parent Common
Share Number, Parent shall be entitled to receive, within
15 days after the Statement becomes final and binding upon
the parties, an aggregate number of shares, rounded to the
nearest whole share, of Parent Common Stock (collectively,
the "Returned Parent Shares") (in each case with one-half of
a share being rounded to the next highest number), equal to
the excess of the Estimated Parent Common Share Number over
the Parent Common Share Number as so finally determined.
The number of Returned Parent Shares to be returned to
Parent by each CMP Stockholder shall be calculated pro rata
on the basis of the Allocation Ratios. The obligation to
deliver Returned Parent Shares shall be satisfied, first,
out of the Escrowed Shares, and second, out of other shares
held by the CMP Stockholders.
SECTION 4.06. Participation Rights and Additional
Adjustments; Adjustments to Threshold. (a) Without
limiting the conditions precedent to the obligations of CMP
and the Principal Stockholder hereunder, in the event that
(i) Parent makes a distribution of the type that would
require a distribution to holders of Parent Preferred Stock
pursuant to Section 2.3 or 3.7 of the Parent Series E
Certificate or the Parent Series F Certificate (a
"Distribution"), and (ii) the record date or (if there shall
not be a record date) effective date for the Distribution
shall occur on or after the date hereof and prior to the
Effective Time, Parent shall, at the Effective Time (or if
<PAGE>15
12
the date for payment of the Distribution is after the
Effective Time, on the date of payment) pay to the Persons
who become record holders of Parent Common Stock at the
Effective Time the amounts and kinds of assets or capital
stock or other securities that such Persons would have been
entitled to receive had such Persons been record holders of
such Parent Common Stock on the relevant record date or
effective date for the Distribution (taking into account
(and giving effect to) any right of election set forth in
such Sections).
(b) Without limiting the conditions precedent to
the obligations of CMP and the Principal Stockholder
hereunder, the Parent Common Share Number shall be adjusted
from time to time after the date hereof and prior to the
Effective Time for events described in paragraphs 3.6 and
3.7 of the Parent Series E Certificate and Parent Series F
Certificate as if the references therein to the term
"Conversion Rate" were instead references to the Common
Share Number as in effect at the time (provided that the
Conversion Price shall be appropriately adjusted by the
parties) and the references therein to "Series E Stock" and
"Series F Stock" were instead to CMP Common Stock (taking
into account (and giving effect to) any right of election
set forth in such Section, including any right of election
that would give such holders a right to receive a
distribution (which distribution shall be treated as a
Distribution for purposes of Section 4.06(a) hereof).
SECTION 4.07. Stockholders' Representative. Each
holder of CMP Common Stock, by approval of the CMP Merger by
the requisite vote of the CMP Stockholders, designates
Philip Dropkin or such other Person as designated by the
Principal Stockholder to be the representative of each such
CMP Stockholder (the "Stockholders' Representative") for
purposes of this Agreement.
ARTICLE V
Conditions Precedent
The respective obligation of each party to effect
the CMP Merger and the other transactions contemplated
<PAGE>16
13
hereby is subject to the satisfaction or waiver (by the
parties for whose benefit the condition is imposed) on or
prior to the Closing Date of the conditions set forth in
Article VI of the Supplemental Agreement.
ARTICLE VI
Termination, Amendment and Waiver
This Agreement may be terminated or amended or the
parties may extend the time for the performance of any of
the obligations or other acts of the other parties, waive
any inaccuracies in the representations and warranties
contained in or in any document delivered pursuant to this
Agreement or waive compliance with any of the agreements or
conditions contained in this Agreement, in each case as
provided in Article VIII of the Supplemental Agreement.
ARTICLE VII
Governing Law
This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof, except to
the extent that the laws of the State of Delaware are
mandatorily applicable to the CMP Merger.
<PAGE>17
14
IN WITNESS WHEREOF, CMP, the Principal Stockholder
and Parent have caused this Agreement to be signed by their
respective duly authorized officers (or, in the case of the
Principal Stockholder, has signed this Agreement), all as of
the date first written above.
CABLEVISION MANAGEMENT CORPORATION
OF PHILADELPHIA,
by /s/
-------------------------------
Name:
Title:
/s/ Alan Gerry
------------------------------
Alan Gerry
TIME WARNER INC.,
by /s/
--------------------------
Name:
Title:
Exhibit 2(d)
============================================================
PURCHASE AGREEMENT
Dated as of February 6, 1995
Among
ALAN GERRY,
CABLEVISION INDUSTRIES LIMITED PARTNERSHIP,
CABLEVISION INDUSTRIES OF TENNESSEE L.P.,
CABLEVISION INDUSTRIES OF SARATOGA ASSOCIATES,
CABLEVISION OF FAIRHAVEN/ACUSHNET,
CABLEVISION INDUSTRIES OF MIDDLE FLORIDA, INC.,
CABLEVISION INDUSTRIES OF FLORIDA, INC.,
CABLEVISION INDUSTRIES OF DELAWARE, INC.,
ARA CABLEVISION, INC.
And
TIME WARNER INC.
============================================================
<PAGE>2
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Interpretation . . . . . . . . . . 2
ARTICLE II
The Purchase
SECTION 2.01. Purchase Transactions . . . . . . . 2
SECTION 2.02. Purchase of Equity Interests . . . 4
SECTION 2.03. Purchase of Assets . . . . . . . . 4
SECTION 2.04 Assumption of Certain Liabilities of
the Asset Gerry Companies by
Purchaser . . . . . . . . . . . . . 6
SECTION 2.04. Allocation . . . . . . . . . . . . 8
ARTICLE III
The Closing
SECTION 3.01. Closing; Delivery of Cash or
Certificates . . . . . . . . . . 8
ARTICLE IV
Purchase Consideration Adjustments
SECTION 4.01. Adjustments to Purchase
Consideration . . . . . . . . . . . 9
SECTION 4.02. Estimated Adjustment Amount; Initial
Calculationof Purchase
Consideration . . . . . . . . . . 12
SECTION 4.03. Escrow Arrangements . . . . . . . . 12
SECTION 4.04. Reconciliation of Adjustment Amount;
Adjustment of Purchase
Consideration . . . . . . . . . . 13
SECTION 4.05. Participation Rights and Additional
Adjusmtnets; Adjustments to
<PAGE>3
Threshold . . . . . . . . . . . . 15
SECTION 4.06 Stockholders' Representative 16
ARTICLE V
Conditions Precedent
ARTICLE VI
Termination, Amendment and Waiver
ARTICLE VII
Governing Law
<PAGE>4
1
PURCHASE AGREEMENT dated as of
February 6, 1995, among ALAN GERRY, an
individual residing at Loomis Road, Liberty,
New York (the "Principal Stockholder"), the
corporations and partnerships listed on the
signature pages hereof as Purchase Gerry
Companies (the "Purchase Gerry Companies"),
the corporations listed on the signature
pages hereof as Direct Holders (the "Direct
Holders") and TIME WARNER INC., a Delaware
corporation ("Parent").
WHEREAS the Principal Stockholder is the sole
beneficial owner of the Gerry Companies;
WHEREAS Parent desires to acquire the business and
operations of the Gerry Companies, either (i) by purchasing
from certain Gerry Companies specified in Section 2.01 (each
an "Asset Gerry Company") all of the assets, and assuming
the liabilities (except as provided herein), of such Asset
Gerry Company or (ii) in the case of certain other Gerry
Companies specified in Section 2.01 (each an "Equity Gerry
Company"), by purchasing all the partnership interests
thereof (the "Equity Interests") of the Equity Gerry
Companies from the Principal Stockholder or, in the case of
the Equity Interests that are not owned directly by the
Principal Stockholder, by the direct holder of such Equity
Interests (all such acquisitions being referred to
collectively as the "Purchase"), and the Principal
Stockholder is willing to cause each Asset Gerry Company to
sell all the assets, subject to the liabilities (except
provided herein), of such Asset Gerry Company or to sell,
and to cause the Direct Holders to sell, the Equity
Interests of the Equity Gerry Companies;
WHEREAS concurrently with the execution and
delivery hereof, Cablevision Industries Corporation (the
"Company"), the Principal Stockholder, Parent and Sub are
entering into the Company Merger Agreement, pursuant to
which upon the terms and subject to the conditions set forth
therein, Sub will be merged with and into the Company and
the Principal Stockholder and the other Stockholders will
receive for each share of Company Common Stock the Merger
Consideration (as defined in the Company Merger Agreement);
WHEREAS concurrently with the execution and
delivery hereof, each of Cablevision Properties, Inc., a
<PAGE>5
2
Delaware corporation ("CPI") and Cablevision Management
Corporation of Philadelphia, a Delaware corporation ("CMP")
is entering into a Merger Agreement with the Principal
Stockholder and Parent, pursuant to which upon the terms and
subject to the conditions set forth therein, CPI Acquisition
Sub will be merged into CPI and CMP Acquisition Sub will be
merged into CMP, as applicable, and the Principal
Stockholder will receive for each share of common stock of
CPI or CMP, as applicable, the Merger Consideration (as
defined in the relevant Merger Agreement); and
WHEREAS concurrently with the execution and
delivery hereof, the Company, the Gerry Companies, the
Direct Holders, the Principal Stockholder, Parent and Sub
are entering into the Supplemental Agreement pursuant to
which the Company, the Gerry Companies, the Principal
Stockholder, the Direct Holders, Parent and Sub are making
certain representations, warranties, covenants and
agreements in connection with the Merger, the Purchase and
the other Transactions and also are prescribing various
conditions to the Merger, the Purchase and the other
Transactions;
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements of the parties
hereto contained in the Acquisition Documents, the parties
agree as follows:
ARTICLE I
Definitions and Interpretation
Capitalized terms used herein and not defined
herein have the meanings given such terms in Annex A to the
Supplemental Agreement, and the rules of interpretation set
forth in such Annex A are applicable hereto.
ARTICLE II
The Purchase
Section 2.01. Purchase Transactions. On the
terms and subject to the conditions specified in this
Agreement and the Supplemental Agreement, (x) Parent and
(y) the relevant Gerry Company, Alan Gerry or the Direct
<PAGE>6
3
Holder will effect the following transactions on the Closing
Date.
(a) Parent and/or one or more Designated Entities
will purchase from Cablevision Industries of Delaware,
Inc., a Delaware corporation ("CID"), its partnership
interest in Cablevision Industries Limited Partnership,
a Delaware limited partnership ("CILP"), in exchange
for the assumption of the obligations of CID with
respect thereto;
(b) Parent and/or one or more Designated Entities
will purchase from Cablevision Industries of Tennessee
L.P., a Delaware limited partnership ("CITLP"), all of
its assets, in exchange for the assumption of all its
Assumed Liabilities;
(c) Parent and/or one or more Designated Entities
will purchase from Cablevision of Fairhaven/Acushnet, a
New York limited partnership ("CFA"), all of its
assets, in exchange for (x) the assumption of all its
Assumed Liabilities and (y) the issuance by Parent of
261,475 shares of Parent Common Stock, as such number
shall be further adjusted pursuant to Section 4.01,
after first giving effect to any adjustments to the
Parent Common Share Number and Common Valuation Number
required by transactions covered by Section 4.05(b);
(d) Parent and one or more Designated Entities
will purchase from the Principal Stockholder and ARA
Cablevision, Inc., a Delaware corporation, all of the
partnership interests in Cablevision Industries of
Saratoga Associates, a New York partnership ("CISA"),
in exchange for the assumption of all its Assumed
Liabilities;
(e) Parent and/or one or more Designated Entities
will purchase from Cablevision Industries of Middle
Florida, Inc., a Florida corporation ("CIMF"), all of
its assets, in exchange for the assumption of all its
Assumed Liabilities; and
(f) Parent and/or one or more Designated Entities
will purchase from Cablevision Industries of Florida,
Inc., a Florida corporation ("CIF"), all of its assets,
in exchange for the assumption of all its Assumed
Liabilities.
<PAGE>7
4
Notwithstanding the foregoing, a cash payment will be made
or the number of shares of Parent Common Stock to be issued
will be adjusted pursuant to Section 4.01 (and, after the
Closing, Section 4.04) to the extent the Adjustment Amount
for any Gerry Company differs from the Threshold of such
Gerry Company. The number of shares of Parent Common Stock
issuable by Parent pursuant to this Section 2.01 (the
"Parent Common Share Number") shall also be subject to
adjustment as provided in Section 4.05. The consideration
payable pursuant to this Section 2.01, as so adjusted
pursuant to Sections 4.01, 4.04 and 4.05 and, together with
any Distributions payable pursuant to Section 4.05 is called
the "Purchase Consideration". Each of CITLP, CFA, CIMF and
CIF shall be an "Asset Gerry Company", and each of CISA and
CILP shall be an "Equity Gerry Company". Each Person from
which the Parent or one or more Designated Entities shall
purchase assets or Equity Interests shall be a "Seller".
Section 2.02. Purchase of Equity Interests. In
the case where the transactions described in Section 2.01
consist of the purchase of Equity Interests, the Principal
Stockholder shall or shall cause the Direct Holder to sell,
transfer and deliver or cause to be sold, transferred and
delivered to Parent and/or one or more Designated Entities
(as specified above), free and clear of any and all Liens
(other than Liens permitted under the Supplemental
Agreement), and Parent and one or more Designated Entities
shall purchase the Equity Interests to be sold and shall
assume the liabilities associated with such Equity
Interests, including arising out of the ownership as a
general partner of the Equity Gerry Companies (such
liabilities, together with the liabilities assumed pursuant
to Section 2.04, the "Assumed Liabilities").
SECTION 2.03. Purchase of Assets. In the case
where the transactions described in Section 2.01 consist of
the purchase of assets (other than Equity Interests) and
assumption of liabilities, each Asset Gerry Company shall,
and the Principal Stockholder shall cause each Asset Gerry
Company to, sell, assign, transfer, convey and deliver or
cause to be sold, transferred, conveyed and delivered to
Parent, and Parent and/or one or more Designated Entities
shall purchase from the Principal Stockholder, all the
assets, rights, properties, goodwill and business of every
kind and description, wherever located, of each Asset Gerry
Company, in each case as the same shall exist at the Closing
Date (the "Assets" of such Asset Gerry Company), including
all properties, tangible or intangible, real, or personal,
<PAGE>8
5
and all additions thereto on and after the date hereof and
through and including the Closing Date, other than such of
those assets and properties as may have been disposed of as
permitted by Section 4.01 of the Supplemental Agreement, but
including the following in respect of each Asset Gerry
Company:
(i) such Asset Gerry Company's right, title and
interest in and to all parcels of real property owned
in fee by such Asset Gerry Company or in which such
Asset Gerry Company has a leasehold interest, and all
buildings, structures and other improvements located
thereon and all rights of way and similar
authorizations;
(ii) such Asset Gerry Company's right, title and
interest in and to all of the tangible personal
property owned or leased by such Asset Gerry Company,
including all towers, tower equipment, antennas, above
ground and underground cable, distribution systems,
headend amplifiers, line amplifiers, testing equipment,
motor vehicles, office equipment, furniture and
fixtures, supplies and other physical assets;
(iii) such Asset Gerry Company's right, title and
interest in and to all contracts, options, leases
(whether of realty or personalty), purchase orders,
commitments or other agreements of such Asset Gerry
Company (other than the Franchises of such Asset Gerry
Company), whether oral or written, including agreements
of such Asset Gerry Company listed in
Sections 3.01(m)(i), 3.01(m)(ii) and 3.01(m)(iii) of
the Disclosure Schedule, all subscription agreements
with individuals for cable television, security or
satellite service entered into in the ordinary course
of business and other contracts entered into in the
ordinary course of business prior to the date hereof or
after the date hereof;
(iv) such Asset Gerry Company's right, title and
interest in and to all subscriber, customer and
advertiser lists;
(v) such Asset Gerry Company's right, title and
interest in and to all municipal, county, state and
federal franchises, domestic satellite, business radio
and other licenses and all other permits, licenses and
authorizations issued by local, state and federal
<PAGE>9
6
Governmental Entities, and applications therefor,
including the Franchises of such Asset Gerry Company;
(vi) such Asset Gerry Company's right, title and
interest in and to copyrights, patents, or any
applications for any of the foregoing, and any goodwill
associated therewith, and other similar intangible
rights and interests;
(vii) all subscriber, customer and trade accounts
receivable due to such Asset Gerry Company as a result
of such Asset Gerry Company's (or the Company's)
operation of the Systems prior to the Closing Date;
(viii) all deposits under subscriber, utility, pole
rental and similar agreements of such Asset Gerry
Company;
(ix) such Asset Gerry Company's records, files and
data, including maps, plans, diagrams, blueprints and
schematics, if any; and
(x) the Working Capital Assets of such Asset Gerry
Company.
(b) Notwithstanding anything in Section 2.01 to
the contrary, no Asset Gerry Company shall have any
obligation to sell, nor shall Parent have any obligation to
purchase, the Excluded Assets or Excluded Systems Assets
held by any Asset Gerry Company.
Section 2.04. Assumption of Certain Liabilities
of the Asset Gerry Companies by Purchaser. In the case
where the transactions described in Section 2.01 consist of
the purchase of assets (other than Equity Interests) and the
assumption of liabilities, Parent and/or one or more
Designated Entities shall assume and agree to pay, perform
and discharge, and indemnify each Asset Gerry Company
against and hold it harmless from (the following, together
with the liabilities assumed pursuant to Section 2.02, being
called the "Assumed Liabilities"):
(a) all the obligations and liabilities of such
Asset Gerry Company under the Franchises (without limiting
the provisions of Section 5.02 of the Supplemental
Agreement);
<PAGE>10
7
(b) all of the obligations of such Asset Gerry
Company for the provision of cable television or other
services after the Closing Date to subscribers to the
Systems of such Asset Gerry Company;
(c) the obligations and liabilities of such Asset
Gerry Company under the express terms of all leases,
subleases, contracts, agreements and other instruments or
binding arrangements to which such Asset Gerry Company is a
party or by which it is bound on the Closing Date;
(d) the Working Capital Liabilities, and the
Closing Indebtedness and Other Liabilities, in each case of
such Asset Gerry Company;
(e) all obligations and liabilities in respect of
Debt Documents of such Asset Gerry Company;
(f) all Tax Liabilities of such Asset Gerry
Company;
(g) all liabilities in respect of such Asset Gerry
Company disclosed in the Balance Sheets or in
Section 3.01(e)(ii) of the Disclosure Schedule; and
(h) all other obligations and liabilities of such
Asset Gerry Company;
provided, however, that Parent shall not assume or become
liable to pay, perform or discharge or to indemnify any
Asset Gerry Company against or hold it harmless from (and
the Assumed Liabilities shall not include) any of the
following (the "Excluded Liabilities"):
(i) any obligations or liabilities of any
Asset Gerry Company under this Agreement or with
respect to or arising out of the Transactions
which, pursuant to the terms of the Acquisition
Documents, are to be borne by the Principal
Stockholder or a Cablevision Company (except as
may otherwise be provided in Section 5.02 of the
Supplemental Agreement);
(ii) any obligations or liabilities of such
Asset Gerry Company arising or incurred after the
Closing Date to the extent not reflected in the
Adjustment Amount;
<PAGE>11
8
(iii) any obligation or liability of such Asset
Gerry Company related to any Excluded Asset or
Excluded Systems Asset of such Asset Gerry
Company;
(iv) any Severance and Incentive Liabilities
of such Asset Gerry Company, to the extent not
reflected in the Adjustment Amount;
(v) any obligation or liability of such Asset
Gerry Company in respect of taxes for pre-Closing
Tax Periods for which no accrual has been made in
the determination of Working Capital Liabilities;
and
(vi) any obligations or liabilities that are
not related to such Asset Gerry Company's cable
television operations and that are incurred in
violation of Section 4.01 of the Supplemental
Agreement.
SECTION 2.05. Allocation. The parties agree that
the purchase price for the Equity Interests and Assets of
the Gerry Companies, as applicable, is allocated as provided
in Section 2.01 (as adjusted pursuant to Sections 4.01 and
4.05) of this Agreement, and none of Parent, the Gerry
Companies or the Principal Stockholder (nor any of their
respective affiliates) shall take any position on any tax
return or with any taxing authority that is inconsistent
with the allocation of the Purchase Consideration set forth
in Section 2.01 of this Agreement.
Article III
The Closing
SECTION 3.01. Closing; Delivery of Cash or
Certificates. (a) In consideration of the Purchase and the
Principal Stockholder's and each Gerry Company's performance
of the Acquisition Documents to which it is a party, on the
terms and subject to the conditions set forth herein and in
the Supplemental Agreement, at the Closing, Parent shall
deliver to the Principal Stockholder, on behalf of the
Sellers, (A) an executed assumption agreement in form and
substance reasonably satisfactory to the Principal
Stockholder that shall provide for the assumption by Parent
of the Assumed Liabilities, (B) a number of fully paid and
<PAGE>12
9
nonassessable shares of Parent Common Stock equal to the
aggregate number of shares of Parent Common Stock issuable
pursuant to Section 2.01 and (C) by wire transfer to a bank
account designated in writing by the Principal Stockholder
at least three business days prior to the Closing Date, in
immediately available funds, an amount equal to the
aggregate amount of any cash payable pursuant to
Section 4.01.
(b) At the Closing, (i) the Principal Stockholder
shall cause each Asset Gerry Company to deliver to Parent
(A) special warranty deeds to any parcels of real property
owned by such Asset Gerry Company in fee, in accordance with
local practice, and (B) bills of sale, assignments and other
instruments of transfer and conveyance, transferring and
assigning to Parent the Assets of such Asset Gerry Company;
and (ii) the Principal Stockholder shall, and shall cause
each Direct Holder of an Equity Gerry Company to, deliver to
Parent an executed assignment agreement in form and
substance reasonably satisfactory to Parent that shall
provide for the assignment of the Equity Interests of such
Equity Gerry Company to Parent and/or one or more Designated
Entities, as specified by Parent not later than three
business days prior to the Closing Date.
ARTICLE IV
Purchase Consideration Adjustments
SECTION 4.01. Adjustments to Purchase
Consideration. (a) The Purchase Consideration shall be
adjusted in accordance with this Section 4.01(a) if the
Adjustment Amount of such Gerry Company is higher or lower
<PAGE>13
10
than the Threshold of such Gerry Company. The Threshold of
each Gerry Company is set forth below:
Purchase Gerry Company Threshold
(1) CILP $197,338,000
(2) CITLP $67,032,000
(3) CFA $12,464,000
(4) CISA $60,410,000
(5) CIMF $83,216,000
(6) CIF $21,140,000
For purposes of this Agreement, the portion of the Threshold
of CILP that shall be allocable to CID's Equity Interest in
CILP shall be $186,625,000. In the event that the Threshold
of CILP is adjusted pursuant to Section 4.05(c), the portion
thereof that is allocable to CID's Equity Interest in CILP
shall be appropriately adjusted, taking into account (and
without duplication of) the adjustment to the portion of the
Threshold of CILP that is allocable to CPI.
In the event that the Threshold of any Purchase Gerry
Company (other than CILP) exceeds the Adjustment Amount of
such Purchase Gerry Company a cash payment shall be made to
the Principal Stockholder (on behalf of the Sellers) in the
<PAGE>14
11
amount of such excess. In the case of CID, in the event
that the portion of the Threshold of CILP allocable to CID's
Equity Interest in CILP shall exceed the portion of the
Adjustment Amount allocable to CID's Equity Interest in
CILP, a cash payment shall be made to the Principal
Stockholder (on behalf of the relevant Seller) in the amount
of such excess. In the event that the Adjustment Amount of
any Purchase Gerry Company (other than CILP) exceeds the
Threshold of such Gerry Company, a cash payment shall be
made by the Sellers in the amount of such excess. In the
case of CID, in the event that the portion of the Adjustment
Amount of CILP allocable to CID's Equity Interest in CILP
exceeds the portion of CILP's Threshold allocable to CID's
Equity Interest in CILP, a cash payment shall be made by the
Principal Shareholder (on behalf of the relevant Sellers) to
Parent. The amount of cash, if any, payable pursuant to
this Section 4.01(a) in respect of a Gerry Company shall be
called the "Cash Amount".
(b) The "Adjustment Amount" of any Gerry Company
shall be an amount equal to, without duplication, (A) the
aggregate amount of Closing Indebtedness and Other
Liabilities of such Gerry Company, plus (B) the amount of
the Working Capital Deficit of such Gerry Company, if any,
or minus (C) the amount of the Working Capital Balance of
such Gerry Company, if any, plus (D) the amount of the
Capital Expenditure Deficiency of such Gerry Company, if
any, or minus (E) the amount of the Capital Expenditure
Excess of such Gerry Company, if any, plus (F) the aggregate
amount of Severance and Incentive Liabilities of such Gerry
Company.
(c) The Adjustment Amount of CILP allocable to
CID's Equity Interest in CILP (the "CID Adjustment Amount")
shall be determined as follows:
(i) If the Adjustment Amount of CILP is $163,000,000
or greater, the CID Adjustment Amount shall be
$152,287,000 plus 41.5% of the excess, if any, of
the Adjustment Amount of CILP over $163,000,000.
(ii) If the Adjustment Amount of CILP is less than
$163,000,000, the CID Adjustment Amount shall be
$152,287,000 less 41.5% of the amount by which
$163,000,000 exceeds the Adjustment Amount of
CILP.
<PAGE>15
12
SECTION 4.02. Estimated Adjustment Amount;
Initial Calculation of Purchase Consideration. Not later
than five business days prior to the Closing, each Gerry
Company shall deliver to Parent an estimate of the
Adjustment Amount (the "Estimated Adjustment Amount") of
such Gerry Company, including therewith estimated Closing
Indebtedness and Other Liabilities ("Estimated Closing
Indebtedness and Other Liabilities") of such Gerry Company,
estimated Working Capital Deficit or estimated Working
Capital Balance ("Estimated Working Capital Deficit or
Balance") of such Gerry Company, estimated Capital
Expenditure Deficiency or estimated Capital Expenditure
Excess ("Estimated Capital Expenditure Deficiency or
Excess") of such Gerry Company, and estimated Severance and
Incentive Liabilities ("Estimated Severance and Incentive
Liabilities") of such Gerry Company, and the Cash Amount of
such Gerry Company shall be determined pursuant to
Section 4.01 as if the Estimated Adjustment Amount of such
Gerry Company were the Adjustment Amount of such Gerry
Company (the "Estimated Cash Amount" of such Gerry Company).
As of the Closing, the Cash Amount of each Gerry Company
shall be deemed to comprise the Estimated Cash Amount of
such Gerry Company. After the Closing, the Purchase
Consideration shall be subject to adjustment in accordance
with Sections 4.04 and 4.05.
SECTION 4.03. Escrow Arrangements. At the
Closing, the Principal Stockholder shall, on behalf of the
Sellers, deposit into escrow, in accordance with the terms
of the Escrow Agreement, an amount in cash (the "Escrowed
Cash") in respect of each Gerry Company, as set forth below
<PAGE>16
13
(and the Principal Stockholder hereby directs the Parent to
deposit such amounts out of the Purchase Consideration):
Gerry Company Escrowed Cash
CILP $479,528
CITLP $162,887
CFA $30,287
CISA $146,795
CIMF $202,214
CIF $51,369
For purposes of this Agreement, the portion of the Escrowed
Cash of CILP that shall be allocable to CID's Equity
Interest in CILP shall be $453,496. The Principal
Stockholder shall be entitled to determine the allocation,
as among the Sellers, of the Escrowed Cash to be deposited
into escrow pursuant to the Escrow Agreement, and unless
otherwise specified shall be deemed to have determined that
all such Escrowed Cash required to be so deposited shall be
the Cash Amount payable to the Principal Stockholder.
SECTION 4.04. Reconciliation of Adjustment
Amount; Adjustment of Purchase Consideration. (a) Within
90 days after the Closing Date, Parent shall prepare and
deliver to the Principal Stockholder, a statement (the
"Statement") setting forth Parent's determination of the
Adjustment Amount of each Gerry Company, including Closing
Indebtedness and Other Liabilities, the Working Capital
Deficit or Working Capital Balance, the Capital Expenditure
Deficiency or the Capital Expenditure Excess and the
Severance and Incentive Liabilities, in each case of such
Gerry Company, and the calculation of the Cash Amount in
accordance with Section 4.01. During the 30-day period
following delivery of the Statement to the Principal
Stockholder, Parent shall provide the Principal Stockholder
with access during normal business hours to any books,
records, working papers or other information reasonably
necessary or useful in the preparation of the Statement and
the calculation of the Adjustment Amount to enable the
Principal Stockholder to verify the accuracy of the
Statement. The Statement shall become final and binding
<PAGE>17
14
upon all parties hereto on the thirtieth day following
delivery thereof to the Principal Stockholder unless the
Principal Stockholder gives written notice of disagreement
with the Statement (a "Notice of Disagreement") to Parent
prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement
so asserted and relate solely to the preparation of the
Statement and the calculation of the Adjustment Amount of
any Gerry Company, the Cash Amount for any Gerry Company in
accordance with Section 4.01.
(b) If a Notice of Disagreement is received by
Parent in a timely manner, then the Statement (as revised in
accordance with clause (c) or (d) below) shall become final
and binding upon the parties hereto on the earlier of
(i) the date the Principal Stockholder and Parent resolve in
writing any differences they may have with respect to any
matter specified in the Notice of Disagreement or (ii) the
date any disputed matters are finally resolved in writing by
the Arbitrator (as defined below). During the 30-day period
following the delivery of a Notice of Disagreement, Parent
and the Principal Stockholder shall seek in good faith to
resolve in writing any differences which they may have with
respect to any matter specified in the Notice of
Disagreement and each shall provide the other with
reasonable access to any books, records, working papers or
other information reasonably necessary or useful in the
preparation or calculation of (u) the Estimated Adjustment
Amount of each Gerry Company, including Estimated Closing
Indebtedness and Other Liabilities, the Estimated Working
Capital Deficit or Balance, the Estimated Capital
Expenditure Deficiency or Excess and the Estimated Severance
and Incentive Liabilities, in each case of each Gerry
Company, (v) the Adjustment Amount of each Gerry Company,
including Closing Indebtedness and Other Liabilities, the
Working Capital Deficit or Working Capital Balance, the
Capital Expenditure Deficiency or the Capital Expenditure
Excess and the Severance and Incentive Liabilities, in each
case of each Gerry Company, (w) the Cash Amount of such
Gerry Company, (x) the Statement, (y) any Notice of
Disagreement or (z) otherwise with respect to any thereof.
At the end of such 30-day period if there has been no
resolution of the matters specified in the Notice of
Disagreement, Parent and the Principal Stockholder shall
submit to an arbitrator (the "Arbitrator") for review and
resolution any and all matters arising under this Section
which remain in dispute. The Arbitrator shall be Price
Waterhouse, or if such firm is unable or unwilling to act,
<PAGE>18
15
such other nationally recognized independent public
accounting firm as shall be agreed upon by Parent and the
Principal Stockholder in writing. The Arbitrator shall
render a decision resolving the matters submitted to the
Arbitrator within 30 days following submission thereto. The
cost of any arbitration (including the fees of the
Arbitrator) pursuant to this Section shall be borne 50% by
Parent and 50% by the Principal Stockholder.
(c) If the Adjustment Amount of any Gerry Company
is higher or lower than the Estimated Adjustment Amount of
such Gerry Company, the Cash Amount of such Gerry Company
shall be finally adjusted pursuant to Section 4.01. If the
Cash Amount of such Gerry Company as so finally adjusted, is
greater than the Estimated Cash Amount of such Gerry
Company, Parent shall, within 15 days after the Statement
becomes final and binding upon the parties, pay to the
Principal Stockholder on behalf of himself and the other
Sellers an aggregate amount (the "Additional Amount") equal
to the excess of the Cash Amount of such Gerry Company, as
so finally determined, over the Estimated Cash Amount of
such Gerry Company; provided, however, that if there shall
be an excess or deficiency in the Cash Amount in respect of
more than one Gerry Company, only one net amount shall in
each case be payable hereunder.
(d) If the Cash Amount of any Gerry Company, as
so finally adjusted, is less than the Estimated Cash Amount
of such Gerry Company, Parent shall be entitled to receive,
within 15 days after the Statement becomes final and binding
upon the parties, an aggregate amount (the "Returned
Amount") equal to the excess of the Estimated Cash Amount of
such Gerry Company over the Cash Amount of such Gerry
Company as so finally determined. The obligation to deliver
the Returned Amount shall be satisfied, first, out of the
Escrowed Amount, and second, out of other cash held by the
Stockholders.
SECTION 4.05. Participation Rights and Additional
Adjustments; Adjustments to Threshold. (a) In the event
that (i) Parent shall make a distribution of the type that
would require a distribution to holders of Parent Preferred
Stock pursuant to Section 2.3 or 3.7 of the Parent Series E
Certificate or the Parent Series F Certificate (a
"Distribution"), and (ii) the record date or (if there shall
not be a record date) effective date for the Distribution
shall occur on or after the date hereof and prior to the
Closing, Parent shall, at the Closing (or if the date for
<PAGE>19
16
payment of the Distribution is after the Closing, on the
date of payment) pay to the Persons who become record
holders of Parent Common Stock at the Closing the amounts
and kinds of assets or capital stock or other securities
that such Persons would have been entitled to receive had
such Persons been record holders of such Parent Common Stock
on the relevant record date or effective date for the
Distribution (taking into account (and giving effect to) any
right of election set forth in such Sections).
(b) The Parent Common Share Number issuable
pursuant hereto shall be adjusted from time to time after
the date hereof and prior to Closing for events described in
paragraphs 3.6 and 3.7 of the Parent Series E Certificate
and Parent Series F Certificate as if (i) the references
therein to the term "Conversion Rate" were instead
references to the Parent Common Share Number issuable in
respect of such Gerry Company as in effect at the time
(provided that the Conversion Price shall be appropriately
adjusted by the parties) and (ii) the references therein to
"Series E Stock" and "Series F Stock" were instead to
Company Common Stock (taking into account (and giving effect
to) any right of election set forth in such Section,
including any right of election that would give such holders
a right to receive a distribution (which distribution shall
be treated as a Distribution for purposes of Section 4.05(a)
hereof).
(c) The Threshold of each Gerry Company shall be
reduced in the event the Principal Stockholder designates as
Excluded Assets any System or Systems (or portions thereof)
owned by such Gerry Company as of the date of this Agreement
pursuant to Section 5.25 of the Supplemental Agreement by an
amount equal to the Excluded Systems Amount of such Gerry
Company. The "Excluded Systems Amount" shall equal
13.5 multiplied by the aggregate amount of operating cash
flow of such Gerry Company for the fiscal year immediately
preceding the Closing that is attributable to each System
(or portion thereof) so designated (it being understood that
such cash flow shall be as so determined in preparing such
Gerry Company's audited financial statements for such fiscal
year).
SECTION 4.06. Stockholders' Representative. The
Principal Stockholder, each Direct Holder and each Asset
Gerry Company hereby designates Philip Dropkin or such other
Person as designated by the Principal Stockholder to be the
representative of each such person or entity (the
<PAGE>20
17
"Stockholders' Representative") for purposes of this
Agreement.
ARTICLE V
Conditions Precedent
The respective obligation of each party to effect
the Purchase and the other transactions contemplated hereby
is subject to the satisfaction or waiver (by the parties for
whose benefit the condition is imposed) on or prior to the
Closing Date of the conditions set forth in Article VI of
the Supplemental Agreement.
ARTICLE VI
Termination, Amendment and Waiver
This Purchase Agreement may be terminated or
amended or the parties may extend the time for the
performance of any of the obligations or other acts of the
other parties, waive any inaccuracies in the representations
and warranties contained in or in any document delivered
pursuant to this Agreement or waive compliance with any of
the agreements or conditions contained in this Agreement, in
each case as provided in Article VIII of the Supplemental
Agreement.
ARTICLE VII
Governing Law
This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
<PAGE>21
18
IN WITNESS WHEREOF, the Principal Stockholder, the
Purchase Gerry Companies, the Direct Holders and Parent have
caused this Agreement to be signed by their respective duly
authorized officers (or, in the case of the Principal
Stockholder, has signed this Agreement), all as of the date
first written above.
/s/ Alan Gerry
-----------------------------------
Alan Gerry, as the
Principal Stockholder
CABLEVISION INDUSTRIES LIMITED
PARTNERSHIP (a Purchase Gerry
Company),
by CABLEVISION INDUSTRIES OF
DELAWARE, INC., as General
Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
and by CABLEVISION PROPERTIES, INC.,
as General Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
CABLEVISION INDUSTRIES OF
TENNESSEE L.P. (a Purchase Gerry
Company),
by CABLEVISION INDUSTRIES OF
TENNESSEE, INC., as General
Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
<PAGE>22
19
and by
/s/ Alan Gerry
Alan Gerry, as
General Partner
CABLEVISION INDUSTRIES OF SARATOGA
ASSOCIATES (a Purchase Gerry
Company),
by ARA CABLEVISION, INC.,
as General Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
and by CABLEVISION OF
FAIRHAVEN/ACUSHNET, as General
Partner,
by CABLEVISION INDUSTRIES OF
MIDDLE FLORIDA, INC., as
General Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
and by
/s/ Alan Gerry
Alan Gerry, as
General Partner
<PAGE>23
20
CABLEVISION OF FAIRHAVEN/ACUSHNET
(a Purchase Gerry Company),
by CABLEVISION INDUSTRIES OF
MIDDLE FLORIDA, INC., as General
Partner,
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
and by
/s/ Alan Gerry
Alan Gerry, as
General Partner
CABLEVISION INDUSTRIES OF MIDDLE
FLORIDA, INC. (a Purchase Gerry
Company),
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
CABLEVISION INDUSTRIES OF FLORIDA,
INC. (a Purchase Gerry Company),
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
CABLEVISION INDUSTRIES OF DELAWARE,
INC. (a Direct Holder),
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
<PAGE>24
21
ARA CABLEVISION, INC. (a Direct
Holder),
by
/s/ Keith Suehnholz
Name: Keith Suehnholz
Title: Vice President
/s/ Alan Gerry
Alan Gerry, as the
Principal Stockholder
TIME WARNER INC.,
by
/s/ Spencer B. Hays
Name: Spencer B. Hays
Title: Vice President
and Deputy
General Counsel
Exhibit 2(e)
============================================================
SUPPLEMENTAL AGREEMENT
Dated as of February 6, 1995,
Among
CABLEVISION INDUSTRIES CORPORATION,
CABLEVISION MANAGEMENT CORPORATION OF PHILADELPHIA,
CABLEVISION PROPERTIES, INC.,
CABLEVISION INDUSTRIES LIMITED PARTNERSHIP,
CABLEVISION INDUSTRIES OF SARATOGA ASSOCIATES,
CABLEVISION INDUSTRIES OF TENNESSEE L.P.,
CABLEVISION OF FAIRHAVEN/ACUSHNET,
CABLEVISION INDUSTRIES OF MIDDLE FLORIDA, INC.,
CABLEVISION INDUSTRIES OF FLORIDA, INC.,
CABLEVISION INDUSTRIES OF DELAWARE, INC.,
ARA CABLEVISION, INC.,
ALAN GERRY,
TIME WARNER INC.
And
TW CVI ACQUISITION CORP.
============================================================
<PAGE>2
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Interpretation . . . . . . . . . . 2
ARTICLE II
Closing . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and
Warranties of the 3
Cablevision Companies . .
(a) Organization, Standing
and Corporate Power . 3
(b) Subsidiaries and Non-
Subsidiary Equity 4
Investments . . . . .
(c) Capital Structure . . 4
(d) Authority; Non-
contravention . . . . 6
(e) SEC Documents;
Financial Statements; 8
Budget . . . . . . . .
(f) Absence of Certain
Changes or 10
Events . . . . . . . .
(g) Litigation . . . . . . 11
(h) Absence of Changes in
Benefit 12
Plans . . . . . . . .
(i) ERISA Compliance . . . 12
(j) Taxes . . . . . . . . 15
(k) No Excess Parachute
Payments . . . . . . . 16
(l) Brokers; Schedule of
Fees and Expenses . . 16
(m) Contracts; Debt
Instruments . . . . . 16
(n) Title to Properties . 17
<PAGE>3
(o) Compliance with
Applicable 18
Laws . . . . . . . . .
(p) Franchises . . . . . . 21
(q) Systems . . . . . . . 22
(r) Overbuilds . . . . . . 22
(s) Rate Regulation . . . 23
(t) Intellectual Property 23
(u) Transactions with 24
Affiliates . . . . . .
(v) Assets and Liabilities
of CMP, CPI and CID . 25
SECTION 3.02. Representations and
Warranties of the 25
Principal Stockholder . .
(a) Share Ownership . . . 25
(b) Authority; Non- 25
Contravention . . . .
SECTION 3.03. Representations and
Warranties of Parent and 27
Sub . . . . . . . . . . .
(a) Organization Standing
and Corporate Power . 27
(b) Capital Structure . . 27
(c) Authority; Non- 28
Contravention . . . .
(d) Parent SEC Documents;
Financial Statements . 30
(e) Litigation . . . . . . 31
(f) Tax Matters . . . . . 31
(g) Brokers . . . . . . . 33
(h) Investment . . . . . . 33
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business . . . . 33
SECTION 4.02. Other Actions . . . . . . . 36
ARTICLE V
Additional Agreements
SECTION 5.01. Access to Information;
Confidentiality . . . . . 36
SECTION 5.02. Reasonable Efforts . . . . 37
SECTION 5.03. Incentive Compensation 41
Plans . . . . . . . . . . .
SECTION 5.04. Benefit Plans and Employee
Matters; Director and
Officer Indemnification . 41
SECTION 5.05. Appointment of Committee 43
<PAGE>4
Member . . . . . . . . . .
SECTION 5.06. Fees and Expenses . . . . . 43
SECTION 5.07. Public Announcements . . . 44
SECTION 5.08. HSR Act . . . . . . . . . . 44
SECTION 5.09. Certificates . . . . . . . 45
SECTION 5.10. Excluded Assets . . . . . . 46
SECTION 5.11. Certificate of Designations
and Amendment . . . . . . 46
SECTION 5.12. Agreement to Cause Vote . . 47
SECTION 5.13. Other Agreements . . . . . 47
SECTION 5.14. TWE-Related Consents . . . 47
SECTION 5.15. Other Stockholder Consents 47
SECTION 5.16. Tax Matters . . . . . . . . 47
SECTION 5.17. Allocation . . . . . . . . 49
SECTION 5.18. Rate Laws and Rate 49
Proceedings . . . . . . .
SECTION 5.19. Capital Expenditures . . . 51
SECTION 5.20. No Other Representations . 51
SECTION 5.21. Discharge of Debt Documents 52
SECTION 5.22. Execution of the
Registration Rights
Agreement and the Support 52
Agreement . . . . . . . .
SECTION 5.23. Registration Statement;
NYSE 52
Listing . . . . . . . . .
SECTION 5.24. Termination and Severance
Plan; Discharge of
Certain Liabilities; 53
Other Employee Matters .
SECTION 5.25. Certain Excluded Assets . . 54
SECTION 5.26. Senior Stock . . . . . . . 55
SECTION 5.27. St. Augustine Right of
First 55
Refusal . . . . . . . . .
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligations To Effect the
Mergers and the Purchase 55
SECTION 6.02. Conditions to Obligation of
the Cablevision Companies
and the Principal
Stockholder To Effect the 56
Merger and the Purchase .
SECTION 6.03. Conditions to Obligations
of Parent and Sub To
Effect any Merger and the 59
Purchase . . . . . . . .
<PAGE>5
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification . . . . . 65
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination, Amendment and 74
Waiver . . . . . . . . . .
SECTION 8.02. Effect of Termination . . . 75
SECTION 8.03. Amendment . . . . . . . . . 76
SECTION 8.04. Extension; Waiver . . . . . 76
ARTICLE IX
General Provisions
SECTION 9.01. Survival of Representations
and Warranties . . . . . 76
SECTION 9.02. Notices . . . . . . . . . . 77
SECTION 9.03. Counterparts . . . . . . . 78
SECTION 9.04. Entire Agreement; No Third-
Party Beneficiaries . . . 78
SECTION 9.05. Governing Law . . . . . . . 79
SECTION 9.06. Assignment . . . . . . . . 79
SECTION 9.07. Enforcement; Waiver of Jury 79
Trial . . . . . . . . . . .
SECTION 9.08. Descriptive Headings . . . 80
SECTION 9.09. Construction . . . . . . . 80
SECTION 9.10. Cooperation . . . . . . . . 80
SECTION 9.11. Stock Legends . . . . . . . 82
Annex and Exhibits
Annex A. Definitions and Interpretation
Exhibit A. Form of Office Lease
Exhibit B. Form of Parent Series E Certificate
Exhibit C. Form of Parent Series F Certificate
Exhibit D. Form of Registration Rights Agreement
Exhibit E. Form of Termination and Severance Plan
Exhibit F. [RESERVED]
Exhibit G. Form of Opinion of Cravath, Swaine & Moore
Exhibit H. Form of Opinion of Dow, Lohnes & Albertson,
Regarding Tax Matters
Exhibit I. Form of Opinion of Dow, Lohnes & Albertson
Exhibit J. Form of Stockholders' Agreement
Exhibit K. Form of Escrow Agreement
Exhibit L. Form of Noncompetition Agreements
<PAGE>6
1
SUPPLEMENTAL AGREEMENT dated as of
February 6, 1995, among CABLEVISION INDUSTRIES
CORPORATION, a Delaware corpora-tion (the
"Company"), the corporations and partnerships
listed on the signature pages hereof as Gerry
Companies (the "Gerry Companies" and together with
their respective subsidiaries and the Company and
their respective subsidiaries, the "Cablevision
Companies"), the corporations listed on the
signature pages hereof as Direct Holders (the
"Direct Holders"), ALAN GERRY, an individual
residing at Loomis Road, Liberty, New York (the
"Principal Stockholder"), TIME WARNER INC., a
Delaware corporation ("Parent"), and TW CVI
ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub").
WHEREAS the Principal Stockholder is the principal
stockholder of the Company and owns directly or indirectly
all of the capital stock and partnership interests of the
Gerry Companies;
WHEREAS the Principal Stockholder desires to transfer
his interest in the Company and to transfer the assets and
the related liabilities of, or transfer all of the ownership
interests in, the Gerry Companies in exchange for certain
consideration and Parent wishes to acquire the Company and
acquire such assets and assume such related liabilities of,
or acquire the ownership interests in, the Gerry Companies;
WHEREAS in order to effect such transactions, (i) the
Company, the Principal Stockholder, Parent and Sub are
entering into the Company Merger Agreement, pursuant to
which Sub will be merged with and into the Company and the
Principal Stockholder and the other Stockholders will
receive for each share of Company Common Stock the Merger
Consideration (as defined in the Company Merger Agreement);
(ii) CMP, the Principal Stockholder and Parent are entering
into the CMP Merger Agreement, pursuant to which CMP
Acquisition Sub will be merged with and into CMP and the
Principal Stockholder will receive for each share of common
stock of CMP the Merger Consideration (as defined in the CMP
Merger Agreement); (iii) CPI, the Principal Stockholder and
Parent are entering into the CPI Merger Agreement, pursuant
to which the Principal Stockholder will receive for each
share of common stock of CPI the Merger Consideration (as
defined in the CPI Merger Agreement); and (iv) the Principal
Stockholder, the Purchase Gerry Companies, the Direct
<PAGE>7
2
Holders and Parent are entering into the Purchase Agreement,
pursuant to which Parent will acquire all of the assets, and
assume the related liabilities, of or acquire all of the
ownership interests in, the Purchase Gerry Companies and the
Principal Stockholder, directly or indirectly, will receive
the Purchase Consideration in respect of each Gerry Company;
and
WHEREAS the Company, the Gerry Companies, the Principal
Stockholder, the Direct Holders, Parent and Sub desire to
make certain representations, warranties, covenants and
agreements in connection with the Transactions, to prescribe
various conditions to the consummation of the Mergers and
the Purchase and to provide for certain indemnities in
connection therewith;
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants, agreements and indemnities
contained in this Agreement, the parties agree as follows:
ARTICLE I
Definitions and Interpretation
Capitalized terms used herein and not defined herein
have the meanings given such terms in Annex A to this
Agreement, and the rules of interpretation set forth in
Annex A are applicable hereto.
ARTICLE II
Closing
The closing of the Mergers and the Purchase (the
"Closing") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be no later than the
seventh business day after satisfaction or waiver of the
conditions set forth in Sections 6.01(b), 6.02(e), 6.02(h),
6.03(h) (other than delivery of the certificate called for
therein which shall be delivered at Closing) and 6.03(i)
(the "Closing Date"), at the offices of Cravath, Swaine &
Moore, Worldwide Plaza, 825 Eighth Avenue, New York,
NY 10019, unless another date or place is agreed to in
writing by the parties hereto. Notwithstanding the fore-
going, to the extent that on the date otherwise scheduled
for Closing hereunder any of the conditions precedent set
forth in any of Sections 6.01(a), 6.02(f)(E), 6.02(g) or
6.03(e) hereof are not satisfied (other than as a result of
the existence of a permanent, final, nonappealable
<PAGE>8
3
injunction prohibiting the consummation of any Merger or the
Purchase), the Closing Date shall be postponed to a date
seven business days after the date on which the circum-
stances preventing such conditions from being satisfied are
no longer applicable, but in no event shall the Closing Date
be postponed later than February 29, 1996, except as pro-
vided in Section 8.01.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the
Cablevision Companies. Subject to any provisions of this
Agreement limiting, qualifying or excluding any of the
representations or warranties made herein, the Company
represents and warrants with respect to itself and its sub-
sidiaries only and not with respect to the Gerry Companies
and their subsidiaries, and the Gerry Companies jointly and
severally represent and warrant with respect to each Gerry
Company and its subsidiaries only and not with respect to
the Company and its subsidiaries, in each case to Parent and
Sub as follows:
(a) Organization, Standing and Corporate Power. Each
of the Cablevision Companies is a corporation or partnership
duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and
has the requisite corporate or partnership power and
authority to carry on its business as now being conducted.
Each of the Cablevision Companies is duly qualified or
licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such
qualification or licensing necessary, except to the extent
such failure to so qualify or be licensed or in good
standing would not have a Cablevision Material Adverse
Effect. The Cablevision Companies have made available to
Parent complete and correct copies of the certificates of
incorporation, by-laws, partnership agreement or other
organizational documents of each Cablevision Company, in
each case as amended to the date of this Agreement (and
where requested have furnished copies thereof to Parent).
(b) Subsidiaries and Non-Subsidiary Equity
Investments. (i) Section 3.01(b)(i) of the Disclosure
Schedule which has been delivered by the Company and the
Gerry Companies to the Parent prior to the execution of this
Agreement, lists each subsidiary of the Company and each
Gerry Company, the percentage of such Cablevision Company's
ownership of each such subsidiary and the identity and per-
<PAGE>9
4
centage ownership of all other Persons with equity interests
in such subsidiary. Except as set forth in
Section 3.01(b)(i) of the Disclosure Schedule, all the out-
standing shares of capital stock of each such subsidiary
have been validly issued and are fully paid and non-
assessable and are owned by the applicable Cablevision
Company, by another subsidiary of such Cablevision Company
or by such Cablevision Company and another such subsidiary,
free and clear of all Liens.
(ii) The only Non-Subsidiary Equity Investments of any
Cablevision Company are those set forth in Sec-
tion 3.01(b)(ii) of the Disclosure Schedule, which Schedule
reflects the carrying value of each such Non-Subsidiary
Equity Investment as of January 15, 1995, and the percentage
and nature of such Cablevision Company's ownership of each
such Non-Subsidiary Equity Investment. Except as set forth
in Section 3.01(b)(ii) of the Disclosure Schedule, the
shares of capital stock, the partnership interests or the
other equity interests, as applicable, of each Non-
Subsidiary Equity Investment that are owned by any Cable-
vision Company are owned directly by such Cablevision
Company or a wholly owned subsidiary of a Cablevision
Company, free and clear of any Liens.
(c) Capital Structure. (i) The authorized capi-tal
stock of the Company consists of 10,000,000 shares of
Company Common Stock and 80,000 shares of Company Preferred
Stock. As of the date of this Agreement, (A) 10,000,000
shares of Company Common Stock and 42,446.8694 shares of
Company Preferred Stock were issued and outstanding and
(B) no shares of Company Common Stock were held by the
Company in its treasury or were reserved for issuance upon
exercise of outstanding employee stock options.
Section 3.01(c)(i) of the Disclosure Schedule sets forth as
of the date of this Agreement, a list of the holders of
record of shares of Company Common Stock and shares of
Company Preferred Stock and the number of shares held by
each such holder and specifies all rights that any Person
has to acquire any capital stock of the Company or any of
its subsidiaries granted by the Company or any of its
subsidiaries.
(ii) Section 3.01(c)(ii) of the Disclosure Sched-ule
sets forth for each Gerry Company as of the date of this
Agreement: (A) in the case of each Gerry Company that is a
corporation, (I) the number of authorized, issued and out-
standing shares of capital stock of such entity and the
amount of such capital stock held in the treasury or
reserved for issuance upon exercise of outstanding employee
stock options and (II) a list of the holders of record of
the shares of capital stock of such entity and the number of
<PAGE>10
5
shares held by each such holder; (B) in the case of each
Gerry Company that is a partnership, (I) a description of
the issued and outstanding partnership interests of such
Gerry Company and any authorized but unissued partnership
interests and (II) a list of the partners in such Gerry
Company and the percentage of interest in such partnership
held by each such partner; and (C) in each case, all rights
that any Person has to acquire any capital stock or partner-
ship interests, as applicable, of such Gerry Company granted
by any Gerry Company.
(iii) Except as set forth in paragraphs (i) and (ii)
of this Section 3.01(c) or in Section 3.01(c)(iii) of the
Disclosure Schedule, no shares of capital stock or other
securities of any Cablevision Company were issued, reserved
for issuance or outstanding, and no rights exist to acquire
any capital stock, partnership interests or other securities
of any Cablevision Company granted by any Cablevision
Company. Except as set forth in Section 3.01(c)(iii) of the
Disclosure Schedule, there are no outstanding stock
appreciation rights, phantom stock rights or other
instruments or obligations of any Cablevision Company the
value of which depends, in whole or in part, on the value of
any of the capital stock or partnership interests of any
Cablevision Company or the financial or business performance
or asset value of any of them. Except as set forth in
Section 3.01(c)(iii) of the Disclosure Schedule, all out-
standing shares of capital stock of each Cablevision Company
that is a corporation are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. All capital contributions in respect of the
partnership interests in each Gerry Company that is a
partnership required to be made to the date hereof under the
applicable partnership agreement have been made. Except as
set forth in Section 3.01(c)(iii) of the Disclosure
Schedule, there are no bonds, debentures, notes or other
indebtedness of any Cablevision Company having the right to
vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stock-
holders of any Cablevision Company may vote. Except as set
forth in Section 3.01(c)(iii) of the Disclosure Schedule,
there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which any Cablevision Company is
a party or by which any of them is bound obligating such
Cablevision Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital
stock, partnership interests or other securities of such
Cablevision Company or obligating such Cablevision Company
to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Except as set forth in
<PAGE>11
6
Section 3.01(c)(iii) of the Disclosure Schedule, there are
no outstanding contractual obligations of any Cablevision
Company to repurchase, redeem or otherwise acquire any
shares of capital stock or partnership interests of such
Cablevision Company.
(d) Authority; Noncontravention. (i) The Company and
each Gerry Company has the requisite corporate or
partnership power and authority to enter into the
Acquisition Documents to which it is a party and, upon
receipt of the requisite shareholder vote in compliance with
Section 5.12, to consummate the Transactions. The execution
and delivery of such Acquisition Documents by the Company
and each Gerry Company have been duly authorized by all
necessary corporate and shareholder action on the part of
the Company and each Gerry Company that is a corporation,
and by all necessary partnership and partner action on the
part of each Gerry Company that is a partnership. Each
Acquisition Document to which a Cablevision Company is a
party has been duly executed and delivered (or, in the case
of Acquisition Documents to be executed at Closing, when
executed will be duly executed and delivered) by such
Cablevision Company and constitutes (or, in the case of
Acquisition Documents to be executed at Closing, when
executed will constitute) a valid and binding obligation of
such Cablevision Company, enforceable against such
Cablevision Company in accordance with its terms, except
(A) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally, (B) as the remedy of specific
performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the dis-
cretion of the court before which any proceeding therefor
may be brought and (C) as rights to indemnity may be limited
by federal or state securities laws or the public policies
embodied therein. The execution and delivery of the
Acquisition Documents to which any Cablevision Company is a
party do not, and the consummation of the Transactions and
compliance with the provisions of the Acquisition Documents
to which such Cablevision Company is a party will not, con-
flict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration
of any obligation or to the loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of such Cablevision Company or any of
its subsidiaries under any of the following:
(I) the certificate of incorporation, by-laws,
partnership agreement or other comparable organiza-tional
documents of such Cablevision Company or any
<PAGE>12
7
such organizational documents of any of its sub-sidiaries;
(II) except as set forth in Section 3.01(d)(i) and (ii)
of the Disclosure Schedule, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to such Cablevision Company or any of its
subsidiaries or their respective properties or assets
(other than any such items that are immaterial in amount
and significance to the operations of the System to which
they pertain); or
(III) subject to the governmental filings and other
matters referred to in clause (ii) of this Sec-
tion 3.01(d), any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such
Cablevision Company or any of its subsidiaries or their
respective properties or assets;
other than, in the case of clauses (II) and (III), any such
conflicts, violations, defaults, rights or Liens that indi-
vidually or in the aggregate would not (x) have a Cable-
vision Material Adverse Effect, (y) impair in any material
respect the ability of such Cablevision Company to perform
its obligations under the Acquisition Documents or (z) pre-
vent, materially delay or make unduly burdensome the consum-
mation of any Merger or the Purchase.
(ii) No consent, approval, order or authorization of,
or registration, declaration or filing with, any Govern-
mental Entity is required by any Cablevision Company in
connection with the execution and delivery of the
Acquisition Documents to which it is a party or the
consummation by such Cablevision Company of the Trans-
actions, except for (A) the filing of a premerger noti-
fication and report form under the HSR Act, (B) the filing
by the Company with the SEC of such reports under Sec-
tion 13(a) of the Exchange Act as may be required in con-
nection with the Acquisition Documents to which the Company
is a party and the transactions contemplated hereby and
thereby, (C) the filing of the Certificates of Merger with
the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which any
of the Company, CMP and CPI are qualified to do business and
(IV) other approvals of Governmental Entities, which
approvals are listed in Section 3.01(d)(i) and (ii) of the
Disclosure Schedule.
(e) SEC Documents; Financial Statements;
Budget. (i) The Company has filed all required reports,
forms, and other documents with the SEC since January 1,
<PAGE>13
8
1993 (such documents as filed and amended through the date
this representation is made or deemed made being called the
"SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent
that information contained in any SEC Document has been
revised or superseded by a later-filed SEC Document made
publicly available prior to the date this representation is
made or deemed made or as otherwise set forth in
Section 3.01(e)(i) of the Disclosure Schedule, none of the
SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Except as set forth in
Section 3.01(e)(i) of the Disclosure Schedule, the financial
statements of the Company included in the SEC Documents
comply as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been pre-
pared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash
flows for the periods indicated (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
Except as set forth in the SEC Documents or in Sec-
tion 3.01(e)(i) of the Disclosure Schedule, and except for
liabilities and obligations incurred in the ordinary course
of business consistent with past practice since the date of
the most recent consolidated balance sheet included in the
SEC Documents, neither the Company nor any of its subsidi-
aries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries or in
the notes thereto.
(ii) Section 3.01(e)(ii) of the Disclosure Sched-ule
describes the following financial statements that have been
delivered to Parent: (A)(I) the audited combined balance
sheet of certain Gerry Companies and their
<PAGE>14
9
respective consolidated subsidiaries, in each case as of
each of December 31, 1992, and December 31, 1993, and
(II) the audited combined statements of income and retained
earnings and cash flows of such Gerry Companies and their
respective consolidated subsidiaries for each such year then
ended, and (B)(I) the unaudited interim combined balance
sheet of such Gerry Companies and their respective
consolidated subsidiaries as of September 30, 1994, and
(II) the unaudited combined statements of income and
retained earnings and cash flows of such Gerry Companies and
their respective consolidated subsidiaries, for the year-to-
date period then ended, and (C)(I) the unaudited balance
sheet of each such Gerry Company and its consolidated sub-
sidiaries as of September 30, 1994, and (II) the unaudited
statement of income and retained earnings for each such
Gerry Company and its consolidated subsidiaries for the
year-to-date period then ended, together with in the case of
the audited statements, the notes to such financial state-
ments and the report of the independent auditors thereon
(the financial statements described above in respect of such
Gerry Companies and the financial statements of such Gerry
Companies delivered or made available pursuant to
Section 5.01, and the balance sheets hereinafter described
or delivered or made available pursuant to Section 5.01, in
each case together with the notes to such financial
statements, collectively, the "Financial Statements", and
the audited combined balance sheets of the Gerry Companies
and their respective consolidated subsidiaries as of
December 31, 1993, the "Balance Sheets"). The Financial
Statements have been prepared in conformity with GAAP con-
sistently applied (except as indicated in the notes thereto)
and fairly present the consolidated financial position of
each such Gerry Company and its consolidated subsidiaries or
the combined financial condition and results of operations
of such Gerry Companies and their respective consolidated
subsidiaries, as applicable, as of the respective dates
thereof and for the respective periods indicated (subject,
in the case of unaudited statements, to normal year-end
adjustments). Except as disclosed, reflected or reserved
against in the balance sheets forming part of the Financial
Statements or as set forth on Section 3.01(e)(ii) of the
Disclosure Schedule, and except for liabilities and
obligations incurred in the ordinary course of business
consistent with past practice since the date of the most
recent balance sheets included in the Financial Statements,
none of such Gerry Companies nor any of their respective
consolidated subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute,
contingent, or otherwise) required by GAAP to be recognized
or disclosed on combined balance sheets of such Gerry
Companies and their respective consolidated subsidiaries or
in the notes thereto.
<PAGE>15
10
(iii) Section 3.01(e)(iii) of the Disclosure Schedule
sets forth a schedule of planned capital expendi-ture
projects for each Cablevision Company for the period ending
December 31, 1995 (the "Capital Budget").
(f) Absence of Certain Changes or Events. Except as
disclosed in Section 3.01(f) of the Disclosure Schedule,
since September 30, 1994 (and, in the case of clauses (ii),
(iii) and (iv), except for matters occurring after the date
hereof that are expressly permitted under Section 4.01
hereof), each of the Cablevision Companies has conducted its
business in all material respects only in the ordinary
course, and there has not been (i) as of the date hereof any
Cablevision Material Adverse Change, (ii) any declaration,
setting aside or payment of any dividend or other dis-
tribution (whether in cash, stock or property) with respect
to any Cablevision Company's capital stock or partnership
interests, (iii) any split, combination or reclassification
of any Cablevision Company's capital stock or any issuance
or the authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares of
its capital stock or partnership interests, (iv) (A) any
granting by any Cablevision Company to any executive officer
of any Cablevision Company or any subsidiary thereof of any
increase in compensation (except in the ordinary course of
business consistent with prior practice or as was required
under employment agreements in effect as of the date of the
most recent audited financial statements included in the SEC
Documents), in the case of the Company, or the date of the
Balance Sheet, in the case of any Cablevision Company (all
of such increases, other than increases referred to in the
preceding parenthetical, being set forth or described in
Section 3.01(f) of the Disclosure Schedule), (B) any
granting by any Cablevision Company to any such executive
officer of any increase in severance or termination pay,
except as was required under employment, severance or
termination agreements in effect as of the date of the most
recent audited financial statements included in the SEC
Documents or the date of the Balance Sheets, as applicable
(all of such increases being set forth in Section 3.01(f) of
the Disclosure Schedule), or (C) any entry by any
Cablevision Company into any employment, severance or
termination agreement with any such executive officer,
(v) as of the date hereof, any damage, destruction or loss,
whether or not covered by insurance, that has or could be
reasonably likely to have a Cablevision Material Adverse
Effect or (vi) any change in accounting methods, principles
or practices by any Cablevision Company materially affecting
its assets, liabilities or business, except insofar as may
have been required by a change in GAAP and described in
Section 3.01(f) of the Disclosure Schedule (or, in the case
<PAGE>16
11
of changes required by GAAP that arise after the date hereof
and prior to the Closing Date, otherwise disclosed in
writing to Parent).
(g) Litigation. Except as disclosed in Sec-
tion 3.01(g) of the Disclosure Schedule, as of the date
hereof, there is no suit, action or proceeding pending
before any court, any governmental administrative agency or
any arbitrator or, to the knowledge of any Cablevision
Company, threatened in writing against any Cablevision
Company that, individually or in the aggregate, could
reasonably be expected to (i) have an adverse effect on the
business, properties, condition or results of operations of
the Cablevision Companies that constitutes a Cablevision
Material Adverse Effect, (ii) impair in any material respect
the ability of the Cablevision Companies or the Principal
Stockholder to perform their respective obligations under
any Acquisition Document or (iii) prevent, materially delay
or make unduly burdensome the consummation of any of the
Transactions, nor as of the date hereof is there any
judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against any
Cablevision Company having, or which is reasonably likely to
have, any effect referred to in the foregoing
clauses (i)-(iii).
(h) Absence of Changes in Benefit Plans. Except as
disclosed in Section 3.01(h) of the Disclosure Schedule or
as required by applicable law, since December 31, 1993,
there has not been any adoption or amendment in any material
respect by any Cablevision Company of any collective
bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock owner-
ship, stock purchase, stock option, phantom stock, retire-
ment, vacation, severance, disability, death benefit, hos-
pitalization, medical or other plan, arrangement or under-
standing (whether or not legally binding) providing benefits
to any current or former employee, officer or director of
such Cablevision Company (collectively, "Benefit Plans").
Except as disclosed in Section 3.01(h) of the Disclosure
Schedule, there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or
understandings between any Cablevision Company and any
current or former officer or director of such Cablevision
Company as to which there remain any unfulfilled obligations
of any Cablevision Company (other than continuing
obligations as to confidentiality).
(i) ERISA Compliance. (i) The Cablevision Companies
have delivered to Parent true, complete and correct copies
of all Benefit Plans that are in effect on the date of this
Agreement, including all "employee pension benefit
<PAGE>17
12
plans" (as defined in Section 3(2) of ERISA) (sometimes
referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(l) of ERISA) and all
other Benefit Plans currently maintained, or contributed to,
or required to be maintained or contributed to, by any
Cablevision Company or any other Person that, together with
such Cablevision Company, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code (each a
"Commonly Controlled Entity") for the benefit of any current
or former employees, officers or directors of any Cable-
vision Company. The Cablevision Companies have delivered to
Parent true, complete and correct copies of (x) the most
recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each Benefit Plan (if any
such report was required), (y) the most recent summary plan
description for each Benefit Plan for which such summary
plan description is required and (z) each trust agreement
and group annuity contract relating to any Benefit Plan.
(ii) Each Benefit Plan has been administered in all
material respects in accordance with its terms. Each
Cablevision Company and all the Benefit Plans are all in
compliance in all material respects with applicable provi-
sions of ERISA and the Code.
(iii) Except as disclosed in Section 3.01(i)(iii) of
the Disclosure Schedule, all Pension Plans intended to be
qualified under Section 401(a) of the Code have been the
subject of determination letters from the Internal Revenue
Service to the effect that such Pension Plans are qualified
and exempt from Federal income taxes under Section 401(a)
and 501(a), respectively, of the Code and no such determina-
tion letter has been revoked nor, to the knowledge of any
Cablevision Company, has revocation been threatened in
writing, nor has any such Pension Plan been amended since
the date of its most recent determination letter or
application therefor in any respect that would adversely
affect its qualification or materially increase its costs.
(iv) No Pension Plan that any Cablevision Company
maintains, or to which such Cablevision Company is obligated
to contribute, other than any Pension Plan that is a "multi-
employer plan" (as such term is defined in
Section 4001(a)(3) of ERISA; collectively, the "Multi-
employer Pension Plans"), had, as of the respective last
annual valuation date for each such Pension Plan, an
"unfunded benefit liability" (as such term is defined in
Section 4001(a)(18) of ERISA), based on actuarial assump-
tions which have been furnished to Parent and no Cablevision
Company is aware of any facts or circumstances that would
materially change the funded status of any such Benefit
Plans. None of the Pension Plans has an "accumulated
<PAGE>18
13
funding deficiency" (as such term is defined in Section 302
of ERISA or Section 412 of the Code), and there has been no
application for a waiver of the minimum funding standards
imposed by Section 412 of the Code with respect to any
Benefit Plan that is a Pension Plan.
(v) Except to the extent set forth in Sec-
tion 3.01(i)(v) of the Disclosure Schedule, none of the
Cablevision Companies, any of the Commonly Controlled
Entities, any officer of any of them or any of the Benefit
Plans which are subject to ERISA, including the Pension
Plans, any trusts created thereunder or, to the knowledge of
any Cablevision Company, any trustee or administrator
thereof, has engaged in a non-exempt "prohibited
transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject any Cablevision
Company or any officer thereof to a material amount of tax
or penalty under ERISA, the Code or other applicable law.
Neither any of such Benefit Plans nor any of such trusts has
been terminated, nor has there been any "reportable event"
(as that term is defined in Section 4043 of ERISA but
excluding any events with respect to which the reporting
obligation has been waived by a Governmental Entity) with
respect thereto, during the last five years with respect to
which any Cablevision Company has any continuing liability.
(vi) None of the Cablevision Companies or any Commonly
Controlled Entity has suffered or otherwise caused a
"complete withdrawal" or a "partial withdrawal" (as such
terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) with respect to any of the Multi-
employer Pension Plans that could lead to the imposition of
any withdrawal liability under Section 4201 of ERISA; and no
action has been taken that alone or with the passage of time
could result in either a partial or complete withdrawal by
any Commonly Controlled Entity or in any liability under
Title IV of ERISA in respect of any such Plan.
(vii) With respect to any Benefit Plan that is an
employee welfare benefit plan, except as disclosed in Sec-
tion 3.01(i)(vii) of the Disclosure Schedule, (x) no such
Benefit Plan is funded through a "welfare benefit fund", as
such term is defined in Section 419(e) of the Code, (y) each
such Benefit Plan that is a "group health plan", as such
term is defined in Section 5000(b)(1) of the Code, complies
in all material respects with the applicable requirements of
Section 4980B(f) of the Code and (z) each such Benefit Plan
(including any such Plan covering retirees or other former
employees) may be amended or terminated without material
liability to any Cablevision Company at the Closing Date or
at any time thereafter.
<PAGE>19
14
(j) Taxes. (i) Each Cablevision Company has filed
all Federal income tax returns and reports and all other
material tax returns and reports required to be filed by
them, either on a separate or combined or consolidated
basis. Each such return (other than an information return
or report) correctly sets forth the tax liability (if any)
of the taxpayer or taxpayers for the taxable period covered
by the return. Each Cablevision Company has paid (or caused
to be paid on its behalf) all Taxes shown as due on such
returns and all material Taxes for which no return was
required to be filed. The most recent financial statements
contained in the SEC Documents reflect an adequate reserve
for all material unpaid Taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof
through the date of such statements, and the Financial
Statements reflect an adequate reserve for all material
unpaid Taxes payable by each Gerry Company. Any unpaid
Taxes of a Cablevision Company for all Pre-Closing Tax
Periods will be included in the Working Capital Liabilities
of such Cablevision Company.
(ii) Except as disclosed in Section 3.01(j)(ii) of the
Disclosure Schedule or in the case of deficiencies asserted,
proposed or assessed after the date hereof, as disclosed in
writing to Parent, (x) no material deficiencies for any
Taxes have been asserted, proposed or assessed against any
Cablevision Company that have not been paid, accrued or
otherwise settled and (y) no requests for waivers of the
time to assess any Taxes are pending.
(iii) No consent under Section 341(f) of the Code has
ever been filed with respect to any Cablevision Company.
None of the Cablevision Companies will be required to
include any amount in its income or exclude any amount from
its deductions in any taxable period ending after the
Closing Date by reason of a change in method of accounting
or use of the installment method of accounting in any Pre-
Closing Tax Period.
(iv) The Company's aggregate net operating loss
carryover under Section 172 of the Code for its taxable year
ending on the day that includes the Effective Time, on a
consolidated basis (the "Company Federal NOL"), is not less
than $250,000,000. Parent and Sub hereby acknowledge and
agree that notwithstanding anything to the contrary con-
tained in this Agreement, including the representations and
warranties made by the Company and the Gerry Companies in
Section 3.01(e), (A) no representation or warranty has been
or is hereby being made as to the amount of net operating
loss carryover for the Company's taxable year ending on the
Closing Date under any state or local tax statute (the
"Company State NOL"); and (B) so long as the Company Federal
<PAGE>20
15
NOL is not reduced to an amount less than $250,000,000, any
reduction in the amount of the Company Federal NOL or in the
Company State NOL shall not (I) cause or constitute,
directly or indirectly, a breach by any Cablevision Company
of any of the representations or warranties made by it in
this Agreement (and such representations and warranties
shall hereby be deemed to be modified appropriately to
reflect the impact of any such reduction), or (II) give rise
to any claim for indemnification by Parent under Article VII
of this Agreement.
(k) No Excess Parachute Payments. Any amount that
could be received (whether in cash or property or the
vesting of property) as a result of any of the Transactions
by any employee, officer or director of any Cablevision
Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or
Benefit Plan currently in effect would not be characterized
when so received as an "excess parachute payment" (as such
term is defined in Section 280G(b)(1) of the Code).
(l) Brokers; Schedule of Fees and Expenses. Except as
set forth in Section 3.01(l) of the Disclosure Schedule, no
broker, investment banker, financial advisor or other Person
is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of
the Principal Stockholder or any Cablevision Company.
(m) Contracts; Debt Instruments. (i) Except as
disclosed in Section 3.01(m)(i) of the Disclosure Schedule,
as of the date of this Agreement, there is no contract or
agreement that is material to the business, financial con-
dition or results of operations of the Cablevision Companies
taken as a whole. Except for waivers and consents which
have not been obtained that are necessary in connection with
the consummation of the Transactions, and except as set
forth on Section 3.01(m)(i) of the Disclosure Schedule, none
of the Cablevision Companies is in material violation of or
in material default under (nor does there exist any
condition which upon the passage of time or the giving of
notice would cause such a violation of or default under)
(A) any loan or credit agreement, note, bond, mortgage or
indenture or (B) any other contract, agreement, arrangement
or understanding ("Other Contracts"), to which it is a party
or by which it or any of its properties or assets is bound
(exclusive of any such Other Contracts that are immaterial
as to amount and significance to the operations of the
<PAGE>21
16
System to which they pertain and are routinely entered into
the ordinary course of business).
(ii) The Cablevision Companies have delivered to
Parent true and correct copies of the Debt Documents. Set
forth in Section 3.01(m)(ii) of the Disclosure Schedule is
(A) a list as of the date hereof of all loan or credit
agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any
Indebtedness of any Cablevision Company thereof in an
aggregate principal amount in excess of $50,000 is out-
standing or may be incurred and (B) the respective principal
amounts outstanding thereunder as of the date of this
Agreement. The aggregate amount of Indebtedness of the
Cablevision Companies that is not referred to in
Section 3.01(m)(ii) of the Disclosure Schedule is not in
excess of $250,000.
(iii) Set forth in Section 3.01(m)(iii) of the
Disclosure Schedule are all contracts in effect as of the
date of this Agreement between any Cablevision Company and
any cable programming service or broadcast television
station. Except as set forth in Section 3.01(m)(iii) of the
Disclosure Schedule and except for waivers and consents
which have not been obtained that are necessary in
connection with the consummation of the Transactions, the
Cablevision Companies have all contracts (including oral
arrangements of the type referred to in Section 3.01(m)(iii)
of the Disclosure Schedule) for programming and retrans-
mission consent as are necessary for the conduct of the
business and operations of the Systems as presently con-
ducted and no Cablevision Company is in default in any
material respect of its obligations under any such
contracts.
(n) Title to Properties. (i) Section 3.01(n) of the
Disclosure Schedule sets forth as of the date hereof all
real property owned in fee or leased by any Cablevision
Company (including the street address or, if none, the
location, of each such property) and, in the case of owned
real property, whether such Cablevision Company holds title
insurance in respect thereof. Each Cablevision Company
thereof has good and, in the case of real property, market-
able title to, or valid leasehold interests in (subject to
Section 3.01(n)(ii) below), all its material real and
personal properties and assets except for (A) such as are no
longer used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of business,
(B) defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate,
do not materially interfere with its ability to conduct its
business as currently conducted and (C) as disclosed in Sec-
<PAGE>22
17
tion 3.01(n) of the Disclosure Schedule. All such material
properties and assets, other than properties and assets in
which such Cablevision Company has leasehold interests, are
free and clear of all Liens, except for Liens that, in the
aggregate, do not and will not materially interfere with the
ability of such Cablevision Company to conduct business as
currently conducted and Liens disclosed in Section 3.01(n)
of the Disclosure Schedule.
(ii) Each Cablevision Company has complied in all
material respects with the terms of all leases to which it
is a party and under which it is in occupancy, and all such
leases are in full force and effect, except (A) leases which
have expired in accordance with their respective terms and
which can reasonably be expected to be renewed or replaced
in the ordinary course of business, and (B) leases which are
immaterial as to amount and significance to the operations
of the System to which they pertain and are routinely
entered into in the ordinary course of business. Each
Cablevision Company thereof enjoys peaceful and undisturbed
possession under all leases to which it is a party (except
such leases excluded under clauses (A) and (B) of the
immediately preceding sentence).
(o) Compliance with Applicable Laws. (i) Except as
set forth in Section 3.01(o)(i) of the Disclosure Sched-ule,
each Cablevision Company holds all Permits (including all
FCC and Federal Aviation Administration ("FAA") Permits)
(x) as are necessary for it to own, lease or operate its
properties and assets, including its Systems, and (y) as are
necessary for it to carry on its business as presently
conducted (other than, in the case of each of clauses (x)
and (y), any Permits that are immaterial as to amount and
significance to the operations of the System to which they
relate and can be expected to be obtained on a routine basis
in the ordinary course of business). Except as set forth in
Section 3.01(o)(i) of the Disclosure Schedule and subject to
the receipt of any necessary consents for the consummation
of any Merger, the Purchase or the other Transactions, each
Cablevision Company is in compliance in all material
respects with the terms of the Permits (other than those of
the type referred to in the parenthetical of the immediately
preceding sentence) applicable to it. Except as set forth
in Section 3.01(o)(i) of the Disclosure Schedule and subject
to the receipt of any necessary consents for the
consummation of any Merger, the Purchase or the other
Transactions, the businesses of the Cablevision Companies
are not being conducted in violation in any material respect
of any law, ordinance or regulation of any Governmental
Entity and, except as set forth in Section 3.01(o)(i) of the
Disclosure Schedule, as of the date of this Agreement, no
Cablevision Company has any knowledge of any allegation or
<PAGE>23
18
claim to the contrary (except that no representation or
warranty is made with respect to any Rate Laws, Rate Prac-
tices or Rate Proceedings). As of the date hereof, except
as set forth in Section 3.01(o)(i) of the Disclosure Sched-
ule, to the knowledge of the Cablevision Companies, no
investigation or review by any Governmental Entity with
respect to any Cablevision Company is pending, or, to the
knowledge of any Cablevision Company, threatened in writing,
nor as of the date hereof has any Governmental Entity
indicated an intention in writing to a Cablevision Company
to conduct the same.
(ii) Each Cablevision Company has made all submissions
(including registration statements) required under the
Communications Act and the applicable rules and regulations
thereunder. The Cablevision Companies have made available
to Parent copies of each such submission that was made
within the three year period immediately preceding the date
of this Agreement.
(iii) (A) Except as set forth in Sec-
tion 3.01(o)(iii)(A) of the Disclosure Schedule, the
Cablevision Companies hold, and are in material compliance
with, all Environmental Permits, and are in material
compliance with all Environmental Laws;
(B) As of the date hereof, none of the Cablevision
Companies has received any oral or written communication
from any Governmental Entity that alleges that it is not
in compliance in any material respect with any
Environmental Laws or Environmental Permits;
(C) As of the date hereof, none of the Cablevision
Companies has entered into or agreed to any court decree
or order and none of them is subject to any judgment,
decree or order relating to compliance with any
Environmental Law or to investigation or cleanup of a
Hazardous Substance under any Environmental Law;
(D) No Lien that could reasonably be expected to give
rise to material liability to a Cablevision Company has
been attached and is continuing, asserted, or to the
knowledge of any Cablevision Company, threatened, to or
against any real or personal property of any Cablevision
Company pursuant to any Environmental Law;
(E) Except as set forth in Section 3.01(o)(iii)(E) of
the Disclosure Schedule, there has been no treat-ment,
storage, disposal or Release, at any time and in any
manner, including disposal in landfills, pits, ponds or
lagoons, of any Hazardous Substance on any
<PAGE>24
19
property owned, operated or leased by any Cablevision
Company at any time in any manner that could reasonably be
expected to give rise to material liability to a
Cablevision Company;
(F) Except as set forth in Section 3.01(o)(iii)(F) of
the Disclosure Schedule, none of the Cablevision Companies
has any material contingent liabilities in respect of its
business operations as presently conducted in connection
with any Hazardous Substance;
(G) As of the date hereof, none of the Cablevision
Companies has received a CERCLA 104(e) information request
or has been named a potentially responsible party at any
site included on the federal National Priorities List (as
that term is defined under Environmental Law) or any site
listed for investigation or remediation under any
analogous state law;
(H) Any and all above-ground or, to the best knowledge
of such Cablevision Company upon due inquiry, underground
storage tanks on, under or about property owned, operated
or leased by any Cablevision Company (the "Tanks") are
listed in Section 3.01(o)(iii)(H) of the Disclosure
Schedule.
(I) Except as set forth in Section 3.01(o)(iii)(I) of
the Disclosure Schedule, the Tanks are in material
compliance with all Environmental Laws including regu-
lations regarding licenses and registration and technical
requirements regarding tank system installation, upgrading
and retrofitting and any former above-ground or
underground tanks on such property have been removed in
accordance with Environmental Law and no residual
contamination, if any, remains at such sites in excess of
applicable standards; and
(J) Except as set forth in Section 3.01(o)(iii)(J) of
the Disclosure Schedule, there are no poly-chlorinated
biphenyls in any article, container or equipment on, under
or about property owned, operated or leased by any
Cablevision Company and there is no asbestos-containing
material at, on, under or within such properties, in
either case at levels or in a condition requiring removal,
treatment or remediation under Environmental Law (on the
basis of the manner in which such properties are currently
used by the relevant Cablevision Company).
(p) Franchises. Section 3.01(p) of the Disclosure
Schedule sets forth each Federal, state, county or municipal
franchise for the construction, operation, main
<PAGE>25
20
tenance or ownership of a cable television system that is
held by a Cablevision Company (each, a "Franchise") as of
the date of this Agreement and that is required for the
conduct of the business and operations of the Systems as
presently conducted, the Systems in respect of each such
Franchise, the expiration date of each such Franchise.
Except as set forth in Section 3.01(p) of the Disclosure
Schedule, (i) as of the date hereof, there are no
applications by any Cablevision Company outside the ordinary
course in connection with the business and operations of the
Systems, nor as of the date hereof are there any proceedings
pending or, to the knowledge of any Cablevision Company,
threatened in writing before any Governmental Entity
relating to the business or operations of the Systems, other
than rate complaints or certifications filed with the
Governmental Entities by subscribers or franchising
authorities, copies of which have been made available to
Parent; (ii) as of the date hereof, no Governmental Entity
that has issued a Franchise has notified any Cablevision
Company of its intention to exercise any rights to purchase
the Systems or any portion thereof subject to such
Franchise; (iii) subject to receipt of any necessary
consents arising as a result of any Merger, the Purchase or
the other Transactions, the operations of the Systems are in
material compliance with the requirements of the Franchises;
(iv) subject to receipt of any necessary consents arising as
a result of any Merger, the Purchase or the other
Transactions, the Franchises listed in Section 3.01(p) of
the Disclosure Schedule were validly and lawfully issued and
are in full force and effect and their respective terms have
not expired, except for Franchises that, although beyond
their stated term, have been extended or otherwise continued
on an interim basis pending negotiation of a definitive
renewal Franchise agreement (which facts are set forth in
Section 3.01(p) of the Disclosure Schedule) and can reason-
ably be expected to be renewed on commercially reasonable
terms from the point of view of the operator; and
(v) subject to receipt of any necessary consents arising as
a result of any Merger, the Purchase or the other
Transactions, assuming due authorization and issuance of
such Franchise by the applicable Governmental Entity, each
Franchise constitutes the legal, valid and binding agreement
of the Cablevision Company to which it is applicable. The
Cablevision Companies have made available to Parent true and
complete copies of all Franchises, including all amendments
thereto and interpretive letters in respect thereof, and
true and complete written summaries of all oral agreements
and understandings in respect of any Franchise. To the
knowledge of the Cablevision Companies, there is no basis
for the non-renewal of any Franchise for the provision of
cable television service, and as of the date hereof, no
Governmental Entity has asserted any such claim.
<PAGE>26
21
(q) Systems. Section 3.01(q) of the Disclosure
Schedule sets forth each System and the following in respect
thereof as of December 31, 1994: (i) the approximate number
of Homes Passed, (ii) the approximate number of miles of
installed cable, (iii) the number of Basic Equivalent Sub-
scribers and (iv) the Basic Subscriber Rate of such System.
Except as set forth in Section 3.01(q) of the Disclosure
Schedule, all Systems owned by the Gerry Companies have been
so owned for over three years.
(r) Overbuilds. Except as set forth in Sec-
tion 3.01(r) of the Disclosure Schedule, as of the date
hereof, (i) to the knowledge of any Cablevision Company, no
other Person has applied for a franchise or other authoriza-
tion to operate a cable television system, MMDS, video dial-
tone service or other multi-channel video programming ser-
vice in the Franchise Areas served by the Systems; and
(ii) no construction programs are being undertaken or to the
knowledge of any Cablevision Company, are threatened to be
undertaken, by other Persons to construct a cable television
system, MMDS or other multi-channel video programming
service in the Franchise Areas served by the Systems.
Except as set forth in Section 3.01(r) of the Disclosure
Schedule, as of the date hereof, there are no existing over-
builds of the Systems in the Franchise Areas.
(s) Rate Regulation. (i) The Cablevision Com-panies
have filed and made available to Parent true and com-plete
copies of all rate regulation forms required to be filed
with the FCC and/or the appropriate franchising authority
for each of the Systems that is required to file such forms,
and has delivered to Parent a list of all Governmental
Entities that are certified to regulate rates pursuant to
the laws, ordinances and regulations of the FCC and a list
of all Franchise Areas in which a complaint regarding cable
programming services has been filed with the FCC (other than
those that have been rejected by the FCC or have been
withdrawn). All factual statements made by or on behalf of
a Cablevision Company in any such form are, in all material
respects, accurate and complete as of the date when made.
(ii) Except as set forth in Section 3.01(s)(ii) of the
Disclosure Schedule, as of the date hereof, no System has
received any written notice from any Governmental Entity of
its intent to (A) assert jurisdiction to regulate such
System's subscriber rates or (B) investigate such rates or
business practices, pursuant to a subscriber complaint or
otherwise including under any state or local so-called con-
sumer protection, trade practice or other similar law, or
with respect to any other statute, law, ordinance, rule or
regulation.
<PAGE>27
22
(t) Intellectual Property. (i) Section 3.01(t)(i) of
the Disclosure Schedule sets forth a list of the Intel-
lectual Property of each Cablevision Company, specifying
(A) the title thereof, if any, (B) the registration or
application number thereof, if any, (C) the record owner
thereof and (D) the jurisdictions in which such Intellectual
Property has been issued or registered, or in which an
application for such issuance or registration has been
filed. With respect to any material item of intellectual
property, each such Cablevision Company has the sole and
exclusive right, title, and interest in and to all such
Intellectual Property, free and clear of all Liens, except
as set forth in Section 3.01(t)(i) of the Disclosure
Schedule, and the consummation of the Transactions will not
alter or impair any such rights. As of the date hereof,
there are no claims or suits pending, or to the knowledge of
any Cablevision Company, threatened in writing against any
Cablevision Company challenging such Cablevision Company's
ownership or right to use the Intellectual Property.
(ii) Except as set forth in Section 3.01(t)(ii) of the
Disclosure Schedule, each Cablevision Company has filed with
the U.S. Copyright Office all required Statements of Account
in true and correct form in all material respects (which
Statements of Account have been made available to Parent)
and has paid when due all copyright royalty fee payments.
(u) Transactions with Affiliates. Except as set forth
in Section 3.01(u) of the Disclosure Schedule, the SEC
Documents or the Financial Statements, there are no agree-
ments, contracts or other arrangements between the Cable-
vision Companies, on the one hand, and any Stockholder or
any of its affiliates (other than any Cablevision Company)
or any present officer or director of any Cablevision
Company, on the other hand, and except as set forth in Sec-
tion 3.01(u) of the Disclosure Schedule, none of such agree-
ments, contracts or other arrangements will continue in
effect after the Closing Date. Except as set forth in Sec-
tion 3.01(u) of the Disclosure Schedule, after the Closing
Date no Stockholder or any affiliate thereof and no present
officer or director of any Cablevision Company has any
interest in any property (real or personal, tangible or
intangible) or contract used in, as of the Closing Date, or
pertaining to, as of the Closing Date, the business of any
Cablevision Company. Except as set forth in Section 3.01(u)
of the Disclosure Schedule, neither the Principal
Stockholder nor any affiliate thereof has any direct or
indirect ownership interest in any Person (other than
through a Cablevision Company) with which any Cablevision
Company competes or has a business relationship. Except as
set forth in Section 3.01(u) of the Disclosure Schedule, no
<PAGE>28
23
Stockholder provides services to any of the Cablevision
Companies which services are material to the Cablevision
Companies, taken as a whole.
(v) Assets and Liabilities of CMP, CPI and CID. As of
the Closing Date, the sole asset of each of CPI and CID will
be the partnership interest in CILP identified in
Section 3.01(b)(i) of the Disclosure Schedule as owned by
such entity. As of the Closing Date, neither CPI nor CID
will have any liabilities other than those arising out of,
relating to or resulting from the ownership of such
partnership interests and the ownership and operation of
CILP. As of the Closing Date, CMP will have no liabilities
other than those arising out of, relating to or resulting
from the performance of its obligations under the Management
Agreement dated as of June 23, 1986, between Wade
Communications Partnership and CMP.
SECTION 3.02. Representations and Warranties of the
Principal Stockholder. The Principal Stockholder repre-
sents and warrants to Parent and Sub as follows:
(a) Share Ownership. Except as set forth in Sec-
tion 3.01(c) or 3.02(a) of the Disclosure Schedule, and
subject to transfers of ownership after the date of this
Agreement described in Section 3.02(a) of the Disclosure
Schedule, the Principal Stockholder is the owner, bene-
ficially and of record, of (i) the number of shares of
Company Common Stock and Company Preferred Stock as is set
forth in Section 3.02(a) of the Disclosure Schedule and
(ii) all of the shares of capital stock or partnership
interests, as applicable, of each Gerry Company. The
ownership interests of the Direct Holders in any of the
Gerry Companies are set forth in Section 3.01(b)(i) and
(c)(ii) of the Disclosure Schedule. Except as set forth in
Section 3.02(a) of the Disclosure Schedule, the Principal
Stockholder holds good and valid title to such Company
Common Stock, capital stock and partnership interests, and
the Direct Holders hold good and valid title to the equity
interests in the Gerry Companies owned by them, in each case
free and clear of all Liens. Except as set forth in Sec-
tion 3.02(a) of the Disclosure Schedule, there are no voting
trusts, proxies or any other agreements or understandings
with respect to the voting of any capital stock of any
Cablevision Company held by the Principal Stockholder.
(b) Authority; Noncontravention. The Principal
Stockholder has all requisite capacity to enter into the
Acquisition Documents to which he is a party and to
consummate the Transactions. Each of the Direct Holders has
the requisite corporate power and authority to enter into
the Acquisition Documents to which it is a party and, upon
<PAGE>29
24
receipt of the requisite shareholder vote in compliance with
Section 5.12, to consummate the Transactions. Each of the
Acquisition Documents to which the Principal Stockholder or
a Direct Holder is a party has been duly executed and deliv-
ered (or, in the case of Acquisition Documents to be
executed at Closing, when executed will be duly executed and
delivered) by the Principal Stockholder or such Direct
Holder and constitutes (or, in the case of Acquisition
Documents to be executed at Closing, when executed will
constitute) a valid and binding obligation of the Principal
Stockholder or such Direct Holder, enforceable in accordance
with its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally, (ii) as the
remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought and (iii) as rights to
indemnity may be limited by Federal or state securities laws
or the public policies embodied therein. Except as set
forth in Section 3.02(b) of the Disclosure Schedule, the
execution and delivery of the Acquisition Documents and
compliance with the provisions of the Acquisition Documents
by the Principal Stockholder and the Direct Holders, does
not and will not conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of
a material benefit under, or result in the creation of any
Lien upon any of the properties or assets of the Principal
Stockholder or either Direct Holder under, subject to the
governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the
Principal Stockholder or his properties or assets, other
than any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate would not
(x) have a Cablevision Material Adverse Effect, (y) impair
in any material respect the ability of the Principal Stock-
holder or either Direct Holder to perform his or its
obligations under the Acquisition Documents or (z) prevent,
materially delay or make unduly burdensome the consummation
of any Merger or the Purchase. No consent, approval, order
or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by the Principal
Stockholder or either Direct Holder in connection with the
execution and delivery of the Acquisition Documents by the
Principal Stockholder or either Direct Holder or the consum-
mation by the Principal Stockholder or either Direct Holder
of the Transactions, except for (I) the filing of a pre-
merger notification and report form by the Principal
Stockholder under the HSR Act, (II) the filing of the
<PAGE>30
25
Certificates of Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
business and (III) other approvals of Governmental Entities
listed in Section 3.02(b) of the Disclosure Schedule.
SECTION 3.03. Representations and Warranties of Parent
and Sub. Parent and Sub each represents and warrants to the
Cablevision Companies and the Principal Stockholder as
follows:
(a) Organization Standing and Corporate Power. Parent
and each of its subsidiaries (including Sub) is and, as of
the Closing Date, CPI Acquisition Sub and CMP Acquisition
Sub will be, a corporation or partnership duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized and
has the requisite corporate or partnership power and
authority to carry on its business as now being conducted.
Parent and each of its subsidiaries is duly qualified or
licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a
Parent Material Adverse Effect. Parent has delivered to the
Company complete and correct copies of its certificate of
incorporation and by-laws and the certificate of incorpora-
tion and by-laws of Sub, in each case as amended to the date
of this Agreement.
(b) Capital Structure. As of the date of this
Agreement, the authorized capital stock of Parent consists
of 750,000,000 shares of Parent Common Stock and 250,000,000
shares of preferred stock, par value $1.00 per share (the
"Additional Parent Preferred Stock"). As of the close of
business on November 30, 1994, 379,254,613 shares (excluding
45,677,131 shares held by Parent in its treasury (or by a
wholly owned subsidiary of Parent)) of Parent Common Stock
were outstanding. As of the close of business on
November 30, 1994, 962,068 shares of Additional Parent
Preferred Stock were outstanding (consisting entirely of
Series B 6.40% Preferred Stock), and 4,000,000 shares of
Series A Participating Cumulative Preferred Stock were
reserved for issuance pursuant to the Rights Agreement dated
as of January 20, 1994, between Parent and Chemical Bank as
Rights Agent. As of December 31, 1993, Parent had reserved
(i) 66,197,497 shares of Parent Common Stock for issuance
upon the conversion of 8.75% convertible subordinated
debentures, zero coupon convertible notes and other
convertible securities of Parent, and (ii) 72,953,537 shares
<PAGE>31
26
of Parent Common Stock for issuance upon the exercise of
outstanding options to purchase shares of Parent. All out-
standing shares of capital stock of Parent have been duly
authorized, validly issued and fully paid and nonassessable,
not subject to, or issued in violation of, any preemptive
rights and have not been issued in violation of any Federal
or state securities laws. As of the date of this Agreement,
Sub, and, with respect to CPI Acquisition Sub and CMP
Acquisition Sub as of the Closing Date, the authorized
capital stock of each such entity consists of or will
consist of 1,000 shares of common stock, par value $1.00 per
share, all of which have been or will have been validly
issued, are or will be fully paid and nonassessable and are
or will be owned by Parent free and clear of any Liens.
(c) Authority; Noncontravention. Parent and Sub each
have, and, as of the Closing Date, CPI Acquisition Sub and
CMP Acquisition Sub will have, all requisite corporate power
and authority to enter into the Acquisition Documents and to
consummate the Transactions. The execution and delivery of
the Acquisition Documents and the consummation of the
Transactions have been duly authorized by all necessary
corporate and shareholder action on the part of Parent and
Sub and as of the Closing Date will have been so authorized
by CPI Acquisition Sub and CMP Acquisition Sub. The
Acquisition Documents to which it is a party have been duly
executed and delivered by each of Parent and Sub (or, in the
case of Acquisition Documents to be executed at Closing
including, in the case of each of CPI Acquisition Sub and
CMP Acquisition Sub, the execution of the Merger Agreement
to which it will be a party, when executed will be duly
executed and delivered) and constitute (or, in the case of
Acquisition Documents to be executed at Closing, including,
in the case of each of CPI Acquisition Sub and CMP
Acquisition Sub, the execution of the Merger Agreement to
which it will be a party, when executed will constitute)
valid and binding obligations of each of Parent, Sub, CPI
Acquisition Sub and CMP Acquisition Sub, enforceable against
each of them in accordance with their respective terms,
except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, (ii) as the remedy of
specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding
therefor may be brought and (iii) as rights to indemnity may
be limited by Federal or state securities laws or the public
policies embodied therein. The execution and delivery of
the Acquisition Documents do not, and the consummation of
the Transactions and compliance with the provisions of the
Acquisition Documents will not, conflict with, or result in
any violation of, or default (with or without notice or
<PAGE>32
27
lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, (i) the certificate
of incorporation or by-laws of Parent or the comparable
charter or organizational documents of any other subsidiary
of Parent, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to
Parent or any of its subsidiaries or their respective pro-
perties or assets or (iii) subject to the governmental fil-
ings and other matters referred to in the following sen-
tence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent or any of its sub-
sidiaries or their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such con-
flicts, violations, defaults, rights or Liens that individu-
ally or in the aggregate would not (x) have a Parent Mate-
rial Adverse Effect, (y) impair in any material respect the
ability of Parent, Sub, CPI Acquisition Sub or CMP
Acquisition Sub to perform its obligations under the
Acquisition Documents or (z) prevent, materially delay or
make unduly burdensome the consummation of any Merger or the
Purchase. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Govern-
mental Entity is required by Parent or any of its subsidi-
aries in connection with the execution and delivery of the
Acquisition Documents or the consummation by Parent, Sub,
CPI Acquisition Sub or CMP Acquisition Sub, as the case may
be, of any of the Transactions, except for (I) the filing of
a premerger notification and report form under the HSR Act,
(II) the filing with the SEC of such reports under
Sections 13(a), 13(d) and 16 of the Exchange Act as may be
required in connection with the Acquisition Documents and
the Transactions, (III) the filing of the Certificates of
Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in
which the Company, Sub, CPI Acquisition Sub or CMP
Acquisition Sub, as applicable, is qualified to do busi-
ness, (IV) approvals of the FCC and local franchising
authorities to the extent necessary to consummate the
Transactions as set forth in Section 3.01(d)(i) of the
Disclosure Schedule and (V) such other consents, approvals,
orders, authorizations, registrations, declarations and
filings, the failure of which to be obtained or made would
not, individually or in the aggregate, (x) have a Parent
Material Adverse Effect, (y) prevent, materially delay or
make unduly burdensome the consummation of any Merger or the
Purchase or (z) impair in any material respect the ability
of Parent, Sub, CPI Acquisition Sub or CMP Acquisition Sub
to perform its obligations under the Acquisition Documents.
<PAGE>33
28
(d) Parent SEC Documents; Financial Statements.
Parent has filed all required reports, forms and other docu-
ments with the SEC since January 1, 1993 (such documents as
filed and amended through the date this representation is
made or deemed made being called the "Parent SEC Docu-
ments"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Docu-
ments, and none of the Parent SEC Documents contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Except to the extent that information contained in any
Parent SEC Document has been revised or superseded by a
later-filed Parent SEC Document filed and publicly available
prior to the date this representation is made or deemed
made, none of the Parent SEC Documents contains any untrue
statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents
comply as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Parent and
its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments).
Except as set forth in the Parent SEC Documents, and except
for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the
date of the most recent consolidated balance sheet included
in the Parent SEC Documents, neither Parent nor any of its
subsidiaries has any material liabilities or obligations of
any nature (whether accrued, absolute, contingent or other-
wise) required by GAAP to be recognized or disclosed on a
consolidated balance sheet of Parent and its consolidated
subsidiaries or in the notes thereto. Notwithstanding the
provisions of this Section 3.03(d), Parent shall not be
deemed to have made any representations or warranties to any
Cablevision Company or to the Principal Stockholder with
respect to any information furnished in writing by any
Cablevision Company, any Stockholder or any of their
<PAGE>34
29
respective representatives for inclusion in any Parent SEC
Document.
(e) Litigation. There is no suit, action or pro-
ceeding pending or, to the knowledge of Parent, threatened
against Parent or any of its subsidiaries that, individually
or in the aggregate, could reasonably be expected to
(i) impair in any material respect the ability of Parent or
any of its subsidiaries to perform its obligations under the
Acquisition Documents, (ii) materially delay the ability of
Parent or any subsidiary to perform its obligations under
the Acquisition Documents or (iii) have an adverse effect on
the business, properties, conditions or results of
operations of Parent or any subsidiary thereof that
constitutes a Parent Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Parent
or any subsidiary thereof having, or which is reasonably
likely to have, any of the foregoing effects referred to in
clauses (i)-(iii).
(f) Tax Matters. (i) Neither Parent nor any of its
affiliates has any intention of requesting any Cablevision
Company to take any action pursuant to Section 5.02(e) that
would cause any Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the
Code. Neither Parent nor any of its affiliates has any
intention of assigning its rights and obligations hereunder
pursuant to Section 9.06 or otherwise so as to cause any
Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code. Neither Parent nor
any of its affiliates has any plan or intention of taking,
or permitting any Surviving Corporation to take, any action
after the Effective Time (including any transfer of any
assets by any Surviving Corporation) that would itself
(without regard to any action taken by the Company, CMP or
CPI or any of their stockholders prior to the Effective Time
(other than (A) transfers of Excluded Assets permitted by
Sections 5.10 and 5.25, and (B) other transfers, redemptions
and distributions disclosed in Section 4.01 of the
Disclosure Schedule prior to the Effective Time) or by any
of such stockholders after the Effective Time) cause any
Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code (it being understood
that the performance by Parent or any affiliates thereof of
its obligations under the Acquisition Documents (including
the Parent Series E Certificate and the Parent Series F
Certificate) shall not constitute a breach of this Sec-
tion 3.03(f)(i)).
<PAGE>35
30
(ii) Parent has formed Sub, and will form CMP
Acquisition Sub and CPI Acquisition Sub, solely in order to
consummate the transactions contemplated by the Merger
Agreements and the Supplemental Agreement, and at no time
will any of such corporations conduct any business
activities or other operations of any kind, other than the
issuance of its stock to Parent prior to the Effective Time.
(iii) Immediately prior to each Merger, Parent will be
in control of Sub, CMP Acquisition Sub and CPI Acquisition
Sub within the meaning of Section 368(c) of the Code.
(iv) Parent will issue only its voting stock as the
Merger Consideration (as defined in each Merger Agreement).
(v) Neither Parent nor Sub is, nor when formed will
CMP Acquisition Sub or CPI Acquisition Sub be, an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
(vi) There is no indebtedness existing between Parent,
Sub, CMP Acquisition Sub or CPI Acquisition Sub, on the one
hand, and the Company, CMP or CPI, respectively, on the
other hand, that was issued or acquired, or will be settled,
at a discount.
(g) Brokers. Except to the extent payable solely by
Parent or any of its subsidiaries, no broker, investment
banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or its
subsidiaries.
(h) Investment. Parent is acquiring the capital stock
or the partnership interests, as applicable, of each Gerry
Company for investment and is not acquiring such capi-tal
stock or partnership interests with a view to or for sale in
connection with any distribution thereof within the meaning
of the 1933 Act.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. Until the Closing
Date, and subject to Section 5.18(b) the Company and each
Gerry Company shall and shall cause its subsidiaries to,
carry on their respective businesses in the ordinary
<PAGE>36
31
course and use all commercially reasonable efforts to
preserve intact their current business organizations, keep
available the services of their current officers and
employees and preserve their relationships with customers,
suppliers and others having business dealings with them.
Without limiting the generality of the foregoing, until the
Closing Date, except as set forth in Section 4.01 of the
Disclosure Schedule, no Cablevision Company shall, without
the consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its
capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any of its
capital stock or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(b) issue, deliver or sell or pledge or otherwise
encumber any shares of its capital stock or any other of
its securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares,
interests, securities or convertible securi-ties;
(c) amend its certificate of incorporation, by-laws,
partnership agreement or other comparable charter or
organizational documents;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any Person or
(ii) any assets that are material, individu-ally or in the
aggregate, to the Cablevision Companies, taken as a whole;
(e) mortgage or otherwise encumber or subject to any
Lien (other than Liens of the type described in
Section 3.01(n)(i)(B) or (C) above or, subject to
paragraph (m)) of this Section 4.01, except in the
ordinary course of business consistent with past practice,
sell, lease or otherwise dispose of any of its properties
or assets;
(f) (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue
or sell any debt securities or warrants or other rights to
acquire any debt securities of such Cable-vision Company,
guarantee any debt securities of
<PAGE>37
32
another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the
economic effect of any of the foregoing, other than the
making of working capital borrowings in the ordinary
course of business consistent with past practice or
(ii) make any loans, advances or capital contributions to,
or investments in, any other Person, other than to the
Company, any Gerry Company or any direct or indirect
wholly owned subsidiary of the Company or a Gerry Company;
(g) fail to use all commercially reasonable efforts to
renew on commercially reasonable terms any of its
Franchises that will terminate after the date hereof and
prior to the Closing Date in accordance with its terms (it
being understood that the Cablevision Companies shall, to
the extent reasonably practicable, permit Parent to
participate in the process of renewals of any such
Franchises);
(h) make any material tax election or settle or
compromise any material tax liability;
(i) pay, discharge or satisfy any claims, liabili-ties
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent financial
statements (or the notes thereto) included in the SEC
Documents, in the case of the Company, or in the most
recent Financial Statements, in the case of any Gerry
Company, or incurred in the ordinary course of business
consistent with past practice; provided, however, that any
Cablevision Company may enter into a negotiated
termination of any swap transaction with the counterparty
thereof;
(j) provide for or allow any increase in compensa-tion
(including bonus, severance or termination pay) to
employees of any Cablevision Company, other than increases
in the ordinary course of business consistent with past
practice, or increase the number of employees of any
Cablevision Company other than in the ordinary course of
business consistent with past practice;
(k) adopt or amend any Benefit Plan;
(l) except in the ordinary course of business, modify,
amend or terminate any material contract or
<PAGE>38
33
agreement to which any Cablevision Company is a party or
waive, release or assign any material rights or claims;
(m) without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed)
purchase or lease any real property (other than
easements);
(n) transfer record or beneficial ownership of any
Company Common Stock other than to a Permitted Assignee;
or
(o) authorize any of, or commit or agree to take any
of, the foregoing actions.
SECTION 4.02. Other Actions. The parties hereto shall
not, and shall not permit any of their respective sub-
sidiaries to, take any action that would, or that could rea-
sonably be expected to, result in (i) any of the representa-
tions and warranties (other than any representation or war-
ranty set forth in Section 3.01(c), the first three
sentences of 3.01(d)(i) or 3.01(f) (other than clause (vi)
thereof), Section 3.02(a), the first two sentences of
3.02(b), 3.03(b), 3.03(c) or 3.03(f)) becoming untrue in any
respect that would be reasonably likely to have a
Cablevision Material Adverse Effect or a Parent Material
Adverse Effect, as applicable, (ii) any of such
representations and warranties set forth in Section 3.01(c),
the first three sentences of 3.01(d)(i) or 3.01(f) (other
than clause (vi) thereof), Section 3.02(a), the first two
sentences of 3.02(b), 3.03(b), 3.03(c) or 3.03(f) becoming
untrue, incorrect or inaccurate in any respect, or (iii) any
of the conditions set forth in Article VI not being
satisfied.
ARTICLE V
Additional Agreements
SECTION 5.01. Access to Information; Confidenti-ality.
Prior to the Closing, the Company and each Gerry Company
shall, and shall cause each of its subsidiaries to, afford
to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisers and other representatives,
reasonable access during normal business hours during the
period prior to the Closing Date to all their respective
properties, books, contracts, commitments, personnel and
records and, during such period, such Cablevision Company
shall, and shall cause each of its sub-sidiaries to,
identify and make available promptly to Parent
<PAGE>39
34
(and if requested, furnish copies of) (a) a copy of each
report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements
of Federal or state securities laws or in respect of any
action or request for information from the FCC or any
franchising authority, (b) monthly balance sheets and
statements of income of such Cablevision Company on a
consolidated basis and copies of any other financial
statements and other information provided to any lenders by
such Cablevision Company, (c) Federal, state and local tax
returns, related work papers and tax sharing agreements of
such Cablevision Company and (d) all other information
concerning its business, properties and personnel as Parent
may reasonably request, subject however, to the terms of any
written confidentiality agreements that are binding upon the
Cablevision Companies (it being understood that the Cable-
vision Companies shall consult with Parent concerning the
nature and scope of all such confidentiality obligations,
provide a copy of all such confidentiality agreements to
Parent (to the extent permitted thereby) and shall, to the
extent possible, identify all matters that are subject to
such obligations). Except as required by law, Parent will
hold, and will cause the officers, employees, accountants,
counsel, financial advisers and other representatives and
affiliates (collectively, the "Representatives") of Parent
to hold, any confidential information in accordance with the
Confidentiality Agreement dated as of March 29, 1994,
between the Company and Time Warner Cable, a division of TWE
(the "Confidentiality Agreement"), and each of Parent, the
Principal Stockholder and the Cablevision Companies will,
and will cause their respective Representatives to, comply
with the terms of the Confidentiality Agreement.
SECTION 5.02. Reasonable Efforts. (a) Upon the terms
and subject to the conditions set forth in the Acqui-sition
Documents and in order to effect the Closing, each of the
parties agrees to use all commercially reasonable efforts
(x) to cause in the most expeditious manner practicable the
conditions in Article VI to be satisfied on or prior to the
Closing Date and to take, or cause to be taken, all actions,
and (y) to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the
Mergers, the Purchase and the other Transactions, in each
case including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with
Governmental Entities, if any) and the taking of all
commercially reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or pro-
<PAGE>40
35
ceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
any Acquisition Document or the consummation of any of the
Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments
necessary to consummate the Transactions and to fully carry
out the purposes of the Acquisition Documents.
(b) Without limiting the generality of anything in
Section 5.02(a), in order to secure any necessary con-sents
relating to any Franchises from Governmental Entities, the
Cablevision Companies, Parent, Sub, CMP Acquisition Sub and
CPI Acquisition Sub shall proceed timely and in good faith,
each using commercially reasonable efforts, to prepare, file
and prosecute each such consent or approval. The
Cablevision Companies shall submit to each Governmental
Entity whose consent is required a form of ordinance,
resolution or other required document, as appropriate,
relating to the transfer of control or assignment, as
appropriate, of the applicable Franchise, which ordinance,
resolution or other document shall be in form and substance
reasonably satisfactory to the Cablevision Companies,
Parent, Sub, CMP Acquisition Sub and CPI Acquisition Sub.
The Cablevision Companies shall consult with Parent and
promptly and regularly notify Parent, Sub, CMP Acquisition
Sub and CPI Acquisition Sub with respect to all material
developments in each such consent process, and shall give
Parent, Sub, CMP Acquisition Sub and CPI Acquisition Sub
reasonable prior notice of all meetings scheduled with the
relevant Governmental Entity. Each of Parent, Sub, CMP
Acquisition Sub and CPI Acquisition Sub shall use its
commercially reasonable efforts to promptly assist the
Cablevision Companies and shall as promptly as practicable
take such actions as may be necessary and commercially
reasonable in obtaining such approvals, including preparing,
filing and prosecuting any joint applications required to be
filed with any Governmental Entity. Each of Parent, Sub,
CMP Acquisition Sub or CPI Acquisition Sub further agrees to
use commercially reasonable efforts to furnish as promptly
as practicable all information as is reasonably required by
and customarily furnished to the applicable Governmental
Entity. If requested by the Cablevision Companies, upon
reasonable notice, Parent, Sub, CMP Acquisition Sub and CPC
Acquisition Sub, as applicable, shall be represented at any
meeting or hearing as may be scheduled to consider any such
applications; and if requested by Parent, Parent or one of
its subsidiaries shall be entitled to be present at any such
meeting.
<PAGE>41
36
(c) If in connection with the process of obtain-ing
such consents from any Governmental Entity, such Govern-
mental Entity imposes any conditions applicable to any
Person (or the Surviving Corporation, the CMP Surviving
Corporation or the CPI Surviving Corporation) as a
requirement for granting its consent, such Person (or, in
the case of any of the Surviving Corporations, Parent) shall
negotiate jointly with such Governmental Entity with respect
to such condition, with such condition to be accepted only
if consented to by the applicable Cablevision Company, the
Principal Stockholder, Parent, Sub, CMP Acquisition Sub and
CPI Acquisition Sub. The Cablevision Companies, the
Principal Stockholder, Parent, Sub, CMP Acquisition Sub and
CPI Acquisition Sub shall each act in a commercially reason-
able manner in granting or withholding such consent (taking
into account the parties' respective interests with respect
thereto). Each of Parent, Sub, CMP Acquisition Sub and CPI
Acquisition Sub agrees that prior to the Closing Date, it
will not, without the prior written consent of the
applicable Cablevision Company, seek amendments,
modifications or other changes to any Franchise, nor will it
institute or participate in any discussions with
Governmental Entities relating to the Franchises without
offering a representative of the Cablevision Companies an
opportunity to participate in such discussions.
(d) Notwithstanding anything to the contrary contained
herein, nothing in this Section 5.02 shall be deemed (i) to
require Parent, Sub, CMP Acquisition Sub or CPI Acquisition
Sub to fulfill any obligations that should have been
fulfilled by a Cablevision Company or the Principal
Stockholder prior to the Closing Date; or (ii) to require
any Cablevision Company or the Principal Stockholder to take
any action that should have been fulfilled by Parent, Sub,
CMP Acquisition Sub or CPI Acquisition Sub prior to the
Closing Date.
(e) Subject to the last sentence of this
Section 5.02(e), each Cablevision Company shall seek to
obtain each waiver, consent or approval from a Governmental
Entity and make each registration or filing with a
Governmental Entity in the name of Parent and its
subsidiaries (or, if Parent shall so request in a reasonably
timely manner, in the name of TWE-Advance/Newhouse or TWE or
a subsidiary of Parent (a "Designated Entity"), rather than
in the name of Parent, Sub, CMP Acquisition Sub or CPI
Acquisition Sub). Subject to the last sentence of this
Section 5.02(e), any actions taken pursuant to this
Section 5.02 in the name of Parent and its subsidiaries (or
if so requested a Designated Entity) shall be deemed to
satisfy the obligations of Parent, Sub, CMP Acquisition Sub,
or CPI Acquisition Sub or such Cablevision Company, as
<PAGE>42
37
applicable, to take such actions pursuant to this
Section 5.02 (it being understood that the Designated Entity
shall be required to comply with this Section 5.02) and
shall be deemed to satisfy the applicable requirement to
obtain the relevant waiver, consent or approval or make the
relevant registration or filing. Subject to the last
sentence of this Section 5.02(e), the Company and each Gerry
Company agrees that it will (and will cause its subsidiaries
to) use commercially reasonable efforts to seek any Permit
that is to specifically reference or is to be obtained in
the name of the acquirer or the control person of a
Cablevision Company or the owner or operator of a System or
any other property, by reference to or in the name of Parent
and its subsidiaries (or if Parent shall so request in a
reasonably timely manner, a Designated Entity), rather than
in the name of Parent, Sub, CMP Acquisition Sub or CPI
Acquisition Sub. Notwithstanding the foregoing sentences of
this Section 5.02(e), (i) any request made by Parent or Sub
pursuant to this Section 5.02(e) shall be made reasonably
prior to the filing with any applicable Governmental Entity
of any required waiver, consent, approval or Permit
application (except to the extent that the relevant
Cablevision Company determines reasonably and in good faith
that the obtaining of such waiver, consent, approval or
Permit application would not be prejudiced or materially
delayed by a later request); (ii) nothing herein shall
require any Cablevision Company to obtain any such waiver,
consent, approval or Permit from a Governmental Entity or
make any such registration or filing with a Governmental
Entity that would not have to otherwise be obtained
hereunder; (iii) no Cablevision Company shall be obligated
to honor such request if, after consultation with Parent, a
Cablevision Company has reasonably and in good faith
determined that the action requested would be unlikely to be
successful or would be expected to unduly delay or
materially impair or hinder the ability to obtain any
required waiver, consent or approval; and (iv) in the event
that, notwithstanding the use of commercially reasonable
efforts and consulting with Parent, such Cablevision Company
shall be unable to obtain any such waiver, consent, approval
or Permit, or shall be unable to do so without unreasonable
delay, such Cablevision Company shall be deemed to have
complied with the requirements of this Agreement if it shall
obtain such Permit in the name of Parent or the Designated
Entity.
SECTION 5.03. Incentive Compensation Plans. All
Benefit Plans that are deferred compensation, incentive
compensation, stock option or phantom stock plans, arrange-
ments or agreements shall terminate as of the Closing Date,
subject to the obligations, to the extent provided therein,
to make payments thereunder subsequent to the Closing Date,
<PAGE>43
38
and the Principal Stockholder shall ensure that following
the Closing Date, no party to or participant in any such
plan, arrangement or agreement shall have any right there-
under to acquire any capital stock of Parent, any Cable-
vision Company or any Surviving Corporation. As soon as
practicable after the Closing Date, Parent shall cause the
Surviving Corporation (as defined in the Company Merger
Agreement) to pay all amounts due under any deferred
compensation agreements disclosed or referred to in
Section 3.01(h) of the Disclosure Schedule; provided,
however, that all such payments shall be made within the
time periods for payment set forth in such agreements,
including any amendments thereto in accordance with the
provisions of Section 4.01 hereof.
SECTION 5.04. Benefit Plans and Employee Matters;
Director and Officer Indemnification. (a) Parent will, for
at least three years after the Effective Time, either main-
tain the employee benefit plans of the Cablevision Companies
in effect on the date of this Agreement (or plans providing
generally comparable benefits) or include employees of the
Cablevision Companies in one or more of the employee benefit
plans of the Parent and its subsidiaries in which similarly
situated employees participate (in which case Parent will
give credit for prior service for all purposes other than
benefit accrual under such plans to the employees of the
Cablevision Companies).
(b) From and after the Effective Time, the Sur-viving
Corporations, in the case of the Company, CMP and CPI, and
Parent, in the case of any Purchase Gerry Company, will
assume the same obligations to satisfy (and will cause the
subsidiaires of the Surviving Corporations existing
immediately following the Effective Time to continue to
satisfy) the rights of indemnification and advancement of
expenses to present and former directors, officers,
employees and agents of the Cablevision Companies
(individually, an "Indemnitee" and collectively, the
"Indemnitees"), to which they are entitled with respect to
any matter existing or occurring prior to the Effective Time
and/or with respect to the Acquisition Documents or the
Transactions, under each such entity's existing certificate
of incorporation, by-laws, partnership agreement or
resolution of such entity's board of directors, in each case
as in effect on the date of this Agreement or as amended to
the Closing Date with the consent of Parent (and without
giving effect to any subsequent amendments or modifications
thereto) in accordance with the terms and conditions of any
such indemnification provisions.
(c) On the Closing Date, Parent shall (or shall cause a
subsidiary to) offer employment to each person who
<PAGE>44
39
immediately prior thereto was a Systems Employee of an Asset
Gerry Company and offer to continue the employment of each
person who immediately prior thereto was a Systems Employee
of the Company (or any of its subsidiaries) or an Equity
Gerry Company, in each case for the same position, in the
same location and at the same salary or wages (subject to
paragraph (a) of this Section 5.04), of such employee
immediately prior to the Closing Date. Effective as of the
Closing Date, Parent shall provide health coverage to all
such System Employees and to all Transition Employees who
were entitled to health coverage under one or more of the
health care plans of the Cablevision Companies immediately
prior to the Closing Date, subject to paragraph (a) of this
Section 5.04, without the application of any minimum
eligibility period of employment for coverage and without
any restriction for pre-existing conditions. Any deductible
requirements under the health care plans of the Cablevision
Companies that have been satisfied by a Systems Employee or
Transition Employee with respect to the coverage year in
which the Closing Date occurs shall be credited thereto
under Parent's health care plan after the Closing Date. As
of the Closing Date, Parent also will offer coverage under
the health care plan covering the Systems Employees and
Transition Employees after the Closing to any former
employees (together with their eligible dependents) who have
been previously employed in any capacity by the Cablevision
Companies and who as of the Effective Time, either
(i) already had elected health care continuation coverage
under the provisions of Section 4980B of the Code or
(ii) are in an election period to elect such coverage, in
accordance with Section 4980B(f)(5) of the Code, as of the
Effective Time (for the purpose of this subsection (ii) all
employees employed by a Cablevision Company immediately
prior to the Closing Date will be considered to be in such
an election period as of the Closing Date). Parent shall
indemnify the Principal Stockholder and the Asset Gerry
Companies and hold them harmless from any liability they
might incur after the Closing Date with respect to any
current or former Systems Employees or Corporate/Regional
Employees under the provisions of Section 4980B of the Code
to the extent that such liability relates to any period
beginning after the Effective Time.
SECTION 5.05. Appointment of Committee Member.
Promptly following the Closing Date, Parent agrees to cause
Alan Gerry to be appointed a member of the TWE Partners
Operating Committee for a term of three years, which period
shall be subject to early termination at any time (i) for
cause, (ii) if Alan Gerry and the Permitted Assignees,
collectively, cease to be the beneficial owners of fifty
percent of the shares of Parent Common Stock received by
Alan Gerry and the Permitted Assignees in connection with
<PAGE>45
40
the Mergers and the Purchase (including the shares
underlying the Parent Series E Preferred Stock and the
Parent Series F Preferred Stock) and (iii) if Alan Gerry
acquires any interest in any Competitive Business (as
defined in the Noncompetition Agreement to which he is a
party) in the United States without the prior written
consent of Parent. For purposes of this Section 5.05,
shares of Parent Series E Preferred Stock and Parent
Series F Preferred Stock which are convertible into shares
of Parent Common Stock shall be deemed to have been so
converted.
SECTION 5.06. Fees and Expenses. (a) Except as
provided in Section 5.06(b) and except for fees and expenses
incurred by any Person in connection with any process of the
type described in, and in accordance with, Section 5.02(c)
("Section 5.02(c) Fees"), all fees and expenses incurred in
connection with the Mergers, the Purchase, the Acquisition
Documents and the Transactions shall be paid (i) in the case
of Parent, Sub, CPI Acquisition Sub or CMP Acquisition Sub,
by Parent, and (ii) in the case of the Cablevision Companies
and the Principal Stockholder, by the Cablevision Companies;
provided that any expenses incurred pursuant to this Sec-
tion 5.06 to be borne by a Cablevision Company, whether paid
before or after the Closing Date, shall be taken into
account in determining the Working Capital Deficit or
Working Capital Balance, as applicable of such Cablevision
Company.
(b) Except for Section 5.02(c) Fees, all recorda-tion,
stamp, transfer and documentary taxes and fees, and federal,
state or local excise, sales or use taxes, and any filing
fees imposed by any Governmental Entity, that are incurred
in connection with the Transactions, shall be paid (i) one-
half by the Principal Stockholder (or by the applicable
Cablevision Company (and included as a Working Capital
Liability)) and (ii) one-half by Parent.
SECTION 5.07. Public Announcements. Parent, on the
one hand, and the Cablevision Companies and the Principal
Stockholder, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public
statements with respect to the Transactions (to the extent
they relate to the Transactions) and shall not issue any
such press release or make any such public statement prior
to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange.
<PAGE>46
41
SECTION 5.08. HSR Act. The Company, the Gerry
Companies, the Principal Stockholder, Parent, Sub, CPI
Acquisition Sub and CMP Acquisition Sub shall file within 45
days of the date of this Agreement notifications under the
HSR Act in connection with the Mergers, the Purchase and the
Transactions and shall respond as promptly as practicable
and in good faith to any inquiries received from the FTC and
the Antitrust Division for additional information or
documentation and shall respond in good faith as promptly as
practicable to all inquiries and reasonable requests
received from any State Attorney General or other
governmental authority in connection with antitrust matters.
The Cablevision Companies, the Principal Stockholder,
Parent, Sub, CPI Acquisition Sub and CMP Acquisition Sub
shall use commercially reasonable efforts to overcome any
objections which may be raised by the FTC or Antitrust
Division; provided, however, that no actions will be
required to be taken pursuant to this sentence that would
(i) prohibit or limit in any material respect the ownership
or operation by any Cablevision Company, the Principal
Stockholder, Parent, Sub, CPI Acquisition Sub, CMP
Acquisition Sub or any of their respective subsidiaries of
the business or assets of any Cablevision Company, the
Principal Stockholder, Parent, Sub, CPI Acquisition Sub, CMP
Acquisition Sub or any of their respective subsidiaries, or
compel any Cablevision Company, the Principal Stockholder,
Parent, Sub, CPI Acquisition Sub, CMP Acquisition Sub or any
of their respective subsidiaries to dispose of or hold
separate from Parent and its affiliates (taken as a group)
any business or assets of any Cablevision Company, the
Principal Stockholder, Parent, Sub, CPI Acquisition Sub, CMP
Acquisition Sub or any of their respective subsidiaries, as
a result of the Mergers, the Purchase or any of the other
Transactions, (ii) impose limitations (other than routine
reporting requirements) on the ability of Parent to acquire
or hold, or exercise full rights of ownership of, any shares
of Company Common Stock or Common Stock of CMP or CPI or of
any Surviving Corporation or of any of the equity interests
of any Gerry Company, including the right to vote such
capital stock on all matters properly presented to the
applicable shareholders, (iii) prohibit Parent or any of its
subsidiaries from effectively controlling in any material
respect the business or operations of any Cablevision
Company or (iv) be reasonably likely to have a Cablevision
Material Adverse Effect.
SECTION 5.09. Certificates. (a) Not later than five
days prior to the Closing Date, and not earlier than 25 days
prior to the Closing Date, the Company and the Gerry
Companies shall deliver a certificate, signed by a duly
authorized officer of the appropriate entity, setting forth
for each of the Systems the information described in
<PAGE>47
42
Section 3.01(q), as well as the following supplemental
information in respect of such System, in each case as of
the end of the calendar month immediately preceding the date
of such certificate: (i) a description of basic and optional
or tier services available from such System, the rates
charged for each, and the number of subscribers receiving
each optional or tier service, (ii) the maximum channel and
MHZ capacity, (iii) the must-carry/retransmission status of
each station carried by such System, (iv) the stations and
signals carried by such System and the channel position of
each such signal and station and (v) the cities, towns,
villages, boroughs and counties served by such System (it
being understood that such supplemental information referred
to in the foregoing clauses (i) through (v) shall not be
subject to the indemnity provisions of Article VII hereof,
unless such supplemental information taken as a whole con-
tains a misstatement of a material fact or omits a material
fact necessary to make the information supplied not mis-
leading).
(b) Not later than five days prior to the Closing Date
and not earlier than 10 days prior to the Closing Date, the
Company and each Gerry Company shall deliver a certificate
pursuant to which it shall set forth, as of such date, any
exceptions to the representations and warranties set forth
in Sections 3.01(c)(i) (with respect to holders of record),
3.01(c)(ii), (g), (m)(ii), (o), (p), (r), (s) and (t) as if
such representations and warranties were made on and as of
the Closing Date (to the extent practicable) or as of the
date of such certificate in all other cases (it being
understood and agreed that (i) the statements set forth in
such certificate shall not be subject to the indemnity
provisions in Article VII hereof (except to the extent such
certificate shall contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements not misleading) and (ii) disclosure of any
exception shall not be deemed an agreement by the Company or
the applicable Gerry Company that such exception is material
or constitutes a Cablevision Material Adverse Effect or a
Cablevision Material Adverse Change).
SECTION 5.10. Excluded Assets. On or prior to the
Closing Date, the Company or the applicable Gerry Company
shall transfer the Excluded Assets owned by it to (or retain
in the applicable Asset Gerry Company, as the case may be)
the Principal Stockholder, any of his subsidiaries (other
than a subsidiary of the Company or an Equity Gerry Company)
or to a third party (which third party, in the case of the
Company's current corporate headquarters in Liberty, New
York, is reasonably acceptable to Parent). At the Closing,
the Principal Stockholder or other owner and the Surviving
Corporation shall enter into a
<PAGE>48
43
lease agreement for the occupancy by the Surviving
Corporation of a portion of the Company's corporate
headquarters in Liberty, New York pursuant to a lease agree-
ment substantially in the form of Exhibit A (the "Office
Lease").
SECTION 5.11. Certificate of Designations and
Amendment. Prior to the Effective Time (as defined in the
Company Merger Agreement), Parent shall file with the
Secretary of State of the State of Delaware, and shall cause
to become effective in accordance with Section 103 of DGCL,
the Parent Series E Certificate, substantially in the form
of Exhibit B, and the Parent Series F Certificate,
substantially in the form of Exhibit C. As of the Effective
Time (as defined in the Company Merger Agreement), Parent
shall have authorized a sufficient number of shares of
Parent Series E Preferred Stock and Parent Series F
Preferred Stock to fulfill its obligations under the Company
Merger Agreement. The shares of Parent Stock to be issued
pursuant to the Mergers will, upon issuance to the
Stockholders, be owned of record by the Stockholders and be
duly authorized, validly issued, fully paid and non-
assessable, free from and not issued in violation of any
preemptive rights.
SECTION 5.12. Agreement to Cause Vote. Prior to the
Closing, the Principal Stockholder shall cause to occur
(i) a vote of the holders of Company Common Stock regarding
the consummation of the Company Merger and the other
Transactions on the terms provided in this Agreement and the
Company Merger Agreement, (ii) a vote of the holders of
common stock of each of CMP and CPI regarding the
consummation of the CMP Merger or the CPI Merger, as
applicable, and the other Transactions on terms provided in
this Agreement and the CMP Merger Agreement or the CPI
Merger Agreement, as applicable, and (iii) a vote of the
holders of equity interests in each Gerry Company regarding
the consummation of the Purchase in respect of such Gerry
Company and the other Transactions on the terms provided in
this Agreement and the Purchase Agreement.
SECTION 5.13. Other Agreements. At the Closing,
Parent, the Principal Stockholder and the Permitted
Assignees party thereto shall enter into the Stockholders'
Agreement and the Escrow Agreement.
SECTION 5.14. TWE-Related Consents. Prior to the
Closing, Parent shall obtain all consents and approvals from
the other partners in TWE to the extent that such consents
and approvals are necessary to consummate the Mergers, the
Purchase and the other Transactions.
<PAGE>49
44
SECTION 5.15. Other Stockholder Consents. Prior to
the Closing, the Company shall use commercially reasonable
efforts to obtain the consent of the Stockholders (other
than the Principal Stockholder) to the Company Merger and
the other Transactions, and Parent and Sub shall use
commercially reasonable efforts to cooperate with the
Company in connection with such efforts.
SECTION 5.16. Tax Matters. (a) Parent, Sub, CMP
Acquisition Sub, CPI Acquisition Sub and the Company shall
report each Merger for income tax purposes as a
reorganization within the meaning of Section 368(a) of the
Code (and any comparable state or local tax statute).
(b) Parent shall not request, and shall not permit any
of its affiliates to request, any Cablevision Company to
take any action pursuant to Section 5.02(e) that would cause
any Merger to fail to qualify as a reorganization with the
meaning of Section 368(a) of the Code. Neither Parent nor
any of its affiliates shall assign, and Parent shall not
permit any of its affiliates to assign, its rights and
obligations hereunder pursuant to Section 9.06 so as to
cause any Merger to fail to qualify as a reorganization with
the meaning of Section 368(a) of the Code. Neither Parent
nor any of its affiliates shall take, and Parent shall not
permit any of its affiliates or any Surviving Corporation to
take, any action after the Effective Time (including any
transfer of any assets by any Surviving Corporation) that
would itself (without regard to any action taken by the
Company, CMP or CPI or any of their stockholders prior to
the Effective Time (other than (A) transfers of Excluded
Assets permitted by Sections 5.10 and 5.25 and (B) other
transfers, redemptions and distributions disclosed in
Section 4.01 of the Disclosure Schedule prior to the
Effective Time) or by any of such stockholders after the
Effective Time) cause any Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the
Code (it being understood that the performance by Parent or
any affiliate thereof of its obligations under the
Acquisition Documents (including the Parent Series E
Certificate and the Parent Series F Certificate) shall not
constitute a breach of this Section 5.16(b)).
(c) Parent shall prepare and file, or cause to be
prepared and filed, in accordance with the Company's past
custom and practice, all tax returns for the Company for all
Pre-Closing Tax Periods for which tax returns have not been
filed prior to the Closing, and the Surviving Corporation
(as defined in the Company Merger Agreement) shall pay all
Taxes shown to be due on such tax returns. Parent shall
<PAGE>50
45
prepare and file, or cause to be prepared and filed, all tax
returns for CILP for all Pre-Closing Tax Periods for which
returns have not been filed prior to the Closing. Such tax
returns shall be prepared in accordance with CILP's past
custom and practice and allocations of items of income and
gain and loss and deduction shall be made using the closing
of the books method. In preparing such Company and CILP tax
returns, Parent shall consult with the Principal Stockholder
in good faith and shall provide the Principal Stockholder
with drafts of such tax returns (together with the relevant
back-up information upon request) for review at least
10 days prior to filing. The Principal Stockholder shall
prepare and file, or cause to be prepared and filed, all tax
returns for CPI, CMP and CISA for all Pre-Closing Tax
Periods. Such tax returns shall be prepared in accordance
with such corporation's past custom and practice.
SECTION 5.17. Allocation. The parties agree that no
part of any Merger Consideration or the Purchase
Consideration is allocable to the covenants contained in the
Noncompetition Agreements or the Stockholders' Agreement.
SECTION 5.18. Rate Laws and Rate Proceedings.
(a) The parties hereto acknowledge and agree that notwith-
standing anything in this Agreement or any other Acquisition
Document to the contrary (including any representation or
warranty made in Section 3.01(e), (f), (g), (o)(i), (p),
covenants of the Cablevision Companies made herein (other
than Section 5.18(b) and Articles VI and VII hereof (except
for the indemnity provided for in Section 7.01(b)(ix)), any
matters relating to, in connection with or resulting or
arising from, Rate Laws or Rate Proceedings, or any actions
taken prior to or after the date hereof (subject to para-
graph (b) of this Section 5.18) by any Cablevision Company
to comply with or in a good faith attempt to comply with
Rate Laws or Rate Proceedings, (including (x) any rate
reduction, refund, penalty or similar action having the
effect of reducing the rates previously or subsequently paid
by subscribers, whether instituted or implemented by or
imposed on any Cablevision Company and, (y) subject to
paragraph (b) of this Section 5.18, changes to Rate
Practices instituted or implemented by or imposed on any
Cablevision Company), shall not:
(i) cause or constitute, directly or indirectly, a
breach by any Cablevision Company of any of its repre-
sentations, warranties, covenants or agreements set forth
in this Agreement or any other Acquisition Docu-ment (and
such representations, warranties, covenants and agreements
shall hereby be deemed to be modified appropriately to
reflect and permit the impact and existence of such Rate
Laws or Rate Proceedings, and,
<PAGE>51
46
subject to paragraph (b) of this Section 5.18, to per-mit
any action by any Cablevision Company to comply with or
attempt in good faith to comply with such Rate Laws or
Rate Proceedings);
(ii) otherwise cause or constitute, directly or
indirectly a default or breach by any Cablevision Company
under this Agreement or any other Acquisition Documents;
(iii) result in the failure of any condition prece-dent
to the obligations of Parent and Sub under this Agreement
or any other Acquisition Document to be satisfied;
(iv) otherwise excuse Parent's or Sub's performance of
its obligations under this Agreement or any other
Acquisition Document; or
(v) give rise to any claim for indemnification or other
compensation by Parent or any adjustment of any Merger
Consideration in respect of the shares of Company Common
Stock or the Purchase Consideration in respect of the
Gerry Companies (except as expressly provided for in
Section 7.01(b)(ix));
provided, however, that clauses (i) through (v) shall not
apply (x) to any breach by a Cablevision Company of any of
its representations and warranties in Section 3.01(s) or
(y) to any Loss relating to any Excluded Laws and Proceed-
ings, in each case which shall be governed by other applica-
ble provisions of this Agreement.
(b) Notwithstanding anything in paragraph (a) of this
Section 5.18 to the contrary, each Cablevision Company shall
obtain the prior written consent of Parent before
instituting or implementing any changes to any Rate
Practices in effect on the date hereof. In connection with
any such changes to the Rate Practices of any Cablevision
Company, (i) the applicable Cablevision Company shall use
its commercially reasonable efforts to notify Parent as
promptly as practicable of any planned changes to its Rate
Practices and of any hearings or meetings with Governmental
Entities with respect thereto and (ii) the Parent shall use
its commercially reasonable efforts to respond as promptly
as practicable (which shall include, subject to clause (i)
above, response in time to permit the Cablevision Companies
to respond to mandatory deadlines) to any requests for
consent to any changes to Rate Practices and shall not with-
hold consent except in cases where it is commercially
reasonable to do so. Notwithstanding anything in this
<PAGE>52
47
Section 5.18(b) to the contrary, (A) to the extent that any
Cablevision Company is required by law, statute, rule,
regulation, ordinance or other action of a Governmental
Authority having the force of law to implement changes to
Rate Practices, it may do so without the prior consent of
Parent; (B) if Parent fails to respond in a reasonably
timely fashion as provided in clause (ii) above, the
applicable Cablevision Company shall be permitted to take
such actions as it deems appropriate in its discretion,
provided that such actions shall be commercially reasonable
and shall be consistent with actions that would be taken by
such Cablevision Company if it were expecting to continue to
be the long-term operator of the relevant System or Systems;
(C) if Parent withholds any consent required by this
Section 5.18(b) to any action, it shall not have any claim
against the applicable Cablevision Company in the
consequence of failing to take such action and (D) if the
change in Rate Practices is a change in rates, accompanied
by all required notices and waiting periods, for rates that
prior to the change are subject to rate regulation under the
rules, regulations, orders or other actions of the FCC,
then, subject to Section 4.01, the rates may be increased
without the Parent's prior consent, provided such increase
is based on a cost-of-service filing made prior to the date
hereof and disclosed to Parent or is in the ordinary course
of business, including through the filing of FCC Form 1205
or FCC Form 1210, but excluding any increases that would be
based on cost-of-service filings made after the date of this
Agreement.
SECTION 5.19. Capital Expenditures. Prior to the
Closing Date, each Cablevision Company shall make capital
expenditures in the ordinary course of business in accor-
dance with the Capital Budget, subject to (i) changes in the
amount, timing and composition among the projects
contemplated by the Capital Budget of such capital
expenditures, consistent with the rebuild strategy disclosed
therein and in the ordinary course of business and
(ii) changes in respect of rebuilds contemplated by the
Capital Budget. The Capital Budget may be amended from time
to time by agreement of the affected Cablevision Company and
the Parent, each of which shall act commercially reasonably
in considering any proposed amendments.
SECTION 5.20. No Other Representations. Except as
otherwise expressly set forth in the Acquisition Docu-ments
and except for other written agreements among any or all of
the parties, none of the parties hereto shall be deemed to
have made any representations, warranties or agreements with
or to each other regarding the subject matter of the
Acquisition Documents. It is understood and agreed by the
parties that notwithstanding any statement in
<PAGE>53
48
the Acquisition Documents to the contrary but without
limiting the indemnity set forth in Section 7.01(b)(viii),
none of the parties hereto shall be deemed to have made any
representations and warranties regarding the Excluded
Assets.
SECTION 5.21. Discharge of Debt Documents. Upon the
Closing with respect to each Asset Gerry Company and
immediately after or concurrent with the Closing with
respect to the Company, its subsidiaries and the Stock Gerry
Companies, Parent shall cause all obligations of the
applicable Cablevision Company (including payment of all
principal and accrued interest) under each Debt Document of
such Cablevision Company for which a required consent to
consummate the Transactions has not been obtained to be dis-
charged in full. Without limiting the generality of the
foregoing, with respect to the Indentures described in the
definition of the term "Debt Documents", Parent and Sub
agree to execute and cause the Surviving Corporation to
execute such documents as may be reasonably necessary to
effect and reflect the Company Merger and shall take no
action or fail to take such action where such action or
inaction would result in a Default or Event of Default (in
each case as defined in the Indentures) occurring or being
continued immediately after the Closing. Upon the Closing,
Parent will, and will cause the Surviving Corporation and
its other Subsidiaries to, use commercially reasonable
efforts to cooperate in any efforts to cause the Principal
Stockholder to be released from any obligations under the
Debt Documents, including any pledge agreements or assump-
tion agreements. Any costs or expenses incurred in connec-
tion with obtaining any necessary consents under or releases
from the Debt Documents shall be borne exclusively and fully
by Parent.
SECTION 5.22. Execution of the Registration Rights
Agreement and the Support Agreement. Contemporaneously with
the execution of this Agreement, Parent and the Principal
Stockholder shall enter into the Registration Rights
Agreement and the Support Agreement. Parent will also
permit any other Stockholder that will become a Holder
entitled to the benefits of the Registration Rights
Agreement to become a party thereto.
SECTION 5.23. Registration Statement; NYSE Listing.
Parent agrees that within 120 days following the date hereof
(or as soon thereafter as is reasonably practicable), it
shall file in accordance with the Registration Rights
Agreement, substantially in the form of Exhibit D hereto,
the Initial Registration Statement (as defined in the
Registration Rights Agreement) and, if necessary, subject to
and in accordance with the
<PAGE>54
49
Registration Rights Agreement, a Designated Shelf
Registration (as defined in the Registration Rights
Agreement) and Parent shall otherwise comply with the
applicable provisions of the Registration Rights Agreement
in seeking to obtain the effectiveness thereof on the
Closing Date. In connection with any such Registration
Statement, the Principal Stockholder and the Company shall
furnish all information (financial and other) with respect
to any of the Cablevision Companies, the Principal
Stockholder and the Direct Holders that is requested by the
SEC staff or is reasonably required under the applicable SEC
rules and forms on a timely basis to enable Parent to comply
with its obligations under this Section and the Registration
Rights Agreement. Parent shall apply to the NYSE for the
listing of (i) the Parent Common Stock issued as part of any
Merger Consideration and Purchase Consideration in
connection with each Merger and the Purchase; and (ii) the
Parent Common Stock issuable upon conversion, exchange or
participation provisions of the Parent Series E Preferred
Stock and the Parent Series F Preferred Stock issued as part
of any Merger Consideration and Purchase Consideration and
shall use commercially reasonable efforts to obtain approval
for the listing of such stock.
SECTION 5.24. Termination and Severance Plan;
Discharge of Certain Liabilities; Other Employee Matters.
(a) Promptly after the date of this Agreement, each Cable-
vision Company shall institute an employee termination and
severance plan on the terms described in Exhibit E, pursuant
to which (i) each eligible Corporate/Regional Employee of
such Cablevision Company, other than a Transition Employee,
shall be entitled to a severance payment in accordance with
Exhibit E, which severance payment shall be payable, subject
to clause (iii) hereof, subsequent to Closing, (ii) each
eligible Transition Employee of such Cablevision Company
shall be entitled to a severance payment in accordance with
Exhibit E, which severance payment shall be payable, subject
to clause (iii) hereof, at the earlier of (A) the last day
of the second month following delivery of notice by Parent
that such employee will be terminated, and (B) the end of
the Transition Period, and (iii) each Corporate/Regional
Employee shall be entitled to his or her severance payment
only if he or she signs a waiver in form and substance
reasonably satisfactory to Parent and the Principal
Stockholder. Subsequent to the Closing, Parent shall cause
all payments to be made to the Corporate/Regional Employees,
including the Transition Employees, within the time periods
for payment set forth in Exhibit E hereto.
(b) On or prior to the date which is two months after
the date hereof, Parent will notify the Cablevision
Companies of (i) the Corporate/Regional Employees to whom it
<PAGE>55
50
intends to offer employment (or continued employment) for
the period commencing on the Closing Date and (ii) the
Corporate/Regional Employees offered employment whose
employment is expected to continue to be required through
the date that is three months after the Closing Date (such
three month period the "Transition Period"), (all such
employees in this clause (ii) being referred to as the
"Transition Employees"). Parent shall give each Transition
Employee who accepts employment two months' prior written
notice before terminating such employee, unless such
employee continues in employment after the end of the
Transition Period as an employee-at-will of, or pursuant to
an employment contract with, Parent or any of its sub-
sidiaries (in which case such employee shall be subject to
the severance policies of the company that employs such
person). On or prior to the Closing Date, the applicable
Cablevision Company shall terminate any Corporate/Regional
Employee not identified as an employee to whom Parent (or
any of its subsidiaries as of Closing) intends to offer
employment or as a Transition Employee pursuant to clause
(i) or (ii) above.
SECTION 5.25. Certain Excluded Assets. At any time
prior to the seventh business day preceding the Closing
Date, the Principal Stockholder may designate any System or
Systems or portions thereof serving in the aggregate not
more than 30,000 Basic Equivalent Subscribers as Excluded
Assets. In the event of such designation, the Thresholds
applicable to each of the Merger Consideration and the
Purchase Consideration will be adjusted as provided in the
Merger Agreements and the Purchase Agreement. In the case
of the Gerry Companies, the Principal Stockholder shall be
entitled to require that the relevant Cablevision Company
sell or otherwise dispose of Excluded Systems Assets on
terms determined by the Principal Stockholder and approved
by Parent (which approval shall not be unreasonably
withheld); provided, however, that the terms of any such
transaction shall provide for a guarantee or other assurance
from the Principal Stockholder acceptable to Parent as to
(i) the amount of consideration to be received and (ii) any
payment obligations of third parties.
SECTION 5.26. Senior Stock. Prior to Closing, Parent
shall not (i) authorize any Senior Stock or reclassify any
Junior Stock or Parity Stock as Senior Stock (each as
defined in the Parent Series E Certificate), or (ii) merge
into or consolidate with any Person where the surviving or
continuing corporation will have any authorized Senior Stock
other than capital stock corresponding to shares of Senior
Stock of Parent existing immediately before such merger or
consolidation.
<PAGE>56
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SECTION 5.27. St. Augustine Right of First Refusal.
Parent and the Principal Stockholder will consult with each
other with respect to the St. Augustine Right of First
Refusal and mutually agree with respect to the initial
communications with the party holding such right. In
connection with any such communications and any exercise of
the St. Augustine Right of First Refusal, Parent shall be
entitled to determine the purchase price in respect of the
St. Augustine System, subject to the approval of the
Principal Stockholder, which approval shall not be
unreasonably withheld and, if arbitration is initiated in
accordance with the agreement granting the St. Augustine
Right of First Refusal, Parent shall be entitled to select
the arbitrator to be selected by CILP pursuant to such
agreement.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obliga-tions
To Effect the Mergers and the Purchase. The respective
obligations of the parties to the Acquisition Documents to
effect the Mergers and the Purchase are subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent juris-diction
or other legal restraint or prohibition pre-venting the
consummation of any Merger or the Purchase shall be in
effect; provided, however, that each of the parties shall
have used commercially reasonable efforts to prevent the
entry of any such injunction or other order or other legal
restraint or prohibition and to appeal as promptly as
possible any injunction or other order or other legal
restraint or prohibition that may be entered.
(b) HSR Waiting Period. The waiting period (and any
extension thereof) applicable to the consummation of any
Merger and the Purchase under the HSR Act shall have
expired or been terminated.
SECTION 6.02. Conditions to Obligation of the Company,
the Gerry Companies, the Direct Holders and the Principal
Stockholder To Effect the Mergers and the Purchase. The
obligation of the Cablevision Companies and the Principal
Stockholder to effect the Mergers and the Purchase shall be
subject to the fulfillment at or prior to
<PAGE>57
52
the Closing Date of the following additional conditions,
unless waived by the Principal Stockholder:
(a) Each of Parent, Sub, CPI Acquisition Sub, CMP
Acquisition Sub shall have performed in all material
respects its agreements contained in the Acquisition
Documents to which it is a party required to be performed
at or prior to the Closing Date, and the Company and the
Principal Stockholder shall have received a certificate
executed by the President or any Vice President of Parent
and by the Chief Financial Officer of Parent to that
effect.
(b) The representations and warranties of Parent,
Sub, CPI Acquisition Sub and CMP Acquisition Sub set forth
in Section 3.03(f) shall be true and correct as the
Closing Date as though made on and as of the Closing Date.
All other representations and warranties of Parent and Sub
set forth in the Acquisition Documents shall be true and
correct as of the Closing Date as though made on and as of
the Closing Date, (i) except to the extent such
representations and warranties expressly relate to or are
stated to be as of an earlier date (in which case such
representations and warranties shall be true and correct
on and as of such earlier date) and (ii) except for
breaches of representations and warranties as to matters
that, individually or in the aggregate (and without regard
to Parent Material Adverse Effect qualifications contained
therein), are not reasonably likely to have a Parent
Material Adverse Effect. The Company and the Principal
Stockholder shall have received a certificate executed by
the President or any Vice President of Parent and by the
Chief Financial Officer of Parent to the effect set forth
in this paragraph (which certificate shall not be subject
to Section 7.01(a)(i)).
(c) The Principal Stockholder shall have received an
opinion, addressed to the Principal Stockholder and any
other consenting Stockholder, dated the Closing Date of
Cravath, Swaine & Moore, counsel to Parent, Sub, CPI
Acquisition Sub and CMP Acquisition Sub, substantially in
the form of Exhibit G.
(d) The Principal Stockholder shall have received, as
of the Effective Time, an opinion of its counsel, Dow,
Lohnes & Albertson, substantially in the form of
Exhibit H, to the effect that each of the Mergers will
qualify as a reorganization within the meaning of
Section 368(a) of the Code and any Distribution (as
defined in the Merger Agreements) payable as part of the
Merger Consideration on the
<PAGE>58
53
Closing Date pursuant to 4.06(a) of any Merger Agreement
shall not be subject to Federal income tax as a result of
such issuance.
(e) Each of (i) the Parent Common Stock issued in
connection with the Mergers and the Purchase and (ii) the
Parent Common Stock into which the Parent Series E
Preferred Stock and the Parent Series F Preferred Stock
issued in connection with the Company Merger is
convertible or exchangeable shall have been authorized for
listing on the NYSE upon official notice of issuance.
(f) There shall not have occurred since the date of
this Agreement, (A) a Parent Material Adverse Change, (B)
a merger, consolidation or reclassification of the capital
stock of Parent (or approval of any such event by the
Board of Directors of Parent) such that the holders of
Voting Securities of Parent immediately prior to such
merger, consolidation or reclassification, fail to hold,
immediately after such merger, consolidation or
reclassification, at least 50% of the aggregate Voting
Power represented by all outstanding Voting Securities of
Parent (or the survivor or successor corporation, in the
case of a merger or consolidation), (C) a transaction or
series of transactions as a result of which a Person shall
beneficially own Voting Securities of Parent representing
40% or more of the aggregate Voting Power represented by
all outstanding Voting Securities of Parent or (D) a
change in the board of directors of Parent such that the
Incumbent Directors cease to constitute a majority of the
entire board of directors of Parent (for this purpose, the
"Incumbent Directors" consist of (x) all persons who are
directors of Parent on the date of this Agreement and (y)
all persons whose nomination or election is approved by a
majority of the Incumbent Directors); or (E) the
commencement and continuation of a bona fide tender or
exchange offer for Voting Securities of Parent within the
meaning of Rule 14d-2(a) under the Exchange Act and by any
Person (other than (I) Parent or any subsidiary of Parent,
(II) any employee benefit plan of Parent or of any
subsidiary of Parent, (III) any Person holding Voting
Securities of Parent for or pursuant to the terms of any
such employee benefit plan, or (IV) the Principal
Stockholder or any affiliate of the Principal Stockholder)
if upon consummation thereof such Person would hold at
least 40% of the aggregate Voting Power represented by all
outstanding Voting Securities of Parent.
<PAGE>59
54
(g) There shall not be (I) any suit, action or
proceeding (an "Action") brought by any Governmental
Entity, other than a local Governmental Entity, pending or
threatened, or (II) any Action brought by any other Person
which has a reasonable likelihood of success, pending or
threatened, which, in the case of clauses (I) and (II),
(i) challenging or seeking to restrict or prohibit the
consummation of any Merger, the Purchase or any of the
other Transactions or (ii) seeking to obtain from the
Principal Stockholder or any of his subsidiaries in
connection with any Merger, the Purchase or any of the
other Transactions, damages that are material in relation
to the Principal Stockholder and his subsidiaries taken as
a whole or seeking to impose limitations (other than
routine reporting requirements) on the ability of the
Principal Stockholder to acquire or hold, or exercise the
full rights of ownership of shares of Parent Common Stock,
including any limitations on voting; provided, however,
that this condition shall be deemed to be waived by the
Principal Stockholder as to any suit, action or pro-
ceeding if Parent provides to the Principal Stockholder
indemnification in form and substance satisfactory to the
Principal Stockholder and its counsel in their sole
discretion with respect to any such suit, action or
proceeding.
(h) The Registration Statement referred to in
Section 5.23 shall have been declared effective by the SEC
and shall not be the subject of a stop order or
proceedings seeking a stop order; provided, however, that
in the case of the Designated Shelf Registration, this
condition shall be deemed to be satisfied if the SEC staff
shall have advised Parent that it has no further comments
on the Registration Statement and will declare it
effective immediately upon receipt of (i) confirmation
that the Mergers and the Purchase have been consumated and
(ii) a request for acceleration.
SECTION 6.03. Conditions to Obligations of Parent and
Sub To Effect any Merger and the Purchase. The obliga-tions
of Parent and Sub to effect the Mergers and the Pur-chase
shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions, unless
waived by Parent:
(a) The Company and each Gerry Company and the
Principal Stockholder shall have performed in all material
respects its or his respective agreements contained in the
Acquisition Documents required to be performed at or prior
to the Closing and Parent shall have received a
certificate executed by the President
<PAGE>60
55
or an Executive Vice President of each Cablevision Company
and by the Chief Financial Officer of such Cablevision
Company to that effect.
(b) The representations and warranties of the Company,
the Gerry Companies, the Principal Stockholder and the
Direct Holders set forth in Sections 3.01(c) and (f)
(other than clauses (ii) and (vi)), the first three
sentences of Section 3.01(d), Section 3.02(a) and the
first two sentences of Section 3.02(b) shall be true and
correct as of the Closing Date as though made on the
Closing Date, except to the extent such representations
and warranties expressly relate to or are stated to be as
of an earlier date (in which case such representations and
warranties shall be true and correct on and as of such
earlier date (but subject to clause (iii) of the next
succeeding sentence)). All other representations and
warranties of the Company, the Gerry Companies, the
Principal Stockholder and the Direct Holders set forth in
the Acquisition Documents shall be true and correct as of
the Closing Date as though made on and as of the Closing
Date, (i) except to the extent that any action set forth
in Section 4.01 of the Disclosure Schedule shall cause a
change in such representation or warranty, (ii) except to
the extent such representations and warranties expressly
relate to or are stated to be as of an earlier date (in
which case such representations and warranties shall be
true and correct on and as of such earlier date (but
subject to clause (iii) of this sentence)), other than the
representations and warranties of the Cablevision
Companies in paragraphs (g), (o), (p), (r), (s) and (t),
which although stated to be true and correct as of the
date hereof, shall be true and correct as of the Closing
Date as if made on and as of the Closing Date (but subject
to clause (iii) of this sentence), (iii) except for
breaches of representations and warranties as to matters
that, individually or in the aggregate (and without regard
to Cablevision Material Adverse Effect qualifications
contained therein), are not reasonably likely to have a
Cablevision Material Adverse Effect and (iv) except for
changes in accuracy of any representation or warranty
resulting from (A) the failure to obtain franchise
transfer approvals to the extent such failure is permitted
under of Section 6.03(h), (B) the failure to obtain FCC
approvals or waivers to the extent such failure is
permitted under Section 6.03(i) or (C) the exercise of
purchase rights to the extent the existence and scope of
such purchase rights are described in Section 6.03(e) of
the Disclosure Schedule. Parent shall have received a
certificate executed by the
<PAGE>61
56
President or Executive Vice President of the Company, each
Gerry Company and each Direct Holder and the Chief
Financial Officer of such entity to the effect set forth
in this paragraph (which certificate shall not be subject
to Section 7.01(b)(i)).
(c) The Company, each Gerry Company and each Direct
Holder shall have delivered to Parent certified copies of
resolutions duly adopted by such entity's Board of
Directors or similar body and shareholders evidencing the
taking of all corporate action necessary to authorize the
execution, delivery and performance of the Acquisition
Documents and the consummation of the Transactions, all in
such detail as Parent and its counsel shall reasonably
request.
(d) Parent shall have received an opinion dated the
Closing Date of Dow, Lohnes and Albertson, counsel to the
Cablevision Companies and the Principal Stock-holder,
substantially in the form of Exhibit I.
(e) There shall neither be (I) any Action brought by
any Governmental Entity or other Person, pending or
threatened in writing which in any such case has a
reasonable likelihood of success, nor (II) any statute,
rule, regulation, executive order, decree, temporary
restraining order, or preliminary or permanent injunc-tion
or order of any Governmental Entity which has been issued
(collectively, "Orders"), (i) challenging or seeking to
restrain or prohibit the consummation of any Merger, the
Purchase or any of the other Transactions or seeking to
obtain from Parent or any of its subsidi-aries any damages
that are material in relation to Parent and its
subsidiaries taken as a whole, (ii) as a result of any
Merger, the Purchase or any of the other Transactions,
seeking to prohibit or limit in any material respect the
ownership or operation by any Cablevision Company, the
Principal Stockholder, Parent, Sub or any of their
respective subsidiaries of the business or assets of any
Cablevision Company or to compel any Cablevision Company,
the Principal Stock-holder, Parent, Sub or any subsidiary
thereof to dis-pose of or hold separate from Parent and
its affiliates (taken as a group) any business or assets
of any Cablevision Company, (iii) as a result of any
Merger, the Purchase or any of the other Transactions,
seeking to impose limitations (other than routine
reporting requirements) on the ability of Parent to
acquire or hold, or exercise full rights of ownership of,
any shares of Company Common Stock or Common Stock of the
Surviving Corporation, any Common Stock of CMP or CPI or
Common Stock of the CMP Surviving Corporation or the
<PAGE>62
57
CPI Surviving Corporation or any equity interests of any
Gerry Company or to impose limitations on the abil-ity of
Parent to vote on all matters properly presented to the
applicable shareholders of such entities, (iv) as a result
of any Merger, the Purchase or any of the other
Transactions, seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material
respect the business or operations of any Cablevision
Company or (v) which otherwise is reason-ably likely to
have a Cablevision Material Adverse Effect; provided,
however, that there shall be excluded from this paragraph
(e) the following: (x) in the case of clauses (i), (ii),
(iii) and (iv) above, (I) Franchises listed in
Section 3.01(p) of the Disclosure Schedule, and amendments
to or replacements of such Franchises that are obtained in
accordance with the procedures of Section 5.02 and other
Actions or Orders (whether or not related to Franchises)
expressly agreed to by the parties in accordance with
Section 5.02 (it being understood that this Sec-
tion 6.03(e) in itself shall not be deemed to require
Parent or Sub to agree to the form of any amendment or
replacement of a Franchise or to enter into any other
agreement) and (II) refusals to transfer FCC licenses to
the extent such refusals are permitted under
Section 6.03(i); and (y) in any case, (I) any Action or
Order with respect to Systems designated pursuant to
Section 5.25 as Excluded Systems Assets, (II) any Action
or Order resulting from or relating to the occurrence of
the Closing prior to the receipt of certain consents or
approvals, to the extent permitted by Section 6.03(h),
(III) any Action or Order with respect to the
St. Augustine Right of First Refusal, (IV) any Action or
Order with respect to the Systems subject to the municipal
or service agreement purchase rights described in
Section 6.03(e) of the Disclosure Schedule and (V) the
items of litigation disclosed in Section 3.01(g) of the
Disclosure Schedule to the extent (but only to the extent)
of the claims and potential estimated recoveries disclosed
thereon or, to the extent not disclosed therein, in the
complaints or amended complaints relating to such
litigation which have been served as of the date hereof
and delivered to Parent and its representatives; and
provided further, that this condition shall be deemed to
be waived by Parent as to any Action or Order if the
Principal Stockholder provides Parent indemnification in
form and substance satisfactory to Parent and its counsel
in their sole discretion with respect to any such suit,
action or proceeding. It is agreed by the parties that
the condition set forth in this Section 6.03(e) shall
<PAGE>63
58
not supersede the obligations of the parties under
Section 5.02.
(f) The number of shares of Company Common Stock
outstanding and capital stock outstanding of each Gerry
Company that is a corporation and the percentage interest
of each partner in each Gerry Company that is a
partnership shall be as of the Closing Date as set forth
in Section 6.03(f) of the Disclosure Schedule and Parent
shall have received a certificate executed by the Chief
Financial Officer of the Company or such Gerry Company, as
applicable, to such effect.
(g) Each of the Stockholders' Agreement, substantially
in the form of Exhibit J, the Escrow Agreement,
substantially in the form of Exhibit K, and the
Noncompetition Agreements, substantially in the form of
Exhibit L, shall have become effective and shall be in
full force and effect.
(h) (i) The Company and each Gerry Company shall have
delivered to Parent a certificate signed by a duly
authorized officer of such entity, setting forth each of
its Franchises (and those of its subsidiaries) and the
number of Basic Equivalent Subscribers in the Franchise
Area of each such Franchise as of the end of the calendar
month that is at least 10 days prior to the Closing Date,
(ii) the aggregate number of Basic Equivalent Subscribers
in the Franchise Areas of all the Cablevision Companies
that are Transferable Franchise Areas shall be at least
90% of the aggregate number of Basic Equivalent
Subscribers in all Franchise Areas and (iii) the aggregate
number of Basic Equivalent Subscribers in each Designated
Franchise Area that are located in Transferable Franchise
Areas shall be equal to 75% of the aggregate number of
Basic Equivalent Subscribers in such Designated Franchise
Area. For purposes of this paragraph, all Basic
Equivalent Subscribers attributable to Excluded Systems
Assets shall be excluded from the determination of the
number of Basic Equivalent Subscribers in any Franchise
Area.
(i) The FCC shall have consented, to the extent such
consent is legally required, to the transfer to the Parent
(or to a Designated Entity in accordance with Section
5.02(e)) of all FCC licenses listed in Section 6.03(i) of
the Disclosure Schedule, and all other FCC licenses
possessed by any Cablevision Company shall be such that
the business and operations currently conducted by the
Cablevision Companies under such FCC License could
continue pursuant to special
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temporary authority granted by the FCC or without FCC
approval pursuant to sharing agreements or the failure to
obtain such consent shall not, individually or in the
aggregate, be material to the operations of the System or
Systems to which they relate; and, subject to
Section 6.03(h), all other approvals of Governmental
Entities listed in Section 6.03(i) of the Disclosure
Schedule shall have been obtained.
(j) There shall not have occurred since the date of
this Agreement a Cablevision Material Adverse Change.
(k) The Company shall have exercised its right to
terminate the Letter Agreement dated as of September 22,
1992, among Cable Associates, L.P., KKR Partners II, L.P.,
the Company and the Principal Stock-holder, as amended by
letter agreement dated as of March 4, 1994, pursuant to
paragraph (d) thereof.
(l) The aggregate of Estimated Closing Indebted-ness
and Other Liabilities of the Cablevision Com-panies,
Estimated Severance and Incentive Liabilities of the
Cablevision Companies and Estimated Working Capital
Deficit or Balance of the Cablevision Companies shall not
exceed the sum of $2,116,625,000 and the aggregate amount
of dividends and other distributions made in accordance
with Section 4.01 made by the Gerry Companies after the
date of this Agreement and prior to Closing.
(m) (i) All Indebtedness of Alan Gerry to any
Cablevision Company shall have been repaid and (ii) all
Excluded Assets and associated liabilities (including
Indebtedness) shall have been transferred to a Stockholder
or a third party or retained by an Asset Gerry Company or
will be sold by a Cablevision Company in accordance with
the terms of Section 5.25.
(n) The Company shall have taken all actions necessary
to redeem its Cumulative Redeemable Preferred Stock, and
the unclaimed amount deposited in trust for the benefit of
holders of shares called for redemption and remaining
unclaimed shall not exceed $20,000.
(o) The Company (or one or more of its subsidiaries)
shall have purchased the Buford Warrants, with Working
Capital Assets of the Company.
(p) The holders of record of shares of Company Common
Stock shall be as of the Closing Date as set forth in the
certificate delivered pursuant to
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Section 5.09(b) and the Principal Stockholder and each
Person that received a transfer of shares of Company
Common Stock from the Principal Stockholder after the date
hereof shall be a party to the Stockholders' Agreement.
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification. (a) Indemnifica-tion
by Parent. Subject to the limitations specified in this
Section 7.01 and to the survival provisions of Sec-
tion 9.01, from and after the Closing, Parent shall indem-
nify, defend and hold harmless each Stockholder, Asset Gerry
Company and Direct Holder from, against and with respect to
any and all loss, damage, claim, obligation, liability,
cost, expense, interest and penalty (including reasonable
attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand) of any kind or
character (a "Loss") borne by it arising out of or in
connection with any of the following:
(i) any breach of any of the representations and
warranties of Parent or Sub contained in any Acquisi-tion
Document or in any certificate delivered pursuant hereto
or thereto;
(ii) any failure by Parent or Sub to perform or
observe, or to have performed or observed, any cove-nant,
agreement or condition to be performed or observed by it
or any Surviving Corporation pursuant to any Acquisition
Document, which failure is not waived or permitted in
writing by the Principal Stockholder, unless such failure
is due to a breach by any Cablevision Company or the
Principal Stockholder of any representation, warranty or
covenant contained in any Acquisition Document;
(iii) (A) the operation by Parent or any of its
affiliates of the Systems on and after the Closing Date
and (B) the Assumed Liabilities of the Gerry Companies
pursuant to the Purchase Agreement;
(iv) Taxes of any Cablevision Company that have been
reflected in Working Capital Liabilities, Taxes of any
Cablevision Company with respect to any taxable period or
portion thereof after the Effective Time, and Taxes of the
Stockholders arising as a result of any breach of the
representations and warranties contained
<PAGE>66
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in Section 3.03(f) or the covenants contained in Sec-
tion 5.16 (it being understood that the determination of
whether a breach of the representations and warranties
contained in Section 3.03(f) or the covenants contained in
Section 5.16(b) has occurred with respect to any Merger
shall be based on a "determination" (as defined in
Section 1313(a) of the Code) of the qualification of such
Merger as a reorganization within the meaning of
Section 368(a) of the Code);
(v) amounts owed by the Cablevision Companies under the
Debt Documents; provided, however, that nothing herein
shall limit Parent's right to indemnification for a breach
of the representations and warranties set forth in
Section 3.01(m)(ii) on the terms and conditions and
subject to the limitations of this Section 7.01; or
(vi) subject to the accuracy in all material respects
of the representations and warranties set forth in
Section 3.01(s) that are relevant to such Loss and
compliance in all material respects with Section 5.18 to
the extent relevant to such Loss, amounts owed by the
Principal Stockholder or any Gerry Company relating to,
arising from or under or in connection with, any Rate
Laws, Rate Practices and Rate Proceedings applicable to
any Cablevision Company at any time whether before or
after the Closing (exclusive, however, of (x) any Excluded
Laws and Pro-ceedings and (y) any matter covered by the
indemnity obligation of the Principal Stockholder under
Sec-tion 7.01(b)(ix)).
(b) Indemnification by the Principal Stockholder.
Subject to the limitations specified in this Section 7.01
and to the survival provisions of Section 9.01, from and
after the Closing, the Principal Stockholder shall indem-
nify, defend and hold harmless Parent from, against and with
respect to, of any and all Losses arising out of or in con-
nection with any of the following:
(i) any breach of any of the representations and
warranties of the Company, any Gerry Company, any Direct
Holder or the Principal Stockholder contained in any
Acquisition Document or in any certificate delivered
pursuant hereto or thereto (which in the case of
Sections 3.01(d) and 3.01(g) shall be determined without
regard to any Cablevision Material Adverse Effect
qualification contained therein), other than any breach of
any of the representations and warranties of
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the Company or any Gerry Company contained in
Section 3.01(j) or 3.01(v);
(ii) any failure by the Company, any Gerry Company, any
Direct Holder or the Principal Stockholder to perform or
observe, or to have performed or observed, any covenant,
agreement or condition to be performed or observed by it
or him pursuant to any Acquisition Document, which failure
is not waived or permitted in writing by Parent, unless
such failure is due to a breach by Parent or Sub of any
representation, warranty or covenant contained in any
Acquisition Document;
(iii) any breach of any of the representations and
warranties of the Company or any Gerry Company contained
in Section 3.01(j); provided, however, that the Principal
Stockholder shall not be required to indemnify Parent for
Losses to the extent that (I) such Losses arise out of or
are in connection with the breach by Parent or Sub of any
of the representations and warranties contained in
Section 3.03(f) or the covenants contained in
Section 5.16(b); or (II) such Losses arise out of or are
in connection with Taxes that could be reduced by any
Company Federal NOL or Company State NOL; and provided,
further, that the Principal Stockholder shall not be
required to indemnify Parent for Losses attributable to a
"tax liability" as defined in Section 4 of the
Indemnification Agreement dated as of December 23, 1988
(the "Indemnity Agreement"), between the Company and
Peachtree Cable Associates, Ltd., a Texas limited
partnership ("Associates") if (I) such Losses could be
recovered from Associates if Parent were to seek recovery
from Associates and exhaust all its remedies (including
all available judicial proceedings and appeals) under or
pursuant to the Indemnity Agreement; or (II) such Losses
could be reduced by any Company Federal NOL or Company
State NOL;
(iv) any liability of any Cablevision Company for the
unpaid taxes of any Person (other than such Cablevision
Company or its subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local
or foreign law) or as a transferee or successor of another
Person, by contract or otherwise;
(v) any liability or obligation of any Cablevision
Company or any of its subsidiaries for any Loss arising
out of the agreements described in Section 3.01(l)
including any indemnification obligations thereunder and
any failure of any of the parties thereto to per-form its
obligations thereunder;
<PAGE>68
63
(vi) (A) any liability to any dissenting Stock-holder
to the extent such liability per share of Company Common
Stock owned by such dissenting Stockholder immediately
prior to the Effective Time (as defined in the Company
Merger Agreement) exceeds the per share Merger
Consideration (as defined in the Company Merger
Agreement), (B) any liability to any Stockholder arising
out of any claim regarding an alleged misallocation among
any Merger Consideration and the Purchase Consideration or
otherwise relating to the conduct of the business of the
Company prior to the Effective Time (as defined in the
Company Merger Agreement) (or control thereof by the
Principal Stockholder), or (C) any liability to any
Stockholder related to, arising under or in connection
with any actions or inactions of the Principal Stockholder
or the Stockholders' Representative in connection with the
Transactions, including actions under the Escrow Agreement
and the failure of the Stockholders' Representative to
deliver any portion of any Merger Consideration or the
Purchase Consideration;
(vii) (A) if the Philadelphia Minority Interest is not
acquired by the Company or any subsidiary thereof prior to
the Closing Date, the excess of (I) the Philadelphia
Minority Interest Amount over (II) the amount included in
Working Capital Liabilities in respect of the Philadelphia
Minority Interest; provided, however, that Parent shall
consult with the Principal Stockholder prior to agreeing
to pay such amount; and (B) any liability in respect of
Johnson et al. v. Wade Communications et al., or any other
litigation related thereto;
(viii) any claim against Parent, any Surviving Cor-
poration, or any affiliate of any of them in respect of
the Excluded Assets and any related liabilities; and any
breach by any of CMP, CPI or CID of its representation set
forth in Section 3.01(v) that is not reflected in Working
Capital Liabilities or Closing Indebtedness and Other
Liabilities of CILP or any other Gerry Company;
(ix) any claim, other than a claim brought in respect
of a Federal law, statute, rule, regulation, order or
other action, against Parent, the Surviving Corporation,
the CMP Surviving Corporation, the CPI Surviving
Corporation or any Gerry Corporation or any affiliate of
any of them in respect of A La Carte Pricing, but only to
the extent of the out-of-pocket costs for rate rebates,
paid or payable (including by way of offset or future rate
reductions) in respect
<PAGE>69
64
thereof (it being understood and agreed that any claim for
indemnification in respect of A La Carte Pricing may be
made only pursuant to this Section 7.01(b)(ix) and not
under any other provision of this Section 7.01(b));
(x) any Severance and Incentive Liability to the extent
not reflected in the Adjustment Amount and any Specified
Copyright Liabilities to the extent not reflected in the
Adjustment Amount;
(xi) any Specified Environmental Liability; and
(xii) any Designated Copyright Liabilities to the
extent not reflected in the Adjustment Amount.
(c) Notice of Claim. Any party seeking to be
indemnified hereunder (the "Indemnified Party") shall,
within 30 days following discovery of the matters giving
rise to a Loss, promptly notify the party from whom indem-
nity is sought (the "Indemnity Obligor") in writing of any
claim for recovery, specifying in reasonable detail the
nature of the Loss and the amount of the liability estimated
to arise therefrom; provided, however, that failure to give
such notification shall not affect the indemnification pro-
vided hereunder except to the extent the Indemnity Obligor
shall have been actually prejudiced as a result of such
failure (except that the Indemnity Obligor shall not be
liable for any expenses incurred during the period in which
the Indemnified Party failed to give such notice). The
Indemnified Party shall provide to the Indemnity Obligor as
promptly as practicable thereafter all information and docu-
mentation reasonably requested by the Indemnity Obligor with
respect to such Loss.
(d) Defense. If the facts pertaining to a Loss arise
out of the claim of any third party, or if there is any
claim against a third party available by virtue of the
circumstances of the Loss, the Indemnity Obligor may, by
giving written notice to the Indemnified Party within
10 days following its receipt of the notice of such claim,
elect to assume the defense or the prosecution thereof,
including the employment of counsel or accountants at its
cost and expense; provided, however, that during the interim
the Indemnified Party shall use all commercially reasonable
efforts to take all action (not including settlement) rea-
sonably necessary to protect against further damage or loss
with respect to the Loss and the Indemnity Obligor shall
have a right to participate in the defense. The Indemnified
Party shall have the right to employ counsel separate from
counsel employed by the Indemnity Obligor in any such action
and to participate therein, but the fees and expenses of
<PAGE>70
65
such counsel shall be at the Indemnified Party's own
expense. Whether or not the Indemnity Obligor chooses so to
defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony and shall
attend such conferences, discovery proceedings and trials as
may be reasonably requested in connection therewith. The
Indemnity Obligor shall not be liable for any settlement of
any claim by the Indemnified Party without the prior written
consent of the Indemnity Obligor, which shall not be unrea-
sonably withheld. The Indemnified Party shall be subject to
settlements agreed to by the Indemnity Obligor and shall
cooperate in effecting such settlements so long as the
Indemnified Party is fully and completely released from any
liability in respect of the claim for which indemnification
from the Indemnity Obligor is due hereunder. The Indemnity
Obligor shall consult with the Indemnified Party with
respect to the proposed terms of any settlement, including
terms which may have a precedential effect on the Indemni-
fied Party. In the event of payment by the Indemnity
Obligor to the Indemnified Party in connection with any Loss
arising out of a third-party claim, the Indemnity Obligor
shall be subrogated to and shall stand in the place of the
Indemnified Party as to any events or circumstances in
respect of which the Indemnified Party may have any right or
claim against such third party relating to such matter. The
Indemnified Party shall cooperate with the Indemnity Obligor
in prosecuting any subrogated claim.
(e) Time for Claims. The obligations to indem-nify
and hold harmless a party hereto (i) pursuant to Sec-
tions 7.01(a)(iv), 7.01(b)(iii), 7.01(b)(iv) and 7.01(b)(x)
shall terminate 30 days after the expiration of the
applicable statute of limitations, (ii) pursuant to
Sections 7.01(a)(i) and 7.01(b)(i) shall terminate when the
applicable representation or warranty terminates pursuant to
Section 9.01, (iii) pursuant to Sections 7.01(a)(ii) and
7.01(b)(ii) shall terminate 30 days after the termination of
the related obligation hereunder (and performance in full
thereof), (iv) pursuant to Section 7.01(b)(ix) shall termin-
ate eighteen months after the Closing Date, (v) pursuant to
Section 7.01(b)(xi) shall terminate five years after the
Closing Date, (vi) pursuant to Section 7.01(b)(xii) shall
terminate three years after the Closing Date and
(vii) pursuant to Sections 7.01(a)(iii), 7.01(a)(v),
7.01(a)(vi), 7.01(b)(v), 7.01(b)(vi), 7.01(b)(vii) and
7.01(b)(viii) shall not terminate.
(f) Limitation. Notwithstanding the provisions of
Section 7.01(a) or (b), the Indemnity Obligor shall not have
any indemnification obligation under this Agreement unless
and until and to the extent that the aggregate amount
<PAGE>71
66
of the Losses of the Indemnified Party exceed $7,500,000
(the "Deductible") in the aggregate; provided that (i) any
liability of the Principal Stockholder with respect to
income taxes, with respect to Sections 7.01(b)(v),
7.01(b)(vi), 7.01(b)(vii), 7.01(b)(viii), 7.01(b)(ix),
7.01(b)(x) and 7.01(b)(xi) or as a result of a breach of
Sections 3.01(a), 3.01(c), 3.01(j)(iv), 3.01(l) and 3.02(a)
or Section 4.05(d) of any Merger Agreement or
Section 4.04(d) of the Purchase Agreement shall not be
included in the calculation of Losses for purposes of
determining whether the Deductible has been exceeded, nor
shall the indemnification obligations of the Principal
Stockholder with respect to income taxes, Sec-
tions 7.01(b)(v), 7.01(b)(vi), 7.01(b)(vii), 7.01(b)(viii),
7.01(b)(ix), 7.01(b)(x) and 7.01(b)(xi) or as a result of a
breach of Sections 3.01(a), 3.01(c), 3.01(j)(iv), 3.01(l) or
3.02(a), Section 4.05(d) of any Merger Agreement or
Section 4.04(d) of the Purchase Agreement be subject to the
Deductible and (ii) any liability of Parent with respect to
Sections 7.01(a)(iii), 7.01(a)(iv), 7.01(a)(v) and
7.01(a)(vi), or as a result of a breach of Section 3.03(f)
or the last sentence of Section 5.11, Section 4.05(c) of any
Merger Agreement or Section 4.04(d) of the Purchase
Agreement shall not be included in the calculation of Losses
for purposes of determining whether the Deductible has been
exceeded, nor shall the indemnification obligations of
Parent with respect to Sections 7.01(a)(iii), 7.01(a)(iv),
7.01(a)(v) and 7.01(a)(vi), or as a result of a breach of
Section 3.03(f), 5.03, 5.04, the last sentence of
Section 5.11 or Section 4.05(c) of any Merger Agreement or
Section 4.04(c) of the Purchase Agreement be subject to the
Deductible.
(g) Adjustments to Indemnity Payments. (i) The
amount payable by an Indemnity Obligor to an Indemnified
Party under Section 7.01(a) or Section 7.01(b) shall be
increased by the amount of any tax payable by the Indemni-
fied Party on or by virtue of the receipt of such amount and
such increase, so that the net after-tax amount realized by
the Indemnified Party is equal to the amount of its Loss
sustained, taking into account clause (ii) of this Section.
(ii) The amount payable by the Indemnity Obligor to an
Indemnified Party with respect to a Loss shall be reduced by
the amount of any insurance proceeds received by the
Indemnified Party with respect to the Loss, and each of the
parties hereby agrees to use commercially reasonable efforts
to collect any and all insurance proceeds to which it may be
entitled in respect of any Loss. Such amount payable shall
be further reduced by the amount of any Tax benefit actually
realized (including by refund or by reduction of or offset
against Taxes otherwise payable had
<PAGE>72
67
the Loss not been sustained) by the Indemnified Party (or
the affiliated or combined group of which it is a member) by
reason of the payment or incurrence by the Indemnified Party
of the Loss for which indemnity is sought or the occurrence
of the event giving rise to such Loss. To the extent that
insurance proceeds are received, or a Tax benefit is
realized, after payment has been made by the Indemnity
Obligor to the Indemnified Party with respect to a Loss, the
Indemnified Party shall promptly pay an amount equal to such
proceeds or benefit to the Indemnity Obligor.
(iii) Any amount payable by Parent as an Indemnity
Obligor shall be paid (A) in the case of indemnification
obligations in respect of the Company, CMP or CPI by
delivering Parent Common Stock (which shall be duly and
validly issued, fully paid and nonassessable) of equal value
calculated on the basis of the Current Market Price as of
the date such payment is made and (B) in the case of indem-
nification obligations arising in respect of any Purchase
Gerry Company, in cash. Any amount payable by the Principal
Stockholder as an Indemnity Obligor shall be paid in cash;
provided, however, that if the Current Market Price of the
Parent Common Stock is greater than the amount in dollars
equal to the Common Valuation Number, any such amount may be
paid, at the Principal Stockholder's option, in cash or in
Parent Common Stock valued at such amount.
(h) Closing Without All Consents. Notwithstand-ing
anything in this Article VII to the contrary, the Prin-cipal
Stockholder shall not have any liability or obligation for
indemnity arising solely as a result of (i) the occurrence
of the Closing without certain consents as contemplated by
Section 6.03(h) or (ii) Parent's waiver of any condition set
forth in Article VI regarding obtaining the consent of any
Person, including any Governmental Entity, nor shall any
adjustment to any Merger Consideration or the Purchase
Consideration be made as a result of either of the events
described in clauses (i) and (ii).
(i) Indemnity as Sole Remedy. After the Closing Date,
indemnification pursuant to this Article VII shall be the
sole and exclusive remedy of any party to this Agreement for
any breach of a representation, warranty or covenant made or
obligation undertaken by any other party, or for any Loss
arising out of or relating to the items listed in para-
graphs (a) and (b) of Section 7.01 or otherwise related to
the Transactions, other than in respect of the Office Lease,
the Registration Rights Agreement, the Stockholders'
Agreement, the Noncompetition Agreements or the Parent
Series E Certificate or the Parent Series F Certificate,
which shall be governed by their terms, whether such claim
may be asserted as a breach of contract, tort or otherwise.
<PAGE>73
68
Notwithstanding the provisions of Article VI regarding the
time as of which certain representations and warranties are
made (or deemed to be made) for purposes of the conditions
to closing set forth in such Article, for purposes of this
Article VII, all representations and warranties set forth in
Article III shall be deemed to be made on and as of the
Closing Date, except to the extent such representations and
warranties expressly relate to or are stated to be as of an
earlier date, in which case such representations and
warranties that expressly relate to or are stated to be as
of an earlier date shall, for purposes of this Article VII,
be deemed to be made on and as of such earlier date.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. The Acquisition Documents
may be terminated at any time prior to the Closing:
(a) by mutual written consent of Parent and the
Principal Stockholder;
(b) by either Parent or the Principal Stockholder if
any Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for
payment of, or payment for, shares of Company Common Stock
pursuant to the Merger shares of common stock of CMP
pursuant to the CMP Merger, shares of common stock of CPI
pursuant to the CPI Merger or shares of capital stock or
partnership interests of any Gerry Company pursuant to the
Purchase, and such order, decree or ruling or other action
shall have become final and nonappealable;
(c) by either Parent or the Principal Stockholder if
the Closing has not occurred by February 29, 1996, unless
the failure of the Closing to occur is the result of a
breach by the Person seeking to terminate the Acquisition
Documents;
(d) by Parent if the conditions precedent to the
obligations of Parent and Sub set forth in Sec-tions 6.01
and 6.03 shall not have been satisfied or waived by Parent
by the date scheduled for Closing under Article II, unless
satisfaction has been frus-trated or made impossible by an
act or failure to act of Parent or Sub in breach or
violation of its covenants, agreements or obligations
hereunder; or
<PAGE>74
69
(e) by the Principal Stockholder if the conditions
precedent to the obligations of the Company, the Gerry
Companies, the Direct Holders and the Principal Stock-
holder set forth in Sections 6.01 and 6.02 shall not have
been satisfied or waived by the Principal Stock-holder by
the date scheduled for Closing under Article II, unless
satisfaction has been frustrated or made impossible by an
act or failure to act of the Principal Stockholder or any
of the Company, the Gerry Companies or the Direct Holders
in breach or violation of its covenants, agreements or
obligations hereunder.
Notwithstanding anything in this Section 8.01 to the con-
trary, (i) the date on which the Acquisition Documents may
be terminated pursuant to paragraph (e) shall be extended
for 60 days in the event the Closing has not occurred as a
result of the failure of the condition specified in
Section 6.02(f)(E), (ii) any date on which the Acquisition
Documents may be terminated pursuant to paragraph (b), (c)
or (d) of this Section 8.01 shall be extended for 60 days in
the event that the Closing has not occurred solely as a
result of the inability of the Company or any Gerry Company
to make (notwithstanding the Cablevision Material Adverse
Effect qualifications contained in Section 6.03(b)) any
representation or warranty set forth in Section 3.01(f)(v)
or Section 3.01(g) as of the Closing Date, if such inability
is curable within such 60 day period and (iii) if on
February 29, 1996 (or any extension thereof), the Closing
has not occurred solely because any required notice period
for Closing has not lapsed, such date shall be extended
until the lapse of such period.
SECTION 8.02. Effect of Termination. In the event of
termination of the Acquisition Documents by either Parent or
the Principal Stockholder as provided in Sec-tion 8.01, the
obligations of the parties hereto shall ter-minate without
any liability or obligation on the part of Parent, Sub, any
Cablevision Company or the Principal Stock-holder, except
that (i) the provisions of Section 3.01(l), 3.03(g), the
second sentence of Section 5.01, Section 5.07 and this
Section 8.02 and Article IX shall survive, and (ii) to the
extent that such termination results from the wilful and
material breach by a party of any of its repre-sentations,
warranties, covenants or agreements set forth in any
Acquisition Document, the non-defaulting parties' rights to
pursue all legal or equitable remedies for breach of con-
tract or otherwise, including the right to specific perfor-
mance or damages or both, shall survive and the non-
prevailing party in any lawsuit related to any such pursuit
shall pay the attorney's fees of the prevailing party.
Without limiting the generality of the foregoing, neither
Parent or Sub, on the one hand, nor the Cablevision Com-
<PAGE>75
70
panies or the Principal Stockholder, on the other hand, may
rely on the failure of any condition precedent set forth in
Article VI to be satisfied if such failure was caused by
such party's (or parties') failure to act in good faith, or
a breach of or failure to perform its representations, war-
ranties, covenants or other obligations in accordance with
the terms of the Acquisition Documents. Notwithstanding
anything to the contrary contained herein, if the Mergers
and Purchase are not consummated, the Principal Stockholder
shall have no obligation or liability hereunder for any
breach or default by any Cablevision Company.
SECTION 8.03. Amendment. Any Acquisition Docu-ment
may be amended by the parties at any time by an instru-ment
in writing signed on behalf of each of the parties.
SECTION 8.04. Extension; Waiver. At any time prior to
the Closing, any party or parties may (a) extend the time
for the performance of any of the obligations or other acts
of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in or in any
document delivered pursuant to an Acquisition Document made
for the benefit of such party or parties or (c) waive
compliance with any of the agreements or conditions
contained in any Acquisition Document made for the benefit
of such party or parties. Any agreement on the part of a
party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of
such party. The failure of any party to an Acquisition
Document to assert any of its rights under such Acquisition
Document or otherwise shall not constitute a waiver of those
rights.
ARTICLE IX
General Provisions
SECTION 9.01. Survival of Representations and
Warranties. The representations and warranties in the
Acquisition Documents or in any instrument delivered pur-
suant to any of the Acquisition Documents shall survive the
Closing solely for the purposes of Article VII and shall
terminate on the date that is 18 months after the Closing
Date, except for (w) the representations and warranties set
forth in Section 3.01(j) relating to Federal or state income
taxes, which shall survive the Closing until 30 days after
the expiration of the applicable statute of limitations,
(x) the representations and warranties set forth in
Sections 3.01(a)(i), 3.01(c) and 3.02(a) to the extent that
such Sections relate to title to capital stock or partner-
ship interests only, which shall not terminate and (y) the
<PAGE>76
71
representations and warranties set forth in Sec-
tion 3.01(o)(iii), which shall survive the Closing for a
period of five years and (z) the representations and war-
ranties set forth in Section 3.03(a) and Section 3.03(b) (to
the extent that it relates to the Parent Stock comprising
any Merger Consideration) and Section 3.03(f), which shall
not terminate. This Section 9.01 shall not limit any
covenant or agreement of the parties which by its terms
contemplates performance after the Closing.
SECTION 9.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be deemed
given (i) on the first Business Day following the date
received, if delivered personally, (ii) on the Business Day
following timely deposit with an overnight courier service,
if sent by overnight courier specifying next day delivery
and (iii) on the first Business Day that is at least five
days following deposit in the mails, if sent by first class
mail, to the party at the following addresses (or at such
other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281
Attention: Peter R. Haje, Esq.
with a copy (which shall not constitute notice)
to:
Time Warner Cable
300 First Stamford Place
Stamford, CT 06902
Facsimile: (203) 328-4840
Attention: Henry Gerken, Esq.
with a copy (which shall not constitute notice)
to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: William P. Rogers, Jr., Esq.
<PAGE>77
72
(b) if to the Company or any Gerry Company or the
Principal Stockholder, to
Cablevision Industries Corporation
One Cablevision Center
Liberty, NY 12754
Facsimile: (914) 292-2411
Attention: Messrs. Alan Gerry and
Rodney Cornelius
with a copy (which shall not constitute notice)
to:
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Suite 500
Washington, D.C. 20016
Facsimile: (202) 857-2900
Attention: Leonard J. Baxt, Esq.
Any such communication shall be deemed received (i) five
days after such communication has been mailed, (ii) the
second day after such communication has been sent by
overnight courier or (iii) the next day after such
communication has been sent by telecopy.
SECTION 9.03. Counterparts. Any Acquisition Document
may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall
become effective when one or more counterparts have been
signed by each of the parties and delivered to the other
parties.
SECTION 9.04. Entire Agreement; No Third-Party
Beneficiaries. The Acquisition Documents and the Confiden-
tiality Agreement constitute the entire agreement, and
supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of the Acquisition Documents and are not
intended to confer upon any Person other than the parties
any rights or remedies hereunder, other than in the case of
(a) Sections 5.03, 5.04, 5.05 and 5.24, in respect of which
the officers, directors and employees of the Cablevision
Companies referred to in any such Section are the intended
beneficiaries in respect of such Section and (b) Section
7.01(a), in respect of which all the Stockholders are the
intended beneficiaries in respect of such Section.
SECTION 9.05. Governing Law. The Acquisition
Documents shall be governed by, and construed in accordance
<PAGE>78
73
with, the laws of the State of New York, regardless of the
laws that might otherwise govern under applicable principles
of conflict of laws thereof, except to the extent that the
laws of the State of Delaware are mandatorily applicable to
the Mergers.
SECTION 9.06. Assignment. No Acquisition Docu-ments
nor any of the rights, interests or obligations under any
Acquisition Document shall be assigned, in whole or in part,
by operation of law or otherwise by any of the parties
without the prior written consent of the other parties,
except that without the consent of the other parties,
(i) Parent or Sub may assign all of its rights and obliga-
tions (other than pursuant to any Merger Agreement and
Article VII of this Agreement) hereunder to any wholly owned
subsidiary of Parent, to TWE or to TWE-Advance/Newhouse and
(ii) the Principal Stockholder may assign his rights here-
under to Permitted Assignees and, upon the death or
permanent disability of Principal Stockholder, his estate
(and his heirs, devisees, legatees or assigns), his guardian
or guardians or his conservator or conservators, as the case
may be, shall be entitled to all rights, and responsible for
all obligations of and liabilities, of the Principal
Stockholder hereunder; provided, however, that with respect
to clause (i), Parent shall remain liable for any such
assigned obligations. Subject to the preceding sentence,
the Acquisition Documents will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 9.07. Enforcement; Waiver of Jury Trial. The
parties agree that irreparable damage would occur in the
event that any of the provisions of the Acquisition Docu-
ments were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the Acquisition Documents
and to enforce specifically the terms and provisions of the
Acquisition Documents in any court of the United States
located in the State of New York or in New York state court,
this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the par-
ties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of
New York or any New York state court in the event any dis-
pute arises out of any Acquisition Document or any of the
Transactions, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by notion or other request
for leave from any such court and (c) agrees that it will
not bring any action relating to any Acquisition Document or
any of the Transactions in any court other than a Federal or
state court sitting in the State of New York.
<PAGE>79
74
SECTION 9.08. Descriptive Headings. The descriptive
headings used herein are inserted for convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of any Acquisition
Document.
SECTION 9.09. Construction. The figures included in
this Agreement setting the Deductible were negotiated by the
parties hereto specifically for the purpose of defining the
rights and obligations of the parties with respect to such
matters and are not intended to constitute and shall not
constitute, a standard for defining any term in any
Acquisition Document, including "in all material respects,"
"Cablevision Material Adverse Change," "Cablevision Material
Adverse Effect", "Parent Material Adverse Change" or "Parent
Material Adverse Effect".
SECTION 9.10. Cooperation. (a) After the Closing,
upon reasonable written notice, the Principal Stockholder
and Parent shall furnish or cause to be furnished to each
other and to their employees, counsel, auditors and
representatives access, during normal business hours, to
such information and assistance relating to the Company, the
Equity Gerry Companies and their respective subsidiaries,
and to any assets acquired pursuant to the Purchase
Agreement, as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing
of any tax returns, reports or forms or the defense of any
tax claim or assessment. Each party shall reimburse the
other for reasonable out-of-pocket costs and expenses
incurred in assisting the other pursuant to this Sec-
tion 9.10. Neither Parent nor any of its subsidiaries shall
be required by this Section 9.10 to take any action that
would unreasonably interfere with the conduct of its
business or unreasonably disrupt its normal operations.
(b) For a period of two years after the Closing, to
the extent such actions would be commercially reasonable,
the parties hereto shall execute all further documents,
financing statements and instruments and take all further
actions that may be required to consummate any of the Trans-
actions that were not consummated as of the Closing Date.
Without limiting the generality of the foregoing, (i) the
Principal Stockholder and each Asset Gerry Company shall
take any actions contemplated by this Agreement (including
Section 5.02) to be taken by the Principal Stockholder or
such Asset Gerry Company to cause any Franchise Area that is
not a Transferable Franchise Area as of the Closing Date to
become a Transferable Franchise Area and (ii) Parent and its
subsidiaries shall execute any instruments, financing state-
ments and agreements that are necessary to release the Prin-
cipal Stockholder from his liability under the Debt Docu-
<PAGE>80
75
ments, provided that such instruments, statements and agree-
ments do not impose additional obligations or liabilities on
Parent or any of its subsidiaries; provided, however, that
in the case of clause (i) of this paragraph (b), Parent
shall pay all fees and expenses, including reasonable
attorney's fees, of the Principal Stockholder and any Asset
Gerry Company resulting from or in connection with compli-
ance with this paragraph (b).
(c) In the event that the Mergers and the Purchase are
consummated without the requisite approval of all
franchising authorities, the Principal Stockholder, the
Company, each Asset Gerry Company and Parent agree to use
commercially reasonable efforts to enter into such
agreements, including any trust or management agreement, as
the parties mutually determine are appropriate to enable
Parent to conduct its operations, subject to applicable
laws, as if all the Transactions had been consummated;
provided, however, that Parent shall pay any fees and
expenses, including reasonable attorney's fees, of the
Principal Stockholder and any Asset Gerry Company as a
result of compliance with this paragraph (c).
(d) To the extent that the Principal Stockholder or
any Asset Gerry Company suffers a loss after the Closing
Date as a result of a claim in respect of the Excluded
Assets which relates to actions prior to the Closing Date
and for which the Principal Stockholder or such Asset Gerry
Company has a claim under insurance policies of the
Surviving Corporations, any Equity Gerry Company or
insurance policies that were acquired pursuant to the
Purchase Agreement, Parent shall use reasonable efforts to
cooperate with the Principal Stockholder in collecting any
amounts owing under such insurance policies.
SECTION 9.11. Stock Legends. (a) If the initial
issuance of any of the Parent Preferred Stock and Parent
Common Stock to be issued pursuant to the Merger Agreements
and the Purchase Agreement and the conversion and exchange
provisions of the Parent Preferred Stock shall not have been
registered under the Securities Act, all certificates
representing such Parent Preferred Stock and Parent Common
Stock, and all certificates issued upon subsequent exchanges
and transfers of such Parent Preferred Stock and Parent
Common Stock shall, subject to paragraph (b) of this
Section 9.11, bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED,
<PAGE>81
76
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF
COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT.
(b) Parent shall deliver new certificates for the
shares of Parent Preferred Stock and Parent Common Stock,
without the legend specified in paragraph (a) of this
Section 9.11, (i) in connection with any underwritten public
offering pursuant to Section 3.02(i) of the Stockholders'
Agreement, (ii) in connection with any other sale that is
registered under the Securities Act (including a Designated
Shelf Registration under the Registration Rights Agreement),
(iii) upon any sale meeting the requirements of Rule 144
under the Securities Act and (iv) after the securities
become eligible for resale pursuant to Rule 144(k) under the
Securities Act, in exchange for (x) in each case, surrender
of existing certificates representing such shares and (y) in
the case of clauses (iii) and (iv), evidence reasonably
satisfactory to Parent that the applicable requirements of
Rule 144 under the Securities Act have been satisfied.
<PAGE>82
77
IN WITNESS WHEREOF, the Company, the Gerry Companies,
the Direct Holders, the Principal Stockholder, Parent and
Sub have caused this Agreement to be signed by their
respective duly authorized officers (or, in the case of the
Principal Stockholder, has signed this Agreement), all as of
the date first written above.
CABLEVISION INDUSTRIES CORPORATION,
by /s/
------------------------------
Name:
Title:
CABLEVISION MANAGEMENT CORPORATION
OF PHILADELPHIA (a Merger Gerry
Company),
by /s/
------------------------------
Name:
Title:
CABLEVISION PROPERTIES, INC. (a
Merger Gerry Company),
by /s/
------------------------------
Name:
Title:
CABLEVISION INDUSTRIES LIMITED
PARTNERSHIP (a Purchase Gerry Company),
by CABLEVISION INDUSTRIES OF
DELAWARE, INC., as General
Partner,
by /s/
------------------------------
Name:
Title:
<PAGE>83
78
and by CABLEVISION PROPERTIES, INC.,
as General Partner,
by /s/
------------------------------
Name:
Title:
CABLEVISION INDUSTRIES OF
TENNESSEE L.P. (a Purchase Gerry
Company),
by CABLEVISION INDUSTRIES OF
TENNESSEE, INC., as General
Partner,
by /s/
------------------------------
Name:
Title:
and by
/s/ Alan Gerry
------------------------------
Alan Gerry, as
General Partner
CABLEVISION INDUSTRIES OF SARATOGA
ASSOCIATES (a Purchase Gerry Company),
by ARA CABLEVISION, INC.,
as General Partner,
by /s/
------------------------------
Name:
Title:
and by
/s/
------------------------------
Alan Gerry, as
General Partner
<PAGE>84
79
and by CABLEVISION OF
FAIRHAVEN/ACUSHNET, as General
Partner,
by CABLEVISION INDUSTRIES OF
MIDDLE FLORIDA, INC., as
General Partner,
by /s/
-----------------------------
Name:
Title:
and by
/s/
----------------------------
Alan Gerry, as
General Partner
CABLEVISION OF FAIRHAVEN/ACUSHNET (a
Purchase Gerry Company),
by CABLEVISION INDUSTRIES OF
MIDDLE FLORIDA, INC., as General
Partner,
by /s/
------------------------------
Name:
Title:
and by
/s/
------------------------------
Alan Gerry, as
General Partner
CABLEVISION INDUSTRIES OF MIDDLE
FLORIDA, INC. (a Purchase Gerry
Company),
by /s/
------------------------------
Name:
Title:
<PAGE>85
80
CABLEVISION INDUSTRIES OF FLORIDA, INC.
(a Purchase Gerry Company),
by /s/
------------------------------
Name:
Title:
CABLEVISION INDUSTRIES OF DELAWARE,
INC. (a Direct Holder),
by /s/
------------------------------
Name:
Title:
ARA CABLEVISION, INC. (a Direct Holder),
by /s/
------------------------------
Name:
Title:
/s/ Alan Gerry
----------------------------------
Alan Gerry, as the
Principal Stockholder
TIME WARNER INC.,
by /s/
--------------------------
Name:
Title:
<PAGE>86
81
TWI CVI ACQUISITION CORP.,
by /s/
--------------------------
Name:
Title:
<PAGE>87
ANNEX A
Definitions and Interpretation
Definitions. The following terms shall have the
meanings set forth below:
"Action" has the meaning given such term in
Section 6.02(g) of the Supplemental Agreement.
"Acquisition Documents" means the Supplemental
Agreement, the Merger Agreements, the Escrow Agreement and
the Purchase Agreement, including in each case all
exhibits and schedules (including the Disclosure Schedule)
but shall in no event be deemed to include the agreements
or documents referred to in the Disclosure Schedule.
"Adjustment Amount" for purposes of each Merger
Agreement, has the meaning given such term in
Section 4.02(c) of the Merger Agreement, and for purposes
of the Purchase Agreement, has the meaning given such term
in Section 4.01(a) of the Purchase Agreement.
"Adjustment Date" for purposes of each Merger Agreement
has the meaning given such term in Section 4.03 of such
Merger Agreement.
"affiliate" of any Person means another Person that
directly or indirectly, through one or more inter-
mediaries, controls, is controlled by, or is under common
control with, such first Person.
"A La Carte Pricing" has the meaning given such term in
the definition of "Rate Laws".
"Allocable Capital Expenditure Deficiency" of the
Company or any Gerry Company means such Person's allocable
portion of any Net Capital Expenditure Deficiency (such
allocable portion being determined on the basis of the
portion of the aggregate of all Capital Expenditure
Deficiencies of the Company and all Gerry Companies
represented by the Capital Expenditure Deficiency of such
Person).
"Allocable Capital Expenditure Excess" of the Company
or any Gerry Company means such Person's allocable portion
of any Net Capital Expenditure Excess
<PAGE>88
(such allocable portion being determined on the basis of
the portion of the aggregate of all Capital Expenditure
Excesses of the Company and all Gerry Companies
represented by the Capital Expenditure Excess).
"Antitrust Division" means the Antitrust Division of
the Department of Justice.
"Asset Gerry Company" has the meaning given such term
in Section 2.01 of the Purchase Agreement.
"Assumed Liabilities" has the meaning given such term
in Section 2.04 of the Purchase Agreement.
"Basic Equivalent Subscribers" means, with respect to
any System or Systems as of any date, the sum of the
Individual Subscribers and Subscriber Equivalents of such
System or Systems as of such date.
"Basic Services" means Basic Cable Service and Cable
Programming Service. "Basic Cable Service" means the
level of cable television service defined in 47 C.F.R.
Section 76.901(a) that includes signals of domestic
television broadcast stations (except for satellite
delivered "superstations") and public, educational and
governmental access channels required by municipal
franchise. "Cable Programming Service" means the level of
cable television service defined in 47 C.F.R.
Section 76.901(b) that includes video programming other
than Basic Cable Service or premium service provided by a
System for separate charge per channel or per program.
"Basic Subscriber Rate" means, with respect to any
System as of any date, the average monthly fees and
charges charged by such System as of such date for the
provision of Basic Services to a single family house-hold.
"Benefit Plans" has the meaning given such term in
Section 3.01(h) of the Supplemental Agreement.
"Buford Warrants" means the warrants purchased by
Buford Television, Inc. ("Buford") pursuant to Section 1
of the Purchase Agreement dated as of August 16, 1989,
among West Valley Cablevision Industries, Inc., the
Company and Buford.
<PAGE>89
"Cablevision Companies" means the Company, the Gerry
Companies and their respective subsidiaries.
"Cablevision Material Adverse Change" or "Cablevision
Material Adverse Effect" means any change or effect (or
any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect)
that is materially adverse to the business, properties,
condition (financial or other) or results of operations of
the Cablevision Companies and their respective
subsidiaries, taken as a whole, or the Surviving
Corporation, the CMP Surviving Corporation, the CPI
Surviving Corporation, the Gerry Companies and their
respective subsidiaries, taken as a whole, which shall be
deemed to include any effect (or development) that results
in the aggregate number of Basic Equivalent Subscribers in
respect of the Systems as of the Closing Date (less any
Subscriber Adjustments) to be less than 1,139,724 (less
any Subscriber Adjustments); provided, however, that an
effect (or development, including any such reduction in
Basic Equivalent Subscribers) shall not be deemed to be a
Cablevision Material Adverse Effect if such effect (or
development) is primarily the result of (A) a change in
economic conditions in the United States of America
generally or (B) a change in conditions (including Rate
Laws, Rate Proceedings, other Federal, state or local
governmental actions, legislation or regulations or
competitive activities) applicable to the cable industry
generally on a national, state, regional or local basis
(unless, in any such case, such governmental action,
legislation or regulation (other than a Rate Law or Rate
Proceeding) or such competitive activity is directed
primarily at a Cablevision Company (even if such action is
on its face applicable to the cable industry generally)
and is attributable primarily to the actions or inactions,
which actions or inactions are not (or were not)
consistent with what a prudent long-term cable operator
would do (or would have done) or fail to do (or would have
failed to do) in the circumstances existing at the time of
such actions or inactions, of one or more Cablevision
Companies or the Principal Stockholder).
"Capital Budget" has the meaning given such term in
Section 3.01(e)(iii) of the Supplemental Agreement.
<PAGE>90
"Capital Expenditure Deficiency" of the Company or any
Gerry Company means the excess as of the Closing Date, if
any, of such Person's Cumulative Projected Capital
Expenditure Amount as of such date over such Cablevision
Company's Cumulative Capital Expenditure Amount as of such
date.
"Capital Expenditure Excess" of the Company or any
Gerry Company means the excess as of the Closing Date, if
any, of (i) the lesser of (A) such Person's Cumulative
Capital Expenditure Amount and (B) 110% of such
Cablevision Company's Cumulative Projected Capital
Expenditure Amount in each case as of such date over
(ii) such Cablevision Company's Cumulative Projected
Capital Expenditure Amount as of such date.
"Certificate of Merger" has the meaning given such term
in Section 2.02 of each Merger Agreement.
"Certificates" for purposes of each Merger Agreement
has the meaning given such term in Section 4.04(a) of such
Merger Agreement.
"CID" means Cablevision Industries of Delaware, Inc., a
Delaware corporation.
"CILP" means Cablevision Industries Limited
Partnership, a Delaware limited partnership.
"Closing" has the meaning given such term in Article II
of the Supplemental Agreement.
"Closing Date" has the meaning given such term in
Article II of the Supplemental Agreement.
"Closing Indebtedness and Other Liabilities" of the
Company or any Gerry Company, as the case may be, as of
the Closing Date means (i) all Indebtedness as of such
date of the Company or such Gerry Company, as the case may
be, and its respective subsidiaries, on a consolidated
basis, and (ii) in the case of the Company, if the
Philadelphia Minority Interest has been purchased prior to
the Closing Date, any portion of the Philadelphia Minority
Interest Amount that was paid from other than Working
Capital Assets; provided, however, that Indebtedness
transferred with any of the Excluded Assets shall not be
deemed to be Closing
<PAGE>91
Indebtedness and Other Liabilities of the Company or any
Gerry Company.
"CMP" means Cablevision Management Corporation of
Philadelphia, a Delaware corporation.
"CMP Acquisition Sub" means a wholly owned subsidiary
of Parent to be formed prior to the Effective Time.
"CMP Merger" has the meaning given such term in the
Introduction to the CMP Merger Agreement.
"CMP Merger Agreement" means the Agreement and Plan of
Merger dated as of February 6, 1995, among CMP, the
Principal Stockholder and Parent.
"CMP Surviving Corporation" has the meaning given such
term in Section 2.01 of the CMP Merger Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Valuation Number" has the meaning agreed to
from time to time by Parent and the Principal Stockholder.
"Communications Act" means the Communications Act of
1934, as amended, including the Cable Communications
Policy Act of 1984 and the Cable Television Consumer
Protection and Competition Act of 1992.
"Company" shall mean Cablevision Industries
Corporation.
"Company Common Share Number" for the purposes of each
Merger Agreement has the meaning given such term in
Section 4.01(c) of such Merger Agreement.
"Company Common Stock" has the meaning given such term
in the Introduction to the Merger Agreement.
"Company Federal NOL" and "Company State NOL" have the
respective meanings given such terms in Section 3.01(j) of
the Supplemental Agreement.
"Company Merger" has the meaning given such term in the
Introduction to the Company Merger Agreement.
<PAGE>92
"Company Merger Agreement" means the Agreement and Plan
of Merger dated as of February 6, 1995, among the Company,
the Principal Stockholder, Parent and Sub.
"Corporate/Regional Employees" means, in respect of any
Cablevision Company, those corporate employees of such
Cablevision Company who are (i) located at the Company's
headquarters in Liberty, New York, or (ii) assigned to a
regional division at one of the regional headquarters in
Liberty, New York, DeLand, Florida, or Cary, North
Carolina.
"CPI" means Cablevision Properties, Inc., a Delaware
corporation.
"CPI Acquisition Sub" means a wholly owned subsidiary
of Parent to be formed prior to the Effective Time.
"CPI Merger" has the meaning given such term in the
Introduction to the CPI Merger Agreement.
"CPI Merger Agreement" means the Agreement and Plan of
Merger dated as of February 6, 1995, among CPI, the
Principal Stockholder and Parent.
"CPI Surviving Corporation" has the meaning given such
term in Section 2.01 of the CPI Merger Agreement.
"Cumulative Capital Expenditure Amount" of any
Cablevision Company as of any date (the "Calculation
Date") means the aggregate amount of all capital expen-
ditures made by such Cablevision Company and its sub-
sidiaries after the date of the Supplemental Agreement and
on or prior to the Calculation Date (the "Measurement
Period"). For purposes of determining the amount of
capital expenditures made during the portion of a month
that is only partially included in the Measurement Period,
the aggregate amount of Capital Expenditures made during
such month shall be allocated pro rata between the
included and excluded portions of such month.
"Cumulative Projected Capital Expenditure Amount" of
any Cablevision Company with respect to any date (the
"Calculation Date") means the amount set forth opposite
such Cablevision Company's name in Section 3.01(e)(iii) of
the Disclosure Schedule
<PAGE>93
multiplied by the sum of the monthly allocations as set
forth in such Section from the date of the Supplemental
Agreement to the Calculation Date.
"Current Market Price" means, with respect to Parent
Common Stock as of any date, the average of the closing
prices of such stock on the NYSE (as reported by The Wall
Street Journal or, if not reported thereby, any other
authoritative source) for all trading days beginning on
the thirteenth trading day before such date and ending on
and including the fifth trading day before such date.
"Debt Documents" shall mean (i) the Indenture dated as
of March 17, 1993, between the Company and The First
National Bank of Boston, as Trustee, (ii) the Indenture
dated as of January 30, 1992, between the Company and
Bankers Trust Company, as Trustee, (iii) the Note
Agreement dated as of May 1, 1991, between Cablevision
Industries, Inc. ("CII") and vari-ous insurance companies,
(iv) the Line of Credit Loan Agreement dated as of
December 23, 1992, between the Company and Fleet National
Bank, (v) the Note Agreement dated as of July 11, 1989,
between CII and various insurance companies, (vi) the
Credit Agreement dated as of May 23, 1994, between CII and
the Banks named therein as lenders, the Bank of Montreal
as Administrative Agent and certain other banks in various
agency capacities, (vii) the Credit Agreement dated as of
November 20, 1992, among Massachusetts Cablevision Systems
Limited Partnership, Massachusetts Cablevision Industries,
Inc., Florida Cablevision Management Corp., Cablevision
Industries of Central Florida, Inc., the several lenders
from time to time party thereto, Royal Bank of Canada as
Administrative Agent and certain other banks in various
agency and management capaci-ties, (viii) the Credit
Agreement dated as of December 17, 1991, among Wade
Communications Partnership, The Chase Manhattan Bank
(National Association) ("Chase") as Agent and CIBC, Inc.
as Co-Agent, (ix) the Credit Agreement dated as of
December 19, 1990, among West Valley Cablevision
Industries, Inc., Chase as Agent and Citibank, N.A. and
Credit Lyonnais New York Branch, as Co-Agents, (x) the
Credit Agreement dated as of November 1, 1993, among
Cablevision Industries of the Southeast Inc. ("CIOS"), and
certain affiliated companies, the banks named therein as
lenders, Nationsbank of Texas, N.A., as
<PAGE>94
Administrative Agent and certain other banks in various
agency capacities, (xi) the promissory note payable to
William A. Wentworth by CIOS and certain affiliated
companies, (xii) the Credit Agreement dated as of
February 14, 1990, among CILP, Cablevision Industries of
Tennessee, L.P. ("CITLP"), Cablevision of
Fairhaven/Acushnet ("CFA"), Cablevision Industries of
Florida, Inc. ("CIFI"), Cablevision Industries of Middle
Florida, Inc. ("CIMFI"), and Cablevision Industries of
Saratoga Associates ("CISA"), First Union National Bank of
North Carolina, as Agent, and certain banks and (xiii) the
Senior Subordinated Credit Agreement dated as of
February 14, 1990, among CILP, CITLP, CFA, CIFI, CIMFI,
CISA and National Westminster Bank USA and CIBC, Inc., as
Co-Agent, (xiv) amendments, modifications, supplements,
refinancings or replacements of the foregoing (but only to
the extent permitted under Section 4.01 of the
Supplemental Agreement) and (xv) all security agreements,
pledge agreements, assumption agreements, guarantees and
other agreements executed in connection with the
agreements listed in clauses (i) through (xiv), other than
any interest rate swap agreement.
"Designated Copyright Liabilities" means any
liabilities arising out of the matters set forth in
Section 3.01(t)(ii) of the Disclosure Schedule, other than
any Specified Copyright Liabilities.
"Designated Entity" has the meaning given such term in
Section 5.02(e) of the Supplemental Agreement.
"Designated Franchise Area" has the meaning agreed to
from time to time by Parent and the Principal Stockholder.
"DGCL" means the Delaware General Corporate Law.
"Disclosure Schedule" means the Disclosure Schedule
referred to in the Supplemental Agreement and delivered to
Parent by the Cablevision Companies prior to the execution
of the Supplemental Agreement.
"Dissenting Shares" has the meaning given such term in
Section 4.01(d) of the Company Merger Agreement.
<PAGE>95
"Effective Time" means the time specified in the
Certificates of Merger which shall be on or immediately
following the Closing Date, as agreed by the parties to
the Merger Agreements.
"Environmental Law" means any and all applicable
treaties, laws, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments,
injunctions, permits, approvals, authorizations, licenses,
variances, permissions, notices or binding agreements
issued, promulgated or entered into by any Governmental
Entity, relating to the environment, preservation or
reclamation of natural resources, or to the management,
Release or threatened Release of Hazardous Substances or
noxious odor, including the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA"), the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the
Clean Air Act, 42 U.S.C. Section 7401 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.,
the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et
seq., the Safe Drinking Water Act, 42 U.S.C.
Section 300(f) et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., and
any similar or implementing state or local law, and all
amendments or regulations promulgated thereunder.
"Environmental Permit" means any permit, license, or
authorization from any Governmental Entity required for
the Cablevision Companies and their subsidiaries to
conduct their respective business operations under
Environmental Laws.
"Equity Gerry Company" has the meaning given such term
in Section 2.1 of the Purchase Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Escrow Agreement" means the Escrow Agreement among the
Parent, the Principal Stockholder and the Escrow Agent (as
defined therein) substantially in the form of Exhibit J to
the Supplemental Agreement, which agreement shall be
executed on or prior to the Closing.
<PAGE>96
"Escrowed Shares" has the meaning given such term in
Section 4.04(h) of each Merger Agreement.
"Estimated Adjustment Amount", "Estimated Capital
Expenditure Deficiency or Excess", "Estimated Closing
Indebtedness and Other Liabilities", "Estimated Severance
and Incentive Liabilities" and "Estimated Working Capital
Deficit or Balance", for purposes of each Merger
Agreement, have the respective meanings given such terms
in Section 4.03 of the Merger Agreement, and for purposes
of the Purchase Agreement have the respective meanings
given such terms in Section 4.02 of the Purchase
Agreement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Excluded Assets" of the Cablevision Companies are
(i) the assets set forth below the name of such
Cablevision Company on Attachment I hereto and all
associated liabilities that are set forth in such Schedule
and (ii) any Excluded Systems Assets.
"Excluded Laws and Proceedings" has the meaning given
such term in the definition of "Rate Laws".
"Excluded Liabilities" has the meaning given such term
in Section 2.04 of the Purchase Agreement.
"Excluded Systems Assets" means cable television
operations (and all associated assets, including plant,
franchises, leases and other contracts) designated as
Excluded Assets pursuant to Section 5.25 of the
Supplemental Agreement, and any liabilities in respect of
such Excluded Systems Assets as designated by the
Principal Stockholder, the amount of which liabilities
shall not exceed the gross value of such cable television
operations (and associated assets); provided, however that
the term Excluded Systems Assets shall not, in any event,
include any cable television operations (and associated
assets) or liabilities that are set forth on Attachment I
hereto.
"FCC" means the Federal Communications Commission.
"Financial Statements" has the meaning given such term
in Section 3.01(e)(ii) of the Supplemental Agreement.
<PAGE>97
"Franchise" has the meaning given to such term in
Section 3.01(p) of the Supplemental Agreement.
"Franchise Area" means any of the geographic areas in
which any Cablevision Company is both providing and is
authorized or otherwise permitted to provide cable
television service, whether pursuant to a Franchise or
otherwise (including any area for which authorization by a
Governmental Entity is not required).
"FTC" means the Federal Trade Commission.
"GAAP" means United States generally accepted
accounting principles.
"Gerry Companies" means the Merger Gerry Companies and
the Purchase Gerry Companies.
"Governmental Entity" means any Federal, state or local
government or any court, administrative or regu-latory
agency, whether domestic or foreign.
"Hazardous Substance" means any explosive or regu-lated
radioactive material or substance, hazardous or toxic
material, waste or chemical, petroleum and petroleum
product (including crude oil and any fraction thereof),
asbestos or asbestos-containing material, and any other
material or chemical regulated pursuant to any
Environmental Law, including any material listed in 49
C.F.R. Section 172.101 and any material defined as
hazardous pursuant to Section 101(14) of CERCLA.
"Homes Passed" means, with respect to any System, the
total of (a) the number of single family residences
capable of being serviced in such System without further
line construction and (b) the number of units in multi-
family residential buildings capable of being serviced in
such System without further line construction.
"HSR Act" means The Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Indebtedness" means with respect to any Person,
without duplication, (A) all obligations of such Person
for borrowed money, or with respect to deposits or
advances of any kind, (B) all obligations of such
<PAGE>98
Person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such Person upon which
interest charges are customarily paid (other than trade
payables of such Person incurred in the ordinary course of
such Person's business), (D) all obligations of such
Person under conditional sale or other title retention
agreements relating to property purchased by such Person,
(E) all obligations of such Person issued or assumed as
the deferred purchase price of property or services
(excluding obligations of such Person to creditors for raw
materials, inventory, services and supplies incurred in
the ordinary course of such Person's business), (F) all
lease obligations of such Person capitalized on the books
and records of such Person, (G) all obligations of others
secured by any Lien on property or assets owned or
acquired by such Person, whether or not the obligations
secured thereby have been assumed, (H) all obligations of
such Person under interest rate, currency or commodity
swap or hedging transactions (valued at the termination
value or settlement amount thereof, computed as of the
Closing Date in the manner set forth in the instruments
and agreements with respect to such transactions entered
into by the Cablevision Companies, such termination value
or settlement amount to be so computed whether or not such
transactions have actually been terminated under such
instruments or agreements as of the Closing Date), (I) all
letters of credit issued for the account of such Person
(other than letters of credit issued for the benefit of
suppliers to support accounts payable to suppliers
incurred in the ordinary course of business and letters of
credit issued in respect of franchise, pole attachment
agreements and insurance agreements) and (J) all
guarantees and arrangements having the economic effect of
a guarantee of such Person of any Indebtedness of any
other Person; provided, however, that (i) Indebtedness
shall not include any amounts in respect of performance or
other similar bonds issued by such Person in the ordinary
course of business; (ii) the amount in respect of any
transaction of the type referred to in clause (H) above
that results in or represents the right of such Person to
receive payments or that otherwise constitutes an asset of
such Person (valued as set forth in the parenthetical in
clause (H)) shall be offset against the amount of
Indebtedness of such Person; (iii) the face amount due
upon maturity of any Indebtedness shall be deemed to be
the principal amount of such
<PAGE>99
Indebtedness; (iv) the Philadelphia Minority Interest
Amount shall not constitute Indebtedness except as
expressly provided in clause (ii) of the definition of
Closing Indebtedness and Other Liabilities and (v) any
prepayment penalties under Indebtedness resulting from the
consummation of the Transactions or the discharge or
satisfaction of the Debt Documents shall not constitute
Indebtedness.
"Indemnified Party" and "Indemnity Obligor" have the
respective meanings given such terms in Section 7.01(c) of
the Supplemental Agreement.
"Individual Subscriber" means, with respect to any
System as of any date, each subscriber to such System at
such System's Basic Subscriber Rate (including subscribers
who receive regularly offered discounts, such as senior
citizens and subscribers included in such System's Limited
Income Rate Program as administered on the date of this
Agreement) (i) who has made at least one full month's
payment without discount (excluding the discounts referred
to above), together with any applicable installation fees,
(ii) whose payment to such System for service (including
installation fees, but excluding late charges) is not more
than sixty days past due from the first day of the period
to which any outstanding invoice relates, (iii) who has
not given or been given notice of termination and who,
consistent with the Company's or the applicable
subsidiary's standard policy, should not have been given
notice of termination and (iv) with respect to a
subscriber who has become such following the date of this
Agreement, who has become a subscriber of such System only
pursuant to customary marketing promotions conducted in
the ordinary course of business.
"Intellectual Property" means all trademarks, trade
names, assumed names, service names, service marks,
copyrights, corporate names, patents and patent
applications, invention disclosures, registered copy-
rights, and applications for registration of the fore-
going, and all licenses, product developments, processes,
know-how and trade secrets (including customer and
supplier lists) and unregistered marks, together with the
goodwill associated with the related business of the
Cablevision Companies and their subsidiaries.
<PAGE>100
"Lien" means any pledge, claim, lien, charge,
encumbrance, restriction on transfer or security interest
of any kind or nature whatsoever.
"Loss" has the meaning given such term in
Section 7.01(a) of the Supplemental Agreement.
"Merger Agreement" means each of the Company Merger
Agreement, the CMP Merger Agreement and the CPI Merger
Agreement.
"Merger Consideration" has the respective meaning given
such term in Section 4.01(c) of any of the Merger
Agreements, as applicable in the context.
"Merger Gerry Companies" means CMP and CPI.
"Mergers" means the Company Merger, the CMP Merger and
the CPI Merger.
"Morgan Stanley Shares" means the shares of Common
Stock held in the name of Morgan Stanley & Co.
Incorporated and listed in Section 3.01(c) of the
Disclosure Schedule.
"Net Capital Expenditure Deficiency" means the excess,
if any, of (i) the sum of all Capital Expenditure
Deficiencies applicable to the Company and the Gerry
Companies over (ii) the sum of all Capital Expenditure
Excesses applicable to the Company and the Gerry
Companies.
"Net Capital Expenditure Excess" means the excess, if
any, of (i) the sum of all Capital Expenditure Excesses
applicable to the Company and the Gerry Companies over
(ii) the sum of all Capital Expenditure Deficiencies
applicable to the Company and the Gerry Companies.
"Noncompetition Agreement" means any of the Non-
competition Agreements dated as of the Closing Date among
Parent and each of the Principal Stockholder, Rodney W.
Cornelius and Frederick H. Schulte.
"Non-Subsidiary Equity Investment" means, with respect
to any Person, any corporation, partnership or other
entity (other than a subsidiary of such Person) whose
voting securities, partnership interests or other
<PAGE>101
equity interests (other than marketable securities) are
owned by such Person.
"Office Lease" has the meaning given such term in
Section 5.10 of the Supplemental Agreement.
"Parent" means Time Warner Inc., a Delaware cor-
poration.
"Parent Common Share Number" for purposes of each
Merger Agreement has the meaning given such term in
Section 4.01(c) of the Merger Agreement and for purposes
of each Purchase Agreement has the meaning given such term
in Section 2.01 of the Purchase Agreement.
"Parent Common Stock" means the Common Stock, par value
$1.00 per share, of Parent, as it may be adjusted pursuant
to Section 4.06 of each Merger Agreement and Section 4.05
of each Purchase Agreement.
"Parent Common Stock Adjustment" has the meaning given
such term in Section 4.06 of the Merger Agreement.
"Parent Material Adverse Change" or "Parent Material
Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen,
is likely to result in any change or effect) that is
materially adverse to the business, properties, condition
(financial or other) or results of operations of the
Parent and its subsidiaries, taken as a whole; provided,
however, that a change or effect (or development) shall
not be deemed to be a Parent Material Adverse Effect if
(i) such change is a Parent Common Stock Adjustment or
such effect (or development) is an effect thereof or
(ii) such effect (or development) is primarily the result
of (A) a change in economic conditions in the United
States of America generally or (B) a change in conditions
(including Rate Laws, Rate Proceedings, other Federal,
state or local governmental actions, legislation or
regulations or competitive activities) applicable to the
cable industry generally on a national, state, regional or
local basis (unless, in any such case, such governmental
action, legislation or regulation (other than a Rate Law
or Rate Proceeding) or such competitive activity is
directed primarily at Parent or any of its
<PAGE>102
subsidiaries (even if such action is on its face
applicable to the cable industry generally) and is
attributable primarily to the actions or inactions, which
actions or inactions are not (or were not) consistent with
what a prudent long-term cable operator would do (or would
have done) or fail to do (or would have failed to do) in
the circumstances existing at the time of such actions or
inactions, of one or more of Parent or any of its
subsidiaries).
"Parent Series E Certificate" means the Certificate of
the Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Special Rights, and
Qualifications, Limitations or Restrictions Thereof, of
the Parent Series E Preferred Stock in the form of
Exhibit B to the Supplemental Agreement.
"Parent Series E Preferred Stock" means the Series E
Convertible Preferred Stock, par value $1.00 per share, of
Parent, with rights, preferences and terms as set forth in
the Parent Series E Certificate.
"Parent Series F Certificate" means the Certificate of
the Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Special Rights, and
Qualifications, Limitations or Restrictions Thereof, of
the Parent Series F Preferred Stock in the Form of
Exhibit C to the Supplemental Agreement.
"Parent Series F Preferred Stock" means the Series F
Convertible Preferred Stock, par value $1.00 per share, of
Parent, with rights, preferences and terms as set forth in
the Parent Series F Certificate.
"Parent Stock" means the Parent Common Stock, the
Parent Series E Preferred Stock and the Parent Series F
Preferred Stock.
"Permit" means any permit, license, franchise, author-
ization, variance, exemption, concession, lease, instru-
ment, order or approval of any Governmental Entity.
"Permitted Assignees" means (i) each of Alan Gerry and
his spouse, (ii) siblings of Alan Gerry, (iii) lineal
descendants (including adoptive children)
<PAGE>103
of the individuals referred to in the foregoing
clauses (i) and (ii), (iv) a trust for the benefit of, the
estate of, heirs, devisees, legatees, executors, personal
representatives, administrators, guardians or conservators
of any of the individuals referred to in the foregoing
clauses (i), (ii) and (iii) (but only in their capacity as
such), (v) charitable trusts and charitable foundations
formed by Alan Gerry and (vi) any corporation or
partnership in which one or more of the individuals or
entities referred to in the foregoing
clauses (i) through (v) owns in the aggregate more than
80% of the voting interests thereof, which voting
interests shall be determined with reference to the power
to vote the Parent Stock beneficially owned by such
corporation or partnership and the power to dispose of or
acquire Parent Stock.
"Person" means an individual, corporation, part-
nership, joint venture, association, trust, unincor-
porated organization or other entity.
"Philadelphia Minority Interest" means the partnership
interest in the Philadelphia Partnership to be acquired by
the Company or any subsidiary thereof pursuant to the
Philadelphia Minority Interest Purchase Agreement.
"Philadelphia Minority Interest Amount" means the
aggregate amount paid or payable by the Company or any
subsidiary thereof or the Surviving Corporation or any
subsidiary thereof to acquire the interest in the
Philadelphia Partnership that is not owned by the Company
or any subsidiary thereof on the date of the Supplemental
Agreement.
"Philadelphia Minority Interest Purchase Agreement"
means the Purchase Agreement dated as of November 3, 1994,
among James N. Wade, Wade Communications, Inc. and CIC
Management Corporation, as the same may be amended from
time to time as permitted by Section 4.01 of the
Disclosure Schedule.
"Philadelphia Partnership" means Wade Communications
Partnership, a Pennsylvania general partnership.
"Pre-Closing Tax Period" means any taxable period
ending on or before the Closing Date (determined in
<PAGE>104
accordance with Treasury Regulation Section 1.1502-76(b),
as amended by Treasury Decision 8560), including the
portion up to the Closing Date of a period that begins
before and ends after the Closing Date.
"Principal Stockholder" means Alan Gerry, the
individual party to the Acquisition Documents.
"Purchase" has the meaning given such term in the
recitals to the Purchase Agreement.
"Purchase Agreement means the Purchase Agreement dated
as of February 6, 1995, between the Principal Stockholder,
the Gerry Companies and Parent.
"Purchase Consideration" has the meaning given such
term in Section 2.05 of the Purchase Agreement.
"Purchase Gerry Companies" means the Asset Gerry
Companies and the Equity Gerry Companies.
"Rate Laws" means (i) (A) the rate regulation pro-
visions of the Cable Television Consumer Protection and
Competition Act of 1992 (the "92 Act"), (B) any laws,
statutes, ordinances, rules, regulations, orders or other
actions (for purposes hereof, laws, statutes, ordinances,
rules, regulations, orders and other actions are referred
to as "Rate Actions") promulgated, enacted or taken on,
prior to or after the date of the Supplemental Agreement
or at any time thereafter by the FCC under or pursuant to
the rate regulation provisions of the 92 Act; and (C) any
Rate Action, regardless of how such Rate Action may be
characterized under state or local law, promulgated,
enacted or taken on, prior to or after the date of the
Supplemental Agreement by any state or local Governmental
Entity or other Person under or pursuant to the rate
regulation provisions of the 92 Act; (ii) any other
Federal law, statute, rule or regulation promulgated,
enacted or taken after the date of the Supplemental
Agreement that directly regulates the rates of any System;
and (iii) to the extent (but only to the extent)
applicable to the creation, implementation, billing,
marketing or offering of "a la carte" cable services and
packages by the Systems of any Cablevision Company or any
subsidiary thereof taken in response to and following the
effectiveness in September 1993 of the rate regulations
promulgated under the 92 Act and in a good faith
<PAGE>105
attempt to comply with such regulations ("A La Carte
Pricing"), any Federal (other than as referred to in
clauses (i) or (ii) above), state or local consumer
protection, negative option, trade practice or other
similar law, statute, rule, regulation, order or action
(whether promulgated, enacted or taken prior to or after
the date of the Supplemental Agreement or at any time
thereafter), relating to the Rate Practices of the
Systems, the Cablevision Companies or their respective
subsidiaries; provided, however, that Rate Laws shall not
include any laws, statutes, rules, regulations, orders or
other actions based on misrepresentation, fraud and
antitrust violations, including price fixing and collusion
(except to the extent that any Rate Proceeding relating to
any such law, statute, rule, regulation, order or other
action, although putatively based on such a law, statute,
rule, regulation, order or other action is in substance
based on the Rate Practices undertaken by a Cablevision
Company for or to effect A La Carte Pricing) (all such
laws, statutes, rules, regulations, orders or other
actions so based being referred to as "Excluded Laws and
Proceedings").
"Rate Practices" means any activity that was, is or can
reasonably be expected to be subject to Rate Laws, whether
existing or taken on, prior to or after the date of the
Supplemental Agreement.
"Rate Proceeding" means any claim, investigation,
certification, inquiry, suit, action or similar pro-
ceeding made, instituted or threatened by any Person,
(including any Governmental Entity) or before any
Governmental Entity, arising from, relating to or in
connection with Rate Laws, whether existing on or prior to
the date of the Supplemental Agreement or arising
thereafter.
"Registration Rights Agreement" means the Registration
Rights Agreement among Parent and the Stockholders,
substantially in the form of Exhibit D to the Supplemental
Agreement, which shall be executed on the date of the
Supplemental Agreement.
"Release" means any spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal,
leaching, emanation or migration of any Hazardous
Substance in, into, onto or through the environment
(including ambient air, surface water,
<PAGE>106
ground water, soils, land surface, subsurface strata,
workplace or structure).
"SEC" means the Securities and Exchange Commission
"SEC Documents" has the meaning given such term in
Section 3.01(e)(i) of the Supplemental Agreement.
"Second Level Adjustment" for purposes of each Merger
Agreement has the meaning given such term in
Section 4.02(b) of such Merger Agreement.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series F Share Number" has the meaning given such term
in Section 4.01(c) of the Company Merger Agreement.
"Series F Valuation Number" has the meaning agreed to
from time to time by Parent and the Principal Stockholder.
"Severance and Incentive Liabilities" of the Company or
any Gerry Company, as the case may be, means all
liabilities of the Company or such Gerry Company and its
respective subsidiaries (i) for severance or other
termination of any of its employees during the period
prior to the Closing Date (including pursuant to Exhibit E
of the Supplemental Agreement), (ii) with respect to
Transition Employees, as described on Exhibit E to the
Supplemental Agreement and (iii) with respect to the
Benefit Plans referred to in Section 5.03 of the
Supplemental Agreement; provided, however, that the term
"Severance and Incentive Liabilities" shall not include
any such liabilities in respect of any Systems Employee
whose primary function immediately prior to the Closing
Date was in respect of any Excluded Systems Asset.
"Specified Copyright Liabilities" means any liabilities
arising out of the matters set forth in
Section 3.01(t)(ii)(1)(c) of the Disclosure Schedule.
"Specified Environmental Liabilities" means liabilities
of any Cablevision Company in respect of (i) the leased
tower site located near Bolivar Road in the town of
Sullivan, New York and (ii) the underground
<PAGE>107
storage tank located in South Carolina referred to in
Section 3.01(o)(iii)(H) of the Supplemental Agreement.
"St. Augustine Right of First Refusal" means the right
of first refusal granted to Continental Cablevision, Inc.
("Continental") pursuant to Section 2 of the Agreement
dated as of April 13, 1987, between Continental and
Cablevision Industries Limited Partner-ship.
"St. Augustine System" means the System or portion
thereof that is the subject of the St. Augustine Right of
First Refusal.
"Stockholder" means any holder of Company Common Stock.
"Stockholders' Agreement" means the Stockholders'
Agreement among Parent, the Principal Stockholder and the
Permitted Assignees party thereto, substantially in the
form of Exhibit J to the Supplemental Agreement, which
shall be executed prior to the Closing.
"Stockholders' Representative" for purposes of each
Merger Agreement has the meaning given such term in
Section 4.07 of such Merger Agreement and for purposes of
the Purchase Agreement has the meaning given such term in
Section 4.06 of the Purchase Agreement.
"Sub" means TW CVI Acquisition Corp., a Delaware
corporation.
"Subscriber Adjustments" means the sum of (i) the
aggregate number of Basic Equivalent Subscribers in the
Excluded Systems Assets as of the Closing Date; (ii) if
the St. Augustine Right of First Refusal is exercised and
the System in respect thereof is sold pursuant thereto,
the aggregate number of Basic Equivalent Subscribers in
such System as of the date of sale; and (iii) if any of
the municipal or service agreement buy-back rights set
forth in Section 6.03(e) of the Disclosure Schedule are
exercised, the aggregate number of Basic Equivalent
Subscribers in such Systems, in each case as of the
earlier of the Closing Date and the date of sale.
<PAGE>108
"Subscriber Equivalent" means, with respect to any
System, as of any date, the quotient of (i) the aggregate
revenues earned by such System for Basic Services during
the last full calendar month ending on or prior to such
date, from billings to residential and commercial
multiple dwelling units, other subscribers of such System
that are billed for such service on a bulk basis and
single family households that receive Basic Cable Service
but is not otherwise an Individual Subscriber, divided by
(ii) the Basic Subscriber Rates of such System for the
30 days immediately preceding such date. For purposes of
the foregoing calculation of aggregate revenues, there
shall be excluded all revenues earned from (x) (i) that
portion of the billings to each subscriber representing an
installation or other non-recurring charge or a separately
stated charge for equipment (ii) with respect to a bulk
account in any residential unit (e.g., an individual
apartment or rental unit), a charge for any tiered service
or a pass-through charge for sales taxes, line-itemized
franchise fees and charges and (y) billings to any bulk
account or single family household that receives Basic
Cable Service but is not otherwise an Individual
Subscriber (I) that has not paid for at least one full
calendar month, (II) that is sixty days or more in arrears
in payment for services, or (III) which is pending
disconnection for any reason.
"subsidiary" means, with respect to any Person, another
Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests
of which) is owned (beneficially or otherwise) directly or
indirectly by such first Person or any subsidiary thereof.
"Supplemental Agreement" means the Supplemental
Agreement dated as of February 6, 1995, among the Company,
the Gerry Companies, the Principal Stockholder, the Direct
Holders, Parent and Sub.
"Support Agreement" means the Support Agreement dated
as of February 6, 1995, between the Company and the
Principal Stockholder.
<PAGE>109
"Surviving Corporation" has the meaning given to such
term in Section 2.01 of the each Merger Agreement.
"System" means any cable television system owned and
operated by any Cablevision Company or any combination of
any of them (or, after the Closing Date, by any Surviving
Corporation or Parent or any of its subsidiaries).
"Systems Employee" means, in respect of any Cablevision
Company, any employee of such Cablevision Company as of
the Closing Date, other than a Corporate/Regional
Employee.
"Tax" or "Taxes" includes all Federal, state, local or
foreign income, gross receipts, franchise, capital,
property, sales, use, excise, transfer, license, payroll,
withholding and other taxes and assessments, together with
any interest or penalties on underpayments of tax, any
additions to tax and any penalties for late filing of or
failure to file tax returns or reports.
"Threshold", for purposes of each Merger Agreement, has
the meaning given such term in Section 4.02(a) of such
Merger Agreement, and for purposes of the Purchase
Agreement, has the meaning given such term in
Section 4.01(a) of the Purchase Agreement.
"Transactions" means the transactions contemplated by
the Acquisition Documents.
"Transferable Franchise Area" means any Franchise Area
in respect of which (A) any authorization, consent, order
or approval of any Governmental Entity necessary for the
transfer of control of the Franchise (or, in the case of
Franchises of any Asset Gerry Company, assignment of the
Franchise) for such Franchise Area in connection with the
consummation of the Transactions has been obtained; (B) no
authorization, consent, order or approval of any
Governmental Entity is necessary for the transfer of
control of the Franchise (or in the case of Franchises of
any Asset Gerry Company, assignment of the Franchise) for
such Franchise Area in connection with the consummation of
the Transactions; or (C) no Franchise is required for the
provision of cable television service in such
<PAGE>110
Franchise Area; provided, however, that a Franchise Area
shall not be a Transferable Franchise Area unless any
purchase rights or rights of first refusal that are
exercisable based on the occurrence of any Merger or the
Purchase have been cancelled or waived or expired
unexercised and any other purchase rights or rights of
first refusal have not been exercised as of the Closing
Date.
"Transition Employees" has the meaning given such term
in Section 5.24(b) of the Supplemental Agreement.
"TWE" means Time Warner Entertainment Company, L.P., a
Delaware limited partnership.
"TWE-Advance/Newhouse" means Time Warner Entertainment-
Advance/Newhouse Partnership, a New York general
partnership.
"Voting Power" has the meaning set forth in the
Stockholders' Agreement.
"Voting Securities" has the meaning set forth in the
Stockholders' Agreement.
"Working Capital Assets" of the Company or any Gerry
Company, as the case may be, as of the Closing Date means
the sum of (i) cash and cash equivalents, marketable
securities other than the shares of Common Stock of QVC
Network Inc. (or cash or other assets in respect thereof)
valued at fair market value, prepaid pole attachment
rentals, prepaid insurance premiums and other prepaid
items of the Company, or any Gerry Company, as the case
may be, and its respective subsidiaries, in each case as
of such date; (ii) receivables from subscribers to the
Systems owned by the Company, or any Gerry Company, as the
case may be, and its respective subsidiaries (exclusive of
those that are past due for more than 60 days) and other
receivables (valued at Book Value) and deposits as of such
date (but only to the extent that such receivables and
deposits are available to the applicable Surviving
Corporation, the Asset Gerry Company or Parent, as
applicable, and it being understood that receivables from
any Stockholder, any employee of a Cablevision Company
shall not be deemed to be Working Capital Assets of a
Cablevision Company other than up to $100,000 of
receivables from employees incurred in the
<PAGE>111
ordinary course of business consistent with past
practices); (iii) tax refunds due to the Company, or any
Gerry Company, as the case may be, or its respective
subsidiaries for any taxable year ending on or including
the Closing Date; (iv) in the case of the Company (or its
subsidiaries, if applicable), if the Philadelphia Minority
Interest has not been purchased by the Company or any
subsidiary thereof as of the Closing Date, the receivables
from James N. Wade, but only to the extent that such
amount is available to be used to satisfy the payment of
the Philadelphia Minority Interest Amount; and (v) in the
case of the Company, any receivable for loans, advances or
management fees due from the Gerry Companies; The "Book
Value" of any receivable shall be the amount of such
receivable less a reasonable reserve for collectibility.
"Working Capital Balance" of the Company or any Gerry
Company, as the case may be, means the excess of the
Working Capital Assets of the Company, or any Gerry
Company, as the case may be, and its respective
subsidiaries over the Working Capital Liabilities of the
Company, or any Gerry Company, as the case may be, and its
respective subsidiaries, in each case computed on a
consolidated basis in accordance with GAAP applied on a
basis consistent with that used in preparing the SEC
Documents, in the case of the Company or in the Financial
Statements, in the case of a Gerry Company (but without
giving effect to any exclusions based on lack of
materiality), except where a different computational
basis is provided for in the definition of Working Capital
Assets or Working Capital Liabilities. For purposes of
making this computation, Working Capital Assets and
Working Capital Liabilities shall be calculated before
giving effect to the consummation of the Mergers or the
Purchase.
"Working Capital Deficit" of the Company or any Gerry
Company, as the case may be, means the excess of the
Working Capital Liabilities of the Company, or any Gerry
Company, as the case may be, and its respective
subsidiaries over the Working Capital Assets of the
Company, or any Gerry Company, as the case may be, and its
respective subsidiaries, in each case computed on a
consolidated basis in accordance with GAAP applied on a
basis consistent with that used in preparing the SEC
Documents, in the case of the Company, or in the
<PAGE>112
Financial Statements, in the case of any Gerry Company
(but without giving effect to any exclusions based on lack
of materiality), except where a different computational
basis is provided for in the definition of Working Capital
Assets or Working Capital Liabilities. For purposes of
making this computation, Working Capital Assets and
Working Capital Liabilities shall be calculated before
giving effect to the consummation of the Mergers or the
Purchase.
"Working Capital Liabilities" of the Company or any
Gerry Company, as the case may be, means, as of the
Closing Date without duplication, the sum of (i) accounts
payable and other current liabilities of the Company or
any Gerry Company, as the case may be, and its respective
subsidiaries, (ii) expenses of the Company or any Gerry
Company, as the case may be and its respective
subsidiaries relating to the consummation of the
Transactions, including fees and expenses such as
attorneys , accountants, financial advisors and brokers
fees, if such fees and expenses are paid after the Closing
Date, but excluding any expenses that Parent agrees to pay
(directly or through any Cablevision Company, Sub, CPI
Acquisition Sub or CMP Acquisition Sub) in accordance with
Section 5.02 or payable by Parent pursuant to
Section 5.06(b), (iii) other accrued and unpaid expenses
of the Company or any Gerry Company, as the case may be,
and its respective subsidiaries (including amounts due and
payable in respect of deferred compensation and unpaid
taxes) as of such date, (iv) subscribers' prepayments and
deposits as of such date, (v) the aggregate amount of all
distributions and other payments made by the Company or
any Gerry Company, as the case may be, and its respective
subsidiaries on or after the date of this Agreement and on
or prior to the Closing Date in violation of
Section 4.01(a) and that did not otherwise reduce Working
Capital Assets, (vi) if the Philadelphia Minority Interest
Amount has not been purchased prior to the Closing Date,
$20,980,000 and (vii) in the case of the Gerry Companies,
any payable for loans, advances or management fees due to
the Company; provided, however, that the term "Working
Capital Liabilities" shall in no event include
(x) deferred taxes of any Cablevision Company, (y) amounts
included in the Severance and Incentive Liabilities of any
Cablevision Company or (z) liabilities transferred without
recourse to any Cablevision Company with any Excluded
Assets.
<PAGE>113
Interpretation. When a reference is made in any
Acquisition Document Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, such Acquisition Document unless
otherwise indicated. The table of contents and headings
contained in any Acquisition Document are for reference pur-
poses only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in any
Acquisition Document, they shall be deemed to be followed by
the words "without limitation".
