<PAGE>
As filed with the Securities and Exchange Commission on October 26, 1995
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------------
CABLEVISION SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4841 11-2776686
(State or other jurisdiction of (PRIMARY STANDARD (I.R.S. employer
incorporation or organization) INDUSTRIAL CLASSIFICATION identification number)
CODE NUMBER)
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
(516) 364-8450
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
__________
Robert S. Lemle
Executive Vice President, General Counsel and Secretary
One Media Crossways
Woodbury, New York 11797
(516) 364-8450
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH COPIES TO:
John P. Mead
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the Securities registered on this Form are to be offered in connection with
the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
_____________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series H Redeemable Exchangeable Preferred Stock $250,000,000 100% $250,000,000 $86,207
11 3/4% Senior Subordinated Debentures due 2007 $250,000,000 (2) (2) (2)
==============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) The Series H Redeemable Exchangeable Preferred Stock is exchangeable, in
whole but not in part, at the option of the Company, on or after January 1,
1996, for the 11 3/4% Senior Subordinated Debentures due 2007. No additional
registration fee is payable in respect thereof.
_____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY
PART I OF FORM S-4
--------------------------
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN PROSPECTUS
- ---------- ------- ----------------------
<S> <C> <C>
Item 1 Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Facing Page of Registration Statement; Cross-
Reference Sheet; Outside Front and Inside
Front Cover Page of Prospectus
Item 2 Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover Pages of Prospectus
Item 3 Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information................... Summary; Risk Factors; The Company
Item 4 Terms of the Transaction......................... The Exchange Offer; Description of New
Preferred Stock; Certain Federal Income Tax
Considerations
Item 5 Pro Forma Financial Information.................. Not Applicable
Item 6 Material Contracts With the Company Being
Acquired......................................... Not Applicable
Item 7 Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters..................................... Plan of Distribution
Item 8 Interests of Named Experts and Counsel........... Not Applicable
Item 9 Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not Applicable
Item 10 Information with Respect to S-3 Registrants...... Incorporation of Certain Documents by
Reference; Recent Developments
Item 11 Incorporation of Certain Information by
Reference........................................ Incorporation of Certain Documents by
Reference
Item 12 Information with Respect to S-2 or S-3
Registrants...................................... Not Applicable
Item 13 Incorporation of Certain Information by
Reference........................................ Not Applicable
Item 14 Information with Respect to Registrants Other
than S-3 or S-2 Registrants...................... Not Applicable
Item 15 Information With Respect to S-3 Companies........ Not Applicable
Item 16 Information With Respect to S-2 or S-3
Companies........................................ Not Applicable
Item 17 Information With Respect to Companies Other
Than S-2 or S-3 Companies........................ Not Applicable
Item 18 Information if Proxies, Consents or
Authorizations Are to be Solicited............... Not Applicable
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN PROSPECTUS
- -------- ------- ----------------------
<S> <C> <C>
Item 19 Information if Proxies, Consents or
Authorizations are Not to be Solicited, or in an
Exchange Offer................................... Summary; The Exchange Offer; Description of
New Preferred Stock; Certain Federal Income
Tax Considerations
</TABLE>
-ii-
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED OCTOBER , 1995
OFFER TO EXCHANGE
all outstanding
11 3/4% Series G Redeemable
Exchangeable Preferred Stock
($250,000,000 aggregate liquidation preference)
for
11 3/4% Series H Redeemable
Exchangeable Preferred Stock
of
CABLEVISION SYSTEMS CORPORATION
__________________
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 p.m., NEW YORK CITY TIME,
ON , 1995, UNLESS EXTENDED
__________________
Cablevision Systems Corporation, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $100 aggregate liquidation preference of its 11 3/4% Series H
Redeemable Exchangeable Preferred Stock (the "New Preferred Stock"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for each $100 aggregate liquidation preference of
the outstanding 11 3/4% Series G Redeemable Exchangeable Preferred Stock (the
"Old Preferred Stock") of the Company of which $250,000,000 aggregate
liquidation preference is outstanding. The New Preferred Stock and the Old
Preferred Stock are collectively referred to herein as the "Preferred Stock."
The Company will accept for exchange any and all Old Preferred Stock that are
validly tendered on or prior to 5:00 p.m., New York City time, on the date the
Exchange Offer expires, which will be , 1995, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Old Preferred
Stock may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the business day prior to the Expiration Date, unless previously accepted for
exchange. The Exchange Offer is not conditioned upon any minimum principal
amount of Old Preferred Stock being tendered for exchange. However, the Exchange
Offer is subject to certain conditions which may be waived by the Company and to
the terms and provisions of the Registration Rights (as defined herein). See
"The Exchange Offer." Old Preferred Stock may be tendered only in denominations
of $100 aggregate liquidation preference and integral multiples thereof. The
Company has agreed to pay the expenses of the Exchange Offer.
The form and terms of the New Preferred Stock are identical in all material
respects to the form and terms of the Old Preferred Stock except that the New
Preferred Stock have been registered under the Securities Act and will not
contain terms restricting the transfer of such Stock. Following the completion
of the Exchange Offer, none of the Preferred Stock will be entitled to the
benefits of the Registration Rights Agreement, dated September 26, 1995,
relating to contingent increases in the dividend rate provided for pursuant
thereto. See "The Exchange Offer."
INVESTMENT IN THE PREFERRED STOCK INVOLVES SIGNIFICANT RISKS DISCUSSED UNDER
"RISK FACTORS" ON PAGE 19 WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
(Continued on next page)
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is , 1995.
<PAGE>
Dividends on the New Preferred Stock are cumulative out of legally
available funds and will accumulate from September 26, 1995 or from the
most recent dividend payment date to which dividends on the Old Preferred
Stock were paid. Holders of Old Preferred Stock whose Old Preferred Stock
are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of dividends on the Old Preferred Stock
accumulated from September 26, 1995 or such dividend payment date, as the
case may be (the "Accrual Date"), to the date of the issuance of the New
Preferred Stock. Dividends on the New Preferred Stock are payable quarterly
in arrears on January 1, April 1, July 1 and October 1 of each year,
commencing January 1, 1996, accruing from the Accrual Date at the annual
rate of 11 3/4% per share of Preferred Stock.
Before October 1, 2000, dividends may, at the option of the Company, be
paid in cash or by issuing fully paid and nonassessable shares of New
Preferred Stock with an aggregate liquidation preference equal to the
amount of such dividends. On and after October 1, 2000, dividends must be
paid in cash. The New Preferred Stock has a liquidation preference of $100
per share, plus accrued and unpaid dividends thereon.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company
believes the New Preferred Stock issued pursuant to the Exchange Offer may
be offered for resale, resold and otherwise transferred by holders thereof
(other than a "Restricted Holder," being (i) a broker-dealer who purchases
such New Preferred Stock directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii)
a person that is an affiliate of the Company within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Preferred Stock are acquired in the ordinary course of such holders'
business and such holders have no arrangements with any person to
participate in the distribution of such New Preferred Stock. Eligible
holders wishing to accept the Exchange Offer must represent to the Company
that such conditions have been met. Each broker-dealer that receives New
Preferred Stock for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale
of such New Preferred Stock. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
New Preferred Stock received in exchange for Old Preferred Stock where such
Old Preferred Stock were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has
agreed that it will make this Prospectus and any amendment or supplement to
this Prospectus available to any broker-dealer for use in connection with
any such resale for a period of 90 days from the date of this Prospectus,
or such shorter period as will terminate when all Old Preferred Stock
acquired by broker-dealers for their own accounts as a result of market-
making activities or other trading activities have been exchanged for New
Preferred Stock and resold by such broker-dealers. See "Plan of
Distribution."
The Company will not receive any proceeds from this offering, and no
underwriter is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD PREFERRED STOCK IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD
NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH
JURISDICTION.
The New Preferred Stock is a new security for which there currently is no
public market. If a market for the New Preferred Stock should develop, the
New Preferred Stock could trade at a discount from their aggregate
liquidation preference. The Company does not intend to list the New
Preferred Stock on a national securities exchange or to apply for quotation
of the New Preferred Stock through the National Association of Securities
Dealers Automated Quotation System. There can be no assurance that an
active public market for the New Preferred Stock will develop.
The Company has been advised by Bear, Stearns & Co. Inc., Merrill
Lynch & Co. and Morgan Stanley & Co. Incorporated that they intend to make
a market in the New Preferred Stock; however, such entities are under no
obligation to do so and any market making activities with respect to the
New Preferred Stock may be discontinued at any time.
-2-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices: Seven World Trade Center,
13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and copies of such material
can be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy statements and other information also
may be inspected at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under
the Securities Act. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information
contained in the Registration Statement and the exhibits and schedules
thereto and reference is hereby made to the Registration Statement and the
exhibits and schedules thereto for further information with respect to the
Company and the securities offered hereby. Statements contained herein
concerning the provisions of any documents filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "Form 10-K");
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarter
ended March 31 and June 30, 1995 (each, a "Form 10-Q" and, collectively,
the "Form 10-Qs");
(c) the Company's Current Reports on Form 8-K filed September 1, 1995,
September 7, 1995 and October 17, 1995 (the "Form 8-Ks"); and
(d) all documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act on or after the date of this Prospectus
and prior to the termination of the offering made hereby.
The Company also incorporates by reference into this Prospectus the
financial statements of Cablevision of Boston Limited Partnership, Monmouth
Cablevision Associates, Riverview Cablevision Associates, L.P., Framingham
Cablevision Associates, Limited Partnership and American Movie Classics
Company included in the Company's Consent Solicitation
Statement/Prospectus, included in the Company's Registration Statement on
Form S-4 (File No. 33-62717).
Any statement contained herein or in any documents incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a
subsequent statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
As used herein, unless the contest otherwise requires, the term "Company"
refers to Cablevision Systems Corporation and its subsidiaries. The term
"Consolidated Financial Statements" refers to the Company's Consolidated
Financial Statements and the notes thereto incorporated by reference from
the Form 10-K and the term "Management's Discussion and Analysis" refers to
the Management's Discussion and Analysis of Financial Condition and Results
of Operations incorporated by reference from the Form 10-K or the Form 10-
Qs, as applicable.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM ROBERT S. LEMLE, EXECUTIVE
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY OF THE COMPANY AT THE
COMPANY'S PRINCIPAL
-3-
<PAGE>
EXECUTIVE OFFICES LOCATED AT ONE MEDIA CROSSWAYS, WOODBURY, NEW YORK 11797,
TELEPHONE NUMBER (516) 364-8450. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1995.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER
OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
TABLE OF CONTENTS
PAGE
----
Available Information .........................................
Incorporation of Certain Documents by Reference ...............
Summary .......................................................
Risk Factors ..................................................
The Company ...................................................
Recent Developments ...........................................
Use of Proceeds ...............................................
The Exchange Offer ............................................
Capitalization ................................................
Description of New Preferred Stock and Exchange Debentures ....
Certain Federal Income Tax Considerations .....................
Plan of Distribution ..........................................
Validity of Preferred Stock ...................................
Independent Accountants .......................................
-4-
<PAGE>
SUMMARY
The following information is qualified in its entirety by the more
detailed information, financial statements and pro forma financial
information appearing elsewhere in this Prospectus or incorporated by
reference herein. Investment in the securities offered hereby involves
significant risks. See "Risk Factors".
THE COMPANY
The Company is one of the largest operators of cable television systems
in the United States, with approximately 2,753,000 subscribers in 19 states
as of June 30, 1995, based on the number of basic subscribers in systems
which the Company manages and which it owns or in which it has investments.
The Company also has ownership interests in companies that produce and
distribute national and regional programming services and provide
advertising sales services for the cable television industry.
For financing purposes, the Company is structured as a restricted group
(collectively, the "Restricted Group"), consisting of Cablevision Systems
Corporation and certain of its subsidiaries, including Cablevision of New
York City ("Cablevision of NYC"), and an unrestricted group of
subsidiaries, consisting primarily of V Cable, Inc. ("V Cable"),
Cablevision MFR, Inc. ("Cablevision MFR") and Rainbow Programming Holdings,
Inc., including Rainbow Advertising Sales Corporation ("Rainbow
Advertising") (together, "Rainbow Programming"). In addition, the Company
has an unrestricted group of investments, consisting of investments in A-R
Cable Services, Inc. ("A-R Cable"), U.S. Cable Television Group, L.P.
("U.S. Cable"), Cablevision of Framingham Holding, Inc. ("CFHI"), A-R Cable
Partners, Cablevision of Boston Limited Partnership ("Cablevision of
Boston") and Cablevision of Newark. As discussed below under "Risk
Factors", the Cablevision of Chicago system, which was managed by the
Company and includes approximately 91,000 subscribers, was sold in August
1995 and is no longer managed by the Company. The Company's unrestricted
subsidiaries and investments are collectively referred to herein as the
"Unrestricted Group". The Restricted Group and each member of the
Unrestricted Group that operates cable television systems are individually
and separately financed. The indebtedness of V Cable and A-R Cable is non-
recourse to the Company, other than with respect to the capital stock of
such entities owned by the Company. Rainbow Programming's cash requirements
have been financed to date by the Restricted Group, by sales of equity
interests in the programming businesses and, as set forth below under
"Programming Services", through separate external debt financing. See
"Management's Discussion and Analysis--Liquidity and Capital Resources" for
a discussion of the restrictions on investments by the Restricted Group and
certain other matters.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable televisions systems") served approximately
1,866,000 subscribers as of June 30, 1995 in New York, Ohio, Connecticut,
New Jersey, Michigan and Massachusetts. In addition, the Company has non-
majority investments in and manages cable television systems which served
approximately 887,000 subscribers as of June 30, 1995 in Alabama, Arkansas,
Florida, Illinois, Kansas, Kentucky, Maine, Massachusetts, Mississippi,
Missouri, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania and
Tennessee. The Company's cable television systems have generally been
characterized by relatively high revenues per subscriber ($37.14 for June
1995) and ratios of premium service units to basic subscribers (1.7:1 for
June 1995). In calculating revenue per subscriber, the Company includes
only recurring service revenues and excludes installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues.
The cable television operations in the Restricted Group (other than those
of Cablevision of NYC) (such operations, the "Core Restricted Group")
served approximately 950,000 subscribers as of June 30, 1995, primarily on
Long Island, New York, in Connecticut (principally Fairfield County), in
northern New Jersey, in Westchester County, New York and in Cleveland,
Ohio. The revenue per subscriber and ratio of premium service units to
basic subscribers for cable television systems in the Core Restricted Group
for June 1995 were $37.82 and 1.5:1, respectively.
-5-
<PAGE>
In July 1992, the Company acquired from Charles F. Dolan, the Company's
Chairman, substantially all of Cablevision of NYC (the "Cablevision of NYC
Acquisition"), a cable television system under development in The Bronx and
in parts of Brooklyn, New York. Prior to the acquisition, the Company had a
15% interest in Cablevision of NYC. Mr. Dolan remains a partner in
Cablevision of NYC with a 1% interest and the right to certain preferential
payments. See "Business-- Consolidated Cable Affiliates--Cablevision of New
York City" in the Form 10-K. In October 1994, Cablevision of NYC became
part of the Restricted Group. As of June 30, 1995, Cablevision of NYC
passed approximately 912,000 homes and served approximately 371,000
subscribers. Construction of the systems in The Bronx and in Brooklyn has
been substantially completed. The Company expects that the remaining costs
to complete the construction of the Cablevision of NYC systems will be
financed by cash flow generated from the operations of Cablevision of NYC
and the amounts available under the Company's principal bank credit
agreement (the "Credit Agreement"). See "Management's Discussion and
Analysis--Liquidity and Capital Resources--Cablevision of NYC".
The cable television operations of the Unrestricted Group are conducted
through the Company's unrestricted subsidiaries, V Cable and Cablevision
MFR, and through its unrestricted investments, consisting of A-R Cable,
U.S. Cable, CFHI, A-R Cable Partners, Cablevision of Boston and Cablevision
of Newark.
In August 1994, Cablevision MFR, a wholly-owned subsidiary of the
Company, acquired substantially all of the assets of Monmouth Cablevision
Associates ("Monmouth Cable") and Riverview Cablevision Associates, L.P.
("Riverview Cable"), consisting of cable television systems in New Jersey.
Also in August 1994, CFHI, a corporation jointly-owned by the Company and
E.M. Warburg Pincus Investors, L.P., acquired substantially all of the
assets of Framingham Cablevision Associates Limited Partnership
("Framingham Cable"), consisting of a cable television system in
Massachusetts. Additionally, in June 1994, a partnership comprised of
subsidiaries of the Company and E.M. Warburg, Pincus & Co. Inc. completed
the purchase of certain assets of Nashoba Communications, a group of three
limited partnerships that operate three cable television systems in
Massachusetts. See "Business" in the Form 10-K.
V Cable was formed by the Company in February 1989 and served
approximately 372,000 subscribers as of June 30, 1995, principally in the
suburbs of Cleveland, Ohio and on Long Island. The revenue per subscriber
and ratio of premium service units to basic subscribers for V Cable's
systems for June 1995 were $31.10 and 1.0:1, respectively. As described
under "Business--Consolidated Cable Affiliates--V Cable" in the Form 10-K,
the Company consummated a significant restructuring and reorganization
involving V Cable and U.S. Cable (the "1992 V Cable Reorganization") on
December 31, 1992. See also "Recent Developments--Proposed V Cable
Transactions" for a description of certain transactions involving V Cable.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow
Programming, its wholly-owned subsidiary and member of the Unrestricted
Group, and through subsidiaries of Rainbow Programming in partnership with
certain unaffiliated entities, including National Broadcasting Company,
Inc. ("NBC") and Liberty Media Corporation ("Liberty"). Rainbow
Programming's businesses include eight regional SportsChannel services,
four national entertainment services (American Movie Classics Company
("AMCC"), Bravo Network ("Bravo"), MuchMusic ("MM") and the Independent
Film Channel ("IFC")), Rainbow News 12 Company (a regional news service
serving Long Island) and the national backdrop sports services of Prime
SportsChannel Networks ("Prime SportsChannel"). Rainbow Programming also
owns an interest in Madison Square Garden Corporation (discussed below).
Rainbow Programming's SportsChannel services provide regional sports
programming to the New York, Philadelphia, New England, Chicago,
Cincinnati, Cleveland, San Francisco and Florida areas. AMCC is a national
program service featuring classic, unedited and non-colorized films from
the 1930s through the 1970s. Bravo is a national program service offering
international films and performing arts programs, including jazz, dance,
classical music, opera and theatrical programs. See "Business--Programming
Operations--General" in the Form 10-K. MM is a Canadian music service
featuring music primarily from Canadian artists. IFC is a national program
service that airs independent films made outside the traditional Hollywood
system.
In July 1994, Rainbow Programming purchased Liberty's 50% interest in
AMCC for a purchase price of approximately $181.0 million pursuant to a
buy-sell procedure set forth in the Partnership Agreement of AMCC.
-6-
<PAGE>
In July 1995, Rainbow Programming purchased NBC's interest in SportsChannel
(New York) Associates and Rainbow News 12 Company for an aggregate purchase
price of approximately $95.5 million, and, effective as of the date of such
purchase, consolidated the results of operations of SportsChannel (New
York) Associates and Rainbow News 12 Company with those of the Company. See
"Recent Developments--NBC Option" and "Business--Programming Services" in
the Form 10-K.
On March 10, 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership
between a subsidiary of Rainbow Programming and a subsidiary of ITT
Corporation ("ITT"), acquired Madison Square Garden Corporation ("MSG") in
a transaction in which MSG was merged with and into MSG Holdings. MSG owns
the Madison Square Garden Arena and the adjoining Paramount Theater, the
New York Rangers professional hockey team, the New York Knicks professional
basketball team and the Madison Square Garden Network, a sports programming
network with over five million subscribers. Rainbow Programming has the
option until March 10, 1996 to (i) acquire interests in MSG Holdings from
ITT sufficient to equalize the interests of ITT and Rainbow Programming in
MSG Holdings, (ii) maintain its investment at the initial level, or (iii)
require ITT to purchase 50% of Rainbow Programming's initial interest in
MSG Holdings at the price paid by Rainbow Programming for such interest
plus an adjustment for Rainbow Programming's share of MSG Holdings'
operating income after interest expense, if any, following the closing of
the acquisition of MSG. Rainbow Programming has not determined which
alternative it will pursue. See "Business--Programming Services" in the
Form 10-K.
ADVERTISING SERVICES
Rainbow Advertising sells advertising time to national, regional and
local advertisers on behalf of the Company's cable television systems and
the SportsChannel and Rainbow News 12 Company programming services, as well
as on behalf of unaffiliated cable television systems.
-7-
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to 2,500,000 shares with
an aggregate liquidation preference of $250,000,000 of Old Preferred Stock
for up to 2,500,000 shares with an aggregate liquidation preference of
$250,000,000 of New Preferred Stock. The form and terms of the New
Preferred Stock are the same as the form and terms of the Old Preferred
Stock except that the New Preferred Stock have been registered under the
Securities Act and will not contain terms restricting the transfer of such
stock, and hence are not entitled to the benefits of the Registration
Rights relating to the contingent increases in the dividend rate provided
for pursuant thereto. The Old Preferred Stock and the New Preferred Stock
are herein collectively referred to as the "Preferred Stock." See
"Description of New Preferred Stock."
THE EXCHANGE OFFER ....... One share of New Preferred Stock with an
aggregate liquidation preference of $100 will be
issued in exchange for each one share of Old
Preferred Stock with an aggregate liquidation
preference of $100. As of the date hereof,
2,500,000 shares of Old Preferred Stock with an
aggregate liquidation preference of $250,000,000
are issued and outstanding. The Company will
issue the New Preferred Stock to tendering
holders of Old Preferred Stock on or promptly
after the Expiration Date.
RESALE ................... The Company believes that the New Preferred
Stock issued pursuant to the Exchange Offer
generally will be freely transferable by the
holders thereof without registration or any
prospectus delivery requirement under the
Securities Act, except that a "dealer" or any of
its "affiliates", as such terms are defined
under the Securities Act, that exchanges Old
Preferred Stock held for its own account (a
"Restricted Holder") may be required to deliver
copies of this Prospectus in connection with any
resale of the New Preferred Stock (the "Resale
Preferred Stock") issued in exchange for such
Old Preferred Stock (the "Prospectus Delivery
Requirement"). See "The Exchange Offer--General"
and "Plan of Distribution."
EXPIRATION DATE .......... 5:00 p.m., New York City time, on , 1995, unless
the Exchange Offer is extended, in which case
the term "Expiration Date" means the latest date
and time to which the Exchange Offer is
extended. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
ACCRUED DIVIDENDS ON THE
NEW PREFERRED STOCK AND
THE OLD PREFERRED STOCK . Dividends on the New Preferred Stock will
accumulate from the Accrual Date. Holders of Old
Preferred Stock whose Old Preferred Stock are
accepted for exchange will be deemed to have
waived the right to receive any payment in
respect of dividends on such Old Preferred Stock
accrued from the Accrual Date to the date of the
issuance of the New Preferred Stock.
Consequently, assuming the Exchange Offer is
consummated prior to the record date in respect
of the January 1, 1996 dividend payment for the
Old Preferred Stock, holders who exchange their
Old Preferred Stock for New Preferred Stock will
receive the same dividend payment on January 1,
1996 that they would have received had they not
accepted the Exchange Offer. See "The Exchange
Offer--Dividends on the New Preferred Stock."
TERMINATION OF THE
EXCHANGE OFFER .......... The Company may terminate the Exchange Offer if
it determines that its ability to proceed with
the Exchange Offer could be materially impaired
due to any legal or governmental action, any new
law, statute, rule or regulation or any
interpretation of the staff of the Commission of
any existing law, statute, rule or regulation.
Holders of Old Preferred Stock will have certain
rights against
-8-
<PAGE>
the Company under the Registration Rights should
the Company fail to consummate the Exchange
Offer. See "The Exchange Offer--Termination."
No federal or state regulatory requirements must
be complied with or approvals obtained in
connection with the Exchange Offer, other than
applicable requirements under federal and state
securities laws.
PROCEDURES FOR TENDERING
OLD PREFERRED STOCK ..... Each holder of Old Preferred Stock wishing to
accept the Exchange Offer must complete, sign
and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the Old Preferred Stock to be exchanged and any
other required documentation to , as
Exchange Agent, at the address set forth herein
and therein or effect a tender of Old Preferred
Stock pursuant to the procedures for book-entry
transfer as provided for herein. See "The
Exchange Offer--Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL HOLDERS ...... Any beneficial holder whose Old Preferred Stock
are registered in the name of his broker,
dealer, commercial bank, trust company or other
nominee and who wishes to tender in the Exchange
Offer should contact such registered holder
promptly and instruct such registered holder to
tender on his behalf. If such beneficial holder
wishes to tender on his own behalf, such
beneficial holder must, prior to completing and
executing the Letter of Transmittal and
delivering his Old Preferred Stock, either make
appropriate arrangements to register ownership
of the Old Preferred Stock in such holder's name
or obtain a properly completed stock power from
the registered holder. The transfer of record
ownership may take considerable time. See "The
Exchange Offer--Procedures for Tendering."
GUARANTEED DELIVERY
PROCEDURES .............. Holders of Old Preferred Stock who wish to
tender their Old Preferred Stock and whose Old
Preferred Stock are not immediately available or
who cannot deliver their Old Preferred Stock and
a properly completed Letter of Transmittal or
any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date may tender their Old Preferred
Stock according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS ........ Tenders of Old Preferred Stock may be withdrawn
at any time prior to 5:00 p.m., New York City
time, on the business day prior to the
Expiration Date, unless previously accepted for
exchange. See "The Exchange Offer--Withdrawal of
Tenders."
ACCEPTANCE OF OLD PREFERRED
STOCK AND DELIVERY OF
NEW PREFERRED STOCK ..... Subject to certain conditions (as summarized
above in "Termination of the Exchange Offer" and
described more fully in "The Exchange Offer--
Termination"), the Company will accept for
exchange any and all Old Preferred Stock which
are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The New Preferred Stock issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--General."
-9-
<PAGE>
CERTAIN TAX
CONSIDERATIONS .......... The exchange pursuant to the Exchange Offer will
generally not be a taxable event for federal
income tax purposes. See "Certain Federal Income
Tax Considerations."
EXCHANGE AGENT ........... is serving as exchange agent
(the "Exchange Agent") in connection with the
Exchange Offer. The mailing address of the
Exchange Agent is: ,
, , Attention:
. Hand deliveries and deliveries by
overnight courier should be addressed to
, ,
Attention: . For information with
respect to the Exchange Offer, the telephone
number for the Exchange Agent is and the
facsimile number for the Exchange Agent is
.
USE OF PROCEEDS .......... There will be no cash proceeds payable to the
Company from the issuance of the New Preferred
Stock pursuant to the Exchange Offer. Of the net
proceeds received by the Company from the sale
of the Old Preferred Stock, approximately
$100,000,000 (plus accrued dividends thereon)
was applied to the redemption of the Company's
outstanding Series E Redeemable Exchangeable
Convertible Preferred Stock "Series E Preferred
Stock"), with the remainder applied to repay
borrowings under the Credit Agreement. The
Company expects to reborrow the amount repaid
under the Credit Agreement in the future for
general corporate purposes. The Company expects
to raise additional funds in the future. See
"Use of Proceeds" herein.
SUMMARY OF TERMS OF THE NEW PREFERRED STOCK AND THE EXCHANGE DEBENTURES
NEW PREFERRED STOCK
DIVIDENDS ................ Cumulative at 11 3/4% per annum out of legally
available funds. Dividends will accumulate from
the Accrual Date and are payable quarterly in
arrears on January 1, April 1, July 1 and
October 1 of each year, commencing January 1,
1996. The rights to dividends on the New
Preferred Stock will be cumulative (whether or
not earned or declared) on a daily basis. Before
October 1, 2000, dividends may, at the option of
the Company, be paid in cash or by issuing
additional fully paid and nonassessable shares
of New Preferred Stock with an aggregate
liquidation preference equal to the amount of
such dividends. On or after October 1, 2000,
dividends are payable only in cash. For federal
income tax purposes, distributions with respect
to the New Preferred Stock will not qualify as
dividends and will be treated as a return of
capital until the Company has earnings and
profits. See "Certain Federal Income Tax
Considerations--Distributions on Preferred
Stock".
LIQUIDATION PREFERENCE ... $100 per share.
VOTING ................... Holders of the New Preferred Stock have no
general voting rights except as provided by law
and as provided in the Certificate of
Designations therefor. Upon the failure of the
Company to (i) pay dividends in cash or, to the
extent permitted by its terms, by the issuance
of additional shares of New Preferred Stock, for
more than six quarters or (ii) discharge any
redemption obligation with respect to the New
Preferred Stock, the size of the Company's Board
of Directors will be increased by one director,
and holders of a majority of the outstanding
shares of Preferred Stock, voting or consenting,
as the case may be, separately as a class, will
be entitled to elect a director to fill the
newly created vacancy. The Company may not issue
any new class of Senior
-10-
<PAGE>
Securities (as defined herein) without the
approval of the holders of at least a majority
of the shares of Preferred Stock then
outstanding, voting or consenting, as the case
may be, separately as a class.
MANDATORY REDEMPTION ..... The Company is required to redeem the New
Preferred Stock out of legally available funds
on October 1, 2007 at a redemption price equal
to the liquidation preference thereof plus
accrued and unpaid dividends thereon to the date
of redemption.
OPTIONAL REDEMPTION ...... On and after October 1, 2002, the New Preferred
Stock is redeemable, at the option of the
Company, in whole or in part, at the redemption
prices set forth herein, plus accrued and unpaid
dividends thereon to the date of redemption. In
addition, shares of the Preferred Stock
representing up to 33 1/3% of the aggregate
liquidation preference of the Preferred Stock
may be redeemed before October 1, 1998 at a
redemption price per share equal to the
liquidation preference of $100 per share plus
accrued and unpaid dividends thereon plus a
premium of $10 per share of Preferred Stock out
of the net proceeds of a sale of Junior Stock
(as defined herein) to a Strategic Equity
Investor (as defined herein) or a public
offering of Class A Common Stock, provided that
following such redemption at least 1,666,667
shares of Preferred Stock (representing at least
66 2/3% of the amount of Preferred Stock
initially issued) remain outstanding.
Furthermore, the Company may, at its option,
prior to October 1, 2002, redeem the New
Preferred Stock, in whole but not in part, at
any time within 180 days after a Change of
Control (as defined herein), at a redemption
price per share equal to the sum of (i) the
liquidation preference of $100 per share plus
(ii) accrued and unpaid dividends to the date of
redemption plus (iii) the Make-Whole Premium (as
defined herein), which is based on a discount
rate equal to the Treasury Rate (as defined
herein) plus 50 basis points.
EXCHANGE FEATURE ......... The New Preferred Stock are exchangeable into
the Exchange Debentures at the option of the
Company, in whole but not in part, on or after
January 1, 1996.
RANKING .................. The New Preferred Stock will rank, subject to
certain conditions, junior to (i) each class of
capital stock of the Company or series of
preferred stock issued by the Company
established after the initial issuance of the
Preferred Stock the terms of which specifically
provide that such class or series will rank
senior to the New Preferred Stock as to
dividends and distributions upon the
liquidation, winding-up or dissolution of the
Company and (ii) all liabilities and obligations
(whether or not for borrowed money) of the
Company. The New Preferred Stock will rank on a
parity with the Old Preferred Stock and the
Company's 8% Series C Cumulative Preferred Stock
("Series C Preferred Stock") and Series D
Cumulative Preferred Stock (which may be issued
in exchange for shares of Series C Preferred
Stock).
EXCHANGE OFFER; REGISTRATION
RIGHTS .................. The Company has entered into a registration
rights agreement with the Initial Purchasers of
the Old Preferred Stock (the "Registration
Rights Agreement") pursuant to which the Company
agreed, for the benefit of the holders of the
Old Preferred Stock, at the Company's cost (i)
within 30 days after the date of original issue
of the Old Preferred Stock, to file a
registration statement (the "Exchange Offer
Registration Statement") with the Commission
with respect to a registered offer to exchange
(the "Exchange Offer") the Old Preferred Stock
for the New Preferred Stock and (ii) use its
best efforts to cause the Exchange Offer
Registration Statement to be declared effective
under the
-11-
<PAGE>
Securities Act, within 120 days after the date
of original issuance of the Old Preferred Stock.
Upon the Exchange Offer Registration Statement
being declared effective, the Company agreed to
offer the New Preferred Stock in exchange for
surrender of the Old Preferred Stock. For each
share of Old Preferred Stock surrendered to the
Company pursuant to the Exchange Offer, the
holder of such Old Preferred Stock will receive
a share of New Preferred Stock. In the event
that the Exchange Offer is not consummated
within 180 days of the date of issuance of the
Old Preferred Stock, the Company will, at its
cost, as promptly as practicable file a shelf
registration statement (the "Shelf Registration
Statement") covering resales of the Old
Preferred Stock and use its best efforts to
cause the Shelf Registration Statement to be
declared effective under the Securities Act.
In the event that the Exchange Offer is not
consummated or a Shelf Registration Statement is
not declared effective on or prior to the 180th
calendar day following the date of original
issue of the Old Preferred Stock, the dividend
rate borne by the Old Preferred Stock shall be
increased by one-quarter of one percent per
annum for the first 90 days following such 180-
day period. Such dividend rate will increase by
an additional one-quarter of one percent per
annum at the beginning of each subsequent 90-day
period, up to a maximum aggregate increase of
one percent per annum. Upon the consummation of
the Exchange Offer or the effectiveness of a
Shelf Registration Statement, as the case may
be, the dividend rate borne by the Old Preferred
Stock will be reduced to the original dividend
rate. Dividends on the New Preferred Stock will
accumulate at the original dividend rate
accruing on the Old Preferred Stock.
ABSENCE OF PUBLIC MARKET . The New Preferred Stock is a new security for
which there currently is no market. Although
Bear, Stearns & Co. Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley &
Co. Incorporated, the initial purchasers of the
Old Preferred Stock (collectively, the "Initial
Purchasers") have informed the Company that they
currently intend to make a market in the New
Preferred Stock and, if issued, the Exchange
Debentures, they are not obligated to do so and
any such market making may be discontinued at
any time without notice. Accordingly, there can
be no assurance as to the development or
liquidity of any market for the Preferred Stock
and, if issued, the Exchange Debentures. The
Company does not intend to apply for listing of
the New Preferred Stock or, if issued, the
Exchange Debentures on any securities exchange
or for quotation through the National
Association of Securities Dealers Automated
Quotation System.
EXCHANGE DEBENTURES
MATURITY DATE ............ October 1, 2007.
INTEREST ................. Interest will accrue at the dividend rate of the
New Preferred Stock and be payable in arrears on
January 1 and July 1 of each year, commencing
with the first of such dates to occur after the
date upon which Exchange Debentures are issued
in exchange for the Preferred Stock ("Exchange
Date"). Before October 1, 2000, interest may, at
the option of the Company, be paid in cash or by
issuing additional Exchange Debentures with a
principal amount equal to such interest. On and
after October 1, 2000, interest on the Exchange
Debentures may be paid only in cash.
OPTIONAL REDEMPTION ...... On and after October 1, 2002, the Exchange
Debentures are redeemable, at the option of the
Company, in whole or in part, at the redemption
prices set forth
-12-
<PAGE>
herein plus accrued and unpaid interest thereon
to the redemption date. In addition, up to
33 1/3% in aggregate principal amount of the
Exchange Debentures may be redeemed before
October 1, 1998 at a price of 110% of the
principal amount thereof, plus accrued and
unpaid interest thereon, out of the net proceeds
of a sale of Junior Stock to a Strategic Equity
Investor or a public offering of Class A Common
Stock, provided that following such redemption
at least $166,666,667 principal amount of
Exchange Debentures remains outstanding. See
"Description of New Preferred Stock and Exchange
Debentures".
SUBORDINATION ............ Subordinated to all existing and future Senior
Indebtedness (as defined) of the Company. The
Exchange Debentures will rank pari passu with
the Company's $275,000,000 of 10 3/4% Senior
Subordinated Debentures due 2004, the Company's
$200,000,000 of 9 7/8% Senior Subordinated
Debentures due 2013 and the Company's
$150,000,000 of 9 7/8% Senior Subordinated
Debentures due 2023 (collectively, the "Existing
Debentures"). The amount of Senior Indebtedness
outstanding at June 30, 1995, adjusted to give
pro forma effect to the transactions described
under "Capitalization" and the application of
the estimated net proceeds to the Company from
the Offering, would have been approximately
$1,096.5 million. At June 30, 1995, the Company
also had outstanding $955.1 million of senior
subordinated indebtedness and obligations
(including $331.5 million of indebtedness of
subsidiaries guaranteed by the Company, included
in indebtedness of consolidated subsidiaries set
forth in the next sentence) that would have
ranked pari passu with the Exchange Debentures.
Also, at June 30, 1995, consolidated
subsidiaries of the Company had outstanding,
adjusted to give pro forma effect to the
transactions described under "Capitalization"
and the application of the estimated net
proceeds to the Company from the Offering,
approximately $1,284.4 million of indebtedness
which, insofar as the assets of those
subsidiaries are concerned, would have been
effectively senior to the Exchange Debentures.
CERTAIN RESTRICTIONS ..... The Indenture for the Exchange Debentures, among
other things, contains restrictions (with
certain exceptions) on the ability of the
Company and its Restricted Subsidiaries (as
defined) to incur additional indebtedness, make
certain dividend payments or payments to redeem
or retire capital stock, invest in Unrestricted
Subsidiaries (as defined) or affiliates, engage
in certain transactions with affiliates and
merge or consolidate with or transfer all or
substantially all of their assets to another
entity. The Indenture also prohibits the Company
from issuing any indebtedness that is senior in
right of payment to the Exchange Debentures and
expressly subordinate in right of payment to any
other indebtedness of the Company.
-13-
<PAGE>
Selected Financial Data
The historical consolidated statement of operations data (except for
book value per common share, deficiency of earnings available to cover fixed
charges and deficiency of earnings available to cover fixed charges and
preferred stock dividends) and balance sheet data for each year ended December
31 and as of December 31 in each year in the five-year period ended December 31,
1994, included in the following selected financial data have been derived from
the Consolidated Financial Statements of the Company, audited by KPMG Peat
Marwick LLP, independent public accountants. The historical consolidated
statement of operations data and balance sheet data for the periods ended and as
of June 30, 1995 and 1994 included in the following selected financial data have
been derived from financial statements of the Company that have not been
audited, but that, in the opinion of the management of the Company, reflect all
adjustments necessary for the fair presentation of such data for the interim
periods. The results of operations for the six-month period ended June 30, 1995
are not necessarily indicative of the results of operations for the full year
although the Company expects to incur a substantial loss for the year ending
December 31, 1995.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
--------------------- ---------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement of Operations
Data(1):
Net revenues........................... $ 509,135 $ 368,177 $ 837,169 $ 666,724 $ 572,487 $ 603,272 $ 562,989
Operating expenses:
Technical............................ 193,243 134,640 302,885 241,877 204,449 213,059 202,850
Selling, general and administrative.. 131,611 72,404 195,942 172,687 120,356 121,527 118,825
Restructuring charge................. - 4,306(2) 4,306(2) - - - -
Depreciation and amortization........ 159,537 110,095 271,343 194,904 168,538 215,326 216,288
-------- --------- -------- --------- --------- --------- ---------
Operating profit.......................... 24,744 46,732 62,693 57,256 79,144 53,360 25,026
Other income (expense):
Interest expense, net................ (154,528) (118,094) (261,781) (230,327) (193,379) (257,189) (261,114)
Provision for preferential payment to
related party...................... (2,800) (2,800) (5,600) (5,600) (2,662) - -
Provision for loss on Olympics
venture............................ - - - - (50,000)(3) - -
Loss on sale of preferred stock...... - - - - (20,000)(4) - -
Write-off of deferred financing costs (2,888)(5) - (9,884)(5) (1,044)(5) (12,284)(5) - -
Loss on redemption of debentures..... - - (7,088)(5) - - - -
Share of affiliates' net loss........ (52,692) (34,257) (82,864) (61,017) (47,278) (23,780) (39,980)
Gain (loss) on sale of programming
interests, net..................... - - - (330) 7,053 15,505 -
Minority interest.................... (4,276) - (3,429) 3,000 - - -
Gain on sale of marketable
securities, net.................... - - - - 733 5,806 -
Settlement of litigation and related
matters............................ - - - - (5,655) (9,677) -
Transaction fees..................... - - - - - - 14,759
Miscellaneous, net................... (2,999) (3,432) (7,198) (8,720) (6,175) (11,224) (10,066)
--------- --------- --------- --------- --------- --------- ---------
Net loss............................... (195,439) (111,851) (315,151) (246,782) (250,503) (227,199) (271,375)
Preferred dividend requirement......... (4,918) (2,054) (6,385) (885) (885) (4,464) (4,065)
--------- --------- --------- --------- -------- --------- ---------
Net loss applicable to common
shareholders......................... $(200,357) $(113,905) $(321,536) $(247,667) $ (251,388) $(231,663) $ (275,440)
========= ========= ========= ========== ========= ========== =========
Net loss per common share.............. $ (8.45) $ (4.88) $ (13.72) $ (10.83) $ (11.17) $ (10.32) $ (12.36)
========= ========= ========= ========= ========= ========== =========
Average number of common shares
outstanding (in thousands)........... 23,710 23,323 23,444 22,859 22,512 22,446 22,290
========= ========= ========= ========= ========= ========== =========
Book value per common share............ $ (84.77) $ (64.52) $ (76.93) $ (64.61) $ (55.28) $ (41.49) $ (31.36)
========= ========= ========= ========= ========= ========== =========
Deficiency of earnings available to
cover fixed charges.................. $(195,402) $(111,777) $(315,003) $(246,644) $(250,429) $(227,124) $(271,301)
========= ========= ========= ========= ========= ========= =========
Deficiency of earnings available to
cover fixed charges and preferred
stock dividends...................... $(200,320) $(113,831) $(321,388) $(247,529) $(251,314) $(231,588) $(275,366)
========= ========= ========= ========= ========= ========= =========
</TABLE>
(footnotes on following page)
-14-
<PAGE>
<TABLE>
<CAPTION>
As of
June 30, As of December 31,
------------------------- -----------------------------------------------------
1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per subscriber data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data(1):
Total assets.............................. $ 2,254,868 $ 2,176,413 $ 1,309,444 $ 1,251,157 $ 1,475,672 $ 1,641,612
Total debt................................ 3,345,942 3,169,236 2,235,499 2,004,452 2,211,056 2,170,275
Cumulative redeemable preferred stock(4).. - - - - 32,094 28,515
Stockholders' deficiency.................. (2,016,763) (1,818,535) (1,503,244) (1,250,248) (932,428) (702,448)
Statistical Data(1):
Homes passed(6)........................... 3,004,000 2,899,000 2,240,000 2,019,000 2,005,000 1,976,000
Basic service subscribers................. 1,866,000 1,768,000 1,379,000 1,262,000 1,372,000 1,326,000
Basic penetration(7)...................... 62.1% 61.0% 61.5% 62.5% 68.4% 67.1%
Number of premium television units........ 3,223,000 3,208,000 3,003,000 2,802,000 2,326,000 2,401,000
Average number of premium units per basic
subscriber............................... 1.7 1.8 2.2 2.2 1.7 1.8
Average monthly revenue per basic
subscriber(8)............................ $ 37.14 $ 36.33 $ 36.59 $ 37.64 $ 34.43 $ 34.09
</TABLE>
(1) The consolidated statement of operations, balance sheet and statistical
data reflect (i) the deconsolidation of A-R Cable, effective as of January
1, 1992, as a result of the restructuring of A-R Cable, (ii) the
acquisition of Cablevision of NYC, effective as of July 10, 1992, and (iii)
various acquisitions of cable television systems and other businesses
during the periods presented. (See "Business-Cable Television Operations"
in the Form 10-K and "Condensed Pro Forma Consolidated Financial
Information" herein.) Acquisitions made by the Company during the periods
presented were accounted for under the purchase method of accounting and,
accordingly, the acquisition costs were allocated to the net assets
acquired based on their fair value, except for the acquisition of
partnership interests in Cablevision of NYC from Mr. Dolan and entities
affiliated with him, which were recorded at Mr. Dolan's and such entities'
historical costs. Acquisitions are reflected in the consolidated statement
of operations, balance sheet and statistical data from the time of
acquisition. Certain reclassifications have been made to the 1991 and 1990
financial statement amounts to conform to the 1992 presentation.
(2) The Company recorded a one-time charge in the first quarter of 1994 to
provide for employee severance and related costs resulting from a
restructuring of its operations.
(3) In 1992, the Company recognized a $50.0 million loss in connection with
Rainbow Programming's commitment in respect of its venture with NBC
relating to the 1992 Summer Olympics, which the Company paid in January
1993.
(4) In connection with the 1992 V Cable Reorganization, the Company redeemed
A-R Cable's redeemable preferred stock on May 11, 1992, incurring a loss of
$20 million.
(5) In connection with the 1992 V Cable Reorganization, the Company wrote off
approximately $7.5 million of deferred financing costs related to V Cable's
debt. Also, a portion of the Company's deferred financing costs of
approximately $4.8 million in 1992 and $1.0 million in 1993, related to the
replacement of bank debt with subordinated debt, were written off. In
October 1994, the Company entered into a new bank credit agreement and
redeemed $200 million of its reset debentures. The related deferred
financing costs and unamortized discount relating to each were written off
and approximately $2.0 million in redemption fees was incurred in
connection with the redemption of the reset debentures. In January 1995,
Rainbow Programming amended its credit agreement to refinance its existing
borrowings and to provide funds for the acquisition of SportsChannel (New
York) Associates and Rainbow News 12 Company, resulting in an approximately
$2.3 million write-off of deferred financing costs.
(6) Homes passed is based upon homes passed by cable actually marketed and
does not include multiple dwelling units passed by the cable plant that are
not connected to it.
(7) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(8) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month of the period, divided by average basic
subscribers for that month.
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<PAGE>
Supplemental Financial and Operating Data
The following tables set forth information concerning the Company's
Core Restricted Group, Cablevision of NYC, combined Restricted Group (which
includes Cablevision of NYC), V Cable and Monmouth Cable and Riverview Cable. In
October 1994, Cablevision of NYC became a member of Cablevision's Restricted
Group. The data should be read in conjunction with the Company's Consolidated
Financial Statements and "Management's Discussion and Analysis".
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
--------------------------- --------------------------------------------
Financial Data 1995 1994 1994 1993 1992
-------------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Core Restricted Group:
Statement of Operations Data:
Net revenues................................ $ 229,381 $ 212,632 $ 435,171 $ 393,815 $ 378,171
Operating profit before depreciation and
amortization(1)(2)...................... 107,014 107,007 212,388 196,760 192,553
Depreciation and amortization............... 60,846 53,667 119,760 90,407 85,939
Operating profit(2)......................... 46,168 53,340 92,628 106,353 106,614
Total interest expense...................... 75,829 66,259 138,154 129,799 112,137
Balance Sheet Data:
Total assets................................ $ 1,018,329 $ 847,397 $ 929,376 $ 661,303 $ 547,373
Senior debt................................. 1,014,375(3) 469,252 829,895(3) 359,022 585,381
Subordinated debt........................... 623,571 822,855 623,534 822,781 474,247
Total debt.................................. 1,637,946(3) 1,292,107 1,453,429(3) 1,181,803 1,059,628
Financial Ratios and Other Data:
Operating profit before depreciation and
amortization to net revenues............ 46.7% 50.3% 48.8% 50.0% 50.9%
Total debt to operating profit before
depreciation and amortization........... 7.6x(4) 6.0x(4) 6.8x 6.0x 5.5x
Operating profit before depreciation and
amortization to total interest expense.. 1.41x 1.61x 1.54x 1.52x 1.72x
Capital expenditures........................ $ 52,015 $ 66,842 $ 147,534 $ 106,379 $ 65,331
Cablevision of NYC:
Statement of Operations Data:
Net revenues................................ $ 97,725 $ 68,402 $ 149,396 $ 101,539 $ 67,409
Operating profit before depreciation and
amortization(1)......................... 26,796 16,125 36,928 18,803 11,731
Financial Ratios and Other Data:
Operating profit before depreciation and
amortization to net revenues............ 27.4% 23.6% 24.7% 18.5% 17.4%
Capital expenditures........................ $ 45,213 $ 48,406 $ 103,544 $ 86,669 $ 55,652
Restricted Group:
Statement of Operations Data:
Net revenues................................ $ 327,106 $ 281,034 $ 584,567 $ 495,354 $ 445,580
Operating profit before depreciation and
amortization(1).......................... 133,810 123,132 249,316 215,563 204,284
Depreciation and amortization............... 81,483 68,523 154,187 111,366 102,015
Operating profit............................ 52,327 54,609 95,129 104,197 102,269
Total interest expense...................... 82,036 71,676 150,626 137,960 118,230
Balance Sheet Data:
Total assets................................ $ 1,212,428 $ 1,052,675 $ 1,119,882 $ 838,746 $ 660,002
Senior debt................................. 1,152,975(3) 631,475 969,895(3) 488,128 664,081
Subordinated debt........................... 623,571 822,855 623,534 822,781 474,247
Obligation to related party................. 190,212 88,748 193,079 91,619 67,000
Total debt.................................. 1,966,758(3) 1,543,078 1,786,508(3) 1,402,528 1,205,328
Financial Ratios and Other Data:
Operating profit before depreciation and
amortization to net revenues............ 40.9% 43.8% 42.6% 43.5% 45.8%
Total debt to operating profit before
depreciation and amortization........... 7.3x(4) 6.3x(4) 7.2x 6.5x 5.9x
Operating profit before depreciation and
amortization to total interest expense.. 1.6x 1.7x 1.7x 1.6x 1.7x
Capital expenditures........................ $ 97,228 $ 115,248 $ 251,078 $ 193,048 $ 120,983
</TABLE>
(footnotes on following page)
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<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------------- ------------------------------------
Financial Data 1995 1994 1994 1993 1992
-------------- --------- --------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
V Cable:
Statement of Operations Data:
Net revenues.............................................. $ 72,789 $ 70,018 $ 140,691 $ 137,853 $ 129,409
Operating profit before depreciation and amortization(1).. 32,929 34,796 68,592 65,789 63,773
Depreciation and amortization............................. 33,965 40,012 83,671 80,287 69,148
Operating loss............................................ (1,036) (5,216) (15,079) (14,498) (5,375)
Total interest expense.................................... 51,496 46,897 96,723 94,452 79,494
Balance Sheet Data:
Total assets.............................................. $ 411,907 $ 490,087 $ 447,381 $ 536,629 $ 558,988
Total debt................................................ 880,888 844,091 862,440 832,964 799,098
Financial Ratios and Other Data:
Operating profit before depreciation and amortization
to net revenues....................................... 45.2% 49.7% 48.8% 47.7% 49.3%
Total debt to operating profit before depreciation
and amortization...................................... 13.3x(4) 12.0x(4) 12.6x 12.7x 12.5x
Operating profit before depreciation and amortization
to total interest expense............................. 0.64x 0.74x 0.71x 0.70x 0.80x
Capital expenditures...................................... $ 13,163 $ 6,793 $ 19,981 $ 20,304 $ 17,608
Monmouth Cable and Riverview Cable:
Balance Sheet Data:
Total assets.............................................. $ 348,574 - $ 375,982 - -
Senior debt............................................... 209,000 - 230,000 - -
Subordinated debt......................................... 141,268 - 141,268 - -
Total debt................................................ 350,268 - 371,268 - -
</TABLE>
<TABLE>
<CAPTION>
As of June As of December 31,
30, --------------------------------------
1995 1994 1993 1992
---------- ---------- ---------- -----------
Statistical Data (Dollars in Thousands)
----------------
<S> <C> <C> <C> <C>
Core Restricted Group:
Homes passed(5).............................................. 1,315,000 1,309,000 1,086,000 1,079,000
Basic service subscribers at end of period................... 950,000 928,000 815,000 790,000
Basic penetration(6)......................................... 72.2% 70.9% 75.0% 73.2%
Number of premium television units........................... 1,459,000 1,572,000 1,504,000 1,586,000
Average number of premium units per basic subscriber......... 1.5 1.7 1.8 2.0
Average revenue per basic subscriber(7)...................... $ 37.82 $ 37.10 $ 38.01 $ 38.85
Cablevision of NYC:
Homes passed(5).............................................. 912,000 829,000 645,000 436,000
Basic service subscribers at end of period................... 371,000 315,000 214,000 134,000
Basic penetration(6)......................................... 40.7% 37.9% 33.1% 30.7%
Number of premium television units........................... 1,272,000 1,127,000 1,053,000 730,000
Average number of premium units per basic subscriber......... 3.4 3.6 4.9 5.4
Average revenue per basic subscriber(7)...................... $ 42.18 $ 41.84 $ 41.12 $ 46.62
Restricted Group:
Homes passed(5).............................................. 2,227,000 2,138,000 1,731,000 1,515,000
Basic service subscribers at end of period................... 1,321,000 1,243,000 1,029,000 924,000
Basic penetration(6)......................................... 59.3% 58.1% 59.4% 61.0%
Number of premium television units........................... 2,731,000 2,699,000 2,557,000 2,316,000
Average number of premium units per basic subscriber......... 2.1 2.2 2.5 2.5
Average revenue per basic subscriber(7)...................... $ 39.03 $ 38.29 $ 38.65 $ 39.96
V Cable:
Homes passed(5).............................................. 515,000 513,000 509,000 504,000
Basic service subscribers at end of period................... 372,000 364,000 350,000 338,000
Basic penetration(6)......................................... 72.2% 71.1% 68.7% 67.1%
Number of premium television units........................... 360,000 375,000(8) 446,000 485,000
Average number of premium units per basic subscriber......... 1.0 1.0 1.3 1.4
Average revenue per basic subscriber(7)...................... $ 31.10 $ 30.41 $ 30.56 $ 31.30
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
As of June As of December 31,
30, --------------------------------------
1995 1994 1993 1992
---------- ---------- ---------- -----------
Statistical Data (Dollars in Thousands)
----------------
<S> <C> <C> <C> <C>
Monmouth Cable and Riverview Cable:
Homes passed(5).............................................. 262,000 248,000 - -
Basic service subscribers at end of period................... 173,000 161,000 - -
Basic penetration(6)......................................... 66.0% 65.1% - -
Number of premium television units........................... 132,000 133,000 - -
Average number of premium units per basic subscriber......... 0.8 0.8 - -
Average revenue per basic subscriber(7)...................... $ 35.70 $ 34.67 - -
</TABLE>
- ---------------
Footnotes
(1) Operating profit before depreciation and amortization is presented here
to provide additional information about the Company's ability to meet
future debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(2) Includes management fees from Cablevision of NYC of $3.4 million, $2.4
million, $5.2 million, $3.5 million and $2.4 million, respectively.
(3) Excludes Cablevision MFR seller note in the amount of approximately
$141.3 million that is guaranteed by the Core Restricted Group.
(4) Operating profit before depreciation and amortization is annualized for
purposes of preparing interim financial ratios that include balance sheet
items.
(5) Homes passed is based upon homes passed by cable actually marketed and
does not include multiple dwelling units passed by the cable plant that are
not connected to it.
(6) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(7) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month in the period presented, divided by the
average number of basic subscribers for that month.
(8) Reflects the reclassification of units of Madison Square Garden Network
subscribers to non-premium units in February 1994.
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<PAGE>
RISK FACTORS
Purchase of the New Preferred Stock offered hereby (the "Offering")
involves various risks, including the following principal factors, which,
together with the other matters set forth herein or incorporated by
reference herein, should be carefully considered by prospective
investors.
Substantial Indebtedness and High Degree of Leverage. The
Company has incurred substantial indebtedness, primarily to finance
acquisitions and expansion of its operations and, to a lesser extent, for
investments in and advances to affiliates. The Company's consolidated debt
and Series E Redeemable Convertible Exchangeable Preferred Stock (the
"Series E Preferred Stock") (which the Company expects to redeem on
November 2, 1995 from the proceeds of the offering of the Old Preferred
Stock) aggregated approximately $3.4 billion at June 30, 1995 ($3.2 billion
on a pro forma basis after giving effect to the acquisition by the Company
of Cablevision of Boston Limited Partnership ("Cablevision of Boston") and
the proposed transactions involving V Cable, Inc. (the "Proposed V Cable
Transactions") with varying maturities to 2023, including an aggregate of
approximately $711.1 million maturing on or prior to December 31, 1999. See
Note 4 of Notes to the Consolidated Financial Statements. In addition, the
Company's unconsolidated subsidiary, Rainbow Programming, incurred
approximately $94.0 million of indebtedness in July 1995 in connection with
the acquisition of NBC's interest in SportsChannel (New York) Associates
and Rainbow News 12 Company (the "NBC Option").
Net Losses and Stockholders' Deficit. The Company reported net
losses for the six months ended June 30, 1995 and 1994 of $195.4 million
and $111.9 million, respectively, and for the years ended December 31,
1994, 1993 and 1992 of $315.2 million, $246.8 million and $250.5 million,
respectively. At June 30, 1995, the Company had a stockholders' deficit of
$2.0 billion. The losses primarily reflect high levels of interest expense
and depreciation and amortization charges relating to the depreciation of
assets obtained through, and debt incurred to finance, acquisitions.
Interest expense and depreciation and amortization charges remained at a
high level throughout 1992, 1993 and 1994 and will continue at high levels
in 1995 and future years as a result of previously completed, pending and
future acquisitions, expected capital expenditures and additional
investments in the Company's programming operations, including the
approximately $95.5 million payment made in connection with the exercise of
the NBC Option. The Company expects to continue incurring substantial
losses for at least the next several years. See "Management's Discussion
and Analysis--Liquidity and Capital Resources".
Need for Additional Financing. The Company's business requires
substantial investment on a continuing basis to finance capital
expenditures and related expenses for, among other things, upgrade of the
Company's cable plant (including the need to make cable system upgrades
mandated by franchise authorities), the offering of new services and the
servicing, repayment or refinancing of its indebtedness. The Company will
require significant additional financing, through debt and/or equity
issuances, to meet its capital expenditure plans and to pay its debt
obligations. There can be no assurance that the Company will be able to
issue additional debt or obtain additional equity capital on satisfactory
terms, or at all, to meet its future financing needs. See "Management's
Discussion and Analysis--Liquidity and Capital Resources".
Future Capital Expenditures and Programming Commitments. The
Company's cable systems have commitments for capital expenditures,
including major system upgrades, which will involve substantial
expenditures over the next several years. In addition, the Company, through
Rainbow Programming, has entered into numerous contracts relating to cable
television programming, including rights agreements with professional and
other sports teams. These contracts typically require substantial payments
over extended periods of time. See Note 8 of Notes to Consolidated
Financial Statements for a discussion of commitments and contingencies. The
Company also has a commitment to fund annual payments to Charles F. Dolan
related to Cablevision of New York City ("Cablevision of NYC"). See
"Business--Consolidated Cable Affiliates--Cablevision of New York City" and
"Business--Programming Operations" in the Form 10-K and "Management's
Discussion and Analysis--Liquidity and Capital Resources".
Intangible Assets. The Company had total assets at June 30,
1995 of approximately $2.3 billion, of which approximately $0.9 billion
were intangible assets, principally subscriber lists, franchises, excess
cost over fair value of net assets acquired, deferred financing,
acquisition and other costs and deferred interest expense. It is possible
that no cash would be recoverable from the voluntary or involuntary sale of
these intangible assets.
Losses on Investments in and Advances to Certain Affiliates.
The Company has made investments in and advances to certain affiliates of
which Charles F. Dolan is the managing general partner or in which Mr.
Dolan has
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<PAGE>
substantial ownership interests. At June 30, 1995, investments in and
advances (less applicable reserves) to such affiliates aggregated
approximately $33.7 million (consisting of $17.6 million for Cablevision of
Boston, $12.5 million for Cablevision of Chicago (which has subsequently
been repaid, as explained below), and $3.6 million for Atlantic Cable
Television Publishing Corporation ("Atlantic Publishing")). Because Mr.
Dolan is the managing general partner or has a substantial interest in such
affiliates, an inherent conflict of interest exists with respect to such
investments and advances. There can be no assurances that such investments
and advances and any amounts accrued with respect thereto will be fully
recovered or that conflicts of interest will not arise with respect to the
recovery of such amounts.
The Company wrote off for accounting purposes its entire investment
in and advances to one such affiliate, Cablevision of Boston, of $34.5
million at September 30, 1985. Between September 1985 and May 1988, the
Company made additional subordinated advances to Cablevision of Boston
which amounted to approximately $17.6 million at June 30, 1995. Management
currently anticipates that no further funds will be advanced by the Company
to Cablevision of Boston to support operations. See "Business--Other Cable
Affiliates--Cablevision of Boston" in the Form 10-K. In June 1994, the
Company and Cablevision of Boston entered into an agreement which is
designed to give the Company full ownership of Cablevision of Boston. The
agreement provides for the acquisition by the Company of the interests of
Cablevision of Boston which it does not already own in a series of
transactions. See "Condensed Pro Forma Consolidated Financial Information".
Consummation of the transactions would result in the limited partners in
Cablevision of Boston receiving Class A common stock of the Company (the
"Class A Common Stock") with an expected aggregate market value of
approximately $40 million. All such additional subordinated advances will
become intercompany indebtedness if the acquisition of Cablevision of
Boston is consummated.
On August 4, 1995, Cablevision of Chicago sold its cable television
systems to Continental Cablevision, Inc. and the loans from the Company to
Cablevision of Chicago, together with accrued interest reserved by the
Company, were repaid in full. Accordingly, in connection therewith, the
Company recognized a gain in the third quarter of 1995 of approximately
$15.6 million.
Atlantic Publishing holds a minority equity interest and a debt
interest in a company that publishes cable television guides which are
offered to the Company's subscribers and to other unaffiliated cable
television operators. As of June 30, 1995, the Company had advanced an
aggregate of $17.9 million to Atlantic Publishing, of which approximately
$0.7 million was advanced during 1992, approximately $0.5 million was
repaid during 1993, $0.6 million was repaid during 1994 and approximately
$0.2 million was advanced during the first six months of 1995. The Company
has written off all advances to Atlantic Publishing other than
approximately $3.6 million. Atlantic Publishing is owned by a trust for
certain Dolan family members; however, the Company has the option to
purchase Atlantic Publishing for an amount equal to the owner's net
investment therein plus interest. The current owner has only a nominal
investment in Atlantic Publishing. See "Business--Other Affiliates--
Atlantic Publishing" in the Form 10-K.
See "Business--Consolidated Cable Affiliates--Cablevision of New
York City" in the Form 10-K for a discussion of the Company's acquisition
of substantially all of Charles F. Dolan's interest in Cablevision of NYC,
which was consummated as described therein in July 1992.
Voting Control by Majority Stockholders; Disparate Voting
Rights. Charles F. Dolan beneficially owned, as of August 31, 1995,
286,000 shares or 2.3% of the Company's outstanding Class A Common Stock
and 2,347,494 shares or 20.3% of the Company's outstanding Class B common
stock (the "Class B Common Stock" and, collectively with the Class A Common
Stock, the "Common Stock"). On a combined basis, these shares represented
11.1% of the total number of shares of both classes of Common Stock and
18.6% of the total voting power of the classes. Trusts established by Mr.
Dolan for the benefit of certain Dolan family members, and as to which Mr.
Dolan disclaims beneficial ownership, owned, as of August 31, 1995, an
additional 500,000 shares of Class A Common Stock or 4.1% of the Class A
Common Stock and 9,225,928 shares of the Class B Common Stock, or 79.7% of
the Class B Common Stock and 72.5% of the total voting power of all classes
of the Common Stock. As a result of this stock ownership, Dolan family
members have the power to elect all 12 directors subject to election by
holders of the Class B Common Stock, which directors constitute 75% of the
entire 16-member Board of Directors of the Company. Moreover, because
holders of Class B Common Stock are entitled to ten votes per share while
holders of Class A Common Stock are entitled to one vote per share, Dolan
family members may control stockholder decisions on matters in which
holders of Class A and Class B Common Stock vote together as a class. These
matters include the amendment of certain provisions of the Company's
certificate of incorporation (the "Certificate of Incorporation") and the
approval of fundamental corporate transactions, including mergers. In
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<PAGE>
addition, because the affirmative vote or consent of the holders of at
least 66 2/3% of the outstanding shares of the Class B Common Stock,
voting separately as a class, is required to approve (i) the authorization
or issuance of any additional shares of Class B Common Stock and (ii) any
amendment, alteration or repeal of any of the provisions of the Certificate
of Incorporation of the Company which adversely affects the powers,
preferences or rights of the Class B Common Stock, Dolan family members
also have the power to prevent such issuance or amendment. The voting
rights of the Class B Common Stock beneficially owned by Mr. Dolan will not
be modified as a result of any transfer of legal or beneficial ownership
thereof.
Restrictive Covenants. The Company's principal bank credit
agreement (the "Credit Agreement") and certain of the Company's other debt
instruments contain various financial and operating covenants which, among
other things, require the maintenance of certain financial ratios and
restrict the Company's ability to borrow funds from other sources and to
utilize funds for various purposes, including investments in certain
subsidiaries. Violation of the covenants in the Credit Agreement could
result in a default under the Credit Agreement which would permit the bank
lenders thereunder to restrict the Company's ability to borrow undrawn
funds under the Credit Agreement and to accelerate the maturity of
borrowings thereunder. See "Management's Discussion and Analysis--
Liquidity and Capital Resources".
Conflicts of Interest. Charles F. Dolan and trusts for Dolan
family interests have varying economic interests in the Company's
affiliates. Mr. Dolan and other officers and directors of the Company are
also officers and directors of affiliated companies. Such officers and
directors of the Company devote such time to the business of the Company as
is reasonably required; however, they have other responsibilities which
require various amounts of their time and which could conflict with their
duties to the Company.
No Dividends Paid or to be Paid; Fluctuations in the Price of Class A
Common Stock. The Company has never declared or paid dividends on any
of its Common Stock and does not intend to pay cash dividends on such stock
in the foreseeable future. In addition, certain debt instruments to which
the Company is a party contain covenants which effectively prohibit the
payment of such dividends. Accordingly, holders of its Common Stock will
receive a return on their investment only through the sale of such stock.
The price of Class A Common Stock on the American Stock Exchange has
fluctuated significantly and is likely to continue to fluctuate.
Shares Eligible for Future Sale. On August 31, 1995, 12,223,367
shares of Class A Common Stock were outstanding. The Company has granted to
each of Charles F. Dolan, certain Dolan family interests, the Dolan Family
Foundation, John Tatta, a director of the Company, and certain Tatta family
interests registration rights with respect to 1,076,075 shares of Class A
Common Stock held by them on such date, as well as with respect to
11,573,922 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock. The Company may determine to fund
acquisitions and investments through sales of Class A Common Stock or other
equity related securities. Sales of a substantial number of shares of Class
A Common Stock or Class B Common Stock could adversely affect the market
price of the Class A Common Stock and could impair the Company's future
ability to raise capital through an offering of its equity securities.
The Company and its subsidiaries, V. Cable, Inc. ("V Cable") and VC
Holding, Inc. ("VC Holding"), have entered into a general non-binding
letter of intent with General Electric Capital Corporation ("GECC"), the
principal creditor of V Cable, pursuant to which the Company would issue
GECC shares of convertible preferred stock having an initial aggregate
liquidation preference of $500 million in the Proposed V Cable
Transactions. It is anticipated that such preferred stock would be
convertible at the option of the holder at certain times and in certain
circumstances in whole or in part into Class A common Stock at a conversion
rate based upon the trading value of the Class A Common Stock at the time
of such conversion. Based on the market value of Class A Common Stock on
October 5, 1995, approximately 8,800,000 shares of Class A Common Stock
(which would represent approximately 41.8% of the outstanding Class A
Common Stock after such conversion) would be issuable upon conversion of
the convertible preferred stock issued in the Proposed V Cable
Transactions. It is also anticipated that the Company would grant GECC
registration rights with respect to the Class A Common Stock issuable upon
any conversion of such preferred stock.
In 1990, a registration statement filed by the Company with the
Commission became effective with respect to 270,000 shares of Class A
Common Stock held by A. Jerrold Perenchio, as trustee of the Jerry
Perenchio Living Trust, and 690,000 shares of Class A Common Stock which
Francis F. Randolph, Jr. has a right to acquire upon the exercise of stock
options held by him. As of August 31, 1995, approximately 458,800 shares
have been sold pursuant to that registration statement. Sales of shares
pursuant to that registration statement could adversely affect
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the market price of the Class A Common Stock. Mr. Randolph and Mr.
Perenchio are directors of the Company. Mr. Randolph resigned as a Vice
Chairman of the Company effective June 30, 1994.
Risks Related to Regulation. The Company's cable television
operations may be adversely affected by government regulation, the impact
of competitive forces and technological changes. In 1992, Congress enacted
the 1992 Cable Act, which represented a significant change in the
regulatory framework under which cable television systems operate. In April
1993 and February 1994, the FCC ordered reductions in cable television
rates. In June 1995, a Federal appeals court upheld the material aspects of
the FCC's rate regulation scheme. Telecommunications legislation pending in
Congress would relax the cable rate regulation required by the 1992 Cable
Act and would also open the local telephone business to competition from
cable television companies and other providers and preempt state and local
barriers to entry into that market. While both the U.S. Senate and the
House of Representatives have passed telecommunications bills, the Company
cannot predict whether the legislation ultimately will be enacted into law
or what form any final legislation will take. See "Business--Cable
Television Operations--Competition" and "Business--Cable Television
Operations--Regulation" in the Form 10-K and "Recent Developments--Impact
of Pending Telecommunications Legislation on FCC Cable Rate Regulation".
Risk of Competition. Cable operators compete with a variety of
distribution systems, including broadcast television stations, multichannel
multipoint distribution services ("MMDS"), satellite master antenna systems
("SMATV"), direct broadcast satellite systems ("DBS"), and private home
dish earth stations. For example, CAI Wireless Systems, Inc., an MMDS
operator, has received investments from Bell Atlantic Corporation and NYNEX
Corporation and owns operating systems or spectrum rights in a significant
portion of the Company's systems. In addition, three DBS systems are now
operational in the United States. The 1992 Cable Act prohibits a cable
programmer that is owned by or affiliated with a cable operator (such as
Rainbow Programming) from unreasonably discriminating among or between
cable operators and other multichannel video distribution systems with
respect to the price, terms and conditions of sale or distribution of the
programmer's service and from unreasonably refusing to sell service to any
multichannel video programming distributor. Cable systems also compete with
the entities that make videotaped movies and programs available for home
rental. The 1992 Cable Act regulates the ownership by cable operators of
MMDS and SMATV. The telecommunications legislation recently passed by the
U.S. Senate would eliminate these statutory cross-ownership limitations,
while the bill passed by the House of Representatives would retain them. In
July 1992, the FCC voted to authorize additional competition to cable
television by video programmers using broadband common carrier facilities
constructed by telephone companies. The FCC allowed telephone companies to
take ownership interests of up to 5% in such programmers. The FCC also
reaffirmed an earlier holding, upheld on appeal by a Federal appeals court,
that programmers using such a telephone company-provided "video dialtone"
system would not need to obtain a state or municipal franchise. Several
telephone companies have sought approval from the FCC to build such "video
dialtone" systems. Such a system has been proposed in several communities
in which the Company currently holds a cable franchise and several of such
systems have been approved by the FCC. Additional competition to cable
systems is possible if the FCC authorizes the licensing of local multipoint
distribution services ("LMDS"). The FCC has proposed to license this type
of service to providers.
Competition from Telephone Companies. The 1984 Cable Act bars
co-ownership of telephone companies and cable television systems operating
in the same service areas ("cable-telco cross-ownership prohibition").
Numerous Federal district courts have held this prohibition to be
unconstitutional. Several of these decisions have been upheld on appeal and
a number of other decisions are pending on appeal in various Federal
appellate courts. The United States Supreme Court is expected to consider
the constitutionality of the prohibition during the 1995-96 term. Neither
the 1984 Cable Act nor the 1992 Cable Act bars a telephone company from
acquiring cable systems outside its telephone service area, and several
Regional Bell operating companies have purchased or made investments in
cable systems. Legislation to repeal the cable-telco cross-ownership
prohibition, subject to certain regulatory requirements, has passed both
the U.S. Senate and the House of Representatives; repeal has also been
endorsed by the Clinton Administration. These bills also would permit a
telephone company to acquire an in-region cable operator in certain small
markets under certain circumstances. The Company cannot predict whether the
legislation ultimately will be enacted into law or what form any final
legislation would take. See "Business--Cable Television Operations--
Regulation" in the Form 10-K.
Risk of Non-Exclusive Franchises and Franchise Renewals. The
Company's cable television systems are operated primarily under
nonexclusive franchise agreements with local government franchising
authorities, in some cases with the approval of state cable television
authorities. The Company's business is dependent on its ability to obtain
and renew its franchises. Although the Company has never lost a franchise
as a result of a failure to obtain
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a renewal, its franchises are subject to non-renewal or termination under
certain circumstances. In certain cases, franchises have not been renewed
at expiration and the Company operates under temporary licenses while
negotiating renewal terms with the franchising authorities. See "Business--
Cable Television Operations--Franchises" in the Form 10-K.
Risks Related to the New Preferred Stock and the Exchange Debentures.
Absence of Public Market. The New Preferred Stock is a new
security for which there currently is no market. Although Bear, Stearns &
Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan
Stanley & Co. Incorporated, the initial purchasers of the Old Preferred
Stock (collectively, the "Initial Purchasers"), have informed the Company
that they currently intend to make a market in the Old Preferred Stock, the
New Preferred Stock and, if issued, the Exchange Debentures, they are not
obligated to do so and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Preferred Stock and, if
issued, the Exchange Debentures. The Company does not intend to apply for
listing of the New Preferred Stock or, if issued, the Exchange Debentures
on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
Restrictions on Company's Ability to Pay Dividends on the New
Preferred Stock. Certain of the Company's debt instruments contain
covenants that restrict the Company's ability to pay, or prevent the
payment of, dividends on the New Preferred Stock. In addition, under
Delaware law, dividends on capital stock may only be paid from "surplus" or
if there is no surplus from the corporation's net profits for the then
current or the preceding fiscal year. The Company does not anticipate
having net profits for the foreseeable future and its ability to pay
dividends on the New Preferred Stock will require the availability of
adequate "surplus", which is defined as the excess, if any, of the
Company's net assets (total assets less total liabilities) over its capital
(generally the par value of its issued capital stock). As of June 30, 1995,
the Company's total liabilities exceeded its total assets by $1.6 billion.
Accordingly, in connection with dividend payments on the New Preferred
Stock, the Company's Board of Directors will have to determine that the
Company has adequate surplus on the basis of valuations of the Company's
assets at higher amounts than are reflected in the Company's financial
statements. There can be no assurance that the Company's Board of Directors
will be able to make such determination and that adequate surplus will be
available to pay dividends on the New Preferred Stock.
Certain Federal Income Tax Consequences. The Company believes
that it does not presently have any current or accumulated earnings and
profits as determined under United States federal income tax principles and
that it is unlikely to have current or accumulated earnings and profits for
the foreseeable future. As a result, until such time as the Company does
have earnings and profits, distributions on the New Preferred Stock will be
treated as a nontaxable return of capital and will be applied against and
reduce the adjusted tax basis of the New Preferred Stock in the hands of
each holder (but not below zero), thus increasing the amount of any gain
(or reducing the amount of any loss) which would otherwise be realized by
such holder upon the disposition of such New Preferred Stock. Consequently,
distributions with respect to the New Preferred Stock will not qualify as
dividends for federal income tax purposes and, as a result, will not be
eligible for the dividends-received deduction.
THE COMPANY
The Company is one of the largest operators of cable television
systems in the United States, with approximately 2,753,000 subscribers in
19 states as of June 30, 1995 based on the number of basic subscribers in
systems which the Company manages and which it owns or in which it has
investments. The Company also has ownership interests in companies that
produce and distribute national and regional programming services and
provide advertising sales services for the cable television industry.
For financing purposes, the Company is structured as a restricted
group (collectively, the "Restricted Group"), consisting of Cablevision
Systems Corporation and certain of its subsidiaries, including Cablevision
of New York City ("Cablevision of NYC"), and an unrestricted group of
subsidiaries, consisting primarily of V Cable, Inc. ("V Cable"),
Cablevision MFR, Inc. ("Cablevision MFR") and Rainbow Programming Holdings,
Inc., including Rainbow Advertising Sales Corporation ("Rainbow
Advertising") (together, "Rainbow Programming"). In addition, the Company
has an unrestricted group of investments, consisting of investments in A-R
Cable Services, Inc. ("A-R Cable"), U.S. Cable Television Group, L.P.
("U.S. Cable"), Cablevision of Framingham Holding, Inc. ("CFHI"), A-R Cable
Partners, Cablevision of Boston Limited Partnership ("Cablevision of
Boston") and Cablevision of
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Newark. As discussed below under "Risk Factors", the Cablevision of Chicago
system, which was managed by the Company and includes approximately 91,000
subscribers, was sold in August 1995 and is no longer managed by the
Company. The Company's unrestricted subsidiaries and investments are
collectively referred to herein as the "Unrestricted Group". The Restricted
Group and each member of the Unrestricted Group that operates cable
television systems are individually and separately financed. The
indebtedness of V Cable and A-R Cable is non-recourse to the Company, other
than with respect to the capital stock of such entities owned by the
Company. Rainbow Programming's cash requirements have been financed to date
by the Restricted Group, by sales of equity interests in the programming
businesses and, as set forth below under "--Programming Services", through
separate external debt financing. See "Management's Discussion and
Analysis--Liquidity and Capital Resources" for a discussion of the
restrictions on investments by the Restricted Group and certain other
matters.
STRATEGY
The Company's strategy has been to concentrate its cable television
systems in and around two major metropolitan areas, New York City and
Cleveland, Ohio, with a view to being the largest cable provider in each of
these markets; to maximize its revenue per subscriber through the use of
"tiered" packaging strategies for marketing premium services; to develop
and promote niche programming services; and to remain an industry leader in
upgrading the technological capabilities of its systems.
The Company believes that its cable television systems on Long
Island, New York comprise the largest contiguous group of cable television
systems under common ownership in the United States (measured by number of
subscribers). By developing systems in and around major metropolitan areas,
including expansion through acquisitions in areas in which the Company has
existing systems, the Company has been able to realize economies of scale
in the operation and management of its systems, and capitalize on
opportunities to create and market programming of regional interest.
Through the current and planned upgrade of its cable plant, including the
utilization of fiber optic cable and associated electronics, the Company is
seeking to significantly increase its analog channel capacity and add new
digital channel capacity that will facilitate the development of such
adjunct new businesses as video on demand, near video on demand,
information services, interactive services, including Internet access,
residential telephony and commercial telephony. To implement successfully
and roll out these adjunct new businesses beyond the initial development
phases, the Company will require additional capital from the sale of equity
in the capital markets or to a strategic investor.
CABLE TELEVISION
The cable television systems that are majority owned and managed by
the Company (the "Company's cable televisions systems") served
approximately 1,866,000 subscribers as of June 30, 1995 in New York, Ohio,
Connecticut, New Jersey, Michigan and Massachusetts. In addition, the
Company has non-majority investments in and manages cable television
systems which served approximately 887,000 subscribers as of June 30, 1995
in Alabama, Arkansas, Florida, Illinois, Kansas, Kentucky, Maine,
Massachusetts, Mississippi, Missouri, New Jersey, New York, North Carolina,
Oklahoma, Pennsylvania and Tennessee. The Company's cable television
systems have generally been characterized by relatively high revenues per
subscriber ($37.14 for June 1995) and ratios of premium service units to
basic subscribers (1.7:1 for June 1995). In calculating revenue per
subscriber, the Company includes only recurring service revenues and
excludes installation charges and certain other revenues such as
advertising, pay-per-view and home shopping revenues.
The cable television operations in the Restricted Group (other than
those of Cablevision of NYC) (such operations, the "Core Restricted Group")
served approximately 950,000 subscribers as of June 30, 1995, primarily on
Long Island, New York, in Connecticut (principally Fairfield County), in
northern New Jersey, in Westchester County, New York and in Cleveland,
Ohio. The revenue per subscriber and ratio of premium service units to
basic subscribers for cable television systems in the Core Restricted Group
for June 1995 were $37.82 and 1.5:1, respectively.
In July 1992, the Company acquired from Charles F. Dolan, the
Company's Chairman, substantially all of Cablevision of NYC (the
"Cablevision of NYC Acquisition"), a cable television system under
development in The Bronx and in parts of Brooklyn, New York. Prior to the
acquisition, the Company had a 15% interest in Cablevision of NYC. Mr.
Dolan remains a partner in Cablevision of NYC with a 1% interest and the
right to certain preferential payments. See "Business--Consolidated Cable
Affiliates--Cablevision of New York City" in the Form 10-K. As
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of June 30, 1995, Cablevision of NYC passed approximately 912,000 homes and
served approximately 371,000 subscribers. Construction of the systems in
The Bronx and in Brooklyn has been substantially completed. The Company
expects that the remaining costs to complete the construction of the
Cablevision of NYC systems will be financed by cash flow generated from the
operations of Cablevision of NYC and the amounts available under the
Company's principal bank credit agreement (the "Credit Agreement"). See
"Management's Discussion and Analysis--Liquidity and Capital Resources--
Cablevision of NYC".
The cable television operations of the Unrestricted Group are
conducted through the Company's unrestricted subsidiaries, V Cable and
Cablevision MFR, through its unrestricted investments, consisting of A-R
Cable, U.S. Cable, CFHI, A-R Cable Partners, Cablevision of Boston, and
Cablevision of Newark.
In August 1994, Cablevision MFR, a wholly-owned subsidiary of the
Company, acquired substantially all of the assets of Monmouth Cablevision
Associates ("Monmouth Cable") and Riverview Cablevision Associates, L.P.
("Riverview Cable"), consisting of cable television systems in New Jersey.
Also in August 1994, CFHI, a corporation jointly-owned by the Company and
E.M. Warburg Pincus Investors, L.P., acquired substantially all of the
assets of Framingham Cablevision Associates Limited Partnership
("Framingham Cable"), consisting of a cable television system in
Massachusetts. Additionally, in June 1994, a partnership comprised of
subsidiaries of the Company and E.M. Warburg, Pincus & Co. Inc. completed
the purchase of certain assets of Nashoba Communications, a group of three
limited partnerships that operate three cable television systems in
Massachusetts.
V Cable was formed by the Company in February 1989 and served
approximately 372,000 subscribers as of June 30, 1995, principally in the
suburbs of Cleveland, Ohio and on Long Island. The revenue per subscriber
and ratio of premium service units to basic subscribers for V Cable's
systems for June 1995 were $31.10 and 1.0:1, respectively. As described
under "Business--Consolidated Cable Affiliates--V Cable" in the Form 10-K,
the Company consummated a significant restructuring and reorganization
involving V Cable and U.S. Cable (the "1992 V Cable Reorganization") on
December 31, 1992. See also "Recent Developments--Proposed V Cable
Transactions" for a description of certain transactions involving V
Cable.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow
Programming, its wholly-owned subsidiary and member of the Unrestricted
Group, and through subsidiaries of Rainbow Programming in partnership with
certain unaffiliated entities, including National Broadcasting Company,
Inc. ("NBC") and Liberty Media Corporation ("Liberty"). Rainbow
Programming's businesses include eight regional SportsChannel services,
four national entertainment services (American Movie Classics Company
("AMCC"), Bravo Network ("Bravo"), MuchMusic ("MM") and the Independent
Film Channel ("IFC")), Rainbow News 12 Company (a regional news service
serving Long Island) and the national backdrop sports services of Prime
SportsChannel Networks ("Prime SportsChannel"). Rainbow Programming also
owns an interest in Madison Square Garden Corporation (discussed below).
Rainbow Programming's SportsChannel services provide regional sports
programming to the New York, Philadelphia, New England, Chicago,
Cincinnati, Cleveland, San Francisco and Florida areas. AMCC is a national
program service featuring classic, unedited and non-colorized films from
the 1930s through the 1970s. Bravo is a national program service offering
international films and performing arts programs, including jazz, dance,
classical music, opera and theatrical programs. See "Business--Programming
Operations--General" in the Form 10-K. MM is a Canadian music service
featuring music primarily from Canadian artists. IFC is a national program
service that airs independent films made outside the traditional Hollywood
system.
In July 1994, Rainbow Programming purchased Liberty's 50% interest in
AMCC for a purchase price of approximately $181.0 million pursuant to a
buy-sell procedure set forth in the Partnership Agreement of AMCC. In July
1995, Rainbow Programming purchased NBC's interest in SportsChannel (New
York) Associates and Rainbow News 12 Company (the "NBC Option") for an
aggregate purchase price of approximately $95.5 million, and, effective as
of such date, consolidated the results of operations of
SportsChannel (New York) Associates and Rainbow News 12 Company with those
of the Company. See "Recent Developments--NBC Option" and "Business--
Programming Services" in the Form 10-K.
On March 10, 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership
between a subsidiary of Rainbow Programming and a subsidiary of ITT
Corporation ("ITT"), acquired Madison Square Garden Corporation ("MSG") in
a transaction in which MSG was merged with and into MSG Holdings. MSG owns
the Madison Square Garden Arena and the adjoining Paramount Theater, the
New York Rangers professional hockey team, the New York
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Knicks professional basketball team and the Madison Square Garden Network,
a sports programming network with over five million subscribers. Rainbow
Programming has the option until March 10, 1996 to (i) acquire interests in
MSG Holdings from ITT sufficient to equalize the interests of ITT and
Rainbow Programming in MSG Holdings, (ii) maintain its investment at the
initial level, or (iii) require ITT to purchase 50% of Rainbow
Programming's initial interest in MSG Holdings at the price paid by Rainbow
Programming for such interest plus an adjustment for Rainbow Programming's
share of MSG Holdings' operating income after interest expense, if any,
following the closing of the acquisition of MSG. Rainbow Programming has
not determined which alternative it will pursue. See "Business--Programming
Services" in the Form 10-K.
ADVERTISING SERVICES
Rainbow Advertising sells advertising time to national, regional and
local advertisers on behalf of the Company's cable television systems and
the SportsChannel and Rainbow News 12 Company programming services, as well
as on behalf of unaffiliated cable television systems.
RECENT DEVELOPMENTS
PROPOSED V CABLE TRANSACTIONS
The Company, V Cable and VC Holding have entered into a general, non-
binding letter of intent with General Electric Capital Corporation
("GECC"), the principal creditor of V Cable. In the transactions proposed
by the letter of intent, the Company would issue to GECC preferred stock
having an initial aggregate liquidation preference of $500 million for an
aggregate purchase price of $500 million. It is anticipated that such
preferred stock would be redeemable at the option of the Company and would
be convertible at the option of the holder at certain times and in certain
circumstances in whole or in part into Class A Common Stock at a conversion
rate based upon the trading value of the Class A Common Stock at the time
of such conversion. The Company would make an equity capital contribution
to V Cable of the gross proceeds from such issuance and V Cable would apply
such amounts as set forth below. The preferred stock to be issued to GECC
will rank on a parity with the New Preferred Stock offered hereby.
As part of the proposed transactions contemplated by the letter of
intent (together with the issuance of the preferred stock to GECC, the
"Proposed V Cable Transactions"), the $500 million capital contribution
received by V Cable would be applied as follows: (i) approximately $26
million to repay V Cable's outstanding indebtedness to GECC; (ii)
approximately $93 million to repay to GECC a portion of U.S. Cable's debt
payable by V Cable under certain circumstances; (iii) approximately $331
million to repay to GECC a portion of VC Holding's indebtedness; and (iv)
$50 million would be used by VC Holding to make a preferred capital
contribution to U.S. Cable as discussed below. The Company's $500 million
capital contribution to V Cable has received the requisite approval of a
majority of the Company's banks under the Credit Agreement.
The Proposed V Cable Transactions also contemplate that V Cable will
enter into one or more agreements pursuant to which, following the receipt
of any required franchise and regulatory approvals, V Cable or one or more
of its subsidiaries (i) will purchase the 80% of U.S. Cable that V Cable
does not already own for approximately $4 million, (ii) will make a
preferred capital contribution to U.S. Cable of $50 million, and (iii) will
assume approximately $165 million of U.S. Cable indebtedness payable to
GECC.
As part of the Proposed V Cable Transactions, GECC would also agree
to provide two new credit facilities, a $325 million three year revolving
credit facility for V Cable's Ohio subsidiary (approximately $210 million
of which would be drawn upon entering into such agreement) and a $260
million two year revolving credit facility for V Cable's Long Island
subsidiary (approximately $220 million of which would be drawn upon
entering into such agreement). The initial amounts drawn under the
respective revolving credit facilities will be used to repay all remaining
VC Holding debt to GECC. Both the Ohio and Long Island credit facilities
would be entered into upon completion of final documentation and the
receipt of any required franchise or regulatory approvals.
The letter of intent between the Company and GECC is a general, non-
binding letter of intent. There can be no assurance that the Proposed V
Cable Transactions will be consummated or will be consummated in the form
described in the letter of intent. If the Proposed V Cable Transactions, or
similar transactions with respect to V Cable, fail to occur, then V Cable
believes that it is likely that it will be unable to meet certain of its
financial covenants as of September 30, 1995. To remedy the anticipated
covenant defaults, V Cable may request waivers
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and/or amendments to its credit agreement and/or seek equity contributions
from the Restricted Group. During 1995, the Restricted Group has made
equity contributions aggregating $1.9 million to enable V Cable to meet
certain of its financial covenants. There can be no assurance as to V
Cable's ability to accomplish either of these alternatives in the future or
the terms or timing of such alternatives. Assuming any covenant defaults
are waived or cured, V Cable anticipates that its cash flow from operations
and amounts available under the VC Holding revolving credit line will be
sufficient to service its debt, to fund its capital expenditures and to
meet its working capital requirements through 1996.
NBC OPTION
On July 12, 1995, Rainbow Programming consummated the purchase of
NBC's interest in SportsChannel (New York) Associates and Rainbow News 12
Company pursuant to the NBC Option, which Rainbow Programming entered into
with NBC in connection with the MSG Acquisition, for an aggregate purchase
price of approximately $95.5 million, and, effective as of such date,
consolidated the results of operations of SportsChannel (New York)
Associates and Rainbow News 12 Company with those of the Company. The
purchase was financed principally by a drawdown of approximately $94.0
million under Rainbow Programming's $202 million amended and restated
credit facility and an equity contribution by the Company of the balance of
the purchase price.
CABLEVISION OF BOSTON ACQUISITION
In June 1994, the Company and Cablevision of Boston entered into an
agreement which is designed to give the Company full ownership of
Cablevision of Boston. The agreement provides for the acquisition by the
Company of the interests of Cablevision of Boston which it does not already
own in a series of transactions. See "Condensed Pro Forma Consolidated
Financial Information". Consummation of the transactions would result in
the limited partners in Cablevision of Boston receiving Class A Common
Stock of the Company with an expected aggregate market value of
approximately $40 million. Upon consummation of the acquisition of
Cablevision of Boston, the Company expects Cablevision of Boston to become
a member of the Restricted Group. All outstanding subordinated advances
made by the Company to Cablevision of Boston will become intercompany
indebtedness if the acquisition of Cablevision of Boston is consummated. In
addition, the Company, along with certain of its affiliates, are parties to
a lawsuit filed with respect to the Company's acquisition of Cablevision of
Boston. The action is brought on behalf of a purported class consisting of
limited partners in Cablevision of Boston and seeks, among other matters,
to enjoin the proposed acquisition of Cablevision of Boston and damages.
The Company, along with the other defendants, is defending the action.
IMPACT OF PENDING TELECOMMUNICATIONS LEGISLATION ON FCC CABLE RATE
REGULATION
Both the U.S. Senate and the House of Representatives have passed
legislation that would significantly relax cable rate regulation. The
Senate bill would modify the 1992 Cable Act's definition of "effective
competition" to deregulate all cable rates, including basic service rates,
whenever a telephone company begins to offer comparable video programming
services to subscribers in a cable operator's franchise area. The Senate
bill also limits the FCC's ability to regulate rates for non-basic services
offered by an operator not subject to "effective competition" only to
instances in which an operator's rates for such services substantially
exceed the national average.
The House bill would deregulate non-basic rates charged by a cable
operator, on a franchise area by franchise area basis, as soon as a
telephone company has been authorized to construct video dialtone
facilities or has been authorized by the FCC or local franchising
authorities to provide video programming to subscribers in the operator's
franchise area by any means. Non-basic rates in all franchise areas would
be deregulated 15 months after the date of enactment, whether or not a
telephone company has been so authorized in a particular franchise area.
The regulation of rates for basic service offered by an operator not
subject to "effective competition" would remain unchanged.
The differences between the Senate and House passed bills would need
to be reconciled before the legislation could become law. The Company
cannot at this point predict whether any legislation ultimately will be
enacted into law or the final form any such legislation would take.
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USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of
the New Preferred Stock offered hereby. In consideration for issuing the
New Preferred Stock as contemplated in this Prospectus, the Company will
receive in exchange a like number of shares of Old Preferred Stock with a
like aggregate liquidation preference, the terms of which are identical in
all material respects to the New Preferred Stock. The Old Preferred Stock
surrendered in exchange for the New Preferred Stock will be retired and
cancelled and cannot be reissued. Accordingly, issuance of the New
Preferred Stock will not result in any change in capitalization of the
Company.
The net proceeds received by the Company from the offering of the Old
Preferred Stock were $ 239.3 million. The Company applied approximately
$103.1 million (plus accrued dividends thereon) of such net proceeds to the
redemption of the Company's outstanding Series E Preferred Stock and the
remainder to the repayment of borrowings under the Company's Credit
Agreement. All of the borrowings repaid may be reborrowed under the Credit
Agreement and the Company expects to reborrow such amount in the future for
general corporate purposes. The Company expects to raise additional funds
in the future. See "Management's Discussion and Analysis--Liquidity and
Capital Resources" for information concerning the Company's significant
expected expenditures.
THE EXCHANGE OFFER
GENERAL
In connection with the sale of the Old Preferred Stock, the
purchasers thereof became entitled to the benefits of certain registration
rights (the "Registration Rights"). Pursuant to the agreement governing the
Registration Rights (the "Registration Rights Agreement"), the Company
agreed (x) within 30 days after September 26, 1995 to file a registration
statement (the "Exchange Offer Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to a registered
offer to exchange the Old Preferred Stock for the New Preferred Stock,
which will have terms identical in all material respects to the Old
Preferred Stock (except that the New Preferred Stock will not contain terms
with respect to transfer restrictions) and (y) to use its best efforts to
cause the Exchange Offer Registration Statement to become effective within
120 days after September 26, 1995. Upon the Exchange Offer Registration
Statement being declared effective, the Company will offer the New
Preferred Stock in exchange for surrender of the Old Preferred Stock. The
Company will keep the Exchange Offer open for not less than 30 days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders of the Old Preferred Stock. For each share
of Old Preferred Stock surrendered to the Company pursuant to the Exchange
Offer, the holder of such Old Preferred Stock will receive a share of New
Preferred Stock having a liquidation preference equal to that of the
surrendered Old Preferred Stock.
Under existing interpretations of the staff of the Commission, the
New Preferred Stock would in general be freely transferable after the
Exchange Offer without further registration under the Securities Act by
holders thereof (other than a "Restricted Holder," being (i) a broker-
dealer who purchases such New Preferred Stock directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an affiliate of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with
the registration and prospectus delivery provisions of the Securities Act
provided that such New Preferred Stock are acquired in the ordinary course
of such holders' business and such holders have no arrangements with any
person to participate in the distribution of such New Preferred Stock.
Eligible holders wishing to accept the Exchange Offer must represent to the
Company that such conditions have been met. Each broker-dealer that
receives New Preferred Stock for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with
any resale of such new Preferred Stock.
In the event that applicable interpretations of the staff of the
Securities and Exchange Commission (the "Commission") would not permit the
Company to effect the Exchange Offer or, if for any other reason the
Exchange Offer was not consummated within 180 days of the issuance of the
Old Preferred Stock, the Company agreed to use its best efforts to cause to
become effective a shelf registration statement (the "Shelf Registration
Statement") with respect to the resale of the Old Preferred Stock and to
keep the Shelf Registration Statement effective until three years after the
date of issuance of the Old Preferred Stock or such shorter period to
terminate once all the Old Preferred Stock covered by the Shelf
Registration Settlement have been sold pursuant to such Shelf Registration
Statement.
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Each holder of Old Preferred Stock who wishes to exchange Old Preferred
Stock for New Preferred Stock in the Exchange Offer will be required to
make certain representations, including that (i) it is neither an affiliate
of the Company nor a broker-dealer tendering Old Preferred Stock acquired
directly from the Company for its own account, (ii) any shares of New
Preferred Stock to be received by it were acquired in the ordinary course
of its business and (iii) at the time of commencement of the Exchange
Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the New
Preferred Stock. In addition, in connection with any resales of New
Preferred Stock, any broker-dealer (a "Participating Broker-Dealer") who
acquired Old Preferred Stock for its own account as a result of market-
making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The Commission has taken
the position that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the New Preferred Stock (other than a
resale of an unsold allotment from the original sale of Old Preferred
Stock) with the prospectus contained in the Exchange Offer Registration
Statement. Under the Registration Rights Agreement, the Company is required
to allow Participating Broker-Dealers and other persons, if any, subject to
similar prospectus delivery requirements to use the prospectus contained in
the Exchange Offer Registration Statement in connection with the resale of
such New Preferred Stock. The Company also agreed that in the event that
either (i) the Exchange Offer Registration Statement was not filed with the
Commission on or prior to the 30th calendar day following the date of
original issue of the Old Preferred Stock, or (ii) the Exchange Offer was
not consummated or a Shelf Registration Statement was not declared
effective on or prior to the 180th calendar day following the date of
original issue of the Old Preferred Stock, the dividend rate borne by the
Old Preferred Stock would be increased by one-quarter of one percent per
annum for the first 30 days following such 30-day period in the case of (i)
above or the first 90 days following such 180-day period in the case of
(ii) above. Such dividend rate would increase by an additional one-quarter
of one percent per annum at the beginning of each subsequent 30-day period
in the case (i) above, or 90-day period in the case of (ii) above, up to a
maximum aggregate increase of one percent per annum. In the event that
Exchange Debentures are issued prior to the issuance of the New Preferred
Stock, the provisions herein shall apply equally in respect of the
registration of any Exchange Debentures provided that changes in the
dividend rate shall result in corresponding changes in the interest rate
applicable to the Exchange Debentures. The Company agreed that upon (x) the
filing of the Exchange Offer Registration Statement or (y) the consummation
of the Exchange Offer or the effectiveness of the Shelf Registration
Statement, as the case may be, the dividend rate borne by the Old Preferred
Stock would be reduced to the original dividend rate. The Exchange Offer
Registration Statement was filed on October , 1995 within 30 days of
the date of original issue of the Old Preferred Stock, and thus no increase
in the interest rate borne by the Old Preferred Stock has been made under
(i) above.
In the event an exchange offer is consummated, the Company will not
be required to file a Shelf Registration Statement to register any
outstanding Old Preferred Stock other than those held by affiliates of the
Company, and the dividend rate on such Old Preferred Stock will remain at
its initial level of 11 3/4%. The Exchange Offer shall be deemed to have
been consummated upon the earlier to occur of (i) the Company having
exchanged New Preferred Stock for all outstanding Old Preferred Stock
(other than Old Preferred Stock held by a Restricted Holder) pursuant to
the Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, New Preferred Stock for all Old Preferred Stock that have
been tendered and not withdrawn on the date that is 30 days following the
commencement of such Exchange Offer. In such event, holders of Old
Preferred Stock seeking liquidity in their investment would have to rely on
exemptions to registration requirements under the securities laws,
including the Securities Act. See "Description of New Preferred Stock--
Registration Rights Agreement" and "Risk Factors."
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal, the Company will
accept all Old Preferred Stock properly tendered prior to 5:00 p.m., New
York City time, on the Expiration Date. The Company will issue one share of
New Preferred Stock with a liquidation preference of $100 in exchange for
each one share of issued and outstanding Old Preferred Stock with a
liquidation preference of $100 accepted in the Exchange Offer. Holders may
tender some or all of their Old Preferred Stock pursuant to the Exchange
Offer in integral multiples of one share.
Based on no-action letters issued by the staff of the Commission to
third parties, the Company believes that the New Preferred Stock issued
pursuant to the Exchange Offer in exchange for Old Preferred Stock may be
offered for resale, resold and otherwise transferred by holders thereof
(other than any such holder that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery requirements of the Securities Act
provided that such New Preferred Stock are acquired in the ordinary course
of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such New Preferred Stock. Any
holder of Old Preferred Stock who tenders in the Exchange Offer
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<PAGE>
for the purpose of participating in a distribution of the New Preferred
Stock could not rely on such interpretation by the staff of the Commission
and must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction. Each
broker-dealer that receives New Preferred Stock for its own account in
exchange for Old Preferred Stock, where such Old Preferred Stock were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Preferred Stock. See
"Plan of Distribution."
As of the date of this Prospectus, 2,500,000 shares of Old Preferred
Stock with an aggregate liquidation preference of $250,000,000 is issued
and outstanding. In connection with the issuance of the Old Preferred
Stock, the Company arranged for the Old Preferred Stock to be eligible for
trading in the Private Offering, Resale and Trading through Automated
Linkages (PORTAL) Market, the National Association of Securities Dealers'
screen based, automated market trading of securities eligible for resale
under Rule 144A.
This Prospectus, together with the accompanying letter of transmittal
(the "Letter of Transmittal"), is being sent to all registered holders as
of , 1995 (the "Record Date").
The Company shall be deemed to have accepted validly tendered Old
Preferred Stock when, as and if the Company has given oral or written
notice thereof to (the "Exchange Agent").
See "Exchange Agent." The Exchange Agent will act as agent for the
tendering holders of Old Preferred Stock for the purpose of receiving New
Preferred Stock from the Company and delivering New Preferred Stock to such
holders.
If any tendered Old Preferred Stock are not accepted for exchange
because of an invalid tender or the occurrence of certain other events set
forth herein, certificates for any such unaccepted Old Preferred Stock will
be returned, without expense, to the tendering holder thereof as promptly
as practicable after the Expiration Date.
Holders of Old Preferred Stock who tender in the Exchange Offer will
not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Preferred Stock pursuant to the Exchange Offer. The
Company will pay all charges and expenses, other than certain applicable
taxes, in connection with the Exchange Offer. See "Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean , 1995 unless the
Company, in its sole discretion, extends the Exchange Offer, in which case
the term "Expiration Date" shall mean the latest date to which the Exchange
Offer is extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to
the record holders of Old Preferred Stock an announcement thereof, each
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Such announcement may state that the
Company is extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old
Preferred Stock, to extend the Exchange Offer or to terminate the Exchange
Offer and to refuse to accept Old Preferred Stock not previously accepted,
if any of the conditions set forth herein under "Termination" shall have
occurred and shall not have been waived by the Company (if permitted to be
waived by the Company), by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, and (ii) to amend the terms
of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Old Preferred Stock. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of the Old Preferred Stock of
such amendment.
Without limiting the manner in which the Company may choose to make
public announcements of any delay in acceptance, extension, termination or
amendment of the Exchange Offer, the Company shall have no obligation to
publish, advertise, or otherwise communicate any such public announcement,
other than by making a timely release to the Dow Jones News Service.
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DIVIDENDS ON THE NEW PREFERRED STOCK
Dividends on the New Preferred Stock will accumulate from the Accrual
Date, payable quarterly in arrears on January 1, April 1, July 1 and
October 1, of each year commencing on January 1, 1996, at the rate of 11
3/4% per annum out of legally available funds. Holders of Old Preferred
Stock whose Old Preferred Stock are accepted for exchange will be deemed to
have waived the right to receive any payment in respect of interest on the
Old Preferred Stock accumulated from the Accrual Date until the date of the
issuance of the New Preferred Stock. Consequently, holders who exchange
their Old Preferred Stock for New Preferred Stock will receive the same
dividend payment on January 1, 1996 (the first dividend payment date with
respect to the Old Preferred Stock and the New Preferred Stock) that they
would have received had they not accepted the Exchange Offer.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and
date the Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together
with the Old Preferred Stock and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date.
The tender by a holder of Old Preferred Stock will constitute an
agreement between such holder and the Company in accordance with the terms
and subject to the conditions set forth herein and in the Letter of
Transmittal.
Delivery of all documents must be made to the Exchange Agent at its
address set forth herein. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect such
tender for such holders.
The method of delivery of Old Preferred Stock and the Letter of
Transmittal and all other required documents to the Exchange Agent is at
the election and risk of the holders. Instead of delivery by mail, it is
recommended that holders use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No
Letter of Transmittal or Old Preferred Stock should be sent to the
Company.
Only a holder of Old Preferred Stock may tender such Old Preferred
Stock in the Exchange Offer. The term "holder" with respect to the Exchange
Offer means any person in whose name Old Preferred Stock are registered on
the books of the Company or any other person who has obtained a properly
completed stock power from the registered holder.
Any beneficial holder whose Old Preferred Stock are registered in the
name of his broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact such registered holder promptly and
instruct such registered holder to tender on his behalf. If such beneficial
holder wishes to tender on his own behalf, such beneficial holder must,
prior to completing and executing the Letter of Transmittal and delivering
his Old Preferred Stock, either make appropriate arrangements to register
ownership of the Old Preferred Stock in such holder's name or obtain a
properly completed bond power from the registered holder. The transfer of
record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution") unless the Old Preferred Stock tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Preferred Stock listed therein, such Old
Preferred Stock must be endorsed or accompanied by appropriate stock powers
which authorize such person to tender the Old Preferred Stock on behalf of
the registered holder, in either case signed as the name of the registered
holder or holders appears on the Old Preferred Stock.
If the Letter of Transmittal or any Old Preferred Stock or stock
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative
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<PAGE>
capacity, such persons should so indicate when signing, and unless waived
by the Company, evidence satisfactory to the Company of their authority to
so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time
of receipt), acceptance and withdrawal of the tendered Old Preferred Stock
will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Preferred Stock not properly tendered or
any Old Preferred Stock the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves
the absolute right to waive any irregularities or conditions of tender as
to particular Old Preferred Stock. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old
Preferred Stock must be cured within such time as the Company shall
determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Preferred Stock nor shall any of them incur
any liability for failure to give such notification. Tenders of Old
Preferred Stock will not be deemed to have been made until such
irregularities have been cured or waived. Any Old Preferred Stock received
by the Exchange Agent that are not properly tendered and as to which the
defects or irregularities have not been cured or waived will be returned
without cost by the Exchange Agent to the tendering holder of such Old
Preferred Stock unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
(a) purchase or make offers for any Old Preferred Stock that remain
outstanding subsequent to the Expiration Date, or, as set forth under
"Termination," to terminate the Exchange Offer and (b) to the extent
permitted by applicable law, purchase Old Preferred Stock in the open
market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers may differ from the terms of the Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Preferred Stock and (i) whose
Old Preferred Stock are not immediately available, or (ii) who cannot
deliver their Old Preferred Stock, the Letter of Transmittal or any other
required documents to the Exchange Agent prior to the Expiration Date, or
if such Holder cannot complete the procedure for book-entry transfer on a
timely basis, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Preferred
Stock, the certificate number or numbers of such Old Preferred Stock and
the number of shares of Old Preferred Stock tendered, stating that the
tender is being made thereby, and guaranteeing that, within five business
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing the Old Preferred
Stock to be tendered in prior form for transfer and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Old Preferred Stock in proper form for transfer and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Preferred Stock
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
business day prior to the Expiration Date, unless previously accepted for
exchange.
To withdraw a tender of Old Preferred Stock in the Exchange Offer, a
written or facsimile transmission notice of withdrawal must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New
York City time, on the business day prior to the Expiration Date and prior
to acceptance for exchange thereof by the Company. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
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<PAGE>
Preferred Stock to be withdrawn (the "Depositor"), (ii) identify the Old
Preferred Stock to be withdrawn (including the certificate number or
numbers and number of shares of such Old Preferred Stock), (iii) be signed
by the Depositor in the same manner as the original signature on the Letter
of Transmittal by which such Old Preferred Stock were tendered (including
any required signature guarantees) or be accompanied by documents of
transfer sufficient to permit the Trustee with respect to the Old Preferred
Stock to register the transfer of such Old Preferred Stock into the name of
the Depositor withdrawing the tender and (iv) specify the name in which any
such Old Preferred Stock are to be registered, if different from that of
the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be determined
by the Company, whose determination shall be final and binding on all
parties. Any Old Preferred Stock so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New
Preferred Stock will be issued with respect thereto unless the Old
Preferred Stock so withdrawn are validly retendered. Any Old Preferred
Stock which have been tendered but which are not accepted for exchange will
be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Preferred Stock may be retendered by
following one of the procedures described above under "Procedures for
Tendering" at any time prior to the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Company
will not be required to accept for exchange, or exchange New Preferred
Stock for, any Old Preferred Stock not theretofore accepted for exchange,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Preferred Stock if: (i) any action or proceeding is
instituted or threatened in any court or by or before any governmental
agency with respect to the Exchange Offer, which, in the Company's
judgment, might materially impair the Company's ability to proceed with the
Exchange Offer or (ii) any law, statute, rule or regulation is proposed,
adopted or enacted, or any existing law, statute rule or regulation is
interpreted by the staff of the Commission in a manner, which, in the
Company's judgment, might materially impair the Company's ability to
proceed with the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer,
as set forth above, the Company may (i) refuse to accept any Old Preferred
Stock and return any Old Preferred Stock that have been tendered to the
holders thereof, (ii) extend the Exchange Offer and retain all Old
Preferred Stock tendered prior to the Expiration of the Exchange Offer,
subject to the rights of such holders of tendered Old Preferred Stock to
withdraw their tendered Old Preferred Stock, (iii) waive such termination
event with respect to the Exchange Offer and accept all properly tendered
Old Preferred Stock that have not been withdrawn. If such waiver
constitutes a material change in the Exchange Offer, the Company will
disclose such change by means of a supplement to this Prospectus that will
be distributed to each registered holder of Old Preferred Stock, and the
Company will extend the Exchange Offer for a period of five to ten
business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders if the Old Preferred Stock, if the
Exchange Offer would otherwise expire during such period. See "Description
of New Preferred Stock--Registration Rights Agreement."
EXCHANGE AGENT
has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent addressed as follows:
By Mail:
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By Hand or
Overnight Courier:
Facsimile Transmission:
Confirm by Telephone:
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer
will be borne by the Company. The principal solicitation for tenders
pursuant to the Exchange Offer is being made by mail. Additional
solicitations may be made by officers and regular employees of the Company
and its affiliates in person, by telegraph or telephone.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for its services
and will reimburse the Exchange Agent for its reasonable out-of-pocket
expenses in connection therewith. The Company may also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this Prospectus, Letters
of Transmittal and related documents to the beneficial owners of the Old
Preferred Stock and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and
accounting and legal fees, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Preferred Stock pursuant to the Exchange Offer. If,
however, certificates representing New Preferred Stock or Old Preferred
Stock not tendered or accepted for exchange are to be delivered to, or are
to be registered or issued in the name of, any person other than the
registered holder of the Old Preferred Stock tendered, or if tendered Old
Preferred Stock are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed
for any reason other than the exchange of Old Preferred Stock pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by
the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such tendering
holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the
Company upon the consummation of the Exchange Offer. The expenses of the
Exchange Offer will be amortized by the Company over the term of the New
Preferred Stock under generally accepted accounting principles.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its consolidated subsidiaries at June 30, 1995 and as adjusted
to reflect the pro forma consolidated capitalization of the Company and its
consolidated subsidiaries at June 30, 1995, adjusted to give effect to (i)
the proposed acquisition of Cablevision of Boston and (ii) the Proposed V
Cable Transactions and as further adjusted to reflect the issuance of $250
million of the Old Preferred Stock, and the application of all of the
estimated net proceeds to the Company from the offering of the Old
Preferred Stock to redeem the Series E Preferred Stock and repay borrowings
under the Company's Credit Agreement. The Old Preferred Stock surrendered
in exchange for the New Preferred Stock will be retired and cancelled and
cannot be reissued. Accordingly, issuance of the New Preferred Stock will
not result in any change in capitalization of the Company. See "Recent
Developments", "Use of Proceeds" and "Condensed Pro Forma Consolidated
Financial Statements".
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
--------------------------------------------------------------------
PRO AS ADJUSTED
HISTORICAL FORMA PRO FORMA
--------------------- --------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LONG-TERM DEBT:
Restricted Group:
Bank indebtedness(1).................................. $ 1,142,749 $ 1,223,522 $ 1,084,222
9 7/8% Senior Subordinated Debentures due 2013........ 198,898 198,898 198,898
9 7/8% Senior Subordinated Debentures due 2023........ 149,673 149,673 149,673
10 3/4% Senior Subordinated Debentures due 2004....... 275,000 275,000 275,000
Capitalized lease obligations......................... 10,226 12,274 12,274
----------- ----------- ------------
Total...................................... 1,776,546 1,859,367 1,720,067
----------- ----------- ------------
V Cable:
Senior debt........................................... 880,888 430,888 430,888
----------- ----------- ------------
MFR:
Senior bank debt...................................... 209,000 209,000 209,000
Subordinated notes.................................... 141,268 141,268 141,268
----------- ----------- ------------
Total...................................... 350,268 350,268 350,268
----------- ----------- ------------
Other Unrestricted Subsidiaries:
Other indebtedness(2)............................ 148,028 313,028 313,028
Obligation to related party(3)................... 190,212 190,212 190,212
----------- ----------- ------------
Total...................................... 338,240 503,240 503,240
----------- ----------- ------------
Total long-term debt.................. 3,345,942 3,143,763 3,004,463
----------- ----------- ------------
Old Preferred Stock/New Preferred Stock...................... -- -- 250,000
----------- ----------- ------------
STOCKHOLDERS' DEFICIENCY:
Series C Cumulative Preferred Stock:
Authorized--225,000 shares
Outstanding--110,622 shares.......................... 1 1 1
Series E Redeemable Exchangeable Convertible Preferred Stock:
Authorized--100,000 shares
Outstanding--100,000 shares.......................... 1 1 --
Series I Redeemable Convertible Preferred Stock(4)........ -- 5 5
Class A Common Stock:
Authorized--50,000,000 shares
Outstanding--12,116,867 shares....................... 121 127 127
Class B Common Stock:
Authorized--20,000,000 shares
Outstanding--11,673,922 shares....................... 117 117 117
Capital contributed in excess of (less than) par
value.................................................... (71,888) 464,710 354,011
Accumulated deficit....................................... (1,941,878) (1,975,495) (1,975,495)
----------- ----------- ------------
(2,013,526) (1,510,534) (1,621,234)
Treasury stock............................................ (3,237) (3,237) (3,237)
----------- ----------- ------------
Total stockholders' deficiency............. (2,016,763) (1,513,771) (1,624,471)
----------- ----------- ------------
Total capitalization.................. $ 1,329,179 $ 1,629,992 $ 1,629,992
=========== =========== ============
</TABLE>
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FOOTNOTES:
(1) See "Management's Discussion and Analysis--Liquidity and Capital
Resources" and the Consolidated Financial Statements for a description
of the bank indebtedness. This indebtedness consists of the Company's
indebtedness under its principal bank credit agreement, the New Jersey
subsidiary credit agreement and the Cablevision of NYC credit
agreement. These amounts do not include approximately $22.7 million
reserved under the Company's bank credit agreements for certain letters
of credit issued on behalf of the Company. The Company and its New
Jersey subsidiary are jointly and severally liable under the New Jersey
subsidiary credit agreement.
(2) On July 12, 1995, Rainbow Programming incurred an additional
approximately $94.0 million of indebtedness in connection with the
exercise of the NBC Option.
(3) Obligation of NYC LP Corp., a wholly-owned Unrestricted Group
subsidiary, relating to the acquisition of Cablevision of NYC, which
obligation has been guaranteed by the Company. NYC LP Corp.'s
obligation under such guarantee may be paid in cash or, at the
Company's option, shares of the Company's Common Stock. Under the
Credit Agreement, the Company is currently prohibited from paying all
but $40.0 million of this obligation in cash and, accordingly, without
the consent of the Company's bank lenders, would be required to pay it
in shares of the Company's Common Stock.
(4) Issuable in connection with the Proposed V Cable Transactions. See
"Recent Developments--Proposed V Cable Transactions" for a discussion
of such transactions.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 80,000,000 shares of capital
stock, of which 50,000,000 shares are Class A Common Stock, par value $.01
per share, 20,000,000 shares are Class B Common Stock, par value $.01 per
share, and 10,000,000 shares are preferred stock, par value $.01 per share,
of which the Preferred Stock offered hereby will be a series.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Voting. Holders of Class A Common Stock are entitled to one vote
per share. Holders of Class B Common Stock are entitled to ten votes per
share. All actions submitted to a vote of stockholders are voted on by
holders of Class A Common Stock and Class B Common Stock voting together as
a single class, except for the election of directors and as otherwise
set forth below. With respect to the election of directors, holders of
Class A Common Stock vote as a separate class and are entitled to elect 25%
of the total number of directors constituting the whole Board of Directors
(the "Class A Directors") and, if such 25% is not a whole number, then the
holders of Class A Common Stock are entitled to elect the nearest higher
whole number of directors that is at least 25% of the total number of
directors. Holders of Class B Common Stock, voting as a separate class, are
entitled to elect the remaining directors. If, however, on the record date
for any stockholder meeting at which directors are to be elected, the
number of outstanding shares of Class A Common Stock is less than 10% of
the total number of outstanding shares of both classes of Common Stock, the
holders of Class A Common Stock and Class B Common Stock will vote together
as a single class with respect to the election of directors and the holders
of Class A Common Stock will not have the right to elect 25% of the total
number of directors but will have one vote per share for all directors and
holders of Class B Common Stock will have ten votes per share for all
directors. If, on the record date for any stockholder meeting at which
directors are to be elected, the number of outstanding shares of Class B
Common Stock is less than 12 1/2% of the total number of outstanding shares
of both classes of Common Stock, then the holders of Class A Common Stock,
voting as a separate class, would continue to elect a number of Class A
Directors equal to 25% of the total number of directors constituting the
whole Board of Directors and, in addition, would vote together with the
holders of Class B Common Stock to elect the remaining directors to be
elected at such meeting, with the holders of class A Common Stock entitled
to one vote per share and the holders of Class B Common Stock entitled to
ten votes per share.
In addition, the affirmative vote or consent of the holders of at
least 66 2/3% of the outstanding shares of Class B Common Stock, voting
separately as a class, is required for the authorization or issuance of any
additional shares of Class B Common Stock and for any amendment, alteration
or repeal of any provisions of the Company's Certificate of Incorporation
which would affect adversely the powers, preferences or rights of the Class
B Common Stock. The Company's Certificate of Incorporation does not provide
for cumulative voting.
Conversion. The Class A Common Stock has no conversion rights.
The Class B Common Stock is convertible into Class A Common Stock in whole
or in part at any time and from time to time on the basis of one share of
Class A Common Stock for each share of Class B Common Stock.
Dividends. Holders of Class A Common Stock and Class B Common
Stock are entitled to receive dividends equally on a per share basis if and
when such dividends are declared by the Board of Directors from funds
legally available therefor. No dividend may be declared or paid in cash or
property on shares of either Class A Common Stock or Class B Common Stock
unless the same dividend is paid simultaneously on each share of the other
class of common stock. In the case of any stock dividend, holders of Class
A Common Stock are entitled to receive the same percentage dividend
(payable in shares of Class A Common Stock) as holders of Class B Common
Stock receive (payable in shares of Class B Common Stock). The Company's
Certificate of Incorporation provides that the distribution of shares of
capital stock of any subsidiary to common stockholders may differ to the
extent that the common stock differs as to voting rights and rights in
connection with certain dividends.
Liquidation. Holders of Class A Common Stock and Class B Common
Stock share with each other on a ratable basis as a single class in the net
assets available for distribution in respect of Class A Common Stock and
Class B Common Stock in the event of liquidation.
Other Terms. Neither the Class A Common Stock nor the Class B
Common Stock may be subdivided, consolidated, reclassified or otherwise
changed unless contemporaneously therewith the other class of shares is
subdivided, consolidated, reclassified or otherwise changed in the same
proportion and in the same manner. In any
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<PAGE>
merger, consolidation or business combination the consideration to be
received per share by holders of either Class A Common Stock or Class B
Common Stock must be identical to that received by holders of the other
class of Common Stock, except that in any such transaction in which shares
of capital stock are distributed, such shares may differ as to voting
rights only to the extent that voting rights now differ between Class A
Common Stock and Class B Common Stock.
Restrictions on Ownership. Transfer of shares of Class A Common Stock or
Class B Common Stock which could result in a change of control of the
Company may require the approval of state agencies or local franchising
authorities in certain states in which the Company operates.
Transfer Agent. The Company's transfer agent and registrar for the Class
A Common Stock is Mellon Securities Trust Company.
No Preemptive Rights. The shares of common stock have no preemptive or
other rights to subscribe for or purchase any proportionate part of any new
or additional issues of stock of any class or of securities convertible
into stock of any class.
PREFERRED STOCK
The following description of the terms of the Company's preferred
stock sets forth certain general terms and provisions of the preferred
stock. The description set forth below is subject to and qualified in its
entirety by reference to the certificate of designations establishing a
particular series of preferred stock.
General. Under the Certificate of Incorporation, the Board of
Directors of the Company is authorized, without further stockholder action,
to provide for the issuance of up to 10,000,000 shares of preferred stock
in one or more series. Subject to limitations imposed by law or the
Company's Certificate of Incorporation, the Board of Directors is empowered
to determine (a) the maximum number of shares to constitute the series and
the distinctive designation thereof; (b) whether the shares of such series
shall have voting rights, in addition to any voting rights provided by law,
and, if so, the terms of such voting rights; (c) the dividend rate, if any,
on the shares of such series, the conditions and dates upon which such
dividends shall be payable, the preference or relation which such dividends
shall bear to the dividends payable on any other class or classes or on any
other series of capital stock, and whether such dividends shall be
cumulative or non-cumulative; (d) whether the shares of such series shall
be subject to redemption by the Company, and, if made subject to
redemption, the times, prices and other terms and conditions of such
redemption; (e) the rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the Company; (f) whether or not
the shares of such series shall be subject to the operation of a retirement
or sinking fund, and, if so, the extent to and manner in which any such
retirement or sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or to other corporate purposes
and the terms and provisions relative to the operation thereof; (g) whether
or not the shares of such series shall be convertible into, or exchangeable
for, shares of stock of any other class or classes, or of any other series
of the same class, and if so convertible or exchangeable, the price or
prices or the rate or rates of conversion or exchange and the method, if
any, of adjusting the same; (h) the limitations and restrictions, if any,
to be effective while any shares of such series are outstanding upon the
payment of dividends or making of other distributions on, and upon the
purchase, redemption or other acquisition by the Company of, the Class A
Common Stock, the Class B Common Stock or any other class or classes of
stock of the Company ranking junior to the shares of such series either as
to dividends or upon liquidation; (i) the conditions or restrictions, if
any, upon the creation or indebtedness of the Company or upon the issue or
any additional stock (including additional shares of such series or of any
other series or of any other class) ranking on a parity with or prior to
the shares of such series as to dividends or distribution of assets on
liquidation, dissolution or winding up; (j) whether fractional interests in
shares of the series will be offered in the form of Depositary Shares; and
(k) any other preference and relative, participating, optional or other
special rights or qualifications, limitations or restrictions thereof.
Designated Preferred Stock. The authorized preferred stock of the
Company consists of (i) 200,000 shares of Series B Cumulative Preferred
Stock, $.01 par value and $100 liquidation value per share (the "Series B
Preferred Stock"), none of which are outstanding, (ii) 112,500 shares of
Series C Cumulative Preferred Stock, $.01 par value and $100 liquidation
value per share (the "Series C Preferred Stock"), of which 110,622 shares
were outstanding at June 30, 1995, (iii) 112,500 shares of Series D
Cumulative Preferred Stock, $.01 par value and $100 liquidation value per
share, none of which are outstanding (the "Series D Preferred Stock"), (iv)
100,000 shares of Series E Redeemable Exchangeable Convertible Preferred
Stock, $.01 par value and $1,000 liquidation preference per share
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(the "Series E Preferred Stock"), 100,000 of which are outstanding at June
30, 1995, (v) 100,000 shares of Series F Redeemable Preferred Stock, $.01
par value and $1,000 liquidation preference per share, none of which are
outstanding (the "Series F Preferred Stock"), and (vi) 4,500,000 shares of
11 3/4 Series G Redeemable Exchangeable Preferred Stock, 2,500,000 shares
of which were issued on September 26, 1995 and are outstanding (the "Series
G Preferred Stock" and the Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and the Series G Preferred Stock are hereinafter sometimes
collectively referred to as the "Authorized Preferred Stock"). The Series A
Preferred Stock, $.01 par value, was cancelled by the Board of Directors on
February 2, 1988. The Company does not expect to issue any Series B
Preferred Stock. The Series D Preferred Stock would have been issuable upon
conversion of the Series C Preferred Stock. The Company expects to redeem
the Series E Preferred Stock on November 2, 1995. The Series F Preferred
Stock would have been issuable upon conversion of the Series E Preferred
Stock. The Company does not expect to issue any Series F Preferred Stock.
The holders of such Series B Preferred Stock are entitled, when
declared by the Board of Directors, to dividends at the time legally
available at the annual rate of $12.00 per share prior and in preference to
any declaration of payment of any dividend on the common stock of the
Company. The holders of Series C Preferred Stock and Series D Preferred
Stock are entitled, when declared by the Board of Directors, to dividends
out of legally available funds at the annual rate of $8.00 per share prior
and in preference to any declaration of payment of any dividend on the
common stock of the Company. The right to dividends on shares of the
Authorized Preferred Stock are cumulative. In the event of any liquidation,
dissolution or winding up of the Company, the holders of Series C Preferred
Stock and Series D Preferred Stock are entitled to receive a preferential
amount equal to $100 for each share of Series C Preferred Stock and Series
D Preferred Stock held plus all dividends (whether or not earned or
declared) accrued and unpaid on such shares of Authorized Preferred Stock
to the date of final distribution in preference to any such distribution to
the holders of the common stock of the Company.
The Company at its option may, but shall not be required to, redeem,
at any time and from time to time, on not less than 30 days nor more than
60 days prior notice, any or all shares of Series B Preferred Stock then
outstanding at a price of $100 per share plus all dividends (whether or not
earned or declared) accrued and unpaid on the shares of Series B Preferred
Stock to the date fixed for redemption (the "Series B Preferred Stock
Redemption Price"). During the period ending 30 years from the date of
authorization, no such redemption may be made unless the closing price per
share of the Class A Common Stock on any 20 trading days within a period of
30 consecutive trading days preceding the date of the notice of redemption
was at least 150% of the conversion price of the Series B Preferred Stock.
Commencing 30 years from the date of authorization, the Series B Preferred
Stock may be redeemed at the Series B Preferred Stock Redemption Price at
any time.
At any time and from time to time commencing on December 31, 1997,
the holders of Series C Preferred Stock and Series D Preferred Stock may
require the Company to redeem, upon 30 days' notice to the Company, any or
all of the shares of Series C Preferred Stock and Series D Preferred Stock
then outstanding at a price equal to the lesser of (i) $100 per share or
(ii) the present value of $100, discounted from December 31, 2007 to the
date of such redemption, plus, in each case, all dividends (whether or not
earned or declared) accrued and unpaid on the shares of Series C Preferred
Stock and Series D Preferred Stock to the date fixed for redemption (the
"Series C Preferred Stock and Series D Preferred Stock Redemption Price").
The Company may, at its option, upon notice to the holders requesting
redemption within 20 days of such holders' notice to the Company, convert
all or part of such shares of Series C Preferred Stock into Class B Common
Stock and all or part of such shares of Series D Preferred Stock into Class
A Common Stock. The company at its option may, but shall not be required
to, redeem, at any time and from time to time after December 31, 1997 on
not less than 30 days' nor more than 60 days' prior notice, any or all of
the shares of Series C Preferred Stock and Series D Preferred Stock then
outstanding at the Series C Preferred Stock and Series D Preferred Stock
Redemption Price.
At any time and from time to time until three days prior to a
redemption by the Company, any holder of Series B Preferred Stock may elect
to convert such shares into that number of shares of Class A Common Stock
determined by dividing $100 plus an amount equal to all dividends (whether
or not earned or declared) accrued or unpaid on any shares of Series B
Preferred Stock being converted by $19.575. If the Company elects to
convert any shares of Series C Preferred Stock or Series D Preferred Stock
after a demand for redemption by such holders, the number of shares to be
issued by the Company shall be calculated by dividing the applicable Series
C Preferred Stock and Series D Preferred Stock Redemption Price by the
average of the market price of a share of Class A Common Stock for the 30
trading days preceding the date on which a holder gives notice of its
election to convert
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such shares. Holders of Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock have no voting rights except as to which they
may be entitled under the laws of the State of Delaware.
If the Company elects to convert any shares of Series C Preferred
Stock or Series D Preferred Stock after a demand for redemption by such
holders, the number of shares to be issued by the Company shall be
calculated by dividing the applicable Series C Preferred Stock and Series D
Preferred Stock Redemption Price by the average of the market price of a
share of Class A Common Stock for the 30 trading days preceding the date on
which a holder gives notice of its election to convert such shares. Holders
of Series C Preferred Stock and Series D Preferred Stock have no voting
rights except as to which they may be entitled under the laws of the State
of Delaware.
The Series G Preferred Stock, with respect to dividends and
distributions upon the liquidation, winding up and dissolution of the
Company, ranks (i) senior to all classes of Common Stock and each other
class of capital stock or series of preferred stock established by the
Board of Directors (except as set forth below) which does not expressly
provide that it ranks senior to the Series G Preferred Stock as to
dividends and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Junior Stock");
(ii) on a parity with the Series B Preferred Stock, Series C Preferred
Stock (after the Series E Preferred Stock is no longer outstanding), Series
D Preferred Stock and any other class of capital stock or series of
preferred stock issued by the Company established after the initial
issuance of the Series G Preferred Stock by the Board of Directors, the
terms of which expressly provide that such class or series will rank on a
parity with the Series G Preferred Stock as to dividends and distributions
upon the liquidation, winding up and dissolution of the Company
(collectively referred to as "Parity Securities"); and (iii) junior to each
class of capital stock or series of preferred stock issued by the Company
established after the initial issuance of the Series G Preferred Stock by
the Board of Directors, the terms of which specifically provide that such
class or series will rank senior to the Series G Preferred Stock as to
dividends and distributions upon the liquidation, winding up and
dissolution of the Company (collectively referred to as "Senior
Securities").
The holders of Series G Preferred Stock are entitled, when declared
by the Board of Directors, to dividends at the annual rate of 11 3/4% per
share of Series G Preferred Stock. The right to dividends on the Series G
Preferred Stock is cumulative (whether or not earned or declared). Before
October 1, 2000, dividends may, at the option of the Company, be paid
either in cash or fully paid and non-assessable shares of Series G
Preferred Stock with an aggregate liquidation preference equal to the
amount of such dividend. On and after October 1, 2000, dividends may only
be paid in cash. If any dividend (or portion thereof) payable on any
dividend payment date on or after October 1, 2000 is not paid in full in
cash on the dividend payment date therefor, the amount of such dividend
that is payable and that is not paid in cash on such date will increase at
the rate of 11 3/4% per annum from such dividend payment until paid in
full.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities for any period unless full
cumulative dividends shall have been paid or set apart for such payment on
the Series G Preferred Stock. If full dividends are not so paid, the Series
G Preferred Stock shall share dividends pro rata with the Parity
Securities. Subject to certain exceptions set forth in the Certificate of
Designations for the Series G Preferred Stock, no dividends may be paid or
set apart for such payment on Junior Stock (except dividends on Junior
Stock in additional shares of Junior Stock), and no Junior Stock may be
repurchased, redeemed or otherwise retired nor may funds be set apart for
payment with respect thereto, if full dividends have not been paid on the
Series G Preferred Stock.
The Company may redeem the Series G Preferred Stock at any time after
October 1, 2002, in whole or in part, at certain redemption prices. In
addition, the Company may redeem shares of Series G Preferred Stock at any
time before October 1, 1998 at a redemption price per share equal to the
liquidation preference of $100, plus accrued and unpaid dividends plus a
premium of $10 per share, out of the net proceeds of the sale of Junior
Stock to a strategic equity investor or a public offering of Class A Common
Stock. Furthermore, the company may, at its option, prior to October 1,
2002, redeem the Series G Preferred Stock at any time within 180 days, at
certain redemption prices, after a Change in Control (as defined in the
Certificate of Designations for the Series G Preferred Stock). On October
1, 2007, the Company will be required to redeem all outstanding shares of
Series G Preferred Stock.
On or after January 1, 1996, the Company may, at its option, on any
scheduled dividend payment date, exchange the Series G Preferred Stock for
the Company's 11 3/4% Senior Subordinated Debentures due 2007.
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In the event of any liquidation, winding up or dissolution of the
Company, holders of Series G Preferred Stock will be entitled to receive a
preferential amount equal to $100 per share, plus all accrued and unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding
up of the Company (including an amount equal to a prorated dividend from
the last dividend payment date to the date fixed for liquidation,
dissolution or winding up), before any distribution is made on the Junior
Stock. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Series G
Preferred Stock and all other Parity Securities are not paid in full, the
holders of the Series G Preferred Stock and the Parity Securities will
share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference to which each is entitled.
After payment of the full amount of the liquidation preferences to which
they are entitled, the holders of shares of Series G Preferred Stock will
not be entitled to any further participation in any distribution of assets
of the Company.
Holders of the Series G Preferred Stock will have no voting rights
with respect to general corporate matters except as provided by law or as
set forth in the Certificate of Designations therefor. The Certificate of
Designations for the Series G Preferred Stock provides that (a) dividends
on the Series G Preferred Stock are in arrears and unpaid (and if after
October 1, 2000, such dividends are not paid in cash) for six quarterly
periods (whether or not consecutive), or (b) the company fails to discharge
its redemption obligation to redeem the Series G Preferred Stock on October
1, 2007, the number of directors constituting the Board of Directors will
be adjusted to permit the holders of the majority of the then outstanding
Series G Preferred Stock, voting as a class, to elect a director. Such
voting rights will continue until such time as all dividends in arrears on
the Series G Preferred Stock are paid in full (and in the case of dividends
payable after October 1, 2000, paid in cash) and any failure, breach or
default referred to in clause (b) is remedied, at which time the term of
the directors elected pursuant to the provisions of this paragraph shall
terminate. Each such event described in clauses (a) and (b) above is
referred to herein as a "Voting Rights Triggering Event."
The Certificate of Designations for the Series G Preferred Stock also
provides that the Company will not authorize any class of Senior Securities
without the affirmative vote or consent of holders of at least a majority
of the shares of Series G Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class. The Company may
not amend the Certificate of Designations for the Series G Preferred Stock
so as to affect adversely the specified rights, preferences, privileges or
voting rights of holders of shares of the Series G Preferred Stock, or
authorize the issuance of any additional shares of Series G Preferred
Stock, without the affirmative vote or consent of the holders of at least a
majority of the outstanding shares of Series G Preferred Stock, voting or
consenting, as the case may be, as one class.
Without the affirmative vote or consent of a majority of the issued
and outstanding shares of Series G Preferred Stock, the Company may not
consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any
person unless: (a) the entity formed by such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (b) the Series G Preferred Stock shall
be converted into or exchanged for and shall become shares of such
successor, transferee or resulting corporation, having in respect of such
successor, transferee or resulting corporation the same powers, preferences
and relative participating, optional or special rights, and the
qualifications, limitations or restrictions thereon, that the Series G
Preferred Stock had immediately prior to such transactions; and (c)
immediately after giving effect to such transaction, no Voting Rights
Triggering Event shall have occurred and be continuing. Notwithstanding the
foregoing, the Company may consolidate or merger with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any person if the Company makes
adequate provision (i) prior to October 1, 2002, to redeem the Series G
Preferred Stock after a Change in Control (as defined in the Certificate of
Designations for the Series G Preferred Stock) or (ii) on or after October
1, 2002, to redeem the Series G Preferred Stock at the applicable
redemption price set forth in the Certificate of Designations therefor.
DESCRIPTION OF NEW PREFERRED STOCK AND EXCHANGE DEBENTURES
NEW PREFERRED STOCK
The New Preferred Stock will be issued pursuant to a certificate of
designations (the "Certificate of Designations"). The summary contained
herein of certain provisions of the New Preferred Stock does not purport to
be complete and is qualified in its entirety by reference to the provisions
of the Certificate of Designations. The
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definitions of certain terms used in the Certificate of Designations and in
the following summary are set forth below under "--Certain Definitions."
GENERAL.
The Board of Directors has adopted resolutions authorizing the
issuance of up to 4,500,000 shares of New Preferred Stock, which consist of
2,500,000 shares of New Preferred Stock issuable in exchange for Old
Preferred Stock plus 2,000,000 additional shares of New Preferred Stock
which may be used to pay dividends on the New Preferred Stock if the
Company elects to pay dividends in additional shares of Preferred Stock,
and will file a Certificate of Designations with respect thereto with the
Secretary of State of the State of Delaware as required by Delaware law.
The Old Preferred Stock surrendered in exchange for the New Preferred Stock
will be retired and cancelled and cannot be reissued. Accordingly, issuance
of the New Preferred Stock will not result in any change in capitalization
of the Company. The New Preferred Stock when issued in accordance with the
terms of the Exchange Offer (as defined herein), will be fully paid and
non-assessable, and the holders thereof will have no subscription or
preemptive rights related thereto.
RANKING.
The New Preferred Stock, with respect to dividends and distributions
upon the liquidation, winding-up and dissolution of the Company, will rank
(i) senior to all classes of Common Stock and each other class of capital
stock or series of preferred stock established by the Board of Directors
which does not expressly provide that it ranks senior to the New Preferred
Stock as to dividends and distributions upon the liquidation, winding-up
and dissolution of the Company (collectively referred to as "Junior
Stock"); (ii) on a parity with the Old Preferred Stock and the Company's
Series B Cumulative Convertible Preferred Stock, 8% Series C Cumulative
Preferred Stock (the "Series C Preferred Stock"), 8% Series D Cumulative
Preferred Stock (which may be issued in exchange for shares of the Series C
Preferred Stock) and any other class of capital stock or series of
preferred stock issued by the Company established after the initial
issuance of the Preferred Stock by the Board of Directors, the terms of
which expressly provide that such class or series will rank on a parity
with the Preferred Stock as to dividends and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) junior to each class of
capital stock or series of preferred stock issued by the Company
established after the initial issuance of the Preferred Stock by the Board
of Directors, the terms of which specifically provide that such class or
series will rank senior to the Preferred Stock as to dividends and
distributions upon the liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Securities").
The Company may not issue any new class of Senior Securities without
the approval of the holders of at least a majority of the shares of
Preferred Stock then outstanding, voting or consenting, as the case may be,
as one class.
DIVIDENDS.
Holders of New Preferred Stock are entitled, when declared by the
Board of Directors, out of funds legally available therefor, to receive
dividends on each outstanding share of the New Preferred Stock, at the
annual rate of 11 3/4% per share of New Preferred Stock. Dividends on
the New Preferred Stock will accumulate from the Accrual Date and are
payable quarterly in arrears on January 1, April 1, July 1 and October 1 of
each year, commencing on January 1, 1996. Holders of Old Preferred Stock
whose Old Preferred Stock are accepted for exchange will be deemed to have
waived the right to receive any payment in respect of interest on the Old
Preferred Stock accrued from the Accrual Date until the date of the
issuance of the New Preferred Stock. Consequently, assuming the Exchange
Offer is consummated prior to the record date in respect of the January 1,
1996 dividend payment date for the Old Preferred Stock, holders who
exchange their Old Preferred Stock for New Preferred Stock will receive the
same dividend payment on January 1, 1996 that they would have received had
they not accepted the Exchange Offer. Before October 1, 2000, dividends
may, at the option of the Company, be paid either in cash or fully paid and
non-assessable shares of New Preferred Stock with an aggregate liquidation
preference equal to the amount of such dividend. On and after October 1,
2000, dividends may only be paid in cash. If any dividend (or portion
thereof) payable on any dividend payment date on or after October 1, 2000
is not paid in full in cash on the dividend payment date therefor, the
amount of such dividend that is payable and that is not paid in cash on
such date will increase at the rate of 11 3/4% per annum from such
dividend payment date until paid in full.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities for any period unless full
cumulative dividends shall have been paid or set apart for such payment on
the
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New Preferred Stock. If full dividends are not so paid, the New Preferred
Stock shall share dividends pro rata with the Parity Securities. No
dividends may be paid or set apart for such payment on Junior Stock (except
dividends on Junior Stock in additional shares of Junior Stock), and no
Junior Stock may be repurchased, redeemed or otherwise retired nor may
funds be set apart for payment with respect thereto, if full dividends have
not been paid on the New Preferred Stock, except for (i) any conversion of
Class B Common Stock of the Company into Class A Common Stock of the
Company, (ii) prior to October 1, 2000, the occurrence of the Rainbow Spin-
Off, (iii) repurchases of Common Stock issued under the Company's stock
incentive programs from employees of the Company, and (iv) dividends or
distributions payable-in-kind in additional shares of, or warrants, rights,
calls or options exercisable for or convertible into additional shares of
Junior Stock. See "Risk Factors--Risks Related to the New Preferred Stock
and the Exchange Debentures--Restrictions on Company's Ability to Pay
Dividends on the New Preferred Stock".
OPTIONAL REDEMPTION.
The Company at its option may, but shall not be required to, redeem
the New Preferred Stock (subject to contractual and other restrictions with
respect thereto and to the legal availability of funds therefor) at any
time after October 1, 2002, in whole or in part, at the redemption prices
(expressed in percentage of liquidation preference) set forth below
together with all accrued and unpaid dividends from the last payment date
to the redemption date, if redeemed during the 12-month period beginning
October 1 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 ................. 105.875%
2003 ................. 103.917
2004 ................. 101.958
2005 and thereafter .. 100.000
</TABLE>
In addition, the Company may redeem shares of Preferred Stock having
an aggregate liquidation preference of up to 33 1/3% of the aggregate
liquidation preference of all shares of Preferred Stock then outstanding at
any time before October 1, 1998 at a redemption price per share equal to
the liquidation preference of $100, plus accrued and unpaid dividends plus
a premium of $10 per share, out of the net proceeds of the sale of Junior
Stock to a Strategic Equity Investor or a public offering of Class A Common
Stock; provided that following such redemption, at least 1,666,667
shares of Preferred Stock (representing at least 66 2/3% of the amount
of the Preferred Stock initially issued) shall remain outstanding.
Furthermore, the Company may, at its option, prior to October 1,
2002, redeem the New Preferred Stock, in whole but not in part, at any time
within 180 days after a Change of Control (as defined herein), at a
redemption price per share equal to the sum of (i) the liquidation
preference of $100 per share plus (ii) accrued and unpaid dividends to the
date of redemption plus (iii) the Make-Whole Premium (as defined herein),
which is based on a discount rate equal to the Treasury Rate (as defined
herein) plus 50 basis points.
In the event of partial redemptions of New Preferred Stock, the
shares to be redeemed will be determined pro rata or by lot, as
determined by the Company, except that the Company may redeem such shares
held by any holders of fewer than 100 shares (or shares held by holders who
would hold less than 100 shares as a result of such redemption), as may be
determined by the Company.
MANDATORY REDEMPTION.
On October 1, 2007 (the "Mandatory Redemption Date"), the Company
will be required to redeem (subject to contractual and other restrictions
with respect thereto and to the legal availability of funds therefor) all
outstanding shares of New Preferred Stock at a price equal to the
liquidation preference thereof plus all accumulated and unpaid dividends
from the last payment date to the date of redemption. Future agreements of
the Company may restrict or prohibit the Company from redeeming the New
Preferred Stock.
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PROCEDURE FOR REDEMPTION.
On and after a redemption date, unless the Company defaults in the
payment of the applicable redemption price, dividends will cease to accrue
on shares of New Preferred Stock called for redemption and all rights of
holders of such shares will terminate except for the right to receive the
redemption price, without interest. The Company will send a written notice
of redemption by first class mail to each holder of record of shares of New
Preferred Stock, not fewer than 30 days nor more than 60 days prior to the
date fixed for such redemption. Shares of New Preferred Stock issued and
reacquired will, upon compliance with the applicable requirements of
Delaware law, have the status of authorized but unissued shares of
preferred stock of the Company undesignated as to series and may with any
and all other authorized but unissued shares of preferred stock of the
Company be designated or redesignated and issued or reissued, as the case
may be, as part of any series of preferred stock of the Company, except
that any issuance or reissuance of shares of New Preferred Stock must be in
compliance with the Certificate of Designations.
EXCHANGE.
On or after January 1, 1996, the Company may, at its option, on any
scheduled dividend payment date, exchange the New Preferred Stock, in whole
but not in part, for the Exchange Debentures. See "--The Exchange
Debentures" below for the terms of the Exchange Debentures. Holders of New
Preferred Stock so exchanged will be entitled to receive a principal amount
of Exchange Debentures equal to $100 for each $100 of liquidation
preference of New Preferred Stock held by such holders at the time of
exchange plus an amount per share in cash (or prior to October 1, 2000, in
principal amount of Exchange Debentures) equal to all accrued but unpaid
dividends thereon from the last dividend payment date to the exchange date.
The Exchange Debentures will be issuable only in denominations of $1,000
and integral multiples thereof. An amount in cash will be paid to holders
for any principal amount otherwise issuable which is less than $1,000.
Following such exchange, all dividends on the New Preferred Stock will
cease to accrue, the rights of the holders of New Preferred Stock as
stockholders of the Company shall cease and the person or persons entitled
to receive the Exchange Debentures issuable upon exchange shall be treated
as the registered holder or holders of such Exchange Debentures. Notice of
exchange will be mailed at least 30 days but not more than 60 days prior to
the date of exchange to each holder of New Preferred Stock. See "--The
Exchange Debentures" below.
LIQUIDATION PREFERENCE.
In the event of any liquidation, dissolution or winding-up of the
Company, holders of New Preferred Stock will be entitled to receive a
preferential amount equal to $100 per share, plus all accrued and unpaid
dividends thereon to the date fixed for liquidation, dissolution or
winding-up of the Company (including an amount equal to a prorated dividend
from the last dividend payment date to the date fixed for liquidation,
dissolution or winding-up), before any distribution is made on any Junior
Stock, including, without limitation, on any Common Stock. If upon any
voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the amounts payable with respect to the New Preferred Stock and
all other Parity Securities are not paid in full, the holders of the New
Preferred Stock and the Parity Securities will share equally and ratably in
any distribution of assets of the Company in proportion to the full
liquidation preference to which each is entitled. After payment of the full
amount of the liquidation preferences to which they are entitled, the
holders of shares of New Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Company.
However, neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all of the property or assets of the Company nor the consolidation or
merger of the Company with one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up of the Company.
The Certificate of Designations for the New Preferred Stock does not
contain any provision requiring funds to be set aside to protect the
liquidation preference of the New Preferred Stock, although such
liquidation preference will be substantially in excess of the par value of
such shares of New Preferred Stock. In addition, the Company is not aware
of any provision of Delaware law or any controlling decision of the courts
of the State of Delaware (the state of incorporation of the Company) that
requires a restriction upon the surplus of the Company solely because the
liquidation preference of the New Preferred Stock will exceed its par
value. Consequently, there will be no restriction upon any surplus of the
Company solely because the liquidation preference of the New Preferred
Stock will exceed the par value and there will be no remedies available to
holders of the New Preferred Stock before or after the payment of any
dividend, other than in connection with the liquidation of the Company,
solely by reason of the fact that such dividend would reduce the surplus of
the Company to an amount less than the difference between the liquidation
preference of the New Preferred Stock and its par value.
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VOTING RIGHTS.
Holders of the New Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set
forth in the Certificate of Designations. The Certificate of Designations
provides that if (a) dividends on the Preferred Stock are in arrears and
unpaid (and if after October 1, 2000, such dividends are not paid in cash)
for six quarterly periods (whether or not consecutive), or (b) the Company
fails to discharge its redemption obligation to redeem the Preferred Stock
on the Mandatory Redemption Date, then the number of directors constituting
the Board of Directors will be adjusted to permit the holders of the
majority of the then outstanding Preferred Stock, voting as a class, to
elect a director. Such voting rights will continue until such time as all
dividends in arrears on the Preferred Stock are paid in full (and in the
case of dividends payable after October 1, 2000, paid in cash) and any
failure, breach or default referred to in clause (b) is remedied, at which
time the term of the directors elected pursuant to the provisions of this
paragraph shall terminate. Each such event described in clauses (a) and (b)
above is referred to herein as a "Voting Rights Triggering Event."
Any vacancy occurring in the office of the director elected by
holders of the Preferred Stock may be filled by the departing director
unless and until such vacancy shall be filled by such holders.
The Certificate of Designations also provides that, except as stated
above under "--Ranking", the Company will not authorize any class of Senior
Securities without the affirmative vote or consent of holders of at least a
majority of the shares of Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class. The Certificate of
Designations also provides that the Company may not amend the Certificate
of Designations so as to affect adversely the specified rights,
preferences, privileges or voting rights of holders of shares of the
Preferred Stock, or authorize the issuance of any additional shares of
Preferred Stock, without the affirmative vote or consent of the holders of
at least a majority of the outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class. The holders of at least a
majority of the outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class, may also waive compliance
with any provision of the Certificate of Designations. The Certificate of
Designations also provides that, except as set forth above, (a) the
creation, authorization or issuance of any shares of Parity Securities or
Junior Stock or (b) the increase or decrease in the amount of authorized
capital stock of any class, including any preferred stock, shall not
require the consent of the holders of Preferred Stock and shall not be
deemed to affect adversely the rights, preferences, privileges or voting
rights of holders of shares of Preferred Stock.
Under Delaware law, holders of preferred stock will be entitled to vote
as a class upon a proposed amendment to the certificate of incorporation,
whether or not entitled to vote thereon by the certificate of
incorporation, if the amendment would increase or decrease the par value of
the shares of such class, or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely.
MERGER, CONSOLIDATION AND SALE OF ASSETS.
Without the affirmative vote or consent of the holders of a majority
of the issued and outstanding shares of Preferred Stock, the Company may
not consolidate or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to,
any Person unless: (a) the entity formed by such consolidation or merger
(if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made shall be a
corporation organized or existing under the laws of the United States or
any State thereof or the District of Columbia; (b) the Preferred Stock
shall be converted into or exchanged for and shall become shares of such
successor, transferee or resulting corporation, having in respect of such
successor, transferee or resulting corporation the same powers, preferences
and relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereon, that the Preferred
Stock had immediately prior to such transaction; and (c) immediately after
giving effect to such transaction, no Voting Rights Triggering Event shall
have occurred or be continuing. Notwithstanding the foregoing, the Company
may consolidate or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to,
any Person if the Company makes adequate provision (i) prior to October 1,
2002, to redeem the Preferred Stock after a Change of Control or (ii) on or
after October 1, 2002, to redeem the Preferred Stock at the applicable
redemption price set forth herein.
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COVENANT TO REPORT.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Company will file with the
Securities and Exchange Commission (the "Commission") and provide the
Transfer Agent and the holders of the Preferred Stock with all information,
documents and reports specified in Section 13 and Section 15(d) of the
Exchange Act.
TRANSFER AGENT AND REGISTRAR.
is the transfer agent and registrar for the
New Preferred Stock.
THE EXCHANGE DEBENTURES
The Exchange Debentures will be issued under an Indenture to be dated
as of September 26, 1995 (the "Exchange Indenture"), between the Company
and The Bank of New York, as trustee (the "Trustee"). The Exchange
Indenture is subject to and is governed by the Trust Indenture Act of 1939,
as amended. The following summaries of certain provisions of the Exchange
Indenture do not purport to be complete, and where reference is made to
particular provisions of the Exchange Indenture, such provisions, including
the definitions of certain terms, are incorporated by reference as a part
of such summaries or terms, which are qualified in their entirety by such
reference. The definitions of certain capitalized terms used in the
Exchange Indenture and in the following summary are set forth below under
"Certain Definitions".
The Exchange Debentures will be unsecured obligations of the Company
and will be limited in aggregate principal amount to the aggregate
liquidation preference of the Preferred Stock, plus accrued and unpaid
dividends on the date of exchange of the Preferred Stock into Exchange
Debentures (plus any additional Exchange Debentures issued in lieu of cash
interest as described herein). The Exchange Debentures will be issued only
in fully registered form without coupons, in denominations of $1,000 or any
integral multiple thereof (other than with respect to additional Exchange
Debentures issued in lieu of cash interest as described herein). The
Exchange Debentures will be subordinated to all existing and future Senior
Indebtedness of the Company.
The Exchange Debentures will mature on October 1, 2007. Each Exchange
Debenture will accrue interest at the dividend rate of the Preferred Stock
or the New Preferred Stock, as applicable, from the Exchange Debenture
Issue Date or from the most recent interest payment date to which interest
has been paid or provided for.
Interest will be payable semi-annually in cash (or, on or prior to
October 1, 2000, in additional Exchange Debentures having a principal
amount equal to the cash interest otherwise payable, or in a combination of
cash and Exchange Debentures, at the option of the Company) in arrears on
January 1 and July 1 of each year, commencing with the first such date
after the Exchange Debenture Issue Date. Interest on the Exchange
Debentures will be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed.
Principal of and premium, if any, and interest on the Exchange
Debentures will be payable, and the Exchange Debentures will be
exchangeable and transferable, at the office or agency of the Company in
The City of New York (which initially will be the Corporate Trust Office of
the Trustee); provided, however, that payment of interest, to the
extent paid in cash, may be made at the option of the Company by check
mailed to the person entitled thereto as shown on the Register of the
Exchange Debentures. No service charge will be made for any registration of
transfer or exchange of Exchange Debentures, except for any tax or other
governmental charge that may be imposed in connection therewith.
The Exchange Indenture will not contain any provisions that limit the
ability of the Company to incur indebtedness or that afford Holders of the
Exchange Debentures protection in the event of a highly leveraged or
similar transaction involving the Company, other than as described under
"--Certain Covenants of the Company--Limitation on Indebtedness".
SINKING FUND.
The Exchange Debentures will not be entitled to the benefits of a
sinking fund.
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SUBORDINATION.
The indebtedness represented by the Exchange Debentures will be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness. (Section 1201) Upon the maturity of any Senior Indebtedness,
by lapse of time, acceleration or otherwise, or upon any payment default
(with or without the giving of notice or lapse of time or both, in
accordance with the terms of the instrument governing such Senior
Indebtedness, and without any waiver or forgiveness) with respect to any
Senior Indebtedness, all obligations with respect to such Senior
Indebtedness must first be paid in full, or such payment duly provided for,
before any payment is made with respect to the Exchange Debentures or
before any acquisition of Exchange Debentures by the Company. (Section
1202)
Upon (i) a default with respect to any Senior Indebtedness (other
than under circumstances when the terms of the previous paragraph are
applicable), as such default is defined therein or in the instrument under
which it is outstanding, permitting the holders of Senior Indebtedness to
accelerate the maturity thereof, and (ii) written notice thereof ("Default
Notice") given to the Company and the Trustee by the agent or agents under
the Credit Agreement, then, unless and until such default shall have been
cured or waived by the holders of such Senior Indebtedness or shall have
ceased to exist, no direct or indirect payment may be made by the Company
with respect to the principal of or interest on the Exchange Debentures
(other than payments made in Junior Securities) or to acquire any of the
Exchange Debentures or on account of the redemption provisions of the
Exchange Debentures; provided, however, that such provision shall not
prevent the making of any payment (which is not otherwise prohibited by the
previous paragraph) for more than 120 days after the Default Notice shall
have been given unless the Senior Indebtedness in respect of which such
event of default exists has been declared due and payable in its entirety,
in which case no such payment may be made until such acceleration has been
rescinded or annulled or such Senior Indebtedness has been paid in full.
Notwithstanding the foregoing, not more than one Default Notice may be
given with respect to Senior Indebtedness within a period of 240
consecutive days.
The Exchange Indenture will provide that, upon any payment by or
distribution of the assets of the Company to creditors upon any
dissolution, winding up, liquidation, bankruptcy, reorganization,
assignment for the benefit of creditors, or any insolvency, receivership or
similar proceeding relating to the Company, all Senior Indebtedness must be
paid in full, or such payment duly provided for, before any payment or
distribution (other than in Junior Securities) is made on account of the
principal of or interest on the Exchange Debentures. (Section 1203)
By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company who are holders of Senior Indebtedness
may recover more, ratably, than other creditors of the Company and
creditors of the Company who are not holders of Senior Indebtedness or of
the Exchange Debentures (or the Company's 10 3/4% Debentures due 2004,
the 9 7/8% Debentures due 2013 and the 9 7/8% Debentures due 2023
(collectively, the "Debentures")) may recover more, ratably, than the
Holders of the Exchange Debentures.
A Holder of Exchange Debentures by such holder's acceptance of the
Exchange Debentures agrees to be bound by such provisions and authorizes
and expressly directs the Trustee, on his behalf, to take such action as
may be necessary or appropriate to effectuate the subordination provided
for in the Exchange Indenture and appoints the Trustee his attorney-in-fact
for such purpose. (Section 1209)
The amount of Senior Indebtedness outstanding at June 30, 1995,
adjusted to give pro forma effect to the transactions described under
"Capitalization" and the application of the net proceeds to the Company
from the Offering, would have been approximately $1,096.5 million.
OPTIONAL REDEMPTION.
The Exchange Debentures will be subject to redemption at any time on
or after October 1, 2002, at the option of the Company, in whole or in
part, on not less than 30 nor more than 60 days' prior notice at the
following redemption prices (expressed as percentages of the principal
amount), if redeemed during the 12-month period beginning October 1 of the
years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002 .................... 105.875%
2003 .................... 103.917
2004 .................... 101.958
2005 and thereafter....... 100.000
</TABLE>
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in each case together with accrued interest to the redemption date
(subject to the right of Holders of record on relevant record dates to
receive interest due on an interest payment date). If less than all of the
Exchange Debentures are to be redeemed, the Trustee shall select the
Exchange Debentures or portions thereof to be redeemed either pro rata or
by lot.
In addition, up to 33 1/3% in aggregate principal amount of the
Exchange Debentures may be redeemed before October 1, 1998 at a price of
110% of the principal amount thereof, plus accrued and unpaid interest
thereon, out of the net proceeds of a sale of Junior Stock to a Strategic
Equity Investor or a public offering of Class A Common Stock, provided that
following such redemption at least $166,666,667 principal amount of
Exchange Debentures remains outstanding.
The Credit Agreement currently prohibits the Company from making
optional redemptions of the Exchange Debentures other than through the
issuance of subordinated indebtedness, preferred stock or common stock.
CERTAIN COVENANTS OF THE COMPANY.
Upon issuance of the Exchange Debentures, the following covenants
shall be applicable:
Limitation on Indebtedness. The Exchange Indenture provides that
the Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly incur, create, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise, or become responsible for the
payment of, contingently or otherwise, any Indebtedness (other than
Indebtedness between or among any of the Company and Restricted
Subsidiaries) unless, after giving effect thereto, the Cash Flow Ratio
shall be less than or equal to 9 to 1. (Section 1007)
At June 30, 1995, such Cash Flow Ratio was approximately 7.7 to 1.
Limitation on Senior Subordinated Indebtedness. The Exchange
Indenture provides that the Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become liable for, contingently or
otherwise, or become responsible for the payment of, contingently or
otherwise, any Indebtedness which is both (i) senior in right of payment to
the Exchange Debentures and (ii) expressly subordinate in right of payment
to any other Indebtedness of the Company. For purposes of this covenant,
Indebtedness is deemed to be senior in right of payment to the Exchange
Debentures if it is not subordinate in right of payment to Senior
Indebtedness at least to the same extent as the Exchange Debentures are
subordinate to Senior Indebtedness. (Section 1008)
Limitation on Restricted Payments. The Exchange Indenture provides that,
so long as any of the Exchange Debentures remains outstanding, the Company
will not, and will not permit any Restricted Subsidiary to, make any
Restricted Payment if (a) at the time of such proposed Restricted Payment,
a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence of such Restricted Payment or (b) immediately
after giving effect to such Restricted Payment, the aggregate of all
Restricted Payments that shall have been made on or after July 1, 1988
would exceed the sum of:
(i) $25,000,000, plus
(ii) an amount equal to the difference between (A) the Cumulative
Cash Flow Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
Notwithstanding the foregoing, so long as no Default or Event of
Default shall have occurred and be continuing, the Company may make any
Permitted Restricted Payment; provided, however, that such Permitted
Restricted Payment shall thereafter be counted as a Restricted Payment
solely for purposes of calculating whether any future Restricted Payments
are permitted under clause (b) of the preceding sentence.
For purposes of the "Limitation on Restricted Payments" covenant, the
amount of any Restricted Payment or Permitted Restricted Payment, if other
than cash, shall be based upon fair market value as determined by the Board
of Directors of the Company, whose good faith determination shall be
conclusive. (Section 1009)
The foregoing provisions do not prevent: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at such
date of declaration such payment complied with the above provisions; (ii)
the
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retirement or redemption of any shares of the Company's capital stock or
warrants, rights or options to acquire capital stock of the Company, in
exchange for, or out of the proceeds of a substantially concurrent sale of,
other shares of the Company's capital stock or warrants, rights or options
to acquire capital stock of the Company (other than Disqualified Stock);
and (iii) the redemption of or payments of cash dividends on the Series C
Preferred Stock outstanding on January 1, 1995, which redemptions or
dividends are provided for by the terms of the Series C Preferred Stock in
effect on such date (or the redemption of or payment of cash dividends on
any security of the Company issued in exchange for or upon the conversion
of such Series C Preferred Stock; provided that the aggregate amount
payable pursuant to the terms of such security is no greater than the
aggregate amount payable pursuant to the terms of the Series C Preferred
Stock). For purposes of determining the aggregate permissible amount of
Restricted Payments in accordance with clause (b) of the first paragraph of
this covenant, all amounts expended pursuant to clauses (i) and (iii) of
this paragraph shall be included and all amounts expended or received
pursuant to clause (ii) of this paragraph shall be excluded; provided,
however, that amounts paid pursuant to clause (i) of this paragraph
shall be included only to the extent that such amounts were not previously
included in calculating Restricted Payments. (Section 1009)
For the purposes of the foregoing provisions, the net proceeds from
the issuance of shares of capital stock of the Company upon conversion of
Indebtedness shall be deemed to be an amount equal to (i) the accreted
value of such Indebtedness so converted on the date of such conversion and
(ii) the additional consideration, if any, received by the Company upon
such conversion thereof, less any cash payment on account of fractional
shares (such consideration, if in property other than cash, to be
determined by the Board of Directors of the Company, whose good faith
determination shall be conclusive). If the Company makes a Restricted
Payment which, at the time of the making of such Restricted Payment, would
in the good faith determination of the Company be permitted under the
requirements of this covenant, such Restricted Payment shall be deemed to
have been made in compliance with this covenant notwithstanding any
subsequent adjustments made in good faith to the Company's financial
statements affecting Cumulative Cash Flow Credit or Cumulative Interest
Expense for any period. (Section 1009)
As of June 30, 1995, the Company would have been able to make Restricted
Payments of $332.0 million.
Limitation on Investments in Unrestricted Subsidiaries and Affiliates.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly (i) make any Investment or (ii) allow any Restricted
Subsidiary to become an Unrestricted Subsidiary (a "redesignation of a
Restricted Subsidiary"), in each case unless (a) no Default or Event of
Default shall have occurred and be continuing or shall occur as a
consequence of such Investment or such redesignation of a Restricted
Subsidiary and (b) after giving effect thereto, the Cash Flow Ratio shall
be less than or equal to 9 to 1.
The foregoing provisions of this covenant shall not prohibit (i) any
renewal or reclassification of any Investment existing on the date hereof
or (ii) trade credit extended on usual and customary terms in the ordinary
course of business. (Section 1010)
Transactions with Affiliates. The Exchange Indenture provides that the
Company shall not, and shall not permit any of its subsidiaries to, sell,
lease, transfer or otherwise dispose of any of its properties or assets to
or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the
benefit of, an Affiliate of the Company that is not a subsidiary of the
Company, having a value, or for consideration having a value, in excess of
$10,000,000 individually or in the aggregate unless the Board of Directors
of the Company shall make a good faith determination that the terms of such
transaction are, taken as a whole, no less favorable to the Company or such
subsidiary, as the case may be, than those which might be available in a
comparable transaction with an unrelated Person. For purposes of
clarification, this provision shall not apply to Restricted Payments or
Permitted Restricted Payments permitted under "Limitation on Restricted
Payments". (Section 1011)
CONSOLIDATION, MERGER AND SALE OF ASSETS.
The Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its assets to, any Person, unless: (i) the entity formed by such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or disposition shall have been made
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and shall assume
by a supplemental indenture all the obligations of the Company under the
Exchange Debentures and the Exchange Indenture; (ii) immediately before and
immediately after such
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transaction, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing; and (iii) immediately after
such transaction, and after giving effect thereto, the Person formed by or
surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease or conveyance or disposition shall have been
made, shall have a Cash Flow Ratio not in excess of 9 to 1. (Section 801)
EVENTS OF DEFAULT.
The following are Events of Default under the Exchange Indenture: (1)
default for 30 days in payment of interest on the Exchange Debentures; (2)
default in payment of principal or premium, if any, on the Exchange
Debentures at Maturity, upon acceleration, redemption or otherwise; (3)
failure to comply with any other covenant or agreement of the Company,
continued for 60 days (or, with respect to certain covenants or agreements,
30 days) after written notice as provided in the Exchange Indenture; (4) a
default or defaults under any mortgage, indenture or instrument which
secures or evidences any Indebtedness for money borrowed or guaranteed by
the Company or a Restricted Subsidiary in an aggregate amount of
$10,000,000 or more (but excluding any Indebtedness for the deferred
purchase price of property or services owed to the Person providing such
property or services as to which the Company or such Restricted Subsidiary
is contesting its obligation to pay the same in good faith and by proper
proceedings and for which the Company or such Restricted Subsidiary has
established appropriate reserves) which result from the failure to pay such
Indebtedness at final maturity or which have resulted in the acceleration
of such Indebtedness; (5) the entry of a final judgment or final judgments
for the payment of money by a court or courts of competent jurisdiction
against the Company or any Restricted Subsidiary in an aggregate amount
exceeding $10,000,000 which remain undischarged and unbonded for a period
(during which execution shall not be effectively stayed) of 60 days or as
to which an enforcement proceeding has been commenced by any creditor, and
(6) certain events of bankruptcy, insolvency or reorganization. (Section
501)
If an Event of Default (other than as specified in clause (6) above)
shall occur and be continuing under the Exchange Indenture, either the
Trustee or the Holders of not less than 25% in aggregate principal amount
of the outstanding Exchange Debentures, by written notice to the Company
and the agents, if any, under the Credit Agreement (and to the Trustee if
such notice is given by the Holders), may declare all the unpaid principal
of, premium, if any, and interest on the Exchange Debentures to be due and
payable as provided in the Exchange Indenture. Upon a declaration of
acceleration, such principal, premium, if any, and accrued interest shall
be due and payable upon the first to occur of an acceleration under the
Credit Agreement or ten days after receipt by the Company and the agents,
if any, under the Credit Agreement of such written notice. No action on the
part of the Trustee or any Holder of the Exchange Debentures is required
for such acceleration if an Event of Default specified in clause (6) above
shall occur and be continuing. The Holders of at least a majority in
principal amount of the Exchange Debentures then outstanding may rescind an
acceleration and its consequences if (i) all existing Events of Default,
other than the nonpayment of principal of, premium, if any, or interest on
the Exchange Debentures which have become due solely because of the
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
A declaration of acceleration because of an Event of Default specified in
clause (4) of the preceding paragraph would be automatically annulled if
the Indebtedness referred to therein were discharged, or the Holders
thereof rescinded their declaration of acceleration referred to therein,
within 30 days after the acceleration of the Exchange Debentures and no
other Event of Default had occurred and not been cured or waived during
such period. (Section 502) The Holders of a majority in principal amount of
the Exchange Debentures outstanding also have the right to waive certain
past defaults under the Exchange Indenture. (Section 513)
No Holder of any Exchange Debentures issued under the Exchange
Indenture has any right to institute any proceeding with respect to such
Exchange Indenture or for any remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of
Default under the Exchange Indenture, (ii) the Holders of at least 25% in
principal amount of the outstanding Exchange Debentures issued under the
Exchange Indenture have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee under the
Exchange Indenture, and (iii) the Trustee has not received from the Holders
of a majority in principal amount of the outstanding Exchange Debentures a
direction inconsistent with such request and the Trustee has failed to
institute such proceeding within 60 days after receipt of such notice.
(Section 507) Such limitations do not apply, however, to a suit instituted
by a Holder of an Exchange Debenture for the enforcement of payment of the
principal of or premium, if any, or interest on such Exchange Debenture on
or after the respective due dates expressed in such Exchange Debenture.
(Section 508)
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During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Exchange Indenture
and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise under the circumstances in the conduct of
such person's own affairs. Subject to the provisions of the Exchange
Indenture relating to the duties of the Trustee, in case an Event of
Default shall occur and be continuing, the Trustee is not under any
obligation to exercise any of its rights or powers under the Exchange
Indenture at the request or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
(Section 602) Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in principal amount of the outstanding
Exchange Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under the Exchange
Indenture. (Section 512)
The Company is required to furnish to the Trustee an annual statement
as to the performance by the Company of its obligations under the Exchange
Indenture and as to any default in such performance. (Section 1013)
DEFEASANCE.
The Company may at any time terminate all of its obligations with
respect to the Exchange Debentures ("defeasance"), except for certain
obligations, including those regarding the Defeasance Trust (as defined
below) and obligations to register the transfer or exchange of Exchange
Debentures, to replace mutilated, destroyed, lost or stolen Exchange
Debentures and to maintain agencies in respect of the Exchange Debentures.
The Company may also at any time terminate its obligations under the
covenants set forth in the Exchange Indenture, which are described under
"--Certain Covenants of the Company" above, and any omission to comply with
such obligations shall not constitute a Default or an Event of Default with
respect to the Exchange Debentures ("covenant defeasance"). (Sections 1402,
1403 and 1404)
In order to exercise either defeasance or covenant defeasance, (i)
the Company must irrevocably deposit in trust, for the benefit of the
Holders, with the Trustee money or U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient to pay the
principal of and premium, if any, and interest on the Exchange Debentures
to redemption or maturity (the "Defeasance Trust"), (ii) the Company must
deliver opinions of counsel to the effect that such Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred (in the case of defeasance, such opinion must refer to and be
based upon a ruling of the Internal Revenue Service or a change in
applicable federal income tax laws), (iii) no event or condition shall
exist that, pursuant to certain provisions described under "Subordination"
above, would prevent the Company from making payments of principal of and
premium, if any, and interest on the Exchange Debentures at the date of the
irrevocable deposit referred to above or at any time during the period
ending on the 91st day after such deposit date and (iv) the Company must
comply with certain other conditions. (Section 1404)
SATISFACTION AND DISCHARGE OF THE EXCHANGE INDENTURE AND THE EXCHANGE
DEBENTURES.
The Exchange Indenture will cease to be of further effect (except as
to surviving rights of registration of transfer or exchange of Exchange
Debentures, as expressly provided for in the Exchange Indenture) when
either (i) all such Exchange Debentures theretofore authenticated and
delivered (except lost, stolen or destroyed Exchange Debentures which have
been replaced or paid) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable by it under the Exchange
Indenture or (ii) all such Exchange Debentures not theretofore delivered to
the Trustee for cancellation (a) have become due and payable, or (b) will
become due and payable within one year, or (c) are to be called for
redemption within one year, and the Company has irrevocably deposited or
caused to be deposited with the Trustee funds in an amount sufficient to
pay the entire indebtedness on such Exchange Debentures not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of deposit (if such Exchange Debentures are
then due and payable) or to the applicable maturity or redemption date (as
the case may be), and the Company has paid all sums payable by it under the
Exchange Indenture. (Section 401)
MODIFICATION AND WAIVER.
Modifications and amendments of the Exchange Indenture or the
Exchange Debentures may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate principal
amount
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of the outstanding Exchange Debentures; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Exchange Debenture, (i) change the Stated Maturity of the
principal of, or the premium, if any, or any installment of interest on,
the Exchange Debentures, (ii) reduce the principal amount of, or the
premium, if any, or interest on, the Exchange Debentures, (iii) change the
Currency in which any Exchange Debenture or any premium or the interest
thereon is payable, (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to the Exchange Debentures,
(v) reduce the percentage in principal amount of outstanding Exchange
Debentures necessary to waive compliance with certain provisions of the
Exchange Indenture or to waive certain defaults, (vi) modify any of the
provisions relating to supplemental indentures requiring the consent of
Holders or relating to the waiver of past defaults, except to increase the
percentage of outstanding Exchange Debentures required for such actions or
to provide that certain other provisions of the Exchange Indenture cannot
be modified or waived without the consent of the Holder of each Exchange
Debenture affected thereby, or (vii) modify any of the provisions of the
Exchange Indenture relating to the subordination of the Exchange Debentures
in a manner adverse to the Holders thereof. (Sections 901 and 902)
The Holders of a majority in aggregate principal amount of the
Exchange Debentures then outstanding may waive compliance with certain
restrictive covenants and provisions of the Exchange Indenture. (Section
1014)
REGARDING THE TRUSTEE.
The Bank of New York ("BONY") is the Trustee under the Exchange Indenture
and the indentures relating to the Company's 10 3/4% Debentures due 2004,
the 9 7/8% Debentures due 2013 and the 9 7/8% Debentures due 2023. BONY is
a party to certain credit agreements with the Company and its subsidiaries,
including the Credit Agreement, borrowings under which constitute Senior
Indebtedness under the Exchange Indenture. BONY may also maintain other
banking arrangements with the Company in the ordinary course of business.
DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Certificate of Designations and in the Exchange Indenture. Reference is
made to the Certificate of Designations and the Exchange Indenture for the
full definition of all such terms, as well as any other capitalized terms
used herein for which no definition is provided.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the
purposes of this definition, control when used with respect to any
specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Annualized Operating Cash Flow" means, for any period of three
complete consecutive calendar months, an amount equal to Operating Cash
Flow for such period multiplied by four.
"Banks" means the lenders from time to time under the Credit Agreement.
"Capitalized Lease Obligation" means any obligation of a person
to pay rent or other amounts under a lease with respect to any property
(whether real, personal or mixed) acquired or leased by such Person and
used in its business that is required to be accounted for as a liability on
the balance sheet of such Person in accordance with generally accepted
accounting principles, and the amount of such Capitalized Lease Obligation
shall be the amount so required to be accounted for as a liability.
"Cash Flow Ratio" means, as at any date, the ratio of (i) the sum
of the aggregate outstanding principal amount of all Indebtedness of the
Company and the Restricted Subsidiaries determined on a consolidated basis
but excluding all Interest Swap Obligations entered into by the Company or
any Restricted Subsidiary and one of the Banks outstanding on such date
plus (but without duplication of Indebtedness supported by Letters of
Credit) the aggregate undrawn face amount of all Letters of Credit
outstanding on such date to (ii) Annualized Operating Cash Flow determined
as at the last day of the most recent month for which financial information
is available.
"Change of Control" means any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation)
the result of which is that Dolan ceases (i) to elect a majority of the
Board of
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Directors of the Company or (ii) to be the "beneficial owner" (as defined
in Rule 13(d)(3) under the Exchange Act) of at least 50% of the aggregate
voting power of the voting stock of the Company.
"Cumulative Cash Flow Credit" means the sum of:
(a) cumulative Operating Cash Flow during the period commencing on
July 1, 1988 and ending on the last day of the most recent month preceding
the date of the proposed Restricted Payment for which financial information
is available or, if cumulative Operating Cash Flow for such period is
negative, minus the amount by which cumulative Operating Cash Flow is less
than zero, plus
(b) the aggregate net proceeds received by the Company from the issue
or sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, plus
(c) the aggregate net proceeds received by the Company from the
issuance or sale (other than to a Restricted Subsidiary) of its capital
stock (other than Disqualified Stock) on or after January 1, 1992, upon the
conversion of, or exchange for, Indebtedness of the Company or any
Restricted Subsidiary or from the exercise of any options, warrants or
other rights to acquire capital stock of the Company.
For purposes of this definition, the net proceeds in property other than
cash received by the Company as contemplated by clauses (b) and (c) above
shall be valued at the fair market value of such property (as determined by
the Board of Directors of the Company, whose good faith determination shall
be conclusive) at the date of receipt by the Company.
"Cumulative Interest Expense" means, for the period commencing on
July 1, 1988 and ending on the last day of the most recent month preceding
the proposed Restricted Payment for which financial information is
available, the aggregate of the interest expense of the Company and its
Restricted Subsidiaries for such period, determined on a consolidated basis
in accordance with generally accepted accounting principles, including
interest expense attributable to Capitalized Lease Obligations.
"Debt" with respect to any Person means, without duplication, any
liability, whether or not contingent, (i) in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereto), but excluding
reimbursement obligations under any surety bond, (ii) representing the
balance deferred and unpaid of the purchase price of any property
(including pursuant to Capitalized Lease Obligations), except any such
balance that constitutes a trade payable, (iii) under Interest Swap
Agreements (as defined in the Credit Agreement) entered into pursuant to
the Credit Agreement, (iv) under any other agreement related to the fixing
of interest rates on any Indebtedness, such as an interest swap, cap or
collar agreement (if and to the extent any of the foregoing would appear as
a liability upon a balance sheet of such Person prepared on a consolidated
basis in accordance with generally accepted accounting principles), or (v)
guarantees of items of other Persons which would be included within this
definition for such other Persons (whether or not the guarantee would
appear on such balance sheet).
"Disqualified Stock" means any capital stock of the Company or
any Restricted Subsidiary which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Exchange Debentures.
"Dolan" shall mean Mr. Charles Dolan, his spouse, his descendants
or any spouse of any such descendants and trusts for the benefit of, inter
alia, him, his spouse, his descendants or any spouse of any such
descendants, and any estate, testamentary trust, or executor,
administrator, conservator or legal or personal representative of any of
the foregoing.
"Exchange Debenture Issue Date" means the date on which the Exchange
Debentures are originally issued under the Exchange Indenture.
"Indebtedness" with respect to any Person, means the Debt of such
Person; provided, however, that, with respect to the Company, the
Minimum Payment or the Preferred Payment (each a "Cablevision of NYC
Payment") payable by a subsidiary of the Company and guaranteed by the
Company as a result of the Cablevision of NYC
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Acquisition shall not be deemed to be "Indebtedness" so long as the Company
and such subsidiary are permitted to make such Cablevision of NYC Payment
in one or more classes of the Company's capital stock (other than
Disqualified Stock) pursuant to the terms of the Cablevision of NYC
Acquisition agreement and the Company and the Restricted Subsidiaries are
prohibited from making such Cablevision of NYC Payment in cash, debt
securities, Disqualified Stock or any combination thereof, pursuant to the
terms of any mortgage, indenture, credit agreement or other instrument that
secures or evidences Indebtedness for money borrowed or guaranteed by the
Company or a Restricted Subsidiary in an aggregate amount of $10,000,000 or
more; provided that, for purposes of the definition of "Indebtedness"
(including the term "Debt" to the extent incorporated in such definition)
and for purposes of the definition of "Event of Default", the term
"guarantee" shall not be interpreted to extend to a guarantee under which
recourse is limited to the capital stock of an entity that is not a
Restricted Subsidiary.
"Interest Swap Obligations" means, with respect to any Person,
the obligations of such Person pursuant to any arrangement with any other
Person whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in
exchange for periodic payments made by such Person calculated by applying a
fixed or a floating rate of interest on the same notional amount.
"Investment" means any advance, loan, account receivable (other
than an account receivable arising in the ordinary course of business), or
other extension of credit (excluding, however, accrued and unpaid interest
in respect of any advance, loan or other extension of credit) or any
capital contribution to (by means of transfers of property to others,
payments for property or services for the account or use of others, or
otherwise), any purchase or ownership of any stocks, bonds, notes,
debentures or other securities (including, without limitation, any
interests in any partnership, joint venture or joint adventure) of, or any
bank accounts with or guarantee of any Indebtedness or other obligations
of, any Unrestricted Subsidiary or Affiliate that is not a subsidiary of
the Company, provided that (i) the term "Investment" shall not include
any transaction that would otherwise constitute an Investment of the
Company or a subsidiary of the Company to the extent that the consideration
provided by the Company or such subsidiary in connection therewith shall
consist of capital stock of the Company (other than Disqualified Stock) and
(ii) the term "guarantee" shall not be interpreted to extend to a guarantee
under which recourse is limited to the capital stock of an entity that is
not a Restricted Subsidiary.
"Junior Securities" means securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment,
junior or the payment of which is otherwise subordinate, at least to the
extent provided in the Exchange Indenture, to the payment of all Senior
Indebtedness at the time outstanding, and to the payment of all securities
issued in exchange therefor, to the holders of the Senior Indebtedness at
the time outstanding.
"Make-Whole Premium" means, with respect to a share of Preferred
Stock, the present value of (i) all accrued and unpaid dividends (assuming
payment thereof in cash on the date of calculation), (ii) all dividends
accruing until October 1, 2002 (assuming payment thereof in cash on the
applicable dividend payment date), and (iii) the liquidation preference and
any applicable optional redemption premium therefor payable on such date
for such share (in each case assuming payment thereof on October 1, 2002),
computed using a discount rate equal to the Treasury Rate plus 50 basis
points.
"Operating Cash Flow" means, for any period, the sum of the following for
the Company and the Restricted Subsidiaries for such period, determined on
a consolidated basis in accordance with generally accepted accounting
principles (except for the amortization of deferred installation income
which shall be excluded from the calculation of Operating Cash Flow for all
purposes of the Exchange Indenture): (i) aggregate operating revenues minus
(ii) aggregate operating expenses (including technical, programming, sales,
selling, general and administrative expenses and salaries and other
compensation, net of amounts allocated to Affiliates, paid to any general
partner, director, officer or employee of the Company or any Restricted
Subsidiary, but excluding interest, depreciation and amortization and the
amount of non-cash compensation in respect of the Company's employee
incentive stock programs for such period (not to exceed in the aggregate
for any calendar year 7% of Operating Cash Flow for the previous calendar
year) and, to the extent otherwise included in operating expenses, any
losses resulting from a writeoff or writedown of Investments by the Company
or any Restricted Subsidiary in Affiliates). For purposes of determining
Operating Cash Flow, there shall be excluded all management fees until
actually paid to the Company or any Restricted Subsidiary in cash.
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"Permitted Restricted Payment" means the payment or declaration of
any dividend by the Company or the making by the Company of any other
distribution or the consummation of an exchange offer, or any combination
of the foregoing, which results in all or a portion of the Capital Stock of
Rainbow Programming Holdings, Inc. or of another entity holding only assets
that were held by Rainbow Programming Holdings, Inc. immediately prior to
the acquisition thereof by such entity (in either case, "RPH") being held
by all or any portion of the shareholders of the Company (an "RPH
Transaction"), it being understood that (i) if the Company and its
Subsidiaries, after the date of the Exchange Indenture and prior to the
date of an RPH Transaction, make Investments in RPH (in cash or assets)
aggregating not more than $15,000,000, then such RPH Transaction shall
continue to constitute a "Permitted Restricted Payment" and (ii) if the
Company or any Subsidiary makes any Investment in RPH, after the date of
the Exchange Indenture and prior to the date of such RPH Transaction, that
is not permitted by the foregoing clause (i), then such RPH Transaction
shall not constitute a "Permitted Restricted Payment". For purposes of the
foregoing, the value of any assets invested in RPH shall be based upon the
fair market value thereof as determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive.
"Principals" means Charles F. Dolan and trusts established for
the benefit of family members of Charles F. Dolan.
"Rainbow Spin-Off" means the payment of any dividend by the
Company or the making by the Company of any other distribution or the
consummation of an exchange offer, or any combination of the foregoing,
which results in all or a portion of the capital stock of Rainbow
Programming Holdings, Inc. or any successor to the assets or equity
interests thereof, or of another entity, holding only assets that were held
by Rainbow Programming Holdings, Inc. immediately prior to the acquisition
thereof by such entity, being held by all or any portion of the
shareholders of the Company.
"Restricted Payment" means,
(a) any Stock Payment by the Company or a Restricted Subsidiary; or
(b) any direct or indirect payment to redeem, repurchase, defease or
otherwise acquire or retire for value, or permit any Restricted Subsidiary
to redeem, repurchase, defease or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Indebtedness of the Company that is subordinate in right
of payment to the Exchange Debentures.
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to the Company or any other
Restricted Subsidiary or (y) any Investment or designation of a Restricted
Subsidiary as an Unrestricted Subsidiary permitted under the "Limitation on
Investments in Unrestricted Subsidiaries and Affiliates" covenant.
"Restricted Subsidiary" means any subsidiary of the Company, whether
existing on the date of the Exchange Indenture or created subsequent
thereto, designated from time to time by the Company as a "Restricted
Subsidiary"; provided, however, that no subsidiary can be or remain so
designated unless (i) at least 67% of each of the total equity interest and
the voting control of such subsidiary is owned, directly or indirectly, by
the Company or another Restricted Subsidiary and (ii) such subsidiary is
not restricted, pursuant to the terms of any loan agreement, note,
indenture or other evidence of indebtedness, from (a) paying dividends or
making any distribution on such subsidiary's capital stock or other equity
securities or paying any Indebtedness owed to the Company or to any
Restricted Subsidiary, (b) making any loans or advances to the Company or
any Restricted Subsidiary or (c) transferring any of its properties or
assets to the Company or any Restricted Subsidiary (it being understood
that a financial covenant any of the components of which are directly
impacted by the taking of the action (e.g., the payment of a dividend)
itself (such as a minimum net worth test) would be deemed to be a
restriction on the foregoing actions, while a financial covenant none of
the components of which is directly impacted by the taking of the action
(e.g., the payment of a dividend) itself (such as a debt to cash flow test)
would not be deemed to be a restriction on the foregoing actions); and
provided further, that the Company may, from time to time, redesignate any
Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the
provisions of the "Limitation on Investments in Unrestricted Subsidiaries
and Affiliates" covenant.
"Senior Indebtedness" means the principal, premium, if any,
interest (including post-petition interest in any proceeding under any
Bankruptcy Law, whether or not such interest is an allowed claim
enforceable against the debtor in a proceeding under such Bankruptcy Law),
penalties, fees and other liabilities payable with respect to (i)
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all Debt of the Company, other than the Exchange Debentures and the
Company's 10 3/4% Debentures due 2004, the 9 7/8% Debentures due 2013 and
the 9 7/8% Debentures due 2023 (with which the Exchange Debentures are
intended to rank on a parity), whether outstanding on the date of the
Exchange Indenture or thereafter created, incurred or assumed, which is (x)
for money borrowed, (y) evidenced by a note or similar instrument given in
connection with the acquisition of any businesses, properties or assets of
any kind or (z) in respect of any Capitalized Lease Obligations and (ii)
all renewals, extensions, refundings, increases or refinancings thereof,
unless, in the case of (i) or (ii) above, the instrument under which the
Debt is created, incurred, assumed or guaranteed expressly provides that
such Debt is not senior in right of payment to the Exchange Debentures. For
purposes of clarification, Senior Indebtedness includes any liability under
Interest Swap Agreements entered into pursuant to the Credit Agreement.
Notwithstanding anything to the contrary contained in the Exchange
Indenture, Senior Indebtedness shall mean and include all amounts of Senior
Indebtedness that is such by virtue of clause (i) or (ii) of the foregoing
definition that are repaid by the Company and subsequently recovered from
the holder of such Senior Indebtedness under any applicable Bankruptcy Laws
or otherwise (other than by reason of some wrongful conduct on the part of
the holders of such Debt).
"Stock Payment" means, with respect to any Person, the payment or
declaration of any dividend, either in cash or in property (except
dividends payable in common stock or common shares of capital stock of such
Person), or the making by such Person of any other distribution, on account
of any shares of any class of its capital stock, now or hereafter
outstanding, or the redemption, purchase, retirement or other acquisition
for value by such Person, directly or indirectly, of any shares of any
class of its capital stock, now or hereafter outstanding.
"Strategic Equity Investor" means a corporation or entity with an
equity market capitalization, a net asset value or annual revenues of at
least $1.0 billion that owns and operates businesses in the
telecommunications, information systems, entertainment, cable or similar or
related industries.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date fixed for
redemption of the Preferred Stock or, if such Statistical Release is no
longer published, any publicly available source of similar market data with
a constant maturity most nearly equal to the then remaining period to the
date scheduled for the mandatory redemption of the Preferred Stock;
provided, however, that if such period is not equal to the constant
maturity of a United States Treasury security for which a weekly average
yield is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are
given.
"Unrestricted Subsidiary" means any subsidiary of the Company which is
not a Restricted Subsidiary.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material anticipated federal income
tax consequences of the ownership and disposition of the New Preferred
Stock and Exchange Debentures. This summary is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the final,
temporary and proposed regulations promulgated thereunder, and
administrative rulings and judicial decisions now in effect, all of which
are subject to change (possibly with retroactive effect) or different
interpretations. This summary does not purport to deal with all aspects of
federal income taxation that may be relevant to an investor's decision to
hold the New Preferred Stock and it is not intended to be applicable to all
categories of investors, some of which, such as dealers in securities,
banks, insurance companies, tax-exempt organizations, foreign persons,
persons that hold New Preferred Stock or Exchange Debentures as part of a
straddle or conversion transaction or holders subject to the alternative
minimum tax, may be subject to special rules. In addition, the summary is
limited to persons that will hold the New Preferred Stock and any Exchange
Debentures received in exchange therefor as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the
Code. Holders should note that Counsel's opinion is not binding on the
Service and there can be no assurance that the Internal Revenue Service
(the "Service") will take a similar view with respect to the tax
consequences described below. No ruling has been or will be requested by
the Company from the Service on any tax matters relating to the New
Preferred Stock or Exchange Debentures. ALL PROSPECTIVE HOLDERS OF SHARES
OF NEW PREFERRED STOCK ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OWNERSHIP AND DISPOSITION OF NEW PREFERRED STOCK OR EXCHANGE DEBENTURES.
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TAXATION OF HOLDERS ON EXCHANGE
No gain or loss will be recognized by a holder that exchanges Old
Preferred Stock for New Preferred Stock pursuant to the Exchange Offer. The
basis of New Preferred Stock received by such holder in the exchange will
be the same as the Old Preferred Stock exchanged therefor. The holder's
holding period for such New Preferred Stock will include the holder's
holding period for the Old Preferred Stock so exchanged, provided that the
Old Preferred Stock was held as a capital asset.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Preferred Stock for its own
account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Preferred
Stock. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of New
Preferred Stock received in exchange for Old Preferred Stock where such Old
Preferred Stock were acquired as a result of market-making activities or
other trading activities. The Company has agreed that it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale for a period of 90 days from the
date of this Prospectus, or such shorter period as will terminate when all
Old Preferred Stock acquired by broker-dealers for their own accounts as a
result of market-making activities or other trading activities have been
exchanged for New Preferred Stock and resold by such broker-dealers.
The Company will not receive any proceeds from any sale of New
Preferred Stock by broker-dealers. New Preferred Stock received by broker-
dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the
New Preferred Stock or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Preferred Stock. Any
broker-dealer that resells New Preferred Stock that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Preferred Stock may be
deemed to be a "underwriter" within the meaning of the Securities Act and
any profit on any such resale of New Preferred Stock and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states
that by acknowledging that it will deliver and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
For a period of 90 days from the date of this Prospectus, or such shorter
period as will terminate when all Old Preferred Stock acquired by broker-
dealers for their own accounts as a result of market-making activities or
other trading activities have been exchanged for New Preferred Stock and
resold by such broker-dealers, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company has agreed to indemnify such broker-dealers
against certain liabilities, including liabilities under the Securities
Act.
VALIDITY OF THE NEW PREFERRED STOCK
The validity of the New Preferred Stock will be passed upon for the
Company by Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated financial statements and schedules of the Company
and its subsidiaries as of December 31, 1994 and 1993 and for each of the
years in the three-year period ended December 31, 1994 that are
incorporated in this Prospectus by reference have been incorporated herein
and in the Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm of experts in
accounting and auditing.
The consolidated financial statements and schedules of A-R Cable
Services, Inc. and its subsidiaries as of December 31, 1994 and 1993 and
for each of the years in the three-year period ended December 31, 1994 that
are incorporated in this Prospectus by reference have been incorporated
herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm of
experts in accounting and auditing.
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The consolidated financial statements of Cablevision of Boston Limited
Partnership as of December 31, 1994 and 1993 and for each of the years in
the three-year period ended December 31, 1994 that are incorporated in this
Prospectus by reference have been incorporated herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm of experts in accounting and
auditing.
The financial statements of American Movie Classics Company as of and
for the years ended December 31, 1993 and 1992 that are incorporated in
this Prospectus by reference have been incorporated herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm of experts in accounting and
auditing.
The financial statements of Monmouth Cablevision Associates, Riverview
Cablevision Associates, L.P. and Framingham Cablevision Associates, Limited
Partnership each as of and for the years ended December 31, 1993 and 1992
that are incorporated in this Prospectus by reference have been
incorporated herein and in the Registration Statement in reliance upon the
report of Deloitte & Touche LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm of experts in
accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation -- a "derivative action"), if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such action, and the
statute requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the
corporation. The statute provides that it is not exclusive of other rights
to which those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The first paragraph of Article Ninth of the Corporation's Certificate of
Incorporation provides:
The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, or by any successor
thereto, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by
said section. Such right to indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators
of such a person. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
Article VIII of the By-Laws of the Corporation provides:
A. The corporation shall indemnify each person who was or is
made a party or is threatened to be made a party to or is involved in
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter
a "proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or alleged action
in any other capacity while serving as a director, officer, employee
or agent, to the maximum extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to
such amendment), against all expense, liability and loss (including
attorney's fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred by such
person in connection with such proceeding. Such indemnification shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators. The right to indemnification conferred
in this Article shall be a contract right and shall include the right
to be paid by the corporation the expenses incurred in defending any
such proceeding in advance of its final disposition; provided that, if
the Delaware General Corporation Law so requires, the payment of such
expenses incurred by a director or officer in advance of the final
disposition of a proceeding shall be made only upon receipt by the
corporation of an undertaking by or on behalf of such person to repay
all amounts so advanced if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as
authorized in this Article or otherwise.
II-1
<PAGE>
B. The right to indemnification and advancement of expenses
conferred on any person by this Article shall not limit the
corporation from providing any other indemnification permitted by law
nor shall it be deemed exclusive of any other right which any such
person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
C. The corporation may purchase and maintain insurance, at
its expense, to protect itself and any director, officer, employee or
agent of the corporation or another corporation, partnership, joint
venture, or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware
General Corporation Law.
The Corporation has entered into indemnification agreements with
certain of its officers and directors indemnifying such officers and
directors from and against certain expenses, liabilities or other matters
referred to in or covered by Section 145 of the Delaware General
Corporation Law. The Corporation has also entered into an agreement with
Charles F. Dolan ("Mr. Dolan"), the Chairman of the Corporation, pursuant
to which Mr. Dolan has agreed to guarantee the Corporation's obligation to
indemnify its officers and directors to the fullest extent permitted by
Delaware law. In addition, subject to certain limitations, Mr. Dolan has
agreed to indemnify such officers and directors against any loss or expense
such person may incur in connection with any transaction involving Mr.
Dolan or entities affiliated with Mr. Dolan to the extent indemnification
is not provided by the Corporation. Any payment required to be made by Mr.
Dolan pursuant to such agreement will be reduced by any proceeds of
insurance or reimbursement under any other form of indemnification
reimbursement available to such officer or director. The Corporation
maintains directors' and officers' liability insurance.
Section 102(b)(7) of the Delaware General Corporation Law permits
a corporation to provide in its certificate of incorporation that a
director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for payments of unlawful
dividends or unlawful stock repurchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
The second paragraph of Article Ninth of the Corporation's Certificate of
Incorporation provides for such limitation of liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
4.1 --Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to
the Company's Registration Statement on Form S-1 dated January 17, 1986, File No. 33-1936 (the "S-1")).
4.1A --Amendment to Certificate of Incorporation and complete copy of amended and restated Certificate of
Incorporation (incorporated herein by reference to Exhibits 3.1A(i) and 3.1A(ii) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (the "1989 10-K")).
4.1B --Certificate of Designations for the Series E Redeemable Exchangeable Convertible Preferred Stock
(incorporated herein by reference to Exhibit 3.1B to the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1994 (the "1994 10-K/A")).
4.1C --Certificate of Designations for the Series F Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1C to the 1994 10-K/A).
4.1D --Certificate of Designations for the Series G Redeemable Exchangeable Preferred Stock (incorporated
by reference to Exhibit 3.1D to the Company's Amendment No. 1 to Registration Statement on Form
S-4 dated October 17, 1995)
*4.1E --Certificate of Designations for the Series H Redeemable Exchangeable Preferred Stock.
4.2 --By-laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the S-1).
4.2A --Amendment to By-laws of the Registrant and complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit 3.2 to the 1989 10-K).
4.2B --Amendment to By-laws of the Registrant and complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit 3.2B to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992).
4.2C --Amendment to By-laws of the Registrant and complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit 3.2C to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994).
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
4.2D --Amendment to By-laws of the Registrant and complete copy of amended and restated By-laws (incorporated herein by
reference to Exhibit 3.2D to the Registrant's Amendment No. 1 to Registration Statement on Form S-4 dated October 17,
1995).
4.3 --Registration Rights Agreement, dated September 26, 1995, between the Registrant and Bear, Stearns
& Co. Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan
Stanley & Co. Incorporated.
4.4 --Indenture dated as of September 26, 1995 between the Registrant and The Bank of New York,
Trustee.
4.5 --Form of 11 3/4% Exchange Debenture due 2007 (included in Exhibit 4.4).
*5 --Opinion of Sullivan & Cromwell.
12 --Computation of ratio of deficiency of earnings to fixed charges.
23.1 --Consents of KPMG Peat Marwick.
23.2 --Consent of Deloitte & Touche LLP
*23.3 --Consent of Sullivan & Cromwell (included in Exhibit 5).
24 --Powers of Attorney (included on page II-5).
25 --Statement of Eligibility of The Bank of New York, Trustee.
*99.1 --Form of Letter of Transmittal.
*99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
* To be filed by amendment prior to the effectiveness of this Registration
Statement.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant, pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by any such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether or not such
indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
II-3
<PAGE>
under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Oyster Bay and the State of New
York, on the 25th day of October, 1995.
CABLEVISION SYSTEMS CORPORATION
By: /s/ James L. Dolan
--------------------------------------
Name: James L. Dolan
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William J. Bell, Francis F. Randolph
Jr. and Robert S. Lemle, and each of them, his true and lawful attorneys-
in-fact and agents, with full power of substitution and resubstitution, for
him in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to the
Registration Statement, and file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities indicated on the 25th day of October, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ James L. Dolan
- ------------------------------------------ Chief Executive Officer (Principal
(James L. Dolan) Executive Officer) and Director
/s/ Charles F. Dolan
- ------------------------------------------ Chairman of the Board of Directors
(Charles F. Dolan)
/s/ Barry J. O'Leary
- ------------------------------------------ Senior Vice President -- Finance and
(Barry J. O'Leary) Treasurer (Principal Financial Officer)
/s/ Jerry Shaw
- ------------------------------------------ Vice President and Controller (Principal
(Jerry Shaw) Accounting Officer)
/s/ William J. Bell
- ------------------------------------------ Vice Chairman and Director
(William J. Bell)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Marc A. Lustgarten Vice Chairman and Director
- ------------------------------------------
(Marc A. Lustgarten)
/s/ Robert S. Lemle Senior Vice President, General Counsel,
- ------------------------------------------ Secretary and Director
(Robert S. Lemle)
/s/ Sheila A. Mahony Vice President and Director
- ------------------------------------------
(Sheila A. Mahony)
/s/ John Tatta Director and Chairman of the Executive
- ------------------------------------------ Committee
(John Tatta)
/s/ Patrick F. Dolan Director
- ------------------------------------------
(Patrick F. Dolan)
/s/ Francis F. Randolph, Jr. Director
- ------------------------------------------
(Francis F. Randolph, Jr.)
/s/ Daniel T. Sweeney Senior Vice President and Director
- ------------------------------------------
(Daniel T. Sweeney)
/s/ Charles D. Ferris Director
- ------------------------------------------
(Charles D. Ferris)
/s/ Richard H. Hochman Director
- ------------------------------------------
(Richard H. Hochman)
/s/ Victor Oristano Director
- ------------------------------------------
(Victor Oristano)
/s/ A. Jerrold Perenchio Director
- ------------------------------------------
(A. Jerrold Perenchio)
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
------- ----------------------- -----------------------
<S> <C> <C>
4.1 --Certificate of Incorporation of the Registrant (incorporated herein by
reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1
dated January 17, 1986, File No. 33-1936 (the "S-1")).
4.1A --Amendment to Certificate of Incorporation and complete copy of amended
and restated Certificate of Incorporation (incorporated herein by reference to
Exhibits 3.1A(i) and 3.1A(ii) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989 (the "1989 10-K")).
4.1B --Certificate of Designations for the Series E Redeemable Exchangeable
Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1B
to the Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994 (the "1994 10-K/A")).
4.1C --Certificate of Designations for the Series F Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1C to the 1994 10-K/A).
4.1D --Certificate of Designations for the Series G Redeemable Exchangeable
Preferred Stock (incorporated by reference to Exhibit 3.1D to the Company's
Amendment No. 1 to Registration Statement on Form S-4 dated October 17,
1995)
*4.1E --Certificate of Designations for the Series H Redeemable Exchangeable
Preferred Stock.
4.2 --By-laws of the Registrant (incorporated herein by reference to Exhibit 3.2
to the S-1).
4.2A --Amendment to By-laws of the Registrant and complete copy of amended and
restated By-laws (incorporated herein by reference to Exhibit 3.2 to the 1989
10-K).
4.2B --Amendment to By-laws of the Registrant and complete copy of amended and
restated By-laws (incorporated herein by reference to Exhibit 3.2B to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992).
4.2C --Amendment to By-laws of the Registrant and complete copy of amended and
restated By-laws (incorporated herein by reference to Exhibit 3.2C to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994).
4.2D --Amendment to By-laws of the Registrant and complete copy of amended and
restated By-laws (incorporated herein by reference to Exhibit 3.2D to the
Registrant's Amendment No. 1 to Form S-4 dated October 17, 1995).
4.3 --Registration Rights Agreement, dated September 26, 1995, between the
Registrant and Bear, Stearns & Co. Inc., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and Morgan Stanley & Co. Incorporated.
4.4 --Indenture dated as of September 26, 1995 between the Registrant and The
Bank of New York, Trustee.
4.5 --Form of 11 3/4% Exchange Debenture due 2007 (included in Exhibit 4.4).
*5 --Opinion of Sullivan & Cromwell.
12 --Computation of ratio of deficiency of earnings to fixed charges.
23.1 --Consents of KPMG Peat Marwick.
23.2 --Consent of Deloitte & Touche LLP
*23.3 --Consent of Sullivan & Cromwell (included in Exhibit 5).
24 --Powers of Attorney (included on page II-5).
25 --Statement of Eligibility of The Bank of New York, Trustee.
*99.1 --Form of Letter of Transmittal.
*99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
- ----------
* To be filed by amendment prior to the effectiveness of this Registration
Statement.
II-7
<PAGE>
EXHIBIT 4.3
================================================================================
CABLEVISION SYSTEMS CORPORATION
11 3/4% Series G Redeemable
Exchangeable Preferred Stock
-----------------------------------------------
Registration Rights Agreement
-----------------------------------------------
Dated: September 26, 1995
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated September 26, 1995 between
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), and
BEAR, STEARNS & CO. INC., MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED and MORGAN STANLEY & CO. INCORPORATED as the initial
purchasers (the "Initial Purchasers") of the Securities referred to below
pursuant to the Purchase Agreement dated September 19, 1995 between the Initial
Purchasers and the Company, in connection with the issuance of up to 4,500,000
shares of the Company's 11 3/4% Series G Redeemable Exchangeable Preferred Stock
(the "Securities").
In consideration of the foregoing, the parties hereto agree as
follows:
1. Certain Definitions.
-------------------
As used in this Agreement, the following defined terms shall have the
following meanings:
"best efforts" with respect to the Company shall mean the Company's
best efforts except that such term shall mean reasonable best efforts in
the event and to the extent that the Company could satisfy the standard for
the issuance of a Suspension Notice pursuant to the third paragraph of
Section 5 hereof.
"Business Day" shall mean any day except (i) a Saturday, Sunday or
other day in The City of New York on which banks are required or authorized
to close or (ii) any other day on which the SEC is closed.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Debentures" shall mean the 11 3/4% Senior Subordinated
Debentures due 2007 of the Company into which the Securities are
exchangeable at the option of the Company on or after January 1, 1996.
"Exchange Indenture" shall mean the indenture relating to the Exchange
Debentures dated as of September 26, 1995 between the Company and The Bank
of New York, trustee.
<PAGE>
2
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement of the Company pursuant to the provisions of Section
2(a) hereof on Form S-4 (or, if applicable,on another appropriate form),
and all amendments and supplements to such registration statement, in each
case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Securities" shall mean the 11 3/4% Series H Redeemable
Exchangeable Preferred Stock of the Company issued as Registered Securities
containing terms identical to the Securities (except that dividends thereon
will accrue from September 26, 1995 or from the most recent dividend
payment date to which were dividends were paid on the Securities
surrendered in exchange therefor and except that such Exchange Securities
shall bear no legend and shall be free from restrictions on transfer), to
be offered to Holders of Securities pursuant to the Exchange Offer.
"Holder" shall mean, individually, each of the Initial Purchasers, for
so long as they own any Registrable Securities, and any of the Initial
Purchasers' successors, assigns and direct and indirect transferees who
become registered owners of Registrable Securities.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
<PAGE>
3
Purchase Agreement" shall mean the Purchase Agreement dated September
19, 1995 between the Company and the Initial Purchasers, providing for the
initial purchase and sale of the Securities.
"Registrable Securities" shall mean the Securities; provided, however,
that any such Securities shall cease to be Registrable Securities upon the
earlier to occur of (i) the Exchange Offer has been consummated, (ii) a
Registration Statement with respect to such Securities shall have been
declared effective under the Securities Act and such Securities shall have
been disposed of pursuant to such Registration Statement, provided
Securities not disposed of pursuant to an effective Shelf Registration
Statement shall cease to be Registrable Securities three years from the
date such Shelf Registration Statement is declared effective by the SEC, or
such longer period as the Company's obligation to keep such Shelf
Registration Statement effective is extended in accordance with Section 5
hereof, (iii) such Registrable Securities have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act, or (iv) such Registrable Securities
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky
laws, (iii) all expenses of any Persons acting on behalf of the Company in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto and other documents reasonably relating to the
performance of and compliance with this Agreement by the Company, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the
Company and, in connection with a Shelf Registration Statement, the fees
and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and shall be reasonably acceptable to the
Company), and (vi) any fees and expenses of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters (in connection with a Shelf Registration) required
by or necessary to such performance and compliance, but excluding
underwriting discounts and commissions, fees and expenses and transfer
taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble.
<PAGE>
4
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities on an appropriate form under
Rule 4l5 under the Securities Act, or any similar rule that may be adopted
by the SEC and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Transfer Agent" shall mean Mellon Securities Trust Company.
"Trustee" shall mean the trustee with respect to the Exchange
Debentures under the Exchange Indenture.
"Underwritten Registration or Underwritten Offering" shall mean a
registration in which Registrable Securities are sold to one or more
Underwriters (as hereinafter defined) for reoffering to the public.
2. Registration Under the Securities Act.
-------------------------------------
(a) Exchange Offer Registration. The Company shall, for the benefit
of the Holders of the Securities, file an Exchange Offer Registration Statement
with respect to Exchange Securities within 30 days after the Closing Time and
use its best efforts to cause such Exchange Offer Registration Statement to be
declared effective under the Securities Act within 120 days after the Closing
Time. Upon such Exchange Offer Registration Statement becoming effective under
the Securities Act, the Company shall offer the Exchange Securities in return
for surrender of the Securities. The Exchange Offer shall remain open for not
less than 30 days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to Holders of the Securities. For the
Securities surrendered to the Company under the Exchange Offer, the Holder will
receive Exchange Securities having an aggregate liquidation preference equal to
that of the surrendered Securities. Dividends on the Exchange Securities shall
accumulate from September 26, 1995 or from the most recent dividend payment date
to which dividends were paid on the Securities surrendered in exchange therefor
(or on the Exchange Securities, as the case may be). The Company shall commence
the Exchange Offer by mailing the related Exchange Offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
<PAGE>
5
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange;
(ii) the date of acceptance for exchange (which shall be a Business
Day no earlier than 30 days nor later than 40 days (unless otherwise
required by applicable law) from the date such notice is mailed) (the
"Exchange Date");
(iii) that any Registrable Security not tendered will remain
outstanding and shall accumulate dividends at the initial rate borne by the
Securities and, other than Registrable Securities referred to in Section
2(b)(iii) below, will not retain any rights under this Registration Rights
Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with letters of transmittal, to the
institution and at the address (located in the Borough of Manhattan, City
of New York) specified in the notice prior to the close of business on the
Business Day immediately preceding the Exchange Date; and
(v) that Holders will be entitled to withdraw the election, not later
than the close of business on the Business Day immediately preceding the
Exchange Date, by sending to the institution and at the address (located in
the Borough of Manhattan, City of New York) specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the number of shares of Registrable Securities delivered for
exchange, and a statement that such Holder is withdrawing its election to
have such Registrable Securities exchanged.
On the Exchange Date, the Company shall:
(i) accept for exchange Registrable Securities tendered and not
validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Transfer Agent for
cancellation all Registrable Securities so accepted for exchange by the
Company, and issue and mail to each Holder or such Holder's nominee, for
the Registrable Securities so surrendered, new Exchange Securities having
an aggregate liquidation preference equal to that of the Registrable
Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above, and the applicable requirements of the Securities Act, the
Exchange Act and other applicable laws in connection with the Exchange Offer.
Consummation of the Exchange Offer shall not be subject to any conditions, other
than that the Exchange Offer does not, and consummation of the Exchange Offer
will not, violate applicable law or any applicable interpretation of the staff
of the SEC. The Company shall inform the Initial Purchasers of the names and
<PAGE>
6
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Registrable Securities in the Exchange Offer.
(b) Shelf Registration. In the event that (i) the Company determines
that the Exchange Offer Registration provided in Section 2(a) above is not
available or may not be consummated because it would violate applicable law or
the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer
is not for any other reason consummated within 180 days after the Closing Time,
or (iii) following the consummation of the Exchange Offer a Registration
Statement must be filed and a Prospectus must be delivered by the Initial
Purchasers in connection with any offering or sale of Registrable Securities
because such Registrable Securities represent an unsold allotment of the
Registrable Securities purchased by the Initial Purchasers from the Company,
unless the Company has previously done so, the Company will (a) file as soon as
practicable after such determination or date, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, (b) use its best efforts to have such Shelf Registration
Statement declared effective by the SEC and (c) keep the Shelf Registration
Statement continuously effective until the third anniversary of the Closing Time
or such shorter period which will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. In the event the Company is required to
file a Shelf Registration Statement solely as a result of the matters referred
to in clause (iii) of the preceding sentence, the Company shall file and have
declared effective by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf
Registration Statement (which may be a combined Registration Statement with the
Exchange Offer Registration Statement) with respect to offers and sales of
Registrable Securities held by the Initial Purchasers after completion of the
Exchange Offer. The Company further agrees, if necessary, to supplement or
amend the Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other rules and
regulations thereunder for shelf registration, and the Company agrees to furnish
to the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
connection with any registration pursuant to Section 2(a) or 2(b) hereof.
(d) Effective Registration Statement. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
<PAGE>
7
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
3. Participation of Broker-Dealers in Exchange Offer.
-------------------------------------------------
(a) The Staff of the SEC has taken the position that any broker-dealer
that receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer") may
be deemed to be an "underwriter" within the meaning of the Securities Act and
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Securities.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers and other persons, if any, subject to similar prospectus delivery
requirements to satisfy their prospectus delivery obligation under the
Securities Act in connection with resales of Exchange Securities for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Initial Purchasers or by one or more
Participating Broker-Dealers in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 3(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 5(i), for a period exceeding 90 days
after the last Exchange Date (as such period may be extended pursuant to
the penultimate paragraph of Section 5 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 3; and
(ii) the application of the Shelf Registration procedures set forth in
Section 5 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the
Securities Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Initial
Purchasers or with the reasonable request in writing to the
<PAGE>
8
Company by one or more broker-dealers who certify to the Initial Purchasers
and the Company in writing that they anticipate that they will be
Participating Broker-Dealers; and provided further that, in connection with
such application of the Shelf Registration procedures set forth in Section
5 to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be one of the Initial Purchasers unless they collectively elect
not to act as such representative, (y) to pay the fees and expenses of only
one counsel representing the Participating Broker-Dealers, which shall be
counsel to the Initial Purchasers unless such counsel elects not to so act
and (z) to cause to be delivered only one, if any, "cold comfort" letter
with respect to the Prospectus in the form existing on the last Exchange
Date and with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (i) above; provided, that
the provisions of clauses (y) and (z) of this Section 3(b)(ii) shall apply
only if one or more Participating Broker-Dealers holding at least 100,000
shares of Registrable Securities shall request that the provisions of this
Agreement as they relate to a Shelf Registration also apply to an Exchange
Offer Registration Statement for the disposition of Exchange Securities by
Participating Broker-Dealers.
4. Liquidated Damages.
------------------
In the event that, for any reason, either (i) the Exchange Offer
Registration Statement is not filed with the SEC on or prior to the 30th
calendar day following the Closing Time or (ii) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective on or
prior to the 180th calendar day following the Closing Time, the dividend rate
borne by the Securities shall be increased by one-quarter of one percent per
annum for the first 30 days following such 30-day period in the case of (i)
above, or the first 90 days following such 180-day period in the case of (ii)
above. Such dividend rate will increase by an additional one-quarter of one
percent per annum at the beginning of each subsequent 30-day period in the case
of (i) above, or 90-day period in the case of (ii) above, up to a maximum
aggregate increase of one percent per annum. Upon (x) the filing of the
Exchange Offer Registration Statement or (y) the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, the dividend rate borne by the Securities will be reduced to the original
interest rate.
5. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to the
Registration Statement pursuant to Sections 2(a) and 2(b) hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be selected
by the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution as the Company is so advised of
by the selling Holders thereof and (z)
<PAGE>
9
shall comply as to form in all material respects with the requirements of
the applicable form and include (including through incorporation by
reference) all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to such Registration Statement as may be necessary to keep such
Registration Statement in compliance with the Securities Act; and cause the
Prospectus to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities and to each Underwriter of Registrable Securities,
if any, without charge, as many copies of the Prospectus, including each
preliminary prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Securities;
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions as any Holder of
Registrable Securities covered by such Shelf Registration Statement and or
any Underwriter shall reasonably request in writing by the time the
applicable Shelf Registration Statement is declared effective by the SEC,
and do any and all other acts and things which may be reasonably necessary
or advisable to enable such Holder or Underwriter to consummate the
disposition in each such designated jurisdiction, provided, however, that
the Company shall not be required to (i) qualify generally to do business
as a foreign corporation or as a broker-dealer in any jurisdiction where it
would not otherwise be required to qualify but for this Section 5(d), (ii)
consent to general service of process in any such jurisdiction or (iii)
subject itself to taxation in any such jurisdiction;
(e) in the case of a Shelf Registration, promptly notify each Holder
and, if requested by such Holder, confirm such advice in writing (i) when
such Shelf Registration Statement has become effective and when any post-
effective amendments and supplements thereto become effective, (ii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of such Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iii) if, between the
effective date of such Shelf Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, and (iv) of the happening of any event
during the period such Shelf Registration Statement is effective which
makes any statement made in such Shelf Registration Statement or the
<PAGE>
10
related Prospectus untrue in any material respect or which requires the
making of any changes in such Shelf Registration Statement or Prospectus in
order to make the statements therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement promptly and shall
provide notice to each Holder of the withdrawal of any such order as
promptly as practicable;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of such
Shelf Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the selling
Holders may reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 5(e)(iv) hereof, use its best efforts to
prepare a supplement or post-effective amendment to such Shelf Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(j) in the case of a Shelf Registration Statement, enter into and
deliver all such customary agreements, documents and take such other
actions (including causing the delivery of opinions of counsel and
"comfort" letters of independent certified public accountants) as are
reasonably required to expedite or facilitate the disposition of
Registrable Securities;
(k) in the case of a Shelf Registration, upon reasonable notice make
available for inspection by a representative of the Holders of the
Registrable Securities, any Underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney or
accountant designated by the Selling Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by
any such representative, Underwriter, attorney or accountant in connection
with a Shelf Registration Statement; provided, however, that such
<PAGE>
11
representatives, attorneys or accountants shall be acceptable to the
Company in its judgment reasonably exercised and shall agree to enter into
a written confidentiality agreement mutually acceptable to the Company and
the Underwriters regarding any records, information or documents that are
designated by the Company as confidential unless such records, information
or documents are available to the public or disclosure of such records,
information or documents is required by court or administrative order after
the exhaustion of appeals therefrom and to use such information obtained
pursuant to this provision only in connection with the transaction for
which such information was obtained, and not for any other purpose;
(1) in the case of a Shelf Registration, provide copies of any
Prospectus, any amendment to any applicable Shelf Registration Statement or
amendment or supplement to any Prospectus or any document which is to be
incorporated by reference into such Shelf Registration Statement or any
Prospectus after initial filing of such Shelf Registration Statement, a
reasonable time prior to the filing of any such Prospectus, amendment,
supplement or document, to the Initial Purchasers on behalf of the Holders
and Underwriters, if any, and except with respect to a Shelf Registration
filed pursuant to Section 2(b)(iii) not file any such document in a form to
which the Initial Purchasers on behalf of the Holders or Underwriters, if
any, shall reasonably object; and make the representatives of the Company
as shall be reasonably requested by the Holders or the Initial Purchasers
on behalf of such Holders available for discussion of such document;
provided that the requirements of this paragraph shall not apply to the
Company's annual report on Form 10-K, its Quarterly Reports on Form 10-Q,
its current reports on Form 8-K or any other documents filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (the "Exchange Act
Documents"); and further provided that the Company shall promptly notify
Holders of the filing of any Exchange Act Documents except for such
Exchange Act Documents specifically related to the offering of other
securities and not to the Registrable Securities; and
(m) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of any
Registration Statement Exchange; and
(n) cause the Exchange Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Debentures, cooperate with the Trustee and the
Holders to effect such changes to the Exchange Indenture as may be required
for the Exchange Indenture to be so qualified in accordance with the terms
of the TIA and execute, and use its best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable the
Exchange Indenture to be so qualified in a timely manner.
<PAGE>
12
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in a Shelf Registration) require each
Holder to furnish to the Company information regarding the Holder and the
proposed distribution by such Holder of any Registrable Securities as the
company may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any (i) notice from the Company of the happening of any
event of the kind described in Section 5(e)(ii) or (iv) hereof, (ii) notice from
the Company that it is in possession of material information that has not been
disclosed to the public and the Company reasonably deems it to be advisable not
to disclose such information in a registration statement or (iii) notice from
the Company that it is in the process of a registered offering of securities and
the Company reasonably deems it to be advisable to temporarily discontinue
disposition of Registrable Securities pursuant to the Shelf Registration
Statement (in each case, such notice being hereinafter referred to as a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to any Shelf Registration Statement and shall
not be entitled to the benefits provided under Section 6 hereof with respect to
any sales made by it in contravention of this paragraph, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(i) or a notice in accordance with Section 5(f) hereof that any order
suspending the effectiveness of the Shelf Registration Statement has been
withdrawn, or, in the case of (ii) or (iii) above, until further notice from the
Company that disposition of Registrable Securities may resume, provided that
(except with respect to a Shelf Registration Filed pursuant to Section
2(b)(iii)) such further notice will be given within 90 days of the Suspension
Notice in the case of (ii) above and within 120 days of the Suspension Notice in
the case of (iii) above, and provided further that in the case of (ii) and (iii)
above that any Suspension Notice must be based upon a good faith determination
of the Board of Directors of the Company or the Executive Committee thereof that
such Notice is necessary; and, if so directed by the Company, such Holder will
deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice to suspend
the disposition of Registrable Securities pursuant to any Shelf Registration
Statement, the Company shall extend the period during which such Shelf
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions or received notice that any order suspending dispositions of
the Securities has been withdrawn.
Each Holder will furnish to the Company such information regarding
such Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing, but only to the extent that
such information is required in order to comply with the Securities Act or any
relevant state securities or Blue Sky law or obligation. Each Holder of
Registrable Securities as to which any registration is being
<PAGE>
13
effected agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such Holder to the
Company or of the happening of any event, in either case as a result of which
any Prospectus relating to such registration contains an untrue statement of a
material fact regarding such Holder or the distribution of such Registrable
Securities or omits to state any material fact regarding such Holder or the
distribution of such Registrable Securities required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and to furnish to the Company
promptly any additional information required to correct and update any
previously furnished information or required such that such prospectus shall not
contain, with respect to such holder or the distribution of such Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
6. Indemnification; Contribution.
-----------------------------
(a) The Company agrees to indemnify and hold harmless each Holder and
each Person, if any, who controls any Holder within the meaning of Section 15 of
the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatever.as incurred (including,
subject to the provisions of subsection (c), fees and disbursements of
counsel chosen by any Holder), reasonably incurred in investigating,
preparing or defending against any litigation, or investigation or
proceeding by any governmental agency or body,
<PAGE>
14
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity does not apply to any loss, claim,
damage, liability or expense to the extent it arises out of an untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any Holder
expressly for use in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto).
The foregoing indemnity with respect to any untrue statement contained
in or any omission from a preliminary prospectus shall not inure to the benefit
of any Holder (or any person controlling such Holder) from whom the person
asserting any such loss, liability, claim. damage or expense purchased any of
the Securities that are the subject thereof if the Company shall sustain the
burden of proving that such person was not sent or given a copy of the
Prospectus (or the Prospectus as amended or supplemented) (in each case
exclusive of the documents from which information is incorporated by reference)
at or prior to the written confirmation of the sale of such Securities to such
person and the untrue statement contained in or the omission from such
preliminary prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented).
(b) Each Holder severally agrees to indemnify and hold harmless the
Company, its directors, officers and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in Section 6(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in the
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
under this indemnity agreement. An indemnifying party may participate at its
own expense in the defense of such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction, arising out of the same
general allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 6 is
for any reason held to be
<PAGE>
15
unenforceable by the indemnified parties although applicable in accordance with
its terms, the Company and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and one or more of the Holders;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. As between the Company and the Holders, such parties shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement in such proportion as shall
be appropriate to reflect (i) the relative benefits received by the Company on
the one hand and the Holders on the other hand, from the offering of the
Exchange Securities or Registrable Securities included in such offering, and
(ii) the relative fault of the Company on the one hand and the Holders on the
other, with respect to the statements or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect thereof, as well as
any other relevant equitable considerations. The Company and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 6 were to be determined by pro rata
--- ----
allocation or by any other method of allocation which does not take into account
the relevant equitable considerations. For purposes of this Section 6, each
Person, if any, who controls a Holder within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such Holder, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
7. Selection of Underwriters. The Holders of Registrable Securities
-------------------------
covered by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
(the "Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Securities included in such offering;
provided that such Underwriters must be reasonably acceptable to the Company and
of a reputation comparable to that of the Initial Purchasers.
8. Issuance of Exchange Debentures. In the event that Exchange
-------------------------------
Debentures are issued prior to the issuance of the Exchange Securities, the
provisions herein shall apply equally in respect of the registration of any
Exchange Debentures provided that changes in the dividend rate as provided for
-------- ----
in Section 4 herein shall result in corresponding changes in the interest rate
applicable to the Exchange Debentures.
9. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way
<PAGE>
16
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority of the issued and outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or departure;
provided, however, no amendment, modification or supplement, waiver or consent
with respect to the provisions of Section 6 hereof shall be effective as against
any Holder of Registrable Securities unless consented to in writing by such
Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 6(c); (ii) if to the Company, initially at One Media Crossways,
Woodbury, New York 11797, Attention: General Counsel, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to any courier guaranteeing overnight
delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Transfer Agent, at
450 West 33rd Street, 15th Floor, New York, NY 10001, Attention: Emmanuel
Galfo.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof.
<PAGE>
17
(e) Enforcement by Initial Purchasers. The Initial Purchasers shall
have the right to directly enforce the agreements made hereunder between the
Company, on the one hand, and the Holders, on the other hand, to the extent they
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder, provided, however, that such right of direct
enforcement shall terminate upon consummation of an Exchange Offer.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, excluding its principles
of conflicts of laws.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CABLEVISION SYSTEMS CORPORATION
By: ____________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
MORGAN STANLEY & CO. INCORPORATED
c/o Bear, Stearns & Co. Inc.
By: Bear, Stearns & Co. Inc.
By ____________________________
Name:
Title:
<PAGE>
EXHIBIT 4.4
================================================================================
CABLEVISION SYSTEMS CORPORATION,
Issuer,
TO
THE BANK OF NEW YORK,
Trustee
-------------------------
INDENTURE
Dated as of September 26, 1995
-------------------------
11 3/4% Senior Subordinated Debentures Due 2007
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C>
Section 101. Definitions ......................................... 1
Affiliate ................................................. 2
Annualized Operating Cash Flow ............................ 2
Bank Credit Agreement ..................................... 2
Banks...................................................... 2
Board of Directors......................................... 2
Board Resolution........................................... 2
Book-Entry Security........................................ 3
Business Day............................................... 3
Capital Stock.............................................. 3
Capitalized Lease Obligation............................... 3
Cash Flow Ratio............................................ 3
Class A Common Stock....................................... 3
Commission................................................. 3
Common Stock............................................... 3
Company.................................................... 4
Company Request" or "Company Order......................... 4
Corporate Trust Office..................................... 4
corporation................................................ 4
Cumulative Cash Flow Credit................................ 4
Cumulative Interest Expense................................ 5
Debt....................................................... 5
Default.................................................... 5
Depository................................................. 5
Disqualified Stock......................................... 5
Event of Default........................................... 6
Exchange Act............................................... 6
Exchange Debenture Issue Date.............................. 6
Generally Accepted Accounting Principles" or "GAAP......... 6
Global Security............................................ 6
guarantee.................................................. 6
</TABLE>
- ---------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
ii
<TABLE>
<CAPTION>
PAGE
<S> <C>
Holder .................................................... 6
Indebtedness............................................... 6
Indenture.................................................. 7
Initial Purchasers......................................... 7
Initial Securities......................................... 7
Interest Payment Date...................................... 7
Interest Swap Obligations.................................. 7
Investment................................................. 7
Junior Securities.......................................... 8
Lien....................................................... 8
Maturity................................................... 8
Officers' Certificate...................................... 8
Operating Cash Flow........................................ 8
Opinion of Counsel......................................... 9
Outstanding................................................ 9
Paying Agent............................................... 10
Permitted Restricted Payment............................... 10
Person..................................................... 10
Predecessor Security....................................... 10
Preferred Stock............................................ 10
Qualified Institutional Buyer" or "QIB..................... 11
Redemption Date............................................ 11
Redemption Price........................................... 11
Registered Securities...................................... 11
Registration Rights Agreement.............................. 11
Regular Record Date........................................ 11
Representative............................................. 11
Responsible Officer........................................ 11
Restricted Payment......................................... 11
Restricted Security........................................ 12
Restricted Subsidiary...................................... 12
RPH........................................................ 12
Securities Act............................................. 12
Security" and "Securities.................................. 13
Senior Indebtedness........................................ 13
Special Record Date........................................ 13
Stated Maturity............................................ 13
Stock Payment.............................................. 13
Strategic Equity Investor.................................. 14
subsidiary................................................. 14
Subsidiary................................................. 14
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
PAGE
<S> <C>
Trust Indenture Act........................................ 14
Trustee.................................................... 14
Unrestricted Subsidiary.................................... 14
Voting Stock............................................... 14
Section 102. Other Definitions.................................... 14
Section 103. Compliance Certificates and Opinions................. 15
Section 104. Form of Documents Delivered to Trustee............... 16
Section 105. Acts of Holders...................................... 16
Section 106. Notices, Etc. to Trustee and Company................. 17
Section 107. Notice to Holders; Waiver............................ 18
Section 108. Conflict of any Provision of Indenture with
Trust Indenture Act................................ 18
Section 109. Effect of Headings and Table of Contents............. 19
Section 110. Successors and Assigns............................... 19
Section 111. Separability Clause.................................. 19
Section 112. Benefits of Indenture................................ 19
Section 113. Governing Law........................................ 19
Section 114. Legal Holidays....................................... 19
Section 115. No Recourse Against Others........................... 20
<CAPTION>
ARTICLE TWO
SECURITY FORMS
<S> <C>
Section 201. Forms Generally; Incorporation of Form in
Indenture.......................................... 20
Section 202. Form of Face of Registered Security.................. 21
Section 203. Form of Reverse of Registered Security............... 22
Section 204. Form of Trustee's Certificate of
Authentication..................................... 25
Section 205. Form of Legend on Restricted Securities.............. 26
Section 206. Form of Legend for Book-Entry Securities............. 26
<CAPTION>
ARTICLE THREE
THE SECURITIES
<S> <C>
Section 301. Title and Terms...................................... 27
Section 302. Denominations........................................ 28
Section 303. Execution, Authentication, Delivery and Dating....... 28
Section 304. Temporary Securities................................. 29
Section 305. Registration, Registration of Transfer and Exchange.. 30
Section 306. Mutilated, Destroyed, Lost and Stolen Securities..... 34
Section 307. Payment of Interest; Interest Rights Preserved....... 35
</TABLE>
<PAGE>
iv
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 308. Persons Deemed Owners................................ 36
Section 309. Cancellation......................................... 36
Section 310. Computation of Interest.............................. 37
Section 311. Registration Rights of Holders of Initial Securities. 37
Section 312. ..................................................... 37
<CAPTION>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
<S> <C>
Section 401. Satisfaction and Discharge of Indenture ............. 37
Section 402. Application of Trust Money .......................... 39
<CAPTION>
ARTICLE FIVE
REMEDIES
<S> <C>
Section 501. Events of Default.................................... 39
Section 502. Acceleration of Maturity; Rescission................. 41
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee......................................... 42
Section 504. Trustee May File Proofs of Claim..................... 43
Section 505. Trustee May Enforce Claims Without Possession of
Securities......................................... 44
Section 506. Application of Money Collected....................... 44
Section 507. Limitation on Suits.................................. 45
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest .............................. 45
Section 509. Restoration of Rights and Remedies................... 46
Section 510. Rights and Remedies Cumulative....................... 46
Section 511. Delay or Omission Not Waiver......................... 46
Section 512. Control by Holders................................... 46
Section 513. Waiver of Past Defaults.............................. 47
Section 514. Undertaking for Costs................................ 47
Section 515. Waiver of Stay, Extension or Usury Laws.............. 47
<CAPTION>
ARTICLE SIX
THE TRUSTEE
<S> <C>
Section 601. Notice of Defaults................................... 48
Section 602. Certain Rights of Trustee............................ 48
Section 603. Not Responsible for Recitals or Issuance of
Securities......................................... 49
</TABLE>
<PAGE>
v
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 604. May Hold Securities.................................. 50
Section 605. Money Held in Trust.................................. 50
Section 606. Compensation and Reimbursement....................... 50
Section 607. Conflicting Interests................................ 51
Section 608. Corporate Trustee Required; Eligibility.............. 51
Section 609. Resignation and Removal; Appointment of Successor.... 52
Section 610. Acceptance of Appointment by Successor............... 53
Section 611. Merger, Conversion, Consolidation or Succession to
Business........................................... 53
Section 612. Preferential Collection of Claims Against Company.... 54
<CAPTION>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
<S> <C>
Section 701. Disclosure of Names and Addresses of Holders......... 54
Section 702. Reports by Trustee................................... 54
Section 703. Reports by Company................................... 55
<CAPTION>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
<S> <C>
Section 801. Company May Consolidate, Etc., Only on Certain Terms. 55
Section 802. Successor Substituted................................ 56
<CAPTION>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<S> <C>
Section 901. Supplemental Indentures Without Consent of Holders... 57
Section 902. Supplemental Indentures with Consent of Holders...... 58
Section 903. Execution of Supplemental Indentures................. 58
Section 904. Effect of Supplemental Indentures.................... 59
Section 905. Conformity with Trust Indenture Act.................. 59
Section 906. Reference in Securities to Supplemental Indentures... 59
<CAPTION>
ARTICLE TEN
COVENANTS
<S> <C>
Section 1001. Payment of Principal, Premium and Interest.......... 59
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1002. Maintenance of Office or Agency..................... 59
Section 1003. Money for Security Payments to Be Held in Trust..... 60
Section 1004. Corporate Existence................................. 61
Section 1005. Payment of Taxes and Other Claims................... 62
Section 1006. Maintenance of Properties........................... 62
Section 1007. Limitation on Indebtedness.......................... 63
Section 1008. Limitation on Senior Subordinated Indebtedness...... 63
Section 1009. Limitation on Restricted Payments................... 63
Section 1010. Limitation on Investments in Unrestricted
Subsidiaries and Affiliates........................ 65
Section 1011. Transactions with Affiliates........................ 65
Section 1012. Provision of Financial Statements................... 65
Section 1013. Statement as to Compliance.......................... 66
Section 1014. Waiver of Certain Covenants......................... 66
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
<CAPTION>
<S> <C>
Section 1101. Right of Redemption................................. 67
Section 1102. Applicability of Article............................ 67
Section 1103. Election to Redeem; Notice to Trustee............... 67
Section 1104. Selection by Trustee of Securities to Be Redeemed... 67
Section 1105. Notice of Redemption................................ 68
Section 1106. Deposit of Redemption Price......................... 68
Section 1107. Securities Payable on Redemption Date............... 69
Section 1108. Securities Redeemed in Part......................... 69
ARTICLE TWELVE
SUBORDINATION
<CAPTION>
<S> <C>
Section 1201. Securities Subordinated to Senior Indebtedness...... 69
Section 1202. No Payment on Securities in Certain Circumstances... 70
Section 1203. Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Winding-Up,
Liquidation or Reorganization of the Company...... 72
Section 1204. Securityholders to Be Subrogated to Rights of
Holders of Senior Indebtedness.................... 73
Section 1205. Obligations of the Company Unconditional............ 74
Section 1206. Knowledge of Trustee................................ 74
</TABLE>
<PAGE>
vii
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1207. Application by Trustee or Paying Agent of Assets
Deposited with It................................. 74
Section 1208. Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior
Indebtedness...................................... 75
Section 1209. Securityholders Authorize Trustee to Effectuate
Subordination of Securities....................... 75
Section 1210. Trustee Not Fiduciary for Holders of Senior
Indebtedness...................................... 76
Section 1211. Right of Trustee to Hold Senior Indebtedness........ 76
Section 1212. Article Twelve Not to Prevent Events of Default..... 76
Section 1213. Trustee's Compensation Not Prejudiced............... 76
<CAPTION>
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<S> <C>
Section 1301. Option to Effect Defeasance or Covenant Defeasance.. 77
Section 1302. Defeasance and Discharge............................ 77
Section 1303. Covenant Defeasance................................. 77
Section 1304. Conditions to Defeasance or Covenant Defeasance..... 78
Section 1305. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.. 80
Section 1306. Reinstatement....................................... 81
TESTIMONIUM........................................................ 80
SIGNATURES AND SEALS............................................... 80
ACKNOWLEDGMENTS.................................................... 81
</TABLE>
EXHIBIT A List of Restricted Subsidiaries
EXHIBIT B Form of Initial Security
EXHIBIT C Form of Certificate of Transfer
EXHIBIT D Form of Transferee Letter of Representation
EXHIBIT E Form of Registration Rights Agreement
<PAGE>
INDENTURE dated as of September 26, 1995 between Cablevision Systems
Corporation, a Delaware corporation (hereinafter called the "Company"), and The
Bank of New York, a state banking corporation duly incorporated and existing
under the laws of the State of New York, as trustee (hereinafter called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 11 3/4%
Senior Subordinated Debentures due 2007 (hereinafter called the "Securities"),
of substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture;
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted
<PAGE>
2
hereunder shall mean such accounting principles as are generally accepted
in the United States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Additional Preferred Stock" has the meaning set forth in Article
Fourth of the Company's Certificate of Incorporation.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Annualized Operating Cash Flow" means, for any period of three
complete consecutive calendar months, an amount equal to Operating Cash Flow for
such period multiplied by four.
"Bank Credit Agreement" means the Fourth Amended and Restated Credit
Agreement, dated as of October 14, 1994, among the Company, the Restricted
Subsidiaries party thereto, the banks party thereto, Toronto Dominion (Texas),
Inc. as agent for the Banks, and Bank of Montreal, Chicago Branch, The Bank of
New York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce and
NationsBank of Texas, N.A., as co-agents for the Banks, as amended by Amendment
No. 1 thereto, as in effect on the date hereof and as such agreement may be
amended from time to time.
"Banks" means the lenders from time to time who are parties to the
Bank Credit Agreement.
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
<PAGE>
3
"Book-Entry Security" means a Security represented by a Global
Security and registered in the name of the nominee of the Depository.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock whether now outstanding or issued after the date of this
Indenture, including, without limitation, all Common Stock and Preferred Stock.
"Capitalized Lease Obligation" means any obligation of a Person to pay
rent or other amounts under a lease with respect to any property (whether real,
personal or mixed) acquired or leased by such Person and used in its business
that is required to be accounted for as a liability on the balance sheet of such
Person in accordance with generally accepted accounting principles and the
amount of such Capitalized Lease Obligation shall be the amount so required to
be accounted for as a liability.
"Cash Flow Ratio" means, as at any date, the ratio of (i) the sum of
the aggregate outstanding principal amount of all Indebtedness of the Company
and the Restricted Subsidiaries determined on a consolidated basis but excluding
all Interest Swap Obligations entered into by the Company or any Restricted
Subsidiary and one of the Banks outstanding on such date plus (but without
duplication of indebtedness supported by Letters of Credit) the aggregate
undrawn face amount of all Letters of Credit outstanding on such date to (ii)
Annualized Operating Cash Flow determined as at the last day of the most recent
month for which financial information is available.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934 or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests and participations (however designated and whether voting or non-
voting) in such Person's common equity, whether now outstanding or issued after
the date of this Indenture, and includes, without limitation, all series and
classes of such common stock.
<PAGE>
4
"Company" means the Person named as the "Company" in the first
paragraph of this instrument, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person. To the extent necessary to comply
with the requirements of the provisions of Trust Indenture Act Sections 310
through 317 as they are applicable to the Company, the term "Company" shall
include any other obligor with respect to the Securities for the purposes of
complying with such provisions.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice Chairman, its
President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary and delivered to the Trustee; provided,
--------
however, that such written request or order may be signed by any two of the
- -------
officers or directors listed in clause (i) above in lieu of being signed by one
of such officers or directors listed in such clause (i) and one of the officers
listed in clause (ii) above.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 101 Barclay Street, 21st Floor, New York, New York 10286.
"corporation" includes corporations, associations, partnerships,
companies and business trusts.
"Cumulative Cash Flow Credit" means the sum of
(a) cumulative Operating Cash Flow during the period commencing on
July 1, 1988 and ending on the last day of the most recent month preceding
the date of the proposed Restricted Payment for which financial information
is available or, if cumulative Operating Cash Flow for such period is
negative, minus the amount by which cumulative Operating Cash Flow is less
than zero, plus
(b) the aggregate net proceeds received by the Company from the issue
or sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, plus
(c) the aggregate net proceeds received by the Company from the
issuance or sale (other than to a Restricted Subsidiary) of its capital
stock (other than Disqualified Stock) on or after January 1, 1992, upon the
conversion of, or exchange for, Indebtedness of the Company or any
Restricted Subsidiary or from the exercise of any options, warrants or
other rights to acquire capital stock of the Company.
<PAGE>
5
For purposes of this definition, the net proceeds in property other than cash
received by the Company as contemplated by clauses (b) and (c) above shall be
valued at the fair market value of such property (as determined by the Board of
Directors of the Company, whose good faith determination shall be conclusive) at
the date of receipt by the Company.
"Cumulative Interest Expense" means, for the period commencing on July
1, 1988 and ending on the last day of the most recent month preceding the
proposed Restricted Payment for which financial information is available, the
aggregate of the interest expense of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, including interest expense attributable to
Capitalized Lease Obligations.
"Debt" with respect to any Person means, without duplication, any
liability, whether or not contingent, (i) in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereto), but excluding
reimbursement obligations under any surety bond, (ii) representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
Capitalized Lease Obligations), except any such balance that constitutes a trade
payable, (iii) under Interest Swap Agreements (as defined in the Bank Credit
Agreement) entered into pursuant to the Bank Credit Agreement, (iv) under any
other agreement related to the fixing of interest rates on any Indebtedness,
such as an interest swap, cap or collar agreement (if and to the extent any of
the foregoing liabilities would appear as a liability upon a balance sheet of
such Person prepared on a consolidated basis in accordance with generally
accepted accounting principles) or (v) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not the guarantee would appear on such balance sheet).
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Depository" means, with respect to the Securities issued in the form
of one or more Book-Entry Securities, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Stock" means any Capital Stock of the Company or any
Restricted Subsidiary of the Company which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity date of the
Securities.
<PAGE>
6
"Event of Default" has the meaning specified in Article Five.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debenture Issue Date" means the date on which the Securities
are originally issued hereunder.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect as of the date hereof.
"Global Security" means a Security evidencing all or a part of the
Securities to be issued as Book-Entry Securities, issued to the Depository in
accordance with Section 303 and bearing the legend prescribed in Section 206.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation or (ii) an agreement, direct or indirect, contingent or
otherwise, providing assurance of the payment or performance (or payment of
damages in the event of non-performance) of any part or all of such obligation,
including, without limiting the foregoing, the payment of amounts drawn down by
letters of credit. Notwithstanding anything herein to the contrary, a guarantee
shall not include any agreement solely because such agreement creates a Lien on
the assets of any Person. The amount of a guarantee shall be deemed to be the
maximum amount of the obligation guaranteed for which the guarantor could be
held liable under such guarantee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" with respect to any Person, means the Debt of such
Person; provided, however, that, with respect to the Company, the "Preferential
-------- -------
Payment" payable by a Subsidiary and guaranteed by the Company, as defined in
and pursuant to the Purchase and Reorganization Agreement (the "CNYC
Agreement"), dated as of December 20, 1991, between the Company and Charles F.
Dolan, as amended as of March 28, 1992 and as further amended from time to time,
shall not be deemed to be "Indebtedness" so long as the Company and such
Subsidiary are permitted to make such payment in one or more classes of the
Company's capital stock (other than Disqualified Stock) pursuant to such CNYC
Agreement and the Company and the Restricted Subsidiaries are prohibited from
making such payment in cash, debt securities, Disqualified Stock or any
combination thereof pursuant to the terms of any mortgage, indenture, credit
agreement or other instrument that secures or evidences Indebtedness for money
borrowed or guaranteed by the Company or a Restricted Subsidiary in an aggregate
amount of $10,000,000 or more; provided that, for
--------
<PAGE>
7
purposes of the definition of "Indebtedness" (including the term "Debt" to the
extent incorporated in such definition) and for purposes of the definition of
Event of Default, the term "guarantee" shall not be interpreted to extend to a
guarantee under which recourse is limited to the capital stock of an entity that
is not a Restricted Subsidiary.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated.
"Initial Securities" means Securities other than Registered
Securities.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Swap Obligations" means, with respect to any Person, the
obligations of such Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a fixed rate
of interest on a stated notional amount in exchange for periodic payments made
by such Person calculated by applying a fixed or a floating rate of interest on
the same notional amount.
"Investment" means any advance, loan, account receivable (other than
an account receivable arising in the ordinary course of business) or other
extension of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or any capital contribution
to (by means of transfers of property to others, or payments for property or
services for the account or use of others, or otherwise), any purchase or
ownership of any stocks, bonds, notes, debentures or other securities
(including, without limitation, any interests in any partnership, joint venture
or joint adventure) of, or any bank accounts with or guarantee of any
Indebtedness or other obligations of, any Unrestricted Subsidiary or Affiliate
that is not a subsidiary of the Company; provided that (i) Investment shall not
--------
include any transaction that would otherwise constitute an Investment of the
Company or a subsidiary of the Company to the extent that the consideration
provided by the Company or such subsidiary in connection therewith shall consist
of capital stock of the Company (other than Disqualified Stock) and (ii) the
term "guarantee" shall not be interpreted to extend to a guarantee under which
recourse is limited to the Capital Stock of an entity that is not a Restricted
Subsidiary.
<PAGE>
8
"Junior Securities" means securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment, junior or
the payment of which is otherwise subordinate, at least to the extent provided
in Article Twelve hereof, to the payment of all Senior Indebtedness at the time
outstanding, and to the payment of all securities issued in exchange therefor,
to the holders of the Senior Indebtedness at the time outstanding.
"Junior Stock" means securities of the Company which are senior to all
classes or series of Common Stock of the Company and any Capital Stock,
including any series of Additional Preferred Stock hereafter created by the
Board of Directors, the terms of which Capital Stock or Additional Preferred
Stock do not expressly provide that it ranks senior to the Series G Redeemable
Exchangeable Preferred Stock as to dividends and distributions upon liquidation,
dissolution and winding-up of the Company;
"Lien" means any lien, security interest, charge or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature of a security interest and any agreement to give any
security interest).
"Maturity" when used with respect to any Security means the date on
which the principal of (and premium, if any) and interest on such Security
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or Redemption Date and whether by declaration of acceleration, call for
redemption or otherwise.
"Officers' Certificate" means a certificate signed by (i) the
Chairman, a Vice Chairman, the President, a Vice President or the Treasurer of
the Company and (ii) the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee; provided, however, that such certificate may be signed
-------- -------
by two of the officers or directors listed in clause (i) above in lieu of being
signed by one of such officers or directors listed in such clause (i) and one of
the officers listed in clause (ii) above.
"Operating Cash Flow" means, for any period, the sum of the following
for the Company and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles
(except for the amortization of deferred installation income which shall be
excluded from the calculation of Operating Cash Flow for all purposes of this
Indenture): (i) aggregate operating revenues minus (ii) aggregate operating
-----
expenses (including technical, programming, sales, selling, general
administrative expenses and salaries and other compensation, net of amounts
allocated to Affiliates, paid to any general partner, director, officer or
employee of the Company or any Restricted Subsidiary, but excluding interest,
depreciation and amortization and the amount of non-cash compensation in respect
of the Company's employee incentive stock programs for such period (not to
exceed in the aggregate for any calendar year 7% of the Operating Cash Flow for
the previous calendar year) and, to the extent otherwise
<PAGE>
9
included in operating expenses, any losses resulting from a writeoff or
writedown of Investments by the Company or any Restricted Subsidiary in
Affiliates). For purposes of determining Operating Cash Flow, there shall be
excluded all management fees until actually paid to the Company or any
Restricted Subsidiary in cash.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee. Each such
opinion shall include the statements provided for in Trust Indenture Act Section
314(e) to the extent applicable.
"Outstanding" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment, redemption or
purchase money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities and the Trustee or
such Paying Agent is not prohibited from paying such money to the Holders
on that date pursuant to the terms of Article Twelve of this Indenture;
provided that, if such Securities are to be redeemed, notice of such
--------
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 1302 and
1303, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Thirteen; and
(d) Securities paid pursuant to Section 306, Securities in exchange
for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands the Securities are valid obligations of the Company;
provided, however, that, in determining whether the Holders of the requisite
- -------- -------
principal amount of Outstanding Securities have given any request, demand,
direction, consent or waiver hereunder, Securities owned by the Company, or any
other obligor upon the Securities or any Affiliate of the Company, or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be
<PAGE>
10
protected in relying upon any such request, demand, direction, consent or
waiver, only Securities which the Trustee actually knows to be so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (or premium, if any) or interest on any Securities on behalf of the
Company.
"Permitted Restricted Payment" means the payment or declaration of any
dividend by the Company or the making by the Company of any other distribution
or the consummation of an exchange offer, or any combination of the foregoing,
which results in all or a portion of the Capital Stock of RPH being held by all
or any portion of the shareholders of the Company (an "RPH Transaction"), it
being understood that (i) if the Company and its Subsidiaries, after the date of
this Indenture and prior to the date of an RPH Transaction, make Investments in
RPH (in cash or assets) aggregating not more than $15,000,000, then such RPH
Transaction shall continue to constitute a "Permitted Restricted Payment" and
(ii) if the Company or any Subsidiary makes any Investment in RPH, after the
date of this Indenture and prior to the date of such RPH Transaction, that is
not permitted by the foregoing clause (i), then such RPH Transaction shall not
constitute a "Permitted Restricted Payment". For purposes of the foregoing, the
value of any Investment of assets in RPH shall be based upon the fair market
value thereof as determined by the Board of Directors of the Company, whose good
faith determination shall be conclusive.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of this Indenture, and includes, without limitation, all classes
and series of preferred or preference stock.
<PAGE>
11
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redemption Date", when used with respect to any Securities to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means Securities issued or sold in a
transaction pursuant to an effective registration statement under the Securities
Act of 1933, as amended, as contemplated in the Registration Rights Agreement,
and any Security subsequently issued in exchange for or upon transfer of any
such Security.
"Registration Rights Agreement" means the Registration Rights
Agreement dated September 26, 1995 among the Company and the Initial Purchasers,
a form of which Registration Rights Agreement is attached hereto as Exhibit C.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the June 15 or December 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Representative" means the indenture trustee or other trustee, agent
or representative for an issue of Senior Indebtedness.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers or assigned
by the Trustee to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payment" means
(a) any Stock Payment by the Company or a Restricted Subsidiary; or
(b) any direct or indirect payment to redeem, repurchase, defease or
otherwise acquire or retire for value, or permit any Restricted Subsidiary
to redeem,
<PAGE>
12
repurchase, defease or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate in right of payment to
the Securities.
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary or (y) any Investment or designation of a Restricted Subsidiary as an
Unrestricted Subsidiary permitted under Section 1010.
"Restricted Security" shall have the meaning set forth in Section 205.
"Restricted Subsidiary" means any Subsidiary, whether existing on the
date hereof or created subsequent hereto, designated from time to time by the
Company as a "Restricted Subsidiary" and the initial Restricted Subsidiaries
designated by the Company are set forth on Exhibit A; provided, however, that no
-------- -------
subsidiary can be or remain so designated unless (i) at least 67% of each of the
total equity interest and the voting control of such subsidiary is owned,
directly or indirectly, by the Company or another Restricted Subsidiary and (ii)
such subsidiary is not restricted, pursuant to the terms of any loan agreement,
note, indenture or other evidence of indebtedness, from (a) paying dividends or
making any distribution on such subsidiary's capital stock or other equity
securities or paying any Indebtedness owed to the Company or to any Restricted
Subsidiary of the Company, (b) making any loans or advances to the Company or
any Restricted Subsidiary of the Company or (c) transferring any of its
properties or assets to the Company or any Restricted Subsidiary (it being
understood that a financial covenant any of the components of which are directly
impacted by the taking of the action (e.g., the payment of a dividend) itself
----
(such as a minimum net worth test) would be deemed to be a restriction on the
foregoing actions, while a financial covenant none of the components of which
are directly impacted by the taking of the action (e.g., the payment of a
----
dividend) itself (such as a debt to cash flow test) would not be deemed to be a
restriction on the foregoing actions); and provided further that the Company
-------- -------
may, from time to time, redesignate any Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with Section 1010 of this Indenture.
"RPH" means Rainbow Programming Holdings, Inc., a New York
corporation, or such other entity holding only (i) assets that were held by
Rainbow Programming Holdings, Inc. immediately prior to their acquisition by
such entity and (ii) such other assets that are immaterial in amount in relation
to the assets acquired by such entity from Rainbow Programming Holdings, Inc.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
13
"Security" and "Securities" have the meaning set forth in the second
paragraph of this Indenture, such terms to include both the Initial Securities
and the Registered Securities.
"Senior Indebtedness" means the principal, premium, if any, interest
(including post-petition interest in any proceeding under any Bankruptcy Law,
whether or not such interest is an allowed claim enforceable against the debtor
in a proceeding under such Bankruptcy Law), penalties, fees and other
liabilities payable with respect to (i) all Debt of the Company, other than the
Securities and the Company's 9-7/8% Senior Subordinated Debentures due 2013, 10-
3/4% Senior Subordinated Debentures due 2004 and 9-7/8% Senior Subordinated
Debentures due 2023 (with which the Securities are intended to rank on a
parity), whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, which is (x) for money borrowed, (y) evidenced by
a note or similar instrument given in connection with the acquisition of any
businesses, properties or assets of any kind or (z) in respect of any
Capitalized Lease Obligations and (ii) all renewals, extensions, refundings,
increases or refinancings thereof, unless, in the case of (i) or (ii) above, the
instrument under which the Debt is created, incurred, assumed or guaranteed
expressly provides that such Debt is not senior in right of payment to the
Securities. Notwithstanding anything to the contrary contained herein, "Senior
Indebtedness" shall mean and include all amounts of Senior Indebtedness that is
such by virtue of clause (i) or (ii) of the foregoing definition that are repaid
by the Company and subsequently recovered from the holder of such Senior
Indebtedness under any applicable Bankruptcy Laws or otherwise (other than by
reason of some wrongful conduct on the part of the holders of such Debt). For
purposes of clarification, Senior Indebtedness includes any liability under
Interest Swap Agreements entered into pursuant to the Bank Credit Agreement.
"Series G Redeemable Exchangeable Preferred Stock" means the 11 3/4%
Series G Redeemable Exchangeable Preferred Stock of the Company containing the
rights, powers and privileges set forth in the Certificate of Designations dated
September 26, 1995 relating thereto.
"Special Record Date" means a date fixed by the Trustee for the
payment of any Defaulted Interest pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Stock Payment" means, with respect to any Person, the payment or
declaration of any dividend, either in cash or in property (except dividends
payable in common stock or common shares of capital stock of such Person), or
the making by such Person of any other distribution, on account of any shares of
any class of its capital stock,
<PAGE>
14
now or hereafter outstanding, or the redemption, purchase, retirement or other
acquisition for value by such Person, directly or indirectly, of any shares of
any class of its capital stock, now or hereafter outstanding.
"Strategic Equity Investor" means a corporation or entity with an
equity market capitalization, a net asset value or annual revenues of at least
$1.0 billion that owns and operates businesses in the telecommunications,
information systems, entertainment, cable or similar or related industries.
"subsidiary" means, as to a particular parent entity at any time, any
entity of which more than 50% of the outstanding Voting Stock or other equity
interest entitled ordinarily to vote in the election of the directors or other
governing body (however designated) of such entity is at the time beneficially
owned or controlled directly or indirectly by such parent corporation, by one or
more such entities or by such parent corporation and one or more such entities.
"Subsidiary" means any subsidiary of the Company.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and as in force at the date as of which this instrument was executed,
except as provided in Section 905; provided, however, that, in the event that
-------- -------
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"Voting Stock" means any Capital Stock having voting power under
ordinary circumstances to vote in the election of a majority of the directors of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
SECTION 102. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
TERM DEFINED
IN SECTION
<S> <C>
"Act"....................................... 105
</TABLE>
<PAGE>
15
<TABLE>
<S> <C>
"Bankruptcy Law"............................ 501
"covenant defeasance"....................... 1303
"Custodian"................................. 501
"defeasance"................................ 1302
"Default Notice"............................ 1202
"Defaulted Interest"........................ 307
"incorporated provision".................... 108
"redesignation of a Restricted Subsidiary".. 1010
"Security Register"......................... 305
"Security Registrar"........................ 305
"successor"................................. 801
"U.S. Government Obligations"............... 1304
</TABLE>
SECTION 103. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 1013) with respect to compliance with a condition or covenant provided
for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
<PAGE>
16
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 104. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 105. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Trust Indenture Act Section 315) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
<PAGE>
17
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding Trust Indenture Act
Section 316(c), any such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not more than 30 days
prior to the first solicitation of Holders generally in connection therewith and
no later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then Outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the
Securities then Outstanding shall be computed as of such record date; provided
--------
that no such request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future Holder
of the same Security or the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the Trustee, any
Paying Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
SECTION 106. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, the agents of the Banks or the Company
shall be sufficient for every purpose hereunder if made, given, furnished
or delivered,
<PAGE>
18
in writing, to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration; or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or delivered in writing to the Company addressed to
it c/o Cablevision Systems Corporation, One Media Crossways, Woodbury, New
York 11797, Attention: Secretary, or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 107. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder whether
or not actually received by such Holder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 108. CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST
INDENTURE ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, or conflicts with any provision (an
"incorporated provision") required by or deemed to be included in this Indenture
by operation of such Trust Indenture Act Sections, such imposed duties or
incorporated provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or
<PAGE>
19
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its respective successors and assigns, whether so expressed or not.
SECTION 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent, the Holders and the holders of Senior Indebtedness)
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 113. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflicts of laws principles.
SECTION 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 307, or any Maturity with
respect to any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, or date established for payment of Defaulted Interest
pursuant to Section 307, or Maturity, and no interest shall accrue with respect
to such payment for the period from and after such Interest Payment Date, or
date established
<PAGE>
20
for payment of Defaulted Interest pursuant to Section 307, or Maturity, as the
case may be, to the next succeeding Business Day.
SECTION 115. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting any of
the Securities waives and releases all such liability.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY; INCORPORATION OF FORM IN INDENTURE.
The Registered Securities and the Trustee's certificate of
authentication with respect thereto shall be in substantially the forms set
forth in this Article, and the Initial Securities and the Trustee's certificate
of authentication with respect thereto shall be substantially in the form of
Exhibit B, which is incorporated in and made part of this Indenture, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
<PAGE>
21
SECTION 202. FORM OF FACE OF REGISTERED SECURITY.
CABLEVISION SYSTEMS CORPORATION
11 3/4% SENIOR SUBORDINATED DEBENTURE DUE 2007
No. ________ $ _________________
CUSIP No. ___________________
Cablevision Systems Corporation, a Delaware corporation (herein called
the "Company", which term includes any successor entity under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________________ or registered assigns the principal sum of ______ Dollars on
October 1, 2007, at the office or agency of the Company referred to below, and
to pay interest thereon on January 1 and July 1 in each year from the Exchange
Debenture Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for at the rate of 11 3/4% per annum
until the principal hereof is paid or duly provided for, and (to the extent
lawful) to pay on demand interest on any overdue interest at the rate borne by
the Securities from the date of the Interest Payment Date on which such overdue
interest becomes payable to the date payment of such interest has been made or
duly provided for. On any Interest Payment Date for this Security on or prior
to the Interest Payment Date on October 1, 2002, the Company may, in lieu of
payment of interest in cash, pay such interest (i) in additional Securities
having a principal amount equal to the cash interest otherwise payable or (ii)
in a combination of cash and additional Securities. The Company will pay
interest on any such Security from the date of issuance (the "Additional
Security Issue Date") of such Security or from the most recent Interest Payment
Date to which interest has been paid. The initial Interest Payment Date for
this Security shall be the first January 1 or July 1 occurring after the
Exchange Debenture Issue Date or after the Additional Security Issue Date,
whichever is later. If any interest has accrued on this Security in respect of
any period prior to the issuance of this Security, such interest will be payable
in respect of such period at the rate or rates borne by the Predecessor Security
surrendered in exchange for this Security from time to time during such period.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid (in cash or
additional Securities, as provided above) to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the June
15 or December 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for, and interest on such defaulted interest at the interest
rate borne by the Securities, to the extent lawful, shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
<PAGE>
22
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any) and interest on this Security will be made at
the office or agency of the Company maintained for that purpose in The City of
New York, or at such other office or agency of the Company as may be maintained
for such purpose, in additional Securities or such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that payment of cash interest
-------- -------
may be made at the option of the Company by check mailed to the address of the
Person entitled thereto as such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CABLEVISION SYSTEMS CORPORATION
By ____________________________
Attest:
By ___________________________
SECTION 203. FORM OF REVERSE OF REGISTERED SECURITY.
This Security is one of a duly authorized issue of securities of the
Company designated as its 11 3/4% Senior Subordinated Debentures due 2007
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $450,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of September 26, 1995, between the Company and The Bank of New York, trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental
<PAGE>
23
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Trustee, the holders of the Senior Indebtedness and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by first-class mail, at any time on or after October
1, 2002, as a whole or in part, at the election of the Company, at a Redemption
Price equal to the percentage of the principal amount set forth below if
redeemed during the 12-month period beginning October 1, of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
<S> <C>
2002................. 105.875%
2003................. 103.917
2004................. 101.958
2005 and thereafter.. 100.000
</TABLE>
together in the case of any such redemption with accrued interest, if any, to
the Redemption Date, all as provided in the Indenture.
Up to 33 1/3% in aggregate principal amount of the Securities is also
subject to redemption upon not less than 30 nor more than 60 days' notice by
first-class mail, at any time before October 1, 1998, at the election of the
Company, at a Redemption Price equal to 110% of the aggregate principal amount
thereof, plus accrued and unpaid interest, out of the net proceeds of the sale
of Junior Stock to a Strategic Equity Investor or a public offering of Class A
Common Stock; provided that following such redemption, at least $166,666,667
--------
aggregate principal amount of the Securities shall remain outstanding.
In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
<PAGE>
24
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Security.
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each
Securityholder by his acceptance hereof agrees to be bound by such provisions
and authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
provided for in the Indenture and appoints the Trustee his attorney-in-fact for
such purpose.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or
<PAGE>
25
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay all documentary, stamp or similar issue or transfer taxes
or other governmental charges payable in connection with any registration of
transfer or exchange.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: THE BANK OF NEW YORK, as Trustee
By _____________________________
Authorized Signatory
<PAGE>
26
SECTION 205. FORM OF LEGEND ON RESTRICTED SECURITIES.
During the period beginning on September 26, 1995 and ending on the
later of September 26, 1998 and the date three years after the last date on
which the Company or any Affiliate of the Company was the Owner of an Initial
Security (or any Predecessor Security), any such Initial Security issued or
owned during the period set forth above, as the case may be, and any Initial
Security issued upon registration of transfer of, or in exchange for, or in lieu
of, such Initial Security shall be deemed a "Restricted Security" and shall be
subject to the restrictions on transfer provided in the legend set forth on the
face of the form of Initial Security in Exhibit B hereto; provided, however,
-------- -------
that the term "Restricted Security" shall not include (a) any Initial Security
which is issued upon transfer of, or in exchange for, any Initial Security which
is not a Restricted Security or (b) any Initial Security as to which such
restrictions on transfer have been terminated in accordance with Section 305 or
(c) any Registered Security issued pursuant to an Exchange Offer (as defined in
the Registration Rights Agreement). Any Restricted Security shall bear the
legend set forth on the face of the Security in Exhibit B hereto.
SECTION 206. FORM OF LEGEND FOR BOOK-ENTRY SECURITIES.
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART
FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ([INSERT DTC ADDRESS AT ISSUE DATE]) TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND
SUCH CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN
THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
<PAGE>
27
WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
ARTICLE THREE
THE SECURITIES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $450,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 303,
304, 305, 306, 906 or 1108 or pursuant to the Exchange Offer.
The Securities shall be known and designated as the "11 3/4% Senior
Subordinated Debentures due 2007" of the Company. Their Stated Maturity shall
be October 1, 2007, and they shall bear interest at the rate of 11 3/4% per
annum (except as otherwise provided for in the form of Initial Security and form
of Registered Security, as the case may be) from the Exchange Debenture Issue
Date, or the most recent Interest Payment Date to which interest has been paid
or duly provided for on a given Security or a Security surrendered in exchange
for such Security, as the case may be, payable on January 1, 1995 and
semiannually thereafter on January 1 and July 1 in each year and at said Stated
Maturity, until the principal thereof is paid or duly provided for. On any
Interest Payment Date for any Security on or prior to the Interest Payment Date
on October 1, 2002, the Company may, in lieu of payment of interest in cash, pay
such interest (i) in additional Securities having a principal amount equal to
the cash interest otherwise payable or (ii) in a combination of cash and
additional Securities. The Company will pay interest on any such Security from
the date of issuance (the "Additional Security Issue Date") of such Security or
from the most recent Interest Payment Date to which interest has been paid. The
initial Interest Payment Date for any Security shall be the first January 1 or
July 1 occurring after the Exchange Debenture Issue Date or after the Additional
Security Issue Date, whichever is later.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose; provided, however, that, at the
-------- -------
option of the Company, cash interest may be paid by check mailed to addresses of
the Persons entitled thereto as such addresses shall appear on the Security
Register.
<PAGE>
28
The Securities shall be redeemable as provided in Article Eleven.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by any one
of the following: its Chairman, one of its Vice Chairmen, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon and attested
by one of its Vice Presidents or its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall (upon Company Order) authenticate and deliver
Securities for original issue in an aggregate principal amount of up to
$450,000,000.
Each Security shall be dated the date of its authentication.
No Security endorsed thereon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form provided
for herein duly executed by the Trustee by manual signature of one of its duly
authorized signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated
or merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of substantially all of its properties and assets to any
Person, and the successor Person resulting from such consolidation, or surviving
such merger, or into which the Company shall have been merged, or the successor
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities authenticated
or delivered prior to such consolidation, merger, conveyance, transfer, lease
<PAGE>
29
or other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any time
be authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of any Holder but without
expense to such Holder, shall provide for the exchange of all Securities at the
time Outstanding held by such Holder for Securities authenticated and delivered
in such new name.
If all or a portion of the Securities are to be issued in the form of
one or more Global Securities, then the Company shall execute and the Trustee
shall authenticate and deliver one or more Global Securities that (i) shall
represent such Securities and shall be in minimum denominations of $1,000, (ii)
shall be registered in the name of the Depository for such Global Security or
Securities or the nominee of such Depository, (iii) shall be delivered by the
Trustee to such Depository or pursuant to such Depository's instructions and
(iv) shall bear the legend set forth in Section 206.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
<PAGE>
30
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee is hereby initially
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Except as otherwise described in this Section 305, upon surrender for
registration of transfer of any Security at the office or agency of the Company
designated pursuant to Section 1002 for such purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denomination or denominations and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations and of a like
aggregate principal amount upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
If an Initial Security is a Restricted Security in certificated form,
then as provided in this Indenture and subject to the limitations herein set
forth, the Holder shall, upon transfer of such Security to a Qualified
Institutional Buyer, instruct the Trustee to arrange for such Initial Security
to be represented by a beneficial interest in a Global Security in accordance
with the customary procedures of the Depository. Upon the exchange of a
definitive Security or Securities for a beneficial interest in a Global
Security, the aggregate principal amount of such Global Security shall be
increased by an adjustment made on the records of the Trustee as custodian for
the Depository. The Trustee shall require delivery of an executed Certificate
of Transfer substantially in the form of Exhibit C hereto, indicating that such
transfer is pursuant to or in compliance with Rule 144A under the Securities
Act, as a condition of such transfer.
If an Initial Security is a Restricted Security in the form of a
Global Security, then as provided in this Indenture and subject to the
limitations herein set forth, the Depository for such Global Security may, upon
transfer of such Initial Security, instruct the Trustee to arrange for a portion
of the beneficial interest in such Global Security to be represented by a
Security in certificated form; provided, however, that, if such Initial Security
-------- -------
is transferred to a Qualified Institutional Buyer and immediately
<PAGE>
31
thereafter shall continue to be a Restricted Security, such Initial Security
shall remain in the form of a Global Security and the Trustee shall not so
arrange for a Security in certificated form. Thereupon, the Company shall
execute, and the Trustee shall authenticate and deliver, without service charge,
to the Person specified by the Depository a new Security or Securities, of any
authorized denominations as requested by such Person, in an aggregate principal
amount equal to and in exchange for such Person's beneficial interest in the
Global Security.
Interests in a Restricted Security in the form of a Global Security
shall be held only by Qualified Institutional Buyers.
Upon the exchange of a beneficial interest in a Global Security for
Securities in certificated form, the aggregate principal amount of such Global
Security shall be decreased by an adjustment made on the records of the Trustee
as custodian for the Depository. Securities in certificated form issued in
exchange for a Global Security pursuant to this Section 305 shall be registered
in such names and shall be in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or an agent of the Company or the Trustee. The
Trustee or such agent shall deliver such Securities to or as directed by the
Persons in whose names such Securities are so registered.
In the case of any transfer of any Restricted Security to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act (an "Institutional Accredited Investor"),
the Trustee shall require the delivery of a signed Transferee Letter of
Representation substantially in the form of Exhibit D hereto as a condition to
such transfer.
In the case of any transfer of any Restricted Security, the Trustee
shall require delivery of an executed Certificate of Transfer substantially in
the form of Exhibit C hereto, as a condition to such transfer and in the case of
any transfer of any Restricted Security to an Institutional Accredited Investor,
to non-U.S. persons outside the United States within the meaning of Regulation S
under the Securities Act or to any other Person in a transaction referred to in
Clause (F) of the legend on the face of the Form of Initial Security set forth
in Exhibit B hereto, the Trustee may require, and if so directed by the Company,
shall require, delivery of such certifications, opinions and other information
as is contemplated in such Certificate of Transfer, as a condition to such
transfer.
Except as otherwise provided in this Section 305, a Global Security is
exchangeable for Securities in certificated form only if (x) the Depository is
at any time unwilling or unable to continue as depository and a successor
depository is not appointed by the Company within 30 days or (y) there shall be
occurred and be continuing an Event of Default or (z) the Company at any time
determines not to have Securities represented
<PAGE>
32
by a Global Security. In addition, in accordance with the provisions of this
Indenture and subject to certain limitations herein set forth, an owner of a
beneficial interest in a Global Security which is an Initial Security may
request a Security in certificated form, in exchange in whole or in part, as the
case may be, for such beneficial owner's interest in the Global Security.
Upon any exchange provided for in the preceding paragraph, the Company
shall execute and the Trustee shall authenticate and deliver to the Person
specified by the Depository a new Security or Securities registered in such
names and in such authorized denominations as the Depository, pursuant to the
instructions of the beneficial owner of the Securities requesting the exchange,
shall instruct the Trustee. Thereupon, the beneficial ownership of such Global
Security shown on the records maintained by the Depository or its nominee shall
be reduced by the amounts so exchanged and an appropriate endorsement shall be
made by or on behalf of the Trustee on the Global Security.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer,
or for exchange or redemption, shall (if so required by the Company or the
Security Registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
Every Restricted Security shall be subject to, and no transfer shall
be made other than in accordance with, the restrictions on transfer provided in
the legend set forth on the form of the face of each Restricted Security and the
restrictions set forth in this Section 305, and the Holder of each Restricted
Security, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer.
The Trustee shall notify the Company of any proposed transfer of a
Restricted Security to any Person.
The restrictions imposed by this Section 305 upon the transferability
of any particular Restricted Security shall cease and terminate (a) on the later
of September 26, 1998 and three years after the last date on which the Company
or any Affiliate of the Company was the owner of such Restricted Security (or
any predecessor of such Restricted Security) or (b) (if earlier) if and when
such Restricted Security has been sold pursuant to an effective registration
statement under the Securities Act. Any Restricted
<PAGE>
33
Security as to which such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon surrender of such
Restricted Security for exchange to the Trustee or any transfer agent in
accordance with the provisions of this Section 305, be exchanged for a new
Initial Security, of like tenor and aggregate principal amount, which shall not
bear the restrictive legend required by Section 205. The Company shall inform
the Trustee in writing of (a) the effective date of any Registration Statement
registering the Initial Securities under the Securities Act and (b) at the
request of the Trustee, the date which is three years after the last date on
which the Company or any Affiliate of the Company was the owner of a Restricted
Security in the event that an Exchange Offer has not been consummated.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay all documentary, stamp or similar issue or transfer taxes
or other governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 303, 304, 906 or 1108 not involving any transfer.
Notwithstanding any other provision of this Section 305, unless and
until it is exchanged in whole or in part for Securities in certificated
registered form, a Global Security representing Book-Entry Securities may not be
transferred, except as a whole by the Depository to a nominee of the Depository
or by another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
Notwithstanding the foregoing, no Global Security shall be registered
for transfer or exchange, or authenticated and delivered, whether pursuant to
this Section, Section 304, 306, 906 or 1108 or otherwise, in the name of a
Person other than the Depository for such Global Security or its nominee until
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Global Security or if at any time the Depository
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depository is not appointed by the Company within 30 days, (ii) the
Company executes and delivers to the Trustee a Company Order that all such
Global Securities shall be exchangeable or (iii) there shall have occurred and
be continuing an Event of Default; provided that the foregoing restriction shall
--------
not prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. Upon the occurrence in respect of
any Global Security representing the Securities of any one or more of the
conditions specified in clauses (i), (ii) and (iii) of the preceding sentence,
such Global Security may be registered for transfer or exchange for Initial
Securities registered in the names of, authenticated and delivered to, such
Persons as the Trustee or the Depository, as the case may be, shall direct.
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34
Except as provided above, any Security authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, any Global
Security, whether pursuant to this Section, Section 304, 306, 906 or 1108 or
otherwise, shall also be a Global Security and bear the legend specified in
Section 206.
The Company shall not be required (a) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
(i) 15 days before the mailing of a notice of redemption of the Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing or (ii) 15 days before an Interest Payment Date and
ending on the close of business on the Interest Payment Date, or (b) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of Securities being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them and any agent of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute and upon Company Order the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a replacement Security
of like tenor and principal amount, and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this Section,
the Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute a contractual obligation
of the Company, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
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35
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest. On any
Interest Payment Date for any Security on or prior to the Interest Payment Date
on October 1, 2002, the Company may, in lieu of payment of interest in cash, pay
such interest (i) in additional Securities having a principal amount equal to
the cash interest otherwise payable or (ii) in a combination of cash and
additional Securities. The Company will pay interest on any such Security from
the Additional Security Issue Date of such Security or from the most recent
Interest Payment Date to which interest has been paid. The initial Interest
Payment Date for any Security shall be the first January 1 or July 1 occurring
after the Exchange Debenture Issue Date or after the Additional Security Issue
Date, whichever is later.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the interest rate borne by the Securities, to the extent
lawful (such defaulted interest and interest thereon herein collectively called
"Defaulted Interest"), shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Subsection provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior
to the date of the proposed
<PAGE>
36
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date. In the name and at the expense of the
Company, the Trustee shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Subsection,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to the time of due presentment for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name any Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all
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37
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of as
directed by the Company pursuant to a Company Order, provided, however, that the
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Trustee shall not be required to destroy such cancelled Securities.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 311. REGISTRATION RIGHTS OF HOLDERS OF INITIAL SECURITIES.
Pursuant to the terms of the Registration Rights Agreement, holders of
Initial Securities, if any, shall be entitled to the benefits of the
Registration Rights Agreement.
SECTION 312. APPLICABILITY OF PROVISIONS.
Notwithstanding anything herein to the contrary, the Company shall
have no obligations hereunder prior to the Exchange Debenture Issue Date and the
provisions hereof, other than the provisions of Section 901, shall not be
applicable prior to the Exchange Debenture Issue Date.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Securities herein expressly provided for) and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
<PAGE>
38
(a) either
(1) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with
<PAGE>
39
the Trustee pursuant to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal (and premium, if any) and
interest for whose payment such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the provisions of Article Twelve
of this Indenture.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on any Security
when the same becomes due and payable and such default continues for a
period of 30 days, whether or not such payment shall be prohibited by the
provisions of Article Twelve hereof;
(b) the Company defaults in the payment of the principal or premium,
if any, of any Security when the same becomes due and payable at maturity,
upon acceleration, redemption or otherwise, whether or not such payment
shall be prohibited by the provisions of Article Twelve hereof;
(c) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture, and the
Default continues for the period and after the notice, if any, specified
below;
(d) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or one of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or one
of its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists or
<PAGE>
40
shall be created hereafter (but excluding any Indebtedness for the deferred
purchase price of property or services owed to the Person providing such
property or services as to which the Company or such Restricted Subsidiary
is contesting its obligation to pay the same in good faith and by proper
proceedings and for which the Company or such Restricted Subsidiary has
established appropriate reserves), and (i) either (A) such event of default
results from the failure to pay any such Indebtedness at final maturity or
(B) as a result of such event of default the maturity of such Indebtedness
has been accelerated prior to its expressed maturity and (ii) the principal
amount of such Indebtedness equals $10,000,000 or more or, together with
the principal amount of any such Indebtedness in default for failure to pay
principal at maturity or the maturity of which has been so accelerated,
aggregates $10,000,000 or more;
(e) a final judgment or final judgments for the payment of money are
entered by a court of competent jurisdiction against the Company or any
Restricted Subsidiary of the Company and either (i) an enforcement
proceeding shall have been commenced by any creditor upon such judgment or
(ii) such judgment remains undischarged and unbonded for a period (during
which execution shall not be effectively stayed) of 60 days, provided that
--------
the aggregate of all such judgments exceeds $10,000,000;
(f) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) admits in writing that it generally is unable to pay its
debts as the same become due; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case or
proceeding,
<PAGE>
41
(ii) appoints a Custodian of the Company or for all or
substantially all of its property, or
(iii) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under
any Bankruptcy Law.
A Default under Section 501(c) is not an Event of Default until the
Trustee notifies the Company in writing, or the Holders of at least 25% in
principal amount of the Securities then Outstanding notify the Company and the
Trustee in writing, of the Default, and the Company does not cure the Default
within 60 days (30 days in the case of a Default under Section 801 or 1004)
after receipt of the notice. The notice must specify the Default, demand that
it be remedied and state that the notice is a "Notice of Default." Such notice
to the Company shall be given by the Trustee if so requested in writing by the
Holders of 25% of the principal amount of the Securities then Outstanding.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION.
If an Event of Default (other than an Event of Default specified in
Section 501(f) or 501(g)) occurs and is continuing, the Trustee or the Holders
of at least 25% of the principal amount of the Securities then Outstanding, by
written notice to the Company and the agents, if any, under the Bank Credit
Agreement (and to the Trustee if such notice is given by the Holders), may, and
the Trustee at the request of such Holders shall, declare all unpaid principal
of, premium, if any, and accrued interest on all the Securities to be due and
payable, as specified below. Upon a declaration of acceleration, such principal
and accrued interest shall be due and payable upon the first to occur of an
acceleration under the Bank Credit Agreement or 10 days after receipt by the
Company and the agents, if any, under the Bank Credit Agreement of such written
notice given hereunder. If an Event of Default specified in Section 501(f) or
501(g) with respect to the Company occurs, the amounts described above shall
ipso facto become and be immediately due and payable without any declaration or
- ---- -----
other act on the part of the Trustee or any Holder. Upon payment of such
principal and interest all of the Company's obligations under the Securities and
this Indenture, other than obligations under Section 606, shall terminate.
The Holders of at least a majority in principal amount of the
Securities then Outstanding, by written notice to the Trustee, may rescind an
acceleration and its consequences if (i) all existing Events of Default, other
than the non-payment of principal
<PAGE>
42
of, premium, if any, or interest on the Securities which have become due solely
because of the acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction.
Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Securities because an Event of Default
specified in Section 501(d) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Indebtedness
that is the subject of such Event of Default has been discharged or the holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness, and written notice of such discharge or rescission, as the case
may be, shall have been given to the Trustee by the Company and countersigned by
the holders of such Indebtedness or a trustee, fiduciary or agent for such
holders, within 30 days after such declaration of acceleration in respect of the
Securities, and no other Event of Default has occurred during such 30-day period
which has not been cured or waived during such period.
Notices by the Trustee to the agents under the Bank Credit Agreement
provided for herein shall be delivered or mailed to Toronto Dominion (Texas),
Inc., 909 Fannin Street, Suite 1700, Houston, Texas 77010, Attention: Agency
Department; and to any other person who hereafter becomes an agent under the
Bank Credit Agreement, provided the Trustee has been notified by the Company or
the Banks of the names and mailing addresses of such persons.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, with interest upon
the overdue principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and
<PAGE>
43
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture by such appropriate private or judicial proceedings
as the Trustee shall deem most effectual to protect and enforce such rights.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or similar
official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the
<PAGE>
44
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any proposal,
plan of reorganization, arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
and as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Twelve any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal (and premium, if any) and interest, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal (and premium, if any) and
interest; and
THIRD: The balance, if any, to the Company.
<PAGE>
45
SECTION 507. LIMITATION ON SUITS.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture except in the manner provided in
this Indenture and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the respective due dates expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
<PAGE>
46
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as provided in Section 306, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided that
--------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability, and
(b) subject to the provisions of Trust Indenture Act Section 315, the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
<PAGE>
47
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the Outstanding
Securities may on behalf of the Holders of all the Securities waive any past
Default or Event of Default hereunder and its consequences, except a Default or
Event of Default
(a) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date); provided that neither this Section
--------
514 nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company.
SECTION 515. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any
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48
time hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, notice of such Default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
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the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders; and provided further that, in the case of any default or breach of the
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character specified in Section 501(d), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution;
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(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no
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50
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility on Form T-1 supplied to the
Company are true and accurate, subject to the qualifications set forth therein.
SECTION 604. MAY HOLD SECURITIES.
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Trust Indenture Act Sections 310(b) and
311, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 605. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 606. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time such compensation as shall
be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust,
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51
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(f) or 501(g), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services will be intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. CONFLICTING INTERESTS.
(a) The Trustee shall comply with the provisions of Section 310(b) of
the Trust Indenture Act.
(b) The indenture, dated as of February 15, 1993, for the Company's 9-
7/8% Senior Subordinated Debentures due 2013, the indenture, dated as of April
1, 1992, for the Company's 10-3/4% Senior Subordinated Debentures due 2004 and
the indenture, dated as of April 1, 1993, for the Company's 9-7/8% Debentures
due 2023 shall be deemed to be specifically described herein for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $25,000,000 to the extent
there is such an institution eligible and willing to serve. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
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52
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 610.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of
a majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Trust
Indenture Act Section 310(b) after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall cease to be eligible under Section 608 and shall
fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor
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53
Trustee shall be appointed by Act of the Holders of a majority in principal
amount of the Outstanding Securities delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with Section 610, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders of the
Securities and so accepted appointment, the Holder of any Security who has been
a bona fide Holder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee, provided, however, that the retiring Trustee
-------- -------
shall continue to be entitled to the benefit of Section 606(c); but, on request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee, and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation
<PAGE>
54
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 612. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312.
SECTION 702. REPORTS BY TRUSTEE.
Within 60 days after September 1 of each year commencing with the
first September 1 after the Exchange Debenture Issue Date, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, as provided in Trust Indenture Act Section 313(c), a brief
report dated as of such September 1 if required by Trust Indenture Act Section
313(a).
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55
SECTION 703. REPORTS BY COMPANY.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of such Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, in the manner and to the extent provided in Trust
Indenture Act Section 313(c), such summaries of any information, documents
and reports required to be filed by the Company pursuant to Subsections (a)
and (b) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate or merge with or into, or sell,
assign, transfer, lease, convey, or otherwise dispose of all or substantially
all of its assets to, any Person, unless:
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56
(a) the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or disposition shall have been made, is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia and shall assume by supplemental
indenture hereto all the obligations of the Company under the Securities
and this Indenture;
(b) immediately before and immediately after such transaction, and
after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing;
(c) immediately after such transaction, and after giving effect
thereto, the Person formed by or surviving any such consolidation or
merger, or to which such sale assignment, transfer, lease or conveyance or
disposition shall have been made (the "successor"), shall have a Cash Flow
Ratio not in excess of 9 to 1; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, or
transfer and such supplemental indenture, if one is required by this
Section 801, comply with this Section 801 and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Cash Flow Ratio for purposes of this Section 801 shall be computed as
if any such successor were the Company.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease or conveyance or other disposition of all or substantially all of the
assets, of the Company in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein. When a successor assumes all the
obligations of its predecessor under this Indenture and the Securities, the
predecessor will be released from those obligations, provided that in the case
--------
of a transfer by lease, the predecessor corporation shall not be released from
the payment of principal and interest on the Securities.
<PAGE>
57
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
At any time prior to the Exchange Debenture Issue Date, the Company
may terminate this Indenture by written notice to the Trustee after which time,
the Company may not elect to issue any Securities hereunder.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein or in the Securities
conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that, in each case, such
--------
provisions shall not adversely affect the interests of the Holders in any
material respect;
(d) to secure the Securities, if the Company so elects;
(e) to make any changes necessary to qualify the Indenture under the
Trust Indenture Act in connection with the Exchange Offer or Shelf
Registration (in each case, as defined in the Registration Rights
Agreement); or
(f) to make any other change that does not adversely affect the rights
of any Holder.
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58
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of such Holders delivered
to the Company and the Trustee and the Company, each when authorized by a Board
Resolution, and the Trustee may enter into one or more indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving or modifying
in any manner the rights of the Holders under this Indenture; provided, however,
-------- -------
that no such supplemental indenture, amendment or waiver shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption
thereof, or change the coin or currency in which the principal of any
Security or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date); or
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture;
or
(c) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Trust Indenture Act Section 315(a) through 315(d) and Section
602 hereof) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is
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59
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in The City of New York, an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or
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60
upon the Company in respect of the Securities and this Indenture may be served.
If the Corporate Trust Office is located in New York City, then it shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; provided, however, that no such designation or
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rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such office or agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on any Securities, deposit with a Paying Agent a
sum in same day funds (or New York Clearing House funds if such deposit is made
prior to the date on which such deposit is required to be made) sufficient to
pay the principal (and premium, if any) or interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium or interest and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
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(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary of the Company and the
corporate rights (charter and statutory), corporate licenses and corporate
franchises of the Company and its Restricted Subsidiaries, except where a
failure to do so, singly or in the aggregate, is not likely to have a materially
adverse effect upon the business, assets, financial condition or results of
operations of the Company and the Restricted Subsidiaries taken as a whole
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be required to
--------
preserve any such existence (except of the
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Company), right, license or franchise if the Board of Directors of the Company,
or of the Restricted Subsidiary concerned, shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company or
such Restricted Subsidiary and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a lien upon the property of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
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discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company shall cause all material properties owned by or leased to
it or any Restricted Subsidiary of the Company and necessary in the conduct of
its business or the business of such Restricted Subsidiary to be maintained and
kept in normal condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section shall prevent the Company or any
--------
Restricted Subsidiary of the Company from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or the Restricted Subsidiary concerned, or of any officer (or other
agent employed by the Company or any Restricted Subsidiary of the Company) of
the Company or such Restricted Subsidiary having managerial responsibility for
any such property, desirable in the conduct of the business of the Company or
any Restricted Subsidiary of the Company and if such discontinuance or disposal
is not adverse in any material respect to the Securityholders.
The Company shall provide or cause to be provided, for itself and any
Restricted Subsidiaries of the Company, insurance (including appropriate self-
insurance) against loss or damage of the kinds customarily insured against by
corporations similarly situated and owning like properties in the same general
areas in which the Company or such Restricted Subsidiaries operate.
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SECTION 1007. LIMITATION ON INDEBTEDNESS.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, incur, create, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise, or become responsible for the
payment of, contingently or otherwise, any Indebtedness unless, after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
SECTION 1008. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become liable for, contingently or otherwise, or become
responsible for the payment of, contingently or otherwise, any Indebtedness
which is senior in right of payment to the Securities and expressly subordinate
in right of payment to any other Indebtedness of the Company. For purposes of
this Section 1008, Indebtedness is deemed to be "senior" in right of payment to
the Securities if it is not subordinate in right of payment to Senior
Indebtedness at least to the same extent as the Securities are subordinate to
Senior Indebtedness.
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
Except as otherwise provided in this Section 1009, the Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
make any Restricted Payment if (a) at the time of such proposed Restricted
Payment, a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence of such Restricted Payment or (b) immediately after
giving effect to such Restricted Payment, the aggregate of all Restricted
Payments that shall have been made on or after July 1, 1988 would exceed the sum
of:
(i) $25,000,000, plus
(ii) an amount equal to the difference between (A) the Cumulative Cash
Flow Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
For purposes of this Section 1009, the amount of any Restricted
Payment or Permitted Restricted Payment, if other than cash, shall be based upon
fair market value as determined by the Board of Directors of the Company, whose
good faith determination shall be conclusive.
The provisions of this Section 1009 shall not prevent (i) the payment
of any dividend within 60 days after the date of declaration thereof, if at such
date of declaration
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such payment complied with the provisions hereof; (ii) the retirement or
redemption of any shares of the Company's capital stock or warrants, rights or
options to acquire capital stock of the Company in exchange for, or out of the
proceeds of a substantially concurrent sale of, other shares of its capital
stock or warrants, rights or options to acquire capital stock of the Company
(other than Disqualified Stock); and (iii) the redemption of or payments of cash
dividends on the Company's 8% Series C Cumulative Preferred Stock (the "Series C
Preferred Stock") outstanding on January 1, 1995, which redemptions or dividends
are provided for by the terms of the Series C Preferred Stock in effect on the
date hereof (or the redemption of or payment of cash dividends on any security
of the Company issued in exchange for or upon the conversion of such Series C
Preferred Stock; provided that the aggregate amount payable pursuant to the
--------
terms of such security is no greater than the aggregate amount payable pursuant
to the terms of the Series C Preferred Stock). For purposes of determining the
aggregate permissible amount of Restricted Payments in accordance with clause
(b) of the first paragraph of this Section 1009, all amounts expended pursuant
to clauses (i) and (iii) of this paragraph shall be included and all amounts
expended or received pursuant to clause (ii) of this paragraph shall be
excluded; provided, however, that amounts paid pursuant to clause (i) of this
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paragraph shall be included only to the extent that such amounts were not
previously included in calculating Restricted Payments.
Notwithstanding the foregoing, so long as no Default or Event of
Default shall have occurred and be continuing, the Company may make any
Permitted Restricted Payment; provided, however, that such Permitted Restricted
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Payment shall thereafter be counted as a Restricted Payment for purposes of
calculating whether any future Restricted Payments are permitted under this
Section 1009.
For the purpose of this Section 1009, the net proceeds from the
issuance of shares of capital stock of the Company upon conversion of
Indebtedness shall be deemed to be an amount equal to (i) the accreted value of
such Indebtedness on the date of such conversion and (ii) the additional
consideration, if any, received by the Company upon such conversion thereof,
less any cash payment on account of fractional shares (such consideration, if in
property other than cash, to be determined by the Board of Directors of the
Company and evidenced by a resolution of such Board, whose good faith
determination shall be conclusive). If the Company makes a Restricted Payment
which, at the time of the making of such Restricted Payment, would in the good
faith determination of the Company be permitted under the requirements of this
Section 1009, such Restricted Payment shall be deemed to have been made in
compliance with this Section 1009 notwithstanding any subsequent adjustments
made in good faith to the Company's financial statements affecting Cumulative
Cash Flow Credit or Cumulative Interest Expense for any period.
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SECTION 1010. LIMITATION ON INVESTMENTS IN UNRESTRICTED SUBSIDIARIES
AND AFFILIATES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, (i) make any Investment or (ii) allow any Restricted
Subsidiary to become an Unrestricted Subsidiary (a "redesignation of a
Restricted Subsidiary"), in each case unless (a) no Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence of such
Investment or such redesignation of a Restricted Subsidiary and (b) after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
The foregoing provisions of this Section 1010 shall not prohibit (i)
any renewal or reclassification of any Investment existing on the date hereof or
(ii) trade credit extended on usual and customary terms in the ordinary course
of business.
SECTION 1011. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, an Affiliate of the Company that is not a subsidiary of the Company, having
a value, or for consideration having a value, in excess of $10,000,000
individually or in the aggregate unless the Board of Directors of the Company
shall make a good faith determination that the terms of such transaction are,
taken as a whole, no less favorable to the Company or such subsidiary, as the
case may be, than those which might be available in a comparable transaction
with an unrelated Person. For purposes of clarification, this Section 1011
shall not apply to any Restricted Payment or Permitted Restricted Payment
permitted by Section 1009.
SECTION 1012. PROVISION OF FINANCIAL STATEMENTS.
(a) The Company shall supply without cost to each Holder of the
Securities, and file with the Trustee (if not otherwise filed with the Trustee
pursuant to Section 703) within 30 days after the Company is required to file
the same with the Commission, copies of the annual reports and quarterly reports
and of the information, documents and other reports which the Company may be
required to file with the Commission pursuant to Section 13(a), 13(c) or 15(d)
of the Securities Exchange Act of 1934.
(b) If the Company is not required to file with the Commission such
reports and other information referred to in Section 1012(a), the Company shall
furnish without cost to each Holder of the Securities and file with the Trustee
(i) within 140 days
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after the end of each fiscal year after the Exchange Debenture Issue Date,
annual reports containing the information required to be contained in Items 1,
2, 3, 6, 7, 8 and 9 of Form 10-K promulgated under the Securities Exchange Act
of 1934, or substantially the same information required to be contained in
comparable items of any successor form, and (ii) within 75 days after the end of
each of the first three fiscal quarters of each fiscal year, quarterly reports
containing the information required to be contained in Form 10-Q promulgated
under the Securities Exchange Act of 1934, or substantially the same information
required to be contained in any successor form.
(c) At any time when the Company is not subject to Section 13 or 15(d)
of the Securities Exchange Act of 1934, upon the request of a holder of a
Restricted Security, the Company will promptly furnish or cause to be furnished
such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) to such holder or to a
prospective purchaser of such Security designated by such holder, as the case
may be, in order to permit compliance by such holder with Rule 144A under the
Securities Act.
SECTION 1013. STATEMENT AS TO COMPLIANCE.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year ending after the Exchange Debenture Issue Date, a brief
certificate of its principal executive officer, principal financial officer or
principal accounting officer stating whether, to such officer's knowledge, the
Company is in compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1013, such compliance
shall be determined without regard to any period of grace or requirement of
notice under this Indenture.
SECTION 1014. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1007 through 1012 if, before or
after the time for such compliance, the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding shall, by Act of such
Holders, waive such compliance in such instance or generally waive compliance
with such covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or condition shall remain
in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. RIGHT OF REDEMPTION.
The Securities may be redeemed, at the election of the Company, as a
whole or from time to time in part, subject to the conditions and at the
Redemption Prices specified in the form of Security, together with accrued
interest to the Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
prior to the Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities to be redeemed.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 60
days and not less than 30 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities not previously called for redemption, either pro rata
or by lot, and the amounts to be redeemed may be equal to $1,000 or any integral
multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
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SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall identify the Securities (including
CUSIP number, if any) to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a Security to be redeemed in part, the
principal amount) of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon shall cease to accrue on and after said date; and
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at its request, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities or portions thereof which are to be
redeemed on that date.
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69
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price together with accrued interest to
the Redemption Date; provided, however, that installments of interest whose
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Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such on the relevant Regular Record Dates according to the terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal thereof (and premium, if any,
thereon) shall, until paid, bear interest from the Redemption Date at the rate
borne by such Security.
SECTION 1108. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at the office or agency of the Company designated for such purpose pursuant to
Section 1002 (with, if the Company, the Security Registrar or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SUBORDINATION
SECTION 1201. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees, that the payment of all amounts due in respect
of the Securities, including any liquidated damages payable in respect of the
Securities, are subordinated, to the extent and in the manner provided in this
Article Twelve, to the prior
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payment in full of all Senior Indebtedness. For purposes of this Article
Twelve, "liquidated damages" shall mean liquidated damages payable pursuant to
the first paragraph of text of the Form of Initial Security and pursuant to
Section Three of the Registration Rights Agreement.
This Article Twelve shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.
SECTION 1202. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration (unless waived, rescinded or annulled) or otherwise, or upon any
payment default (with or without the giving of notice or lapse of time or both,
in accordance with the terms of the instrument governing such Senior
Indebtedness, and without any waiver or forgiveness) with respect to any Senior
Indebtedness, all amounts payable thereon shall first be paid in full, or such
payment duly provided for in cash or in a manner satisfactory to the holders of
such Senior Indebtedness, before any payment is made, directly or indirectly by
set off or otherwise, on account of principal of, or interest on, or liquidated
damages, if any, with respect to, the Securities or on account of the
Registration Rights Agreement or to acquire any of the Securities or on account
of the redemption provisions of the Securities.
(b) Upon a default with respect to any Senior Indebtedness (other than
under circumstances when the terms of paragraph (a) of this Section are
applicable), as such default is defined therein or in the instrument under
which it is outstanding, permitting the holders to accelerate the maturity
thereof, upon written notice thereof given to the Company and the Trustee by the
agent or agents under the Bank Credit Agreement ("Default Notice"), then, unless
and until such default shall have been cured or waived by the holders of such
Senior Indebtedness or shall have ceased to exist, no direct or indirect payment
shall be made by the Company with respect to the principal of, interest on, or
liquidated damages, if any, with respect to the Securities (other than payments
made in Junior Securities) or on account of the Registration Rights Agreement or
to acquire any of the Securities or on account of the redemption provisions of
the Securities; provided, however, that this paragraph (b) shall not prevent the
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making of any payment (which is not otherwise prohibited by paragraph (a)) for
more than 120 days after the Default Notice shall have been given unless the
Senior Indebtedness in respect of which such event of default exists has been
declared due and payable in its entirety, in which case no such payment may be
made until such acceleration has been rescinded or annulled or such Senior
Indebtedness has been paid in full. Notwithstanding the foregoing, not more
than
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one Default Notice shall be given with respect to Senior Indebtedness within a
period of 240 consecutive days.
(c) If, notwithstanding the foregoing provisions of this Section, any
payment on account of principal of, interest on or liquidated damages, if any,
with respect to the Securities or on account of the Registration Rights
Agreement shall be received by the Trustee, by any Holder or by any Paying Agent
(or, if the Company is acting as its own Paying Agent, money for any such
payment is segregated and held in trust), then, unless and until such payment is
no longer prohibited by this Section, such payment (subject to the provisions of
Sections 1206 and 1207) shall be held in trust for the benefit of the holders of
Senior Indebtedness and, upon notice to the Trustee or such Paying Agent from
the representative of the holders of the Senior Indebtedness and pursuant to the
directions of such representative, shall be paid over or delivered to the
holders of Senior Indebtedness or their representative(s), ratably according to
the aggregate amount remaining unpaid on account of the principal of and
interest on the Senior Indebtedness held or represented by each, for application
to the payment or prepayment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in accordance with its
terms, after giving effect to any concurrent payment or distribution or
provision therefor to or for the holders of Senior Indebtedness. Promptly after
becoming aware thereof, the Company shall give written notice to the Trustee of
any event prohibiting payments on account of principal of, interest on or
liquidated damages, if any, with respect to the Securities or on account of the
Registration Rights Agreement and, in such event, shall provide to the Trustee,
in the form of an Officers' Certificate, the names and addresses of the holders
of such Senior Indebtedness and their representative(s), if any, the amount of
the Senior Indebtedness held by each such holder, any information necessary to
calculate the daily or other increase in Senior Indebtedness held by such
holders and any other information which the Trustee may reasonably request to
comply with this Article. Subject to the provisions of Section 1203 hereof, in
the event that the Trustee or the Paying Agent reasonably determines that
additional evidence is required with respect to any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee or the Paying Agent, as the case may be, may request that
such person furnish evidence to its reasonable satisfaction as to the amount of
Senior Indebtedness held by each such person, as to the extent such person is
entitled to participate in such payment or distribution and as to other facts
pertinent to the rights of such persons under this Article and if such evidence
is not furnished, the Trustee or the Paying Agent, as the case may be, may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
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SECTION 1203. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, WINDING-UP, LIQUIDATION OR REORGANIZATION OF THE
COMPANY.
Upon any payment by or distribution of the assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company (whether in a bankruptcy or reorganization case, insolvency or
receivership proceedings, voluntary liquidation or upon any assignment for the
benefit of creditors or otherwise):
(1) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all amounts payable thereon, or provision shall
be made for such payment, before the Holders are entitled to receive any
payment on account of the principal of, interest on or liquidated damages,
if any, with respect to the Securities or on account of the Registration
Rights Agreement;
(2) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities (other than
Junior Securities) to which the Holders or the Trustee on behalf of the
Holders would be entitled except for the provisions of this Article Twelve,
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, shall be paid
by the liquidating trustee or agent or other Person making such a payment
or distribution, directly to the holders of Senior Indebtedness or their
representative(s), ratably according to the aggregate amounts remaining
unpaid on account of the principal of and interest on the Senior
Indebtedness held or represented by each, for application to payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Senior
Indebtedness; and
(3) if, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property
or securities (other than Junior Securities) shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company is acting as
its own Paying Agent, money for any such payment or distribution is
segregated or held in trust) on account of principal of, interest on or
liquidated damages, if any, with respect to the Securities or on account of
the Registration Rights Agreement before all Senior Indebtedness is paid in
full, or effective provision made for its payment, such payment or
distribution (subject to the provisions of Sections 1206 and 1207) shall be
received and held in trust for and shall be paid over to the holders of the
Senior Indebtedness remaining unpaid or unprovided for or their
representative(s), ratably according to the aggregate amounts remaining
unpaid on account of the
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principal of and interest on the Senior Indebtedness held or represented by
each, for application to payment or prepayment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness.
If the Company effects a transaction permitted by Article Eight, such
transaction shall not be deemed to be a dissolution, winding-up, liquidation or
reorganization of the Company for purposes of this Section.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
Upon any distribution of assets of the Company referred to in this
Article, the Trustee, subject to the provisions of Sections 601 and 602, and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up or liquidation
proceeding, or bankruptcy or reorganization case, is pending, or a certificate
of the liquidating trustee or agent or other Person making any distribution to
the Trustee or to the Holders, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article.
SECTION 1204. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS
OF SENIOR INDEBTEDNESS.
Upon payment in full of all Senior Indebtedness, the Holders of
Securities shall be subrogated (equally and ratably with the holders of all
Indebtedness of the Company which by its terms is not superior in right of
payment to the Securities and which ranks on a parity with the Securities) to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Securities shall be paid in full, and for the
purposes of such subrogation no payments or distributions to the holders of
Senior Indebtedness by the Company to which the Holders would be entitled except
for the provisions of this Article, and no payment pursuant to the provisions of
this Article to the holders of Senior Indebtedness shall, as between the
Company, its creditors (other than the holders of Senior Indebtedness) and the
Holders, be deemed to be payment by the Company to or on account of the Senior
Indebtedness, it being understood that the provisions of this Article are
intended solely for the purpose of defining the relative rights
<PAGE>
74
of the Holders, on the one hand, and the holders of Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article shall have been
applied, pursuant to the provisions of this Article, to the payment of all
amounts payable under the Senior Indebtedness, then and in such case, the
Company specifically agrees that the Holders shall be entitled to receive from
the holders of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full.
SECTION 1205. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in any Security is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness) and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on or liquidated damages, if
any, with respect to the Securities or on account of the Registration Rights
Agreement as and when the same shall become due and payable in accordance with
their terms, or to affect the relative rights of the Holders and creditors of
the Company (other than the holders of Senior Indebtedness), nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
SECTION 1206. KNOWLEDGE OF TRUSTEE.
Notwithstanding the provisions of this Article or any other provision
of this Indenture, the Trustee shall not at any time be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or by the Trustee, or the taking of any other action under this Indenture by the
Trustee, unless and until two Business Days after the Trustee shall have
received written notice thereof from the Company, any Securityholder, any Paying
Agent or any holder of Senior Indebtedness or its representative.
SECTION 1207. APPLICATION BY TRUSTEE OR PAYING AGENT OF ASSETS
DEPOSITED WITH IT.
If on a date not less than two Business Days prior to the date on
which by the terms of this Indenture any monies deposited with the Trustee or
any Paying Agent
<PAGE>
75
(other than the Company, if it acts as Paying Agent) may become payable for any
purpose (including, without limitation, the payment of either principal of,
interest on or liquidated damages, if any, with respect to any Security) the
Trustee or such Paying Agent shall not have received with respect to such
payment the written notice provided for in Section 1206, then the Trustee or
such Paying Agent shall have full power and authority to receive such monies and
to apply them to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior
Indebtedness may have to recover any such payments from the Holders in
accordance with the provisions of this Article.
SECTION 1208. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior Indebtedness
to enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of Senior Indebtedness may extend, renew, modify, or increase Senior
Indebtedness or amend the terms of the Senior Indebtedness or any security or
guarantee therefor and release, sell or exchange such security or guarantee and
otherwise deal freely with the Company, all without affecting the liabilities
and obligations of the parties to this Indenture or the Holders.
SECTION 1209. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.
Each Holder by his acceptance of the Securities authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in a bankruptcy or reorganization case,
insolvency or receivership proceedings, voluntary liquidation or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the immediate filing of a
claim for the unpaid balance of its or his Securities in the form required in
such proceeding and cause such claim to be approved. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding on
or prior to 30 days before the expiration of the time to file such claim or
claims, then the holders of the Senior Indebtedness or their representative(s)
are hereby authorized to have the right to file and are hereby authorized to
file an appropriate claim for and on behalf of the Holders.
<PAGE>
76
SECTION 1210. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS.
Neither the Trustee nor any Paying Agent (including the Company if the
Company acts as Paying Agent) shall be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness. Neither the Trustee nor any Paying Agent shall
be liable to any such holder (subject to Section 1206 hereof, except for its own
gross negligence or willful misconduct) if any of them shall mistakenly pay over
or distribute to Securityholders, the Company or any other person monies or
assets to which any holders of Senior Indebtedness shall be entitled by virtue
of this Article or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee or the Paying Agent undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee or the Paying Agent.
SECTION 1211. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 1212. ARTICLE TWELVE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article shall not be
construed as preventing the occurrence of an Event of Default under Section 501.
Nothing contained in this Article Twelve shall limit the right of the Trustee or
the Holders of Securities to take any action to accelerate the maturity of the
Securities pursuant to Section 502 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness then or thereafter due or
--------
declared to be due shall first be paid in full before the Holders or the Trustee
are entitled to receive any payment from the Company of principal of, interest
on or liquidated damages, if any, with respect to the Securities.
SECTION 1213. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article shall apply to amounts due to the Trustee
pursuant to Section 606.
<PAGE>
77
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 1302 or Section 1303 be
applied to all Outstanding Securities upon compliance with the conditions set
forth below in this Article Thirteen.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1301 of the option
applicable to this Section 1302, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall
be deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1305 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities to receive solely from the trust fund described in
Section 1304 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (D) this Article Thirteen. Subject to compliance with
this Article Thirteen, the Company may exercise its option under this Section
1302 notwithstanding the prior exercise of its option under Section 1303 with
respect to the Securities.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1301 of the option
applicable to this Section 1303, the Company shall be released from its
obligations under any covenant contained in Article Eight and in Sections 1004
through 1012 with respect to the Outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities shall thereafter be deemed to be not
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act
<PAGE>
78
of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder (it being understood that such Securities shall not be deemed
Outstanding for financial accounting purposes). For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities, the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a default
or an Event of Default under Section 501(c), but, except as specified above, the
remainder of this Indenture and such Securities shall be unaffected thereby. In
addition, upon the Company's exercise under Section 1301 of the option
applicable to Section 1303, Sections 501(c) through 501(e) shall not constitute
Events of Default.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
1302 or Section 1303 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 608 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment, cash in U.S. Dollars in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
(i) the principal of (and premium, if any) and interest on the Outstanding
Securities on the Stated Maturity of such principal or installment of
principal (and premium, if any) or interest and (ii) any mandatory sinking
fund payments or analogous payments applicable to the Outstanding
Securities on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities;
provided that the Trustee shall have been irrevocably instructed to apply
--------
such money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this purpose, "U.S.
Government Obligations" means securities that are (x) direct obligations of
the United States of America for the timely payment of which its full faith
and credit is pledged or (y)
<PAGE>
79
obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt; provided that (except
--------
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or,
insofar as Subsection 501(f) or 501(g) is concerned, at any time during the
period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) No event or condition shall exist that, pursuant to the provisions
of Section 1202 or 1203, would prevent the Company from making payments of
the principal of (and premium, if any) or interest on the Securities on the
date of such deposit or at any time during the period ending on the 91st
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound.
(5) In the case of an election under Section 1302, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
stating that (x) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (y) since September 26, 1995,
there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that,
the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred.
<PAGE>
80
(6) In the case of an election under Section 1303, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States to
the effect that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(7) In the case of an election under either Section 1302 or 1303, the
Company shall represent to the Trustee that the deposit made by the Company
pursuant to its election under Section 1302 or 1303 was not made by the
Company with the intent of preferring the Holders over other creditors of
the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating
that all conditions precedent provided for relating to either the
defeasance under Section 1302 or the covenant defeasance under Section 1303
(as the case may be) have been complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law. Money and
U.S. Government Obligations so held in trust are not subject to Article Twelve.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities.
<PAGE>
81
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
1304(1)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 1306. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 1302 or 1303, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1302 or 1303, as the case may be; provided, however,
-------- -------
that, if the Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or Paying Agent.
* * * * *
<PAGE>
82
This Indenture may be signed in any number of counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
CABLEVISION SYSTEMS CORPORATION
By /s/ William J. Bell
----------------------------
Title: Vice Chairman
Attest:
/s/ Robert S. Lemle
- -----------------------------------------
Title: Executive Vice President, General
Counsel and Secretary
THE BANK OF NEW YORK
By
-----------------------------
Title:
Attest:
- -----------------------------
Title:
<PAGE>
83
STATE OF NEW YORK )
) ss:
COUNTY OF NASSAU )
On the 22nd day of September, 1995, before me personally came William
J. Bell, to me known, who, being by me duly sworn, did depose and say that he
resides at 22 Youngshill Rd, Huntington, NY; that he is Vice Chairman of
Cablevision Systems Corporation, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of such
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of Directors of such
corporation; and that he signed his name thereto pursuant to like authority.
[Notarial Seal]
/s/ Kathleen M. Caprisecca
------------------------------------
<PAGE>
84
STATE OF )
) ss:
COUNTY OF )
On the _____ day of ___________, 1995, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that s/he resides at ____________________________________; that s/he is
________________________ of ____________________, one of the corporations
described in and which executed the above instrument; that s/he knows the
corporate seal of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority of the Board
of Directors of such corporation; and that s/he signed her/his name thereto
pursuant to like authority.
[Notarial Seal]
-------------------------------
<PAGE>
EXHIBIT A
LIST OF RESTRICTED SUBSIDIARIES
CSC Acquisition - MA, Inc.
CSC Acquisition - NY, Inc.
CSC Acquisition Corporation
Cablevision Area 9 Corporation
Cablevision Fairfield Corporation
Cablevision Finance Corporation
Cablevision Finance Limited Partnership
Cablevision Programming of Southern Connecticut,
Limited Partnership
Cablevision Systems Dutchess Corporation
Cablevision Systems East Hampton Corporation
Cablevision Systems Great Neck Corporation
Cablevision Systems Huntington Corporation
Cablevision Systems Islip Corporation
Cablevision Systems Long Island Corporation
Cablevision Systems Suffolk Corporation
Cablevision Systems Westchester Corporation
Cablevision Systems of Southern Connecticut Limited
Partnership
Cablevision of Connecticut Corporation
Cablevision of Connecticut Limited Partnership
Cablevision of Michigan, Inc.
Cablevision of New Jersey, Inc.
Communications Development Corporation
Cablevision Lightpath, Inc. (f/k/a NuComm Test, Inc.)
<PAGE>
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
(S) 310(a)(1)............................. 607(a)
(a)(2)............................. 607(a)
(b)................................ 607(b), 608
(S) 312(c)................................ 701
(S) 314(a)................................ 703
(a)(4)............................. 1004
(c)(1)............................. 102
(c)(2)............................. 102
(e)................................ 102
(S) 315(b)................................ 601
(S) 316(a)(last
sentence).............................. 101 ("Outstanding")
(a)(1)(A).......................... 502, 512
(a)(1)(B).......................... 513
(b)................................ 508
(c)................................ 104(e)
(S) 317(a)(1)............................. 503
(a)(2)............................. 504
(b)................................ 1003
(S) 318(a)................................ 111
</TABLE>
<PAGE>
EXHIBIT B
FORM OF INITIAL SECURITY
[FORM OF FACE OF INITIAL SECURITY.]
[INSERT LEGEND PER SECTION 206 IF A GLOBAL SECURITY.]
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
WHICH IS THREE YEARS AFTER THE LATER OF SEPTEMBER 26, 1995 AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3)
OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT (AND IF
ACQUIRING THE SECURITIES FROM SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR" IS
ACQUIRING NOT LESS THAN $250,000 PRINCIPAL AMOUNT OF DEBENTURES), OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, PROVIDED THAT AN INITIAL HOLDER THAT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" HOLDING AS DESCRIBED IN CLAUSE (E) ABOVE SHALL NOT BE
PERMITTED TO TRANSFER THIS SECURITY TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF
<PAGE>
B-2
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT;
PROVIDED FURTHER THAT THE COMPANY SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION (IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY) OF COUNSEL
SATISFACTORY TO THE COMPANY, AND CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO THE COMPANY, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO TRUSTEE.
<PAGE>
B-3
CUSIP NO.
CABLEVISION SYSTEMS CORPORATION
11 3/4% SENIOR SUBORDINATED DEBENTURE DUE 2007
No. ________ $ _______________
CUSIP NO. _______
Cablevision Systems Corporation, a Delaware corporation (herein called
the "Company", which term includes any successor entity under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________________________ or registered assigns the principal sum of
____________________________ Dollars on October 1, 2007, at the office or agency
of the Company referred to below, and to pay interest thereon on January 1, 1996
and semiannually thereafter, on January 1 and July 1 in each year, from the
Exchange Debenture Issue Date or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 11 3/4% per
annum (except as provided in the following three sentences), until the principal
hereof is paid or duly provided for, and (to the extent lawful) to pay on demand
interest on any overdue interest at the rate borne by the Securities from the
date of the Interest Payment Date on which such overdue interest becomes payable
to the date payment of such interest has been made or duly provided for. In the
event that either (i) a registration statement under the Securities Act with
respect to an exchange offer for the Company's 11 3/4% Series G Redeemable
Exchangeable Preferred Stock or the Securities (the "Exchange Offer") is not
filed with the Securities and Exchange Commission (the "Commission") on or prior
to October 26, 1995 or (ii) the Exchange Offer is not consummated or a
registration statement under the Securities Act with respect to resales of the
Company's 11 3/4% Series G Redeemable Exchangeable Preferred Stock or the
Securities (the "Shelf Registration Statement") is not declared effective by the
Commission on or prior to March 26, 1996, in either case in accordance with the
Registration Rights Agreement dated September 26, 1995 among the Company and the
Initial Purchasers, the aforesaid interest rate borne by the Securities shall be
increased by one-quarter of one percent per annum for the first 30 days
following October 26, 1995 in the case of (i) above, or the first 90 days
following March 26, 1996 in the case of (ii) above. Such interest rate will
increase by an additional one-quarter of one percent per annum at the beginning
of each subsequent 30-day period in the case of (i) above, or 90-day period in
the case of (ii) above, up to a maximum aggregate increase of one percent per
annum. Upon (x) the filing of a registration statement with respect to the
Exchange Offer or (y) the consummation of the Exchange Offer or the
effectiveness of a Shelf Registration Statement, as the case may be, the
interest rate borne by the Securities will be reduced to the original interest
rate. On any Interest Payment Date for this Security on or prior to the
Interest Payment Date on October 1, 2002, the Company may, in lieu of payment of
interest in cash,
<PAGE>
B-4
pay such interest (i) in additional Securities having a principal amount equal
to the cash interest otherwise payable or (ii) in a combination of cash and
additional Securities. The Company will pay interest on any such Security from
the date of issuance (the "Additional Security Issue Date") or from the most
recent Interest Payment Date to which interest has been paid. The initial
Interest Payment Date for this Security shall be the first January 1 or July 1
occurring after the Exchange Debenture Issue Date or after the Additional
Security Issue Date, whichever is later. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid (in cash or additional Securities, as
provided above) to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 15 or December 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for, and interest on such defaulted interest at the interest rate borne
by the Securities, to the extent lawful, shall forthwith cease to be payable to
the Holder on such Regular Record Date, and may be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of (and premium, if any)
and interest on this Security will be made at the office or agency of the
Company maintained for that purpose in The City of New York, or at such other
office or agency of the Company as may be maintained for such purpose, in
additional Securities or such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that payment of cash interest may be made at the
-------- -------
option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
<PAGE>
B-5
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CABLEVISION SYSTEMS CORPORATION
By ____________________________
Attest:
By _____________________________
[FORM OF REVERSE OF INITIAL SECURITY.]
This Security is one of a duly authorized issue of securities of the
Company designated as its 11 3/4% Senior Subordinated Debentures due 2007
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $450,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of September 26, 1995, between the Company and The Bank of New York, trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee, the holders of the Senior Indebtedness and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by first-class mail, at any time on or after October
1, 2002, as a whole or in part, at the election of the Company, at a Redemption
Price equal to the percentage of the principal amount set forth below if
redeemed during the 12-month period beginning October 1, of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2002 105.875%
2003 103.917
2004 101.958
2005 and thereafter 100.000
</TABLE>
<PAGE>
B-6
together in the case of any such redemption with accrued interest, if any, to
the Redemption Date, all as provided in the Indenture.
Up to 33 1/3% in aggregate principal amount of the Securities is also
subject to redemption upon not less than 30 nor more than 60 days' notice by
first-class mail, at any time before October 1, 1998, at the election of the
Company, at a Redemption Price equal to 110% of the aggregate principal amount
thereof, plus accrued and unpaid interest, out of the net proceeds of the sale
of Junior Stock to a Strategic Equity Investor or a public offering of Class A
Common Stock; provided that following such redemption, at least $166,666,667
--------
aggregate principal amount of the Securities shall remain outstanding.
In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange
<PAGE>
B-7
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The Securities are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each
Securityholder by his acceptance hereof agrees to be bound by such provisions
and authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
provided for in the Indenture and appoints the Trustee his attorney-in-fact for
such purpose.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
Subject to the restrictions on transfer set forth on the face hereof,
the Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay all documentary, stamp or similar issue or transfer taxes
or other governmental charges payable in connection with any registration of
transfer or exchange.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes,
<PAGE>
B-8
whether or not this Security be overdue, and neither the Company, the Trustee
nor any agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
<PAGE>
B-9
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By _____________________________
Authorized Signatory
<PAGE>
B-10
[FOR GLOBAL SECURITY]
SCHEDULE OF EXCHANGES FOR DEFINITIVE DEBENTURES
-----------------------------------------------
The following exchanges of a part of this Security in global form for definitive
Securities or of definitive Securities for a part of this Security in global
form have been made:
Principal
Amount of Amount of Amount of Signature of
decrease in increase in this Security authorized
Principal Principal in global form officer of
Amount of Amount of following such Trustee or
Date of this Security this Security decrease (or Securities
Exchange in global form in global form increase) Custodian
- ---------- -------------- -------------- -------------- ------------
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers this Security to
________________________________________________________________________________
(Please typewrite or print name and taxpayer identification number)
________________________________________________________________________________
(Please typewrite or print address)
and hereby irrevocably constitutes and appoints
_________________________________ his attorney to transfer the same on the books
of the Company, with full power of substitution in the premises.
In connection with any transfer of all or any portion of the Security
evidenced by this certificate for as long as such Security is a Restricted
Security, the undersigned confirms that such Security is being transferred:
[_] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act");
or
[_] Pursuant to offers and sales to non-U.S. Persons that occur outside
the United States within the meaning of Regulation S under the
Securities Act;
or
[_] To an institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act that is acquiring the Security for its own account or for the
account of such an institutional "accredited investor" for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act (and if
acquiring the Security from such an institutional "accredited
investor", is acquiring not less than $250,000 principal amount of
Securities); provided that the transferor hereof was not an initial
-------- ----
holder in such Security
<PAGE>
and did not acquire such Security as an institutional "accredited
investor" holding as described above.
Unless one of the boxes above is checked, the Trustee will refuse to
register all or any portion of the Security evidenced by this certificate in the
name of any person other than the registered holder thereof (or hereof);
provided, however, that the Trustee may, in its sole discretion, register the
- -------- -------
transfer of such Security if it has received such certifications, legal opinions
and/or other information as it has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended.
In addition, if the transferee is an institutional accredited
investor, a purchaser who is not a U.S. person, or is a purchaser in a
transaction referred to in clause (F) of the legend on the face of the Security,
the holder must furnish to the Trustee and the Company and the Trustee shall
refuse to register such Security in the name of anyone other than the registered
holder thereof if it does not receive (i) in the case of an institutional
accredited investor, a signed letter substantially in the form of Exhibit D to
the Indenture containing certain representations and agreements relating to the
restrictions on transfer of the security evidenced hereby, and (ii) such other
certifications, legal opinions or other information as the Trustee or the
Company may reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, as amended, and in
accordance with the provisions thereof.
Dated:
Signature ____________________
______________________________
NOTE: The signature to this assignment must correspond with the name as written
upon the face of this Security in every particular, without alteration or
enlargement, or any change whatever.
<PAGE>
EXHIBIT D
FORM OF TRANSFEREE LETTER OF REPRESENTATION
Cablevision Systems Corporation
c/o The Bank of New York
Ladies and Gentlemen:
In connection with our proposed purchase of $_____ aggregate principal
amount of the 11 3/4% Senior Subordinated Debentures due 2007 (the "Debentures")
of Cablevision Systems Corporation, a Delaware Corporation (the "Company"):
1. We understand that the Debentures have not been registered under
the Securities Act of 1933, as amended (the Securities Act"), and may not
be sold except as permitted in the following sentence. We agree on our own
behalf and on behalf of any investor account for which we are purchasing
Debentures to offer, sell or otherwise transfer such Debentures prior to
the date which is three years after the later of the date of original issue
and the last date on which the Company or any affiliate of the Company was
the owner of such Debentures (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) for so long as the Debentures are eligible for resale
pursuant to Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales to non-U.S. persons that occur outside the
United States within the meaning of Regulation S under the Securities Act,
(e) to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
that is acquiring the Debentures for its own account or for the account of
such an institutional "accredited investor" for investment purposes and not
with a view to, or for offer or sale in connection with, any distribution
in violation of the Securities Act and that, if acquiring the Debentures
from such an institutional "accredited investor", is acquiring not less
than $250,000 principal amount of Debentures or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor account or
accounts be at all times within our or their control and to compliance with
any applicable state securities laws; provided that an initial holder that
is an institutional "accredited investor" holding as described in clause
(e) above shall not be permitted to transfer the Debentures to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act. The
<PAGE>
D-2
foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the
Debentures is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter
from the transferee substantially in the form of this letter to the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and that it is
acquiring such Debentures for investment purposes and not for distribution
in violation of the Securities Act. Each purchaser acknowledges that the
Company and the Trustee reserve the right prior to any offer, sale or other
transfer prior to the Resale Restriction Termination Date of the Debentures
pursuant to clauses (d), (e) and (f) above to require the delivery of an
opinion of counsel, certifications and/or other information satisfactory to
the Company and the Trustee.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) that
is acquiring the Debentures for our own account or for the account of such
an institutional "accredited investor" (and, if acquiring the Debentures
from such an institutional "accredited investor" are acquiring not less
than $250,000 principal amount of Debentures) and we are acquiring the
Debentures for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities
Act and we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Debentures, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its investment.
3. We are acquiring the Debentures purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
4. You are entitled to rely upon this letter, and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
By: (Name of Purchaser)
-----------------------
Date:_____________________
<PAGE>
D-3
Upon transfer, the Debentures would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________
Address: ________________________
Taxpayer ID Number: _____________
<PAGE>
EXHIBIT E
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT 12
CABLEVISION SYSTEMS CORPORATION
COMPUTATION OF RATIO OF DEFICIENCY OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(FIXED CHARGES COVERAGE DEFICIENCIES)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
--------------------- ---------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Loss from continuing
operations................. $(195,439) $(111,851) $(315,151) ($246,782) ($250,503) $(227,199) $(271,375)
Add:
Fixed charges per (B)
below...................... 159,051 121,436 269,627 238,109 199,661 264,039 268,491
Amortization of previously
capitalized interest....... 37 74 148 138 74 75 74
Deduct:
Interest capitalized
during period.............. -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Earnings for computation
purposes (A)............... $ (36,351) $ 9,659 $ (45,376) $ (8,535) $ (50,768) $ 36,915 $ (2,810)
========= ========= ========= ========= ========= ========= =========
Fixed Charges:
Interest on indebtedness,
expensed or capitalized,
including amortization
of debt expense............ 155,318 118,586 263,299 232,434 194,628 258,794 263,564
Portion of rents
representative of the
interest factor............ 3,733 2,850 6,328 5,675 5,033 5,245 4,927
--------- --------- --------- --------- --------- --------- ---------
Fixed charges for
computation purposes (B).... $ 159,051 $ 121,436 $ 269,627 $ 238,109 $ 199,661 $ 264,039 $ 268,491
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges (A)/(B)............. -- -- -- -- -- -- --
Deficiency of earnings
available to cover fixed
charges..................... $(195,402) $(111,777) $(315,003) $(246,644) $(250,429) $(227,124) $(271,301)
========= ========= ========= ========= ========= ========= =========
Preferred stock
dividends (C)............... $ 4,918 $ 2,054 $ 6,385 $ 885 $ 885 $ 4,464 $ 4,065
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges and preferred
stock dividends (A)/(B+C)... -- -- -- -- -- -- --
Deficiency of earnings
available to cover fixed
charges and preferred
stock dividends............. $(200,320) $(113,831) $(321,388) $(247,529) $(251,314) $(231,588) $(275,366)
========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
CABLEVISION SYSTEMS CORPORATION
COMPUTATION OF PRO FORMA RATIO OF
DEFICIENCY OF EARNINGS TO FIXED CHARGES
(FIXED CHARGES COVERAGE DEFICIENCIES)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31, 1994
---------- ------------------
(Dollars in thousands)
<S> <C> <C>
Earnings:
Loss from continuing operations.......................... $(184,646) $(344,775)
Add:
Fixed charges per (B) below.............................. 141,377 273,547
Amortization of previously capitalized interest.......... 37 148
Deduct:
Interest capitalized during period....................... -- --
--------- ---------
Earnings for computation purposes (A).................... $ (43,232) $ (71,080)
========= =========
Fixed Charges:
Interest on indebtedness, expensed or capitalized,
including amortization of debt expense.................. 137,556 266,443
Portion of rents representative of the
interest factor......................................... 3,821 7,104
--------- ---------
Fixed Charges for computation purposes (B)................ $ 141,377 $ 273,547
========= =========
Ratio of earnings to fixed charges (A)/(B)................ -- --
Deficiency of earnings available to cover fixed
charges.................................................. $(184,609) $(344,627)
========= =========
Preferred stock dividends (C)............................. $ 25,993 $ 49,788
========= =========
Ratio of earnings to fixed charges and preferred
Stock dividends (A)/(B+C)................................ -- --
Deficiency of earnings available to cover fixed
charges and preferred stock dividends................... $(210,602) $(394,415)
========= =========
</TABLE>
<PAGE>
Exhibit 23.1
------------
ACCOUNTANTS' CONSENT
--------------------
The Board of Directors
Cablevision Systems Corporation:
We consent to the incorporation by reference in the registration
statement on Form S-4 of Cablevision Systems Corporation of our report dated
March 10, 1995, relating to the consolidated balance sheets of Cablevision
Systems Corporation and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' deficiency and
cash flows for each of the years in the three-year period ended December 31,
1994, and the related schedule, which report appears in the December 31, 1994
annual report on Form 10-K of Cablevision Systems Corporation, and to the
references to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Jericho, New York
October 24, 1995
<PAGE>
ACCOUNTANTS' CONSENT
--------------------
The Board of Directors
A-R Cable Services, Inc.:
We consent to the incorporation by reference in the registration
statement on Form S-4 of Cablevision Systems Corporation of our report dated
March 10, 1995, relating to the consolidated balance sheets of A-R Cable
Services, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' deficiency and cash
flows for each of the years in the three-year period ended December 31, 1994,
which report appears as an exhibit in the December 31, 1994 annual report on
Form 10-K of Cablevision Systems Corporation, and to the reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Jericho, New York
October 24, 1995
<PAGE>
ACCOUNTANTS' CONSENT
--------------------
The General Partners
Cablevision of Boston Limited Partnership:
We consent to the incorporation by reference in the registration
statement on Form S-4 of Cablevision Systems Corporation of our report dated
March 10, 1995, except as to Note 11 which is as of April 14, 1995, relating to
the consolidated balance sheets of Cablevision of Boston Limited Partnership and
consolidated company as of December 31, 1994 and 1993, and the related
consolidated statements of operations, partners' deficiency and cash flows
for each of the years in the three-year period ended December 31, 1994, which
report appears in the registration statement on Form S-4 (File No. 33-62717), as
amended, of Cablevision Systems Corporation, and to the reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Jericho, New York
October 24, 1995
<PAGE>
ACCOUNTANTS' CONSENT
--------------------
The Partners
American Movie Classics Company:
We consent to the incorporation by reference in the registration
statement on Form S-4 of Cablevision Systems Corporation of our report dated
March 4, 1994, relating to the balance sheets of American Movie Classics Company
as of December 31, 1993 and 1992, and the related consolidated statements of
operations, partners' capital (deficiency) and cash flows for each of the years
in the three-year period ended December 31, 1993, which report appears in the
registration statement on Form S-4 (File No. 33-62717), as amended, of
Cablevision Systems Corporation, and to the reference to our firm under the
heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
KPMG Peat Marwick LLP
Jericho, New York
October 24, 1995
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the Registration Statement, on Form S-4, of Cablevision
Systems Corporation of our report dated April 28, 1994 (June 3, 1994 as to Note
9) relating to the financial statements of Monmouth Cablevision Associates,
L.P., of our report dated April 28, 1994 (June 3, 1994 as to Note 8) relating to
the financial statements of Riverview Cablevision Associates, L.P. and of our
report dated April 28, 1994 (June 3, 1994 as to Note 8) relating to the
financial statements of Framingham Cablevision Associates, Limited Partnership,
each incorporated in this Registration Statement by reference to the Consent
Solicitation Statement/Prospectus, Form S-4 No. 33-62717 of Cablevision Systems
Corporation.
We also consent to the references to us under the heading "Experts" in such
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
October 25, 1995
<PAGE>
EXHIBIT 25
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CABLEVISION SYSTEMS CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 11-2776686
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Media Crossways
Woodbury, New York 11797
(Address of principal executive offices) (Zip code)
______________________
11 3/4% Senior Subordinated Debentures due 2007
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
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<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 20th day of October, 1995.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------
Name: Walter N. Gitlin
Title: Vice President
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<PAGE>
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1995,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 3,025,419
Interest-bearing balances............. 881,413
Securities:
Held-to-maturity securities........... 1,242,368
Available-for-sale securities......... 1,774,079
Federal funds sold in domestic
offices of the bank................... 5,503,445
Securities purchased under agree-
ments to resell....................... 200,634
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ................. 26,599,533
LESS: Allowance for loan and
lease losses ........... 516,283
Loans and leases, net of unearned
income and allowance 26,083,250
Assets held in trading accounts......... 1,455,639
Premises and fixed assets (including
capitalized leases)................... 612,547
Other real estate owned................. 79,667
Investments in unconsolidated
subsidiaries and associated
companies............................. 198,737
Customers' liability to this bank on
acceptances outstanding............... 1,111,464
Intangible assets....................... 105,263
Other assets............................ 1,237,264
-----------
Total assets............................ $43,511,189
===========
LIABILITIES
Deposits:
In domestic offices................... $19,233,885
Noninterest-bearing ....... 7,677,954
Interest-bearing .......... 11,555,931
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 12,641,676
Noninterest-bearing ....... 72,479
Interest-bearing .......... 12,569,197
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased............... 1,747,659
Securities sold under agreements
to repurchase....................... 73,553
Demand notes issued to the U.S.
Treasury.............................. 300,000
Trading liabilities..................... 738,317
Other borrowed money:
With original maturity of one year
or less............................. 1,586,443
With original maturity of more than
one year............................ 220,877
Bank's liability on acceptances exe-
cuted and outstanding................. 1,113,102
Subordinated notes and debentures....... 1,053,860
Other liabilities....................... 1,489,252
-----------
Total liabilities....................... 40,198,624
-----------
EQUITY CAPITAL
Common stock............................ 942,284
Surplus................................. 525,666
Undivided profits and capital
reserves.............................. 1,849,221
Net unrealized holding gains
(losses) on available-for-sale
securities............................ ( 662)
Cumulative foreign currency transla-
tion adjustments...................... ( 3,944)
-----------
Total equity capital.................... 3,312,565
-----------
Total liabilities and equity
capital ........................... $43,511,189
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Samuel F. Chevalier )
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