AS OF NOVEMBER 4, 2002
TABLE OF CONTENTS
Page
1. Definitions...............................................................2
1.01 Certain Definitions..............................................2
1.02 Interpretation and Rules of Construction........................15
2. The Merger and the Exchanges.............................................16
2.01 The Merger......................................................16
2.02 The RMHI Exchange...............................................18
2.03 The Cablevision Exchange........................................19
2.04 Working Capital Adjustment......................................19
2.05 Adjustment for Payments under Affiliation Agreements
and Capital Expenditures........................................22
2.06 Adjustments to Prevent Dilution.................................22
2.07 Possible Restructuring..........................................23
3. Representations and Warranties of Cablevision............................24
3.01 Organization and Authority......................................24
3.02 Legal Capacity; Approvals and Consents..........................25
3.03 Interests; Subsidiaries.........................................26
3.04 Financial Statements............................................27
3.05 Accounts Receivable.............................................29
3.06 Properties; Owned Tangible Personal Property....................29
3.07 Compliance with Law; Licenses...................................30
3.08 Intellectual Property...........................................31
3.09 Contracts.......................................................32
3.10 Labor Contracts and Actions.....................................34
3.11 Employee Benefit Plans..........................................35
3.12 Legal and Governmental Proceedings and Judgments................37
3.13 Finders and Brokers.............................................37
3.14 Environmental Matters...........................................37
3.15 Absence of Certain Changes......................................38
3.16 Insurance.......................................................39
3.17 Assets; Sufficiency of Assets...................................39
3.18 Affiliate Transactions..........................................39
3.19 Affiliation Agreements..........................................40
3.20 Advertisers.....................................................40
3.21 Film Exhibition Agreement.......................................41
3.22 Investment Purpose..............................................41
3.23 Media Expenditures..............................................41
4. Representations and Warranties of GE Merger Sub, NBC Holdings and NBC....42
4.01 Organization and Authority......................................42
4.02 Legal Capacity: Approvals and Consents..........................42
4.03 Ownership of Cablevision Shares.................................44
4.04 Legal and Governmental Proceedings and Judgments................44
4.05 GE Shares.......................................................44
4.06 GE SEC Reports..................................................44
4.07 GE Financial Statements; Absence of Certain Changes.............44
4.08 BHC Convertible Preferred Stock.................................45
4.09 Finders and Brokers.............................................45
5. Covenants Pending Closing................................................45
5.01 Conduct of Cablevision..........................................45
5.02 Access to Information...........................................48
5.03 Covenants of NBC Holdings and NBC...............................48
5.04 Notice of Developments..........................................49
5.05 Termination of Intercompany Arrangements........................50
5.06 Required Consents...............................................50
5.07 Separation of IFC Business from Bravo...........................50
6. Deliveries at Closing....................................................51
6.01 Deliveries by Cablevision.......................................51
6.02 Deliveries by NBC Holdings and NBC..............................51
6.03 Deliveries by GE Merger Sub.....................................52
7. Conditions to the Obligations of NBC Holdings, NBC and GE Merger Sub.....52
7.01 Receipt of Consents.............................................53
7.02 Performance by Cablevision......................................53
7.03 Absence of Breach of Representations and Warranties.............53
7.04 Absence of Breach of Tax Matters Agreement Representations
and Warranties..................................................53
7.05 Absence of Proceedings..........................................53
7.06 Reorganization Transactions.....................................53
7.07 Release of Liens................................................54
7.08 MGM Closing.....................................................54
7.09 Related Agreements..............................................54
8. Conditions to the Obligations of Cablevision.............................54
8.01 Receipt of Consents.............................................54
8.02 Performance by NBC Holdings and NBC.............................54
8.03 Absence of Breach of Representations and Warranties.............54
8.04 Absence of Breach of Tax Matters Agreement Representations
and Warranties..................................................54
8.05 Absence of Proceedings..........................................55
8.06 Reorganization Transactions.....................................55
8.07 Registration Rights Agreement...................................55
8.08 Listing of GE Stock.............................................55
8.09 MGM Closing.....................................................55
8.10 Related Agreements..............................................55
9. Covenants................................................................55
9.01 Compliance with Conditions......................................55
9.02 Compliance with HSR Act and Rules; Foreign Antitrust Laws.......55
9.03 Records and Related Matters.....................................57
9.04 Use of Bravo Marks..............................................58
9.05 Salon.com.......................................................58
9.06 Benefit of Contracts............................................59
9.07 Confidentiality.................................................60
9.08 Insurance.......................................................62
9.09 Termination of Agreements.......................................62
9.10 Magno Contract..................................................62
9.11 BHC Convertible Preferred Stock.................................63
10. Survival of Representations, Warranties, Covenants and Other Agreements;
Indemnification..........................................................63
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements......................................................63
10.02 Indemnification by Cablevision..................................63
10.03 Indemnification by NBC Holdings, NBC and GE Merger Sub..........65
10.04 Third Party Claims..............................................66
11. Further Assurances.......................................................68
12. Closing..................................................................68
12.01 Closing.........................................................68
12.02 Termination.....................................................68
13. Miscellaneous............................................................69
13.01 Amendments; Waivers.............................................69
13.02 Entire Agreement................................................69
13.03 Binding Effect; Assignment......................................69
13.04 Construction; Counterparts......................................69
13.05 Notices.........................................................70
13.06 Expenses of the Parties.........................................71
13.07 Non-Recourse....................................................71
13.08 Third Party Beneficiary.........................................71
13.09 Governing Law; Choice of Forum; Waiver of Jury Trial............71
13.10 Press Releases..................................................72
13.11 Severability....................................................72
EXHIBITS
Exhibit A - 2 Park Avenue Lease Assignment
Exhibit B - GE Registration Rights Agreement
Exhibit C - Film Exhibition Agreement
Exhibit D - Reorganization Transactions
Exhibit E - Transition Services Agreement
Exhibit F - NBC Holdings Release
Exhibit G - Cablevision Release
Exhibit H - Amended RNC Letter Agreement
Exhibit I - Transponder Lease Assignment
Exhibit J - IFC Agreements
Exhibit K - Cablevision Affiliation Agreement Amendment
SCHEDULES
Schedule 1.01 - Knowledge of Cablevision/Knowledge of NBC
Schedule 1.02 - Related Agreements
Schedule 1.03 - Certain IFC Assets
Schedule 2.04 - Working Capital
Schedule 2.04(f) - Preferred Stock Expense Amount
Schedule 3.02 - Consents and Approvals
Schedule 3.03 - Interests in Bravo Companies and Subsidiaries
Schedule 3.04 - Pro Forma Financial Statements
Schedule 3.06 - Leased Real Property
Schedule 3.07 - Noncompliance with Laws; Licenses
Schedule 3.08 - Intellectual Property
Schedule 3.09 - Listed Contracts
Schedule 3.11 - Company Benefit Plans
Schedule 3.12 - Legal Proceedings; Governmental Orders
Schedule 3.14 - Environmental Matters
Schedule 3.15 - Conduct out of Ordinary Course; Certain Changes
Schedule 3.16 - Insurance Policies
Schedule 3.17 - No Rights to Assets
Schedule 3.18 - Affiliate Transactions
Schedule 3.20 - Advertisers
Schedule 3.21 - Programming Agreements
Schedule 3.23 - Media Expenditures
Schedule 4.02 - NBC Consents
Schedule 5.01 - Non-ordinary Course Actions
Schedule 5.05 - Continuing Inter-company Contracts
Schedule 9.06 - Consents
AGREEMENT AND PLAN OF MERGER AND EXCHANGE
This Agreement and Plan of Merger and Exchange is made and entered into as of November 4, 2002, by and between Cablevision Systems Corporation, a
Delaware corporation ("Cablevision"), Bravo Holding Corporation, a Delaware corporation ("BHC"), Bravo II Holding Corporation, a Delaware corporation ("B2HC"), Rainbow Media Group, LLC, a Delaware limited liability company ("RMG LLC"), National Broadcasting Company, Inc., a Delaware corporation ("NBC"), NBC-Rainbow Holding, Inc., a California corporation ("NBC Holdings"), and Applause Acquisition Corporation, a Delaware corporation ("GE Merger Sub") and a direct wholly-owned Subsidiary of General Electric Company, a New York corporation ("GE").
R E C I T A L S
WHEREAS, BHC and B2HC, each of which is an indirect wholly-owned Subsidiary of Cablevision, own, in the aggregate, an 80% partnership interest (the "Cablevision Bravo Interest") in Bravo Company ("Bravo"), a general partnership organized under New York law;
WHEREAS, MGM Networks U.S. Inc., a Delaware corporation ("MGM Holdings") and a wholly-owned Subsidiary of Metro-Goldwyn-Mayer Inc. ("MGM"), owns a 20% partnership interest in Bravo (the "MGM Bravo Interest");
WHEREAS, NBC Holdings owns 21,816,226 shares of Class A common stock (the "Cablevision Shares") of Cablevision and 1,562.25 shares of Class A common stock (the "RMHI Shares") of Rainbow Media Holdings, Inc. ("RMHI");
WHEREAS, Cablevision, MGM Holdings, NBC and NBC Holdings wish to effect, and to have effected, the Reorganization Transactions (as hereinafter defined);
WHEREAS, as part of the Reorganization Transactions, GE Merger Sub will be merged (the "B2HC Merger") with and into B2HC in a transaction in which the shareholder of B2HC receives shares of common stock, par value $.06 per share, of GE ("GE Common Stock");
WHEREAS, at the time of the B2HC Merger, B2HC will own a partnership interest in Bravo (the "B2HC Bravo Interest");
WHEREAS, as part of the Reorganization Transactions, Cablevision will cause RMHI to distribute to NBC Holdings all of the BHC Class B Stock in exchange for all of the RMHI Shares and BHC will, at the time of such transfer, own a partnership interest in Bravo (the "BHC Bravo Interest").
WHEREAS, as part of the Reorganization Transactions, Cablevision will distribute to NBC Holdings all of the BHC Class A Stock in exchange for the
Cablevision Shares and BHC will, at the time of such transfer, own directly the BHC Bravo Interest;
WHEREAS, Cablevision, RMHI, CSC Holdings, Inc., a Delaware corporation ("CSC Holdings"), RMG LLC, NBC Holdings, NBC and GE Merger Sub are entering into a Tax Matters Agreement (the "Tax Matters Agreement") simultaneously upon the execution of this Agreement; and
WHEREAS, NBC Holdings, NBC, MGM Holdings and MGM have entered into a Purchase Agreement, dated as of the date hereof (the "MGM Agreement"), pursuant to which NBC Holdings will acquire the MGM Bravo Interest and MGM, MGM Holdings and Cablevision have entered into an Agreement dated as of the date hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows, each intending to be legally bound as and to the extent herein provided.
1. Definitions.
1.01 Certain Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below:
2 Park Avenue Lease means the Lease, dated August 7, 2000, for the property at 2 Park Avenue, New York, NY between Two Park Company, as landlord, and Sterling Digital LLC, as tenant.
2 Park Avenue Lease Assignment means the lease assignment pursuant to which the 2 Park Avenue Lease will be assigned by Sterling Digital LLC to NBC, effective as of the Closing, substantially in the form attached hereto as Exhibit A.
Action means any action, suit, arbitration, inquiry, proceeding or investigation by or before any court or Governmental Authority.
Additional GE Shares means the shares of GE Common Stock, if any, issued pursuant to Sections 2.04 and 2.05.
Adjusted Statement of Working Capital has the meaning set forth in Section 2.04(b)(ii).
Adjustment Amount has the meaning set forth in Section 2.05(a).
Adjustment Payment has the meaning set forth in Section 2.04(c).
Advertising Inventory has the meaning set forth in Section 9.05.
Affiliate of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For
-2-
purposes of this Agreement, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. For all purposes hereof, none of the Cablevision Companies or the Companies shall be deemed to be an Affiliate of GE, NBC or NBC Holdings.
Affiliation Agreements has the meaning set forth in Section 3.09(a)(iv).
After-Tax Basis means that, in determining the amount of the payment necessary to indemnify a Cablevision Indemnified Party or an NBC Holdings Indemnified Party, as the case may be, against, or reimburse any such indemnified party for, Losses, the amount of such Losses shall be determined net of any reduction in Tax derived by the indemnified party as the result of incurring such Losses, and the amount of such indemnification payment shall be increased (i.e., "grossed up") by the amount necessary to satisfy any income or franchise Tax liabilities actually incurred by the indemnified party as a result of its receipt of, or right to receive, such indemnification payment (as so increased), whether such income or franchise Tax liabilities are incurred for the Tax year of receipt of (or right to receive) the indemnification payment or for a subsequent tax year for which a net operating loss carryover would otherwise have been available, so that the indemnified party is put in the same net after-Tax economic position as if it had not incurred such Losses; provided, however, that no indemnification payment shall be increased (i.e. "grossed up") by reason of the failure of any of the Reorganization Transactions to obtain the intended tax treatment (as described in Section 11(c) of the Tax Matters Agreement) as a result of the receipt of, or right to receive, any indemnification payment.
Agreement means this Agreement and Plan of Merger and Exchange and the Exhibits and Schedules attached hereto.
Aggregate Cablevision Share Value has the meaning set forth in Section 2.01(c).
Aggregate GE Stock Consideration has the meaning set forth in Section 2.01(c).
Aggregate RMHI Share Value has the meaning set forth in Section 2.01(c).
Amended RNC Letter Agreement means the Letter Agreement, to be effective as of the Closing, between Rainbow Network Communications and Bravo amending the letter agreement, dated as of December 20, 2000, between Rainbow Network Communications and Bravo, substantially in the form attached hereto as Exhibit H.
Asserted Claim has the meaning set forth in Section 10.04.
-3-
Assets means all real, personal and mixed assets, both tangible and intangible, of every kind, nature and description owned by any of the Companies, including, without limitation, the Owned Intellectual Property.
Average Cablevision Share Price has the meaning set forth in Section 2.01(c).
Average GE Share Price has the meaning set forth in Section 2.01(c).
Benefit Plans means all "employee benefit plans" within the meaning of Section 3(3) of ERISA, and all bonus, equity, incentive, deferred compensation, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements.
BHC has the meaning set forth in the Preamble to this Agreement.
BHC Bravo Interest has the meaning set forth in the Preamble to this Agreement.
BHC Class A Stock means, after completion of step 3 of the Reorganization Transactions, all of the issued and outstanding Class A common stock, $0.01 par value per share, of BHC.
BHC Class B Stock means, after completion of step 3 of the Reorganization Transactions, all of the issued and outstanding Class B common stock, $0.01 par value per share, of BHC.
BHC Convertible Preferred Stock means, after completion of step 3 of the Reorganization Transactions, all of the Convertible Preferred Stock, $0.01 par value per share, of BHC.
BHC Percentage means the percentage that (i) the BHC Bravo Interest (expressed as a percentage partnership interest in Bravo) as of the time of computation constitutes of (ii) 80%.
BHC Shares means the BHC Class A Stock, BHC Class B Stock and BHC Convertible Preferred Stock.
Bravo has the meaning set forth in the Preamble to this Agreement.
Bravo Balance Sheets has the meaning set forth in Section 3.04(a).
Bravo Financial Statements has the meaning set forth in Section 3.04(a).
Bravo Income Statements has the meaning set forth in Section 3.04(a).
Bravo Intercompany Indebtedness means the Indebtedness owing from any of the Companies to any of the Cablevision Companies.
-4-
Bravo Interim Financial Statements has the meaning set forth in Section 3.04(a).
Bravo Marks has the meaning set forth in Section 9.04.
B2HC has the meaning set forth in the Preamble to this Agreement.
B2HC Bravo Interest has the meaning set forth in the Preamble to this Agreement.
B2HC Merger has the meaning set forth in the Preamble to this Agreement.
B2HC Percentage means the percentage that (i) the B2HC Bravo Interest (expressed as a percentage partnership interest in Bravo) as of the time of computation constitutes of (ii) 80%.
Business means the business of providing the Bravo program service, including, without limitation, producing or acquiring content, advertising sales and distribution, in each case as conducted as of the date hereof. The advertising sales agency function conducted by Rainbow Advertising Sales Corporation is not part of the Business.
Business Day means any day other than a Saturday, Sunday or a day on which banks in New York City are authorized or obligated by law or executive order to close.
Cablevision has the meaning set forth in the Preamble to this Agreement.
Cablevision Affiliation Agreement Amendment means the amendment to the affiliation agreement between Bravo and Cablevision, to be entered into as of the Closing, substantially in the form attached as Exhibit K.
Cablevision Agreement Amount has the meaning set forth in Section 2.08(a).
Cablevision Bravo Interest has the meaning set forth in the Preamble to this Agreement.
Cablevision Common Stock means shares of Class A common stock, par value $0.01 per share, of Cablevision.
Cablevision Companies means Cablevision and each of its Subsidiaries (other than the Companies).
Cablevision Payment has the meaning set forth in Section 2.04(c)
Cablevision Proprietary Information has the meaning set forth in Section 9.07(c).
Cablevision SEC Reports means all forms, reports, statements, schedules and other documents filed with the SEC by Cablevision pursuant to the Exchange Act since December 31, 2001.
-5-
Cablevision Shares has the meaning set forth in the Preamble to this Agreement or such other number or kind of securities as may result from (i) any of the events described in Section 2.06(b), or (ii) any exchanges not prohibited by the proviso to Section 5.03(b).
Cablevision Valuation Period has the meaning set forth in Section 2.01(c).
CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act, as amended.
Certificate of Merger has the meaning set forth in Section 2.01(a)(ii).
Claim has the meaning set forth in Section 5.01(j).
Closing means the meeting for the purpose of concluding the transactions contemplated by this Agreement held at the place and on the date fixed in accordance with Section 12.01.
Closing Balance Sheet has the meaning set forth in Section 2.04(a).
Closing Date means the date fixed for the Closing in accordance with Section 12.01.
Closing Statement of Working Capital has the meaning set forth in Section 2.04(a).
Code means the Internal Revenue Code of 1986, as amended.
Communications Act means the Communications Act of 1934, as amended, and the rules, regulations and written policies promulgated thereunder by the FCC, as in effect from time to time.
Companies means BHC (and, after the Closing, the Surviving Corporation), B2HC and Bravo and each of their Subsidiaries (other than IFC and its Subsidiaries), and Company means any one of the Companies or a specified Company, as the case may be.
Company Benefit Plans has the meaning set forth in Section 3.11(a).
Company Material Adverse Effect means any change in, or effect on, any of the Companies that is materially adverse to the assets, liabilities, properties, business, financial condition or operations of the Companies, taken as a whole, other than any such change or effect resulting from changes in general economic or political conditions or legal, governmental or regulatory factors affecting Persons engaged in the cable television programming business generally, provided in each case that the Companies are not materially disproportionately affected as compared to other Persons engaged in the cable television programming business, by such changes or effects.
-6-
Competitively Sensitive Bravo Information has the meaning set forth in Section 9.07(b).
Confidentiality Agreement means the Confidentiality Agreement dated September 5, 2002 between Cablevision and NBC.
Contract means any written contract, mortgage, deed of trust, bond, indenture, lease, sublease, license, note, certificate, option, warrant, right, or other instrument, document, agreement or arrangement.
CSC Holdings has the meaning set forth in the Preamble to this Agreement.
DGCL means the General Corporation Law of the State of Delaware.
DOJ means the United States Department of Justice.
Effective Time has the meaning set forth in Section 2.01(a)(ii).
Employees means (i) all current active employees of any of the Companies, (ii) all employees of Cablevision and its Affiliates substantially all of whose time is dedicated to the Companies or the Business and (i ...