<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 1, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CABLEVISION SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2776686
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION 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)
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ROBERT S. LEMLE
SENIOR 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 JONATHAN JEWETT
SULLIVAN & CROMWELL SHEARMAN & STERLING
125 BROAD STREET 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10022
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AS
DETERMINED IN LIGHT OF MARKET CONDITIONS.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities(3)..... 100%
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Preferred Stock (3).... --
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Class A Common
Stock(3).............. $ 1,000,000,000(4) -- $ 1,000,000,000(4)(5) $344,828
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Depositary Shares(6)... --
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Warrants(7)............ --
</TABLE>
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(1) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(2) Estimated for the sole purpose of computing the registration fee in
accordance with Rule 457(o).
(3) Also includes such indeterminate amounts of Debt Securities and Preferred
Stock and indeterminate number of shares of Class A Common Stock as may be
issued upon conversion of or exchange for any other Debt Securities or
Preferred Stock that provide for conversion or exchange into other
Securities.
(4) Such amount represents the principal amount of any Debt Securities issued
at their principal amount, the issue price rather than the principal
amount of any Debt Securities issued at an original issue discount, the
liquidation preference of any Preferred Stock, the amount computed
pursuant to Rule 457(c) for any Class A Common Stock, the issue price of
any Warrants and the exercise price of any Securities issuable upon the
exercise of Warrants.
(5) No separate consideration will be received for the Debt Securities,
Preferred Stock, Class A Common Stock or the Depositary Shares issuable
upon conversion of or in exchange for Debt Securities, Preferred Stock or
Depositary Shares.
(6) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In the event
the Registrant elects to offer to the public fractional interests in
shares of the Preferred Stock registered hereunder, Depositary Receipts
will be distributed to those persons purchasing such fractional interests
and the shares of Preferred Stock will be issued to the Depositary under
the Deposit Agreement. No separate consideration will be received for the
Depositary Shares.
(7) Warrants may be sold separately or with Debt Securities, Preferred Stock
or Class A Common Stock.
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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.
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<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 SEPTEMBER 1, 1995
PROSPECTUS
[LOGO]
CABLEVISION SYSTEMS CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
CLASS A COMMON STOCK AND WARRANTS
Cablevision Systems Corporation (the "Company") may from time to time offer,
together or separately, its (i) debt securities (the "Debt Securities") which
may be either senior debt securities (the "Senior Debt Securities") or
subordinated debt securities (the "Subordinated Debt Securities"), (ii) shares
of its preferred stock, $.01 par value (the "Preferred Stock"), which may be
issued in the form of Depositary Shares evidenced by Depositary Receipts, (iii)
shares of its Class A common stock, par value $.01 per share (the "Class A
Common Stock"), and (iv) warrants to purchase securities of the Company as
shall be designated by the Company at the time of the offering (the "Warrants")
in amounts, at prices and terms to be determined at the time of offering. The
Debt Securities, Preferred Stock, Class A Common Stock and Warrants are
collectively called the "Securities".
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $ aggregate public offering
price (or its equivalent (based on the applicable exchange rate at the time of
sale) in one or more foreign currencies, currency units or composite currencies
as shall be designated by the Company). Certain specific terms of the
particular Securities in respect of which this Prospectus is being delivered
are set forth in the accompanying Prospectus Supplement (the "Prospectus
Supplement"), including, where applicable, in the case of Debt Securities, the
specific title, aggregate principal amount, the denomination, whether such Debt
Securities are secured or unsecured obligations, maturity, premium, if any, the
interest rate (which may be fixed, floating or adjustable), the time and method
of calculating payment of interest, if any, the place or places where principal
of (and premium, if any) and interest, if any, on such Debt Securities will be
payable, the currency in which principal of (and premium, if any) and interest,
if any, on such Debt Securities will be payable, any terms of redemption at the
option of the Company or the holder, any sinking fund provisions, terms for any
conversion or exchange into other Securities, the initial public offering price
and other special terms, in the case of Preferred Stock, the specific title,
the aggregate amount, any dividend (including the method of calculating payment
of dividends), liquidation, redemption, voting and other rights, any terms for
any conversion or exchange into other Securities, the initial public offering
price and other special terms, and, in the case of Warrants, the duration, the
purchase price, the exercise price and detachability of, and Securities to be
received upon exercise of, such Warrants. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities. The
Company's Class A Common Stock is listed on the American Stock Exchange under
the trading symbol "CVC". Any Class A Common Stock sold pursuant to a
Prospectus Supplement will be listed on such exchange, subject to official
notice of issuance.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Debt of the Company.
The Prospectus Supplement will contain information concerning U.S. federal
income tax considerations, if applicable to the Securities offered.
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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 Securities will be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. If
agents of the Company or any dealers or underwriters are involved in the sale
of the Securities in respect of which this Prospectus is being delivered, the
names of such agents, dealers or underwriters and any applicable commissions or
discounts are set forth in or may be calculated from the Prospectus Supplement
with respect to such Securities.
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The date of this Prospectus is , 1995.
<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, Suite 1300, 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.
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 quarters
ended March 31 and June 30, 1995 (each, a "Form 10-Q" and, collectively,
the "Form 10-Qs");
(c) the Company's Current Report on Form 8-K filed September 1, 1995 (the
"Form 8-K"); 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.
Any statement contained herein or in any document 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.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of any such person, a copy of any or all of the information
incorporated herein by reference other than exhibits to such information
(unless such exhibits are specifically incorporated by reference into such
information). The Company's principal executive offices are located at One
Media Crossways, Woodbury, New York 11797, and its telephone number is (516)
364-8450. Requests for such copies should be directed to the Secretary of the
Company at its executive offices.
As used herein, unless the context 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.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
THE COMPANY
The Company is one of the largest operators of cable television systems in
the United States, with approximately 2,753,000 subscribers (including 91,000
subscribers in the Cablevision of Chicago system that was sold on August 4,
1995, as discussed below) 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. The Company was formed in 1985 to effect a reorganization of its
predecessors.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable television 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.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow Programming
Holdings, Inc. ("Rainbow Programming"), its wholly-owned subsidiary, and
through subsidiaries of Rainbow Programming in partnership with certain
unaffiliated entities, including National Broadcasting Company, Inc. ("NBC")
and Liberty Media Corporation. Rainbow Programming's businesses include eight
regional SportsChannel services, four national entertainment services
(American Movie Classics Company, Bravo Network, MuchMusic and the Independent
Film Channel), News 12 Long Island (a regional news service serving Long
Island) and the national backdrop sports services of Prime SportsChannel
Networks. Rainbow Programming also owns an interest in Madison Square Garden
Corporation.
ADVERTISING SERVICES
Rainbow Advertising Sales Corporation sells advertising time to national,
regional and local advertisers on behalf of the Company's cable television
systems and the SportsChannel and News 12 Long Island programming services, as
well as on behalf of unaffiliated cable television systems.
RISK FACTORS
Purchase of the Securities offered hereby 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. Additional risk factors may be set forth
in the accompanying Prospectus Supplement.
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 aggregated
approximately $3.3 billion at June 30, 1995 ($3.4 billion on a pro forma basis
after giving effect to the acquisition by the Company of Cablevision of Boston
Limited Partnership ("Cablevision of Boston")) with varying maturities to
2013, 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 incurred approximately $95.5
3
<PAGE>
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.
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, the cost of completion
of the Cablevision of New York City ("Cablevision of NYC") system, expected
capital expenditures and additional investments in the Company's programming
operations, including the approximately $95.5 million payment in connection
with the acquisition of NBC's interests in SportsChannel (New York) Associates
and Rainbow News 12 Company. 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".
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 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. 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. 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 will
recognize 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 weekly cable television guide which is 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
4
<PAGE>
$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 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 Mr. Dolan's interest in Cablevision of NYC, which was
consummated as described therein in July 1992.
Programming and Other Capital Commitments. 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. Rainbow Programming also had a significant commitment in
respect of its venture with NBC relating to the 1992 Summer Olympics which
resulted in a payment by the Company of $50 million in January 1993. See Note
8 of Notes to Consolidated Financial Statements for a discussion of these and
other commitments and contingencies. 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 will need to invest significant resources to complete
the construction of the Cablevision of NYC system and to fund annual payments
to Mr. Dolan. 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".
Voting Control by Majority Stockholder; Disparate Voting Rights. Charles F.
Dolan beneficially owned, as of July 31, 1995, 340,200 shares or 2.8% of the
Company's outstanding Class A Common Stock and 2,347,494 shares or 20.1% 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 11.3% of the total number of shares
of both classes of Common Stock and 20.9% 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 July 31, 1995, an additional 500,000 shares of Class A Common
Stock or 4.1% of the Class A Common Stock and 9,326,928 shares of the Class B
Common Stock, or 76.3% of the Class B Common Stock and 72.8% 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 and the approval of fundamental corporate
transactions, including mergers. In 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.
5
<PAGE>
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. The Company
currently is not in violation of any covenant under the Credit Agreement or
such other debt instruments. See "Management's Discussion and Analysis--
Liquidity and Capital Resources".
Conflicts of Interest. Mr. 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 would 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 July 31, 1995, 12,119,680 shares of
Class A Common Stock were outstanding. The Company has granted to each of Mr.
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 11,673,922 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
possible 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's $100 million Series E Redeemable Exchangeable Convertible
Preferred Stock (the "Series E Preferred Stock") is convertible into shares of
Class A Common Stock in certain circumstances. In certain circumstances, each
such share is convertible into shares of Class A Common Stock based upon the
then current market price of Class A Common Stock. Based on the market value
of Class A Common Stock on the 20 trading days ending August 31, 1995,
approximately 1,570,000 shares of Class A Common Stock would be issuable upon
conversion of the Series E Preferred Stock. In connection with the issuance of
such Series E Preferred Stock, the Company granted registration rights to the
holder thereof with respect to the Class A Common Stock issuable upon
conversion of the Series E Preferred Stock. See "Description of Capital
Stock--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 July 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 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.
Risk Related to Cable 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 represents 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. 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
6
<PAGE>
and the House of Representatives have passed telecommunications bills, the
Company cannot predict whether any legislation ultimately will be enacted into
law or what form any such final legislation will take. See "Business--Cable
Television Operations--Competition" and "Business--Cable Television
Operations--Regulation" in the Form 10-K.
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. Three DBS systems are now operational in the United States. 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. 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, recently upheld
on appeal by a federal 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 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 a smaller market,
under certain circumstances. The Company cannot predict whether any
legislation ultimately will be enacted into law or what form any such final
legislation will 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 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.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Securities will be added to
the Company's general funds and used for general corporate purposes, including
the repayment of indebtedness.
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<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratio of earnings to fixed
charges and ratio of earnings to combined fixed charges and preferred stock
dividends (a) for each of 1994, 1993, 1992, 1991 and 1990 and for the six
months ended June 30, 1995 on an historical basis and (b) for 1994 and the six
months ended June 30, 1995 on the pro forma basis set forth in the Company's
Condensed Pro Forma Consolidated Financial Statements included in the Form 8-
K.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
-------------------- -------------------- ---- ---- ---- ----
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges.......... -- -- -- -- -- -- -- --
=== === === === === === === ===
Ratio of earnings to
fixed charges and
preferred stock
dividends.............. -- -- -- -- -- -- -- --
=== === === === === === === ===
</TABLE>
For purposes of computing such ratios, earnings consist of income before
income taxes and cumulative effect of accounting change plus fixed charges net
of interest capitalized, and fixed charges consist of interest expense,
interest capitalized, and the portion of rental expense attributable to
interest.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any
Prospectus Supplement or Prospectus Supplements will be described therein. The
Senior Debt Securities will be issued under the Senior Indenture (the "Senior
Indenture"), between the Company and the trustee named in the applicable
Prospectus Supplement (the "Senior Trustee") prior to the issuance of the
Senior Debt Securities. The Subordinated Debt Securities will be issued under
the Subordinated Indenture (the "Subordinated Indenture"), between the Company
and the trustee named in the applicable Prospectus Supplement (the
"Subordinated Trustee") prior to the issuance of the Subordinated Debt
Securities. The Senior Indenture and the Subordinated Indenture are referred
to herein individually as the "Indenture" and collectively as the
"Indentures", and the Senior Trustee and the Subordinated Trustee are referred
to herein individually as the "Trustee" and collectively as the "Trustees".
The Indentures are subject to and are governed by the Trust Indenture Act of
1939, as amended.
The statements herein relating to the Debt Securities and the Indentures are
summaries and are subject to the detailed provisions of the Indentures. Where
no distinction is made between the Senior Debt Securities and the Subordinated
Debt Securities or between the Senior Indenture and the Subordinated
Indenture, such summaries refer to any Debt Securities and either Indenture.
The following summaries of certain provisions of the Indentures do not purport
to be complete, and where reference is made to particular provisions of the
Indentures, 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 and with respect to any
particular Debt Securities, to the description thereof in the Prospectus
Supplement related thereto. The definitions of certain capitalized terms used
in the following summary are set forth below under "Certain Definitions".
8
<PAGE>
GENERAL
The Debt Securities will be general unsecured obligations of the Company.
The Indentures do not limit the aggregate amount of Debt Securities which may
be issued thereunder, and Debt Securities may be issued thereunder from time
to time in separate series up to the aggregate amount from time to time
authorized by the Company for each series. Unless otherwise specified in the
Prospectus Supplement, the Senior Debt Securities when issued will be
unsecured and unsubordinated obligations of the Company and will rank equally
and ratably with all other unsecured and unsubordinated indebtedness of the
Company. The Subordinated Debt Securities when issued will be subordinated in
right of payment to the prior payment in full of all Senior Debt (as defined)
of the Company as described under "Subordination of Subordinated Debt
Securities" and in the Prospectus Supplement applicable to an offering of
Subordinated Debt Securities.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the series of Debt Securities in respect of which this
Prospectus is being delivered: (1) the title of such Debt Securities; (2) any
limit on the aggregate principal amount of such Debt Securities; (3) the
person to whom any interest on any Debt Security of the series shall be
payable if other than the person in whose name the Debt Security is registered
on the regular record date; (4) the date or dates on which such Debt
Securities will mature; (5) the rate or rates of interest, if any, or the
method of calculation thereof, which such Debt Securities will bear, the date
or dates from which any such interest will accrue, the interest payment dates
on which any such interest on such Debt Securities will be payable and the
regular record date for any interest payable on any interest payment date; (6)
the place or places where the principal of, premium, if any, and interest on
such Debt Securities will be payable; (7) the period or periods within which,
the events upon the occurrence of which, and the price or prices at which,
such Debt Securities may, pursuant to any optional or mandatory provisions, be
redeemed or purchased, in whole or in part, by the Company and any terms and
conditions relevant thereto; (8) the obligations of the Company, if any, to
redeem or repurchase such Debt Securities at the option of the Holders; (9)
the denominations in which any such Debt Securities will be issuable, if other
than denominations of $1,000 and any integral multiple thereof; (10) any index
or formula used to determine the amount of payments of principal of and any
premium and interest on such Debt Securities; (11) the currency, currencies or
currency unit or units of payment of principal of and any premium and interest
on such Debt Securities if other than U.S. dollars; (12) if the principal of,
or premium, if any, or interest on such Debt Securities is to be payable, at
the election of the Company or a holder thereof, in one or more currencies or
currency units other than that or those in which such Debt Securities are
stated to be payable, the currency, currencies or currency units in which
payment of the principal of and any premium and interest on Debt Securities of
such series as to which such election is made shall be payable, and the
periods within which and the terms and conditions upon which such election is
to be made; (13) if other than the principal amount thereof, the portion of
the principal amount of such Debt Securities of the series which will be
payable upon acceleration of the maturity thereof; (14) if the principal
amount of any Debt Securities which will be payable at the maturity thereof
will not be determinable as of any date prior to such maturity, the amount
which will be deemed to be the outstanding principal amount of such Debt
Securities; (15) the applicability of any provisions described under
"Defeasance"; (16) whether any of such Debt Securities are to be issuable in
permanent global form ("Global Security") and, if so, the terms and
conditions, if any, upon which interests in such Securities in global form may
be exchanged, in whole or in part, for the individual Debt Securities
represented thereby; (17) the applicability of, and modifications to, any
provisions described under "Event of Default" and any additional Event of
Default applicable thereto; (18) any covenants applicable to such Debt
Securities in addition to, or in lieu of, the covenants described under "--
Certain Covenants of the Company"; (19) the terms and conditions, if any,
pursuant to which the Debt Securities are convertible or exchangeable into
Class A Common Stock or other securities; (20) whether such Debt Securities
are secured; and (21) any other terms of such Debt Securities not inconsistent
with the provisions of the Indentures. Debt Securities may also be issued
under the Indentures upon the exercise of Debt Warrants. (Section 301) See
"Description of Warrants--Debt Warrants".
Debt Securities may be issued at a discount from their principal amount.
United States Federal income tax considerations and other special
considerations applicable to any such original issue discount Debt Securities
will be described in the applicable Prospectus Supplement.
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<PAGE>
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax considerations, specific terms
and other information with respect to such issue of Debt Securities will be
set forth in the applicable Prospectus Supplement.
The Indentures do not contain any provisions that limit the ability of the
Company to incur indebtedness or that afford Holders of the Debt Securities
protection in the event of a highly leveraged or similar transaction involving
the Company, other than as described below under "Certain Covenants of the
Company--Limitation on Indebtedness".
CONVERSION OR EXCHANGE OF DEBT SECURITIES
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Debt Securities, such series will be convertible or
exchangeable into Class A Common Stock or other securities on the terms and
conditions set forth therein. Such terms shall include provisions as to
whether conversion is mandatory, at the option of the holder or at the option
of the Company, and may include provisions pursuant to which the number of
shares of Class A Common Stock or other securities of the Company to be
received by the holders of Debt Securities would be calculated according to
the market price of Class A Common Stock or other securities of the Company as
of a time stated in the Prospectus Supplement.
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, the Debt
Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof. (Section 302) Unless otherwise indicated
in the applicable Prospectus Supplement, payment of principal, premium, if
any, and interest on the Debt Securities will be payable, and the exchange,
conversion and transfer of Debt Securities will be registerable, at the office
or agency of the Company maintained for such purposes and at any other office
or agency maintained for such purpose. (Sections 301, 305 and 1002) No service
charge will be made for any registration of transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge imposed in connection therewith. (Section
305)
All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become
due and payable may be repaid to the Company and thereafter the Holder of such
Debt Security may look only to the Company for payment thereof. (Section 1003)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary ("Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such a case, one or more Global
Securities will be issued in a denomination or aggregate denomination equal to
the portion of the aggregate principal amount of Outstanding Debt Securities
of the series to be represented by such Global Security or Securities. Unless
and until it is exchanged in whole or in part for Debt Securities in
registered form, a Global Security may not be registered for transfer or
exchange except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
nominee to a successor Depositary or a nominee of such successor Depositary
and except in the circumstances described in the applicable Prospectus
Supplement. (Sections 204 and 305)
10
<PAGE>
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that
the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on
behalf of the Depositary for such Global Security, the Depositary will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Global Security to the
accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interest in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of such ownership
interests within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
Debt Securities will be issued in fully registered, certificated form
("Definitive Securities") to holders or their nominees, rather than to the
Depositary or its nominee, only if (i) the Depositary advises the applicable
Trustee in writing that the Depositary is no longer willing or able to
discharge properly its responsibilities as depository with respect to such
Debt Securities and it is unable to locate a qualified successor, (ii) the
Company, at its option, elects to terminate the book-entry system or (iii)
after the occurrence of an Event of Default with respect to such Debt
Securities, a holder of Debt Securities advises the applicable Trustee in
writing that it wishes to receive a Definitive Security.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all applicable
holders through the Depositary and its Participants of the availability of
Definitive Securities. Upon surrender by the Depositary of the definitive
certificates representing the corresponding Debt Securities and receipt of
instructions for re-registration, the applicable Trustee will reissue such
Debt Securities as Definitive Securities to such holders.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Securities
represented by such Global Security for all purposes under the applicable
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not
be considered the holders thereof for any purposes under the applicable
Indenture. (Sections 204 and 305) Accordingly, each Person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such Person is not a participant, on the procedures of the participant
through which such Person owns its interest, to exercise any rights of a
holder under the applicable Indenture. The Company understands that under
existing industry practices, if the Company requests any action of holders or
an owner of a beneficial interest in such Global Security desires to give any
notice or take any action a holder is entitled to give or take under the
applicable Indenture, the Depositary would authorize the participants to give
such notice or take such action, and participants would authorize beneficial
owners owning through such participants to give such notice or take such
action or would otherwise act upon the instructions of beneficial owners
owning through them.
11
<PAGE>
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN DEFINITIONS
Unless otherwise specified in the applicable Prospectus Supplement, the
following definitions are applicable to one or both of the Indentures relating
to the Debt Securities. Reference is made to the applicable Indenture for the
full definition of all such terms.
"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 this 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.
"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.
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<PAGE>
"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, (ii) 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
Debt Securities.
"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
acquisition of Cablevision of NYC (the "Cablevision of NYC 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
13
<PAGE>
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 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.
"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
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 the 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.
"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
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 an Investment in RPH, after the
date of the applicable Indenture with respect to the relevant series of Debt
Securities issued thereunder 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.
"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, defense 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 Debt Securities of such series.
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.
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"Restricted Subsidiary" means any subsidiary of the Company, whether
existing on the date of the applicable Indenture with respect to the relevant
series of Debt Securities 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, with respect to Subordinated Debt Securities of
a series, 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 Subordinated Debt
Securities of such series, other Subordinated Debt Securities 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 Subordinated Debt Securities of
such series are intended to rank on a parity), whether outstanding on the date
of the applicable Subordinated Indenture with respect to the relevant series
of Subordinated Debt Securities issued thereunder 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 clause (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
of the Subordinated Debt Securities of any series. Notwithstanding anything to
the contrary contained in the 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 reasons 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.
"Unrestricted Subsidiary" means any subsidiary of the Company which is not a
Restricted Subsidiary.
CERTAIN COVENANTS OF THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement, the
following covenants contained in the Subordinated Indenture shall be
applicable with respect to any series of Subordinated Debt Securities:
Limitation on Indebtedness. The Subordinated 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
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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)
Limitation on Senior Subordinated Indebtedness. The Subordinated 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 Debt Securities of such
series 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 of the Debt Securities of such series
if it is not subordinate in right of payment to Senior Indebtedness at least
to the same extent as the Debt Securities of such series are subordinate to
Senior Indebtedness. (Section 1008)
Limitation on Restricted Payments. The Subordinated Indenture provides that,
so long as any of the Debt Securities of such series remain 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, 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
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 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 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
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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, 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)
Limitation on Investments in Unrestricted Subsidiaries and Affiliates. The
Subordinated Indenture provides that 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 9:1.
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 Subordinated 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)
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following are Events of Default under the Indentures with respect to Debt
Securities of any series (unless they are inapplicable to such series of Debt
Securities or they are specifically deleted in the supplemental indenture or
Board Resolution under which such series of Debt Securities is issued or has
been modified): (a) default for 30 days in payment of interest on any Debt
Security of such series; (b) default in payment of principal or premium, if
any, of any Debt Security of such series at maturity, upon acceleration,
redemption or otherwise; (c) default in the deposit of any sinking fund
payment when and as due in respect of any Debt Security of such series; (d)
failure to comply with any other covenant of 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 applicable Indenture; (e) 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 any 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; (f) 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
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(during which execution shall not be effectively stayed) of 60 days or as to
which an enforcement proceeding has been commenced by any creditor; (g)
certain events of bankruptcy, insolvency or reorganization; and (h) any other
Event of Default as may be specified for such series. (Section 501)
If an Event of Default (other than as specified in (g) above) shall occur
and be continuing under the Indenture applicable to any series of Debt
Securities, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of the outstanding Debt Securities of such series
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, premium, if any, and interest on the Debt
Securities of such series to be due and payable as provided in the applicable
Indenture. Upon a declaration of acceleration with respect to a series
outstanding under the applicable Indenture (or of all series, as the case may
be), 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 Debt Securities of any series is required for such
acceleration if an Event of Default specified in (g) above shall occur and be
continuing. The Holders of at least a majority in principal amount of the Debt
Securities of any series then outstanding may rescind an acceleration and its
consequences if (i) all existing Events of Default, other than the non-payment
of principal of, premium, if any, or interest on the Debt Securities of such
series 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 (e) 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
Debt Securities of such series 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 Debt Securities of any series outstanding
also have the right to waive certain past defaults under the Indentures.
(Section 513)
No Holder of Debt Securities of any series issued under the Indentures has
any right to institute any proceeding with respect to such 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 applicable
Indenture, (ii) with respect to certain Events of Default, the Holders of at
least 25% in principal amount of the outstanding Debt Securities of such
series issued thereunder have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee under the
applicable Indenture, and (iii) with respect to certain Events of Default, the
Trustee has not received from the Holders of a majority in principal amount of
the outstanding Debt Securities of such series 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 a Debt Security of a
series for the enforcement of payment of the principal of or premium, if any,
or interest on such Debt Security on or after the respective due dates
expressed in such Debt Security. (Section 508)
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indentures 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 applicable 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 such 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 Debt Securities of any series 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 of power conferred on the Trustee
under the applicable 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 Indentures, and as
to any default in such performance. (Section 1013)
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SATISFACTION AND DISCHARGE OF THE INDENTURES AND THE DEBT SECURITIES
The Indentures will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Debt Securities of any
series outstanding under the applicable Indenture, as expressly provided for
therein) as to such series when either (i) all Debt Securities of such series
outstanding thereunder theretofore authenticated and delivered have been
delivered to the Trustee for cancellation and the Company has paid all sums
payable by it under the Indentures or (ii) all Debt Securities of such series
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 the Debt Securities of such
series not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of deposit (if the
Debt Securities of such series 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 Indentures. (Section 401)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures or the Debt Securities of any
series may be made by the Company and the applicable Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of
the outstanding Debt Securities at the time outstanding of each series to be
affected under the applicable Indenture; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Debt Security of such series, (i) change the stated maturity of
the principal of, or premium, if any, or any installment of interest on, any
Debt Securities of such series, (ii) reduce the principal amount of, or the
premium, if any, or interest on, the Debt Securities of such series, (iii)
change the coin or currency in which any Debt Securities of such series 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 Debt
Securities of such series, (v) reduce the percentage in principal amount of
outstanding Debt Securities of such series necessary to waive compliance with
certain provisions of the 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 Debt Securities of such series required
for such actions or to provide that certain other provisions of the applicable
Indenture cannot be modified or waived without the consent of the Holder of
each Debt Security of such series affected thereby, or (vii) modify any of the
provisions of the applicable Indenture relating to the subordination of the
Debt Securities of such series in a manner adverse to the Holders thereof.
(Sections 901 and 902)
The Holders of a majority in aggregate principal amount of the Debt
Securities of any series then outstanding under any Indenture may waive
compliance with certain restrictive covenants and provisions of such Indenture
with respect to such series. (Section 1014)
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 Outstanding Debt
Securities and the respective Indenture; (ii) immediately before and
immediately after such transaction, 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)
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DEFEASANCE
If the Prospectus Supplement relating to the offered Debt Securities (the
"Offered Debt Securities") so provides, the Company at its option at any time
may terminate all of its obligations with respect to the Debt Securities of
any series ("defeasance"), except for certain obligations, including those
regarding the Defeasance Trust (as defined below) and obligations to register
the transfer or exchange of the Debt Securities of such series, to replace
mutilated, destroyed, lost or stolen Debt Securities of such series and to
maintain agencies in respect of the Debt Securities of any series. The Company
may also at any time terminate its obligations under the covenants set forth
in the Indentures, which are described under "--Covenants of the Company", and
any omission to comply with such obligations shall not constitute a Default or
an Event of Default with respect to the Debt Securities of such series
("covenant defeasance"). (Sections 1402, 1403 and 1404)
In order to exercise either defeasance or covenant defeasance with respect
to Debt Securities of a series, (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
Debt Securities of such series 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 "Subordinated
Debt Securities" below, would prevent the Company from making payments of
principal of and premium, if any, and interest on the Debt Securities of such
series 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)
SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities of any
series.
The indebtedness represented by the Subordinated Debt Securities is
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 Subordinated Debt
Securities or before any acquisition of Subordinated Debt Securities 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, premium, if any, or interest on the Subordinated Debt Securities (other
than payments made in Junior Securities) or to acquire any of the Subordinated
Debt Securities or on account of the redemption provisions of the Subordinated
Debt Securities (except mandatory redemption payments made, in accordance with
the terms of the Subordinated Debt Securities, in Subordinated Debt Securities
acquired by the Company before the Default Notice; 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
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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 Subordinated 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 premium, if any,
or interest on the Subordinated Debt Securities. (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 Subordinated Debt
Securities (or the 10 3/4% Debentures due 2004, the 9 7/8% Debentures due 2013
and the 9 7/8% Debentures due 2023) may recover more, ratably, than the
Holders of the Subordinated Debt Securities.
A Holder of Subordinated Debt Securities by his acceptance of Subordinated
Debt Securities 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
Subordinated Indenture and appoints the Trustee his attorney-in-fact for such
purpose. (Section 1209)
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 112)
REGARDING THE TRUSTEES
The Indentures contain certain limitations on the right of the respective
Trustees, should they become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize for their own accounts on certain
property received in respect of any such claim as security or otherwise.
(Section 613) The Trustees will be permitted to engage in certain other
transactions; however, if they acquire any conflicting interest and there is a
default under the Debt Securities, they must eliminate such conflict or
resign. (Section 608)
Any Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect
to such series. (Section 601). In the event that two or more persons are
acting as Trustee with respect to different series of Debt Securities, each
such Trustee shall be a Trustee of a trust under the related Indenture
separate and apart from the trust administered by any other such Trustee
(Section 611), and any action described herein to be taken by the "Trustee"
may then be taken by each such Trustee with respect to, and only with respect
to, the one or more series of Debt Securities for which it is Trustee.
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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.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
All shares of common stock currently outstanding are fully paid and non-
assessable, not subject to redemption and without 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.
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 will
vote as a separate class and be 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 will be 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, will be 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 the 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 A Common Stock entitled to one vote per share and the holder 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 Restated Certificate of Incorporation which would
affect adversely the powers, preferences or rights of the Class B Common
Stock. The Company's Restated 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
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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). On June 14,
1994, stockholders approved an amendment to the Company's Restated Certificate
of Incorporation to permit the distribution of shares of capital stock of any
subsidiary to common stockholders that 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 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 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.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series. 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, which will
be filed with the Commission in connection with the offering of such series.
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. The powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions, including dividend rights, voting rights, conversion rights,
terms of redemption and liquidation preferences, of the Preferred Stock of
each series will be fixed or designated by the Board of Directors pursuant to
a certificate of designations. The specific terms of a particular series of
Preferred Stock offered hereby will be described in a Prospectus Supplement
relating to such series and will include the following: (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
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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 of indebtedness of the Company or upon
the issue of 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 as
described below under "Description of Depositary Shares"; and (k) any other
preference and relative, participating, optional or other special rights or
qualifications, limitations or restrictions thereof.
The Preferred Stock will, when issued, be fully paid and nonassessable.
The transfer agent, registrar and dividend disbursement agent for a series
of Preferred Stock will be selected by the Company and will be described in
the applicable Prospectus Supplement. The registrar for shares of Preferred
Stock will send notices to stockholders of any meetings at which holders of
the Preferred Stock have the right to elect directors of the Company or to
vote on any other matter.
Designated Preferred Stock. The authorized preferred stock of the Company
consists of (1) 200,000 shares of Series B Cumulative Convertible 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 (the "Series E Preferred Stock"),
100,000 of which are outstanding at June 30, 1995 and (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 the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock are
hereinafter sometimes collectively referred to as the "Preferred Stock"). The
Series A Preferred Stock, $.01 par value, was cancelled by the Board of
Directors on February 2, 1988.
The holders of 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 at the time legally available 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 holders of the
Series E Preferred Stock and the Series F Preferred Stock are entitled, when
declared by the Board of Directors, to dividends at the time legally available
at the floating rate of LIBOR plus 2.50% payable prior and in preference to
any declaration of payment of any dividend on the common stock of the Company.
Dividends on the Series E Preferred Stock and Series F Preferred Stock are
payable, at the Company's option, either in cash or registered shares of Class
A Common Stock with a value equalling 105% of the required dividend. The right
to dividends on shares of the Preferred Stock are cumulative. In the event of
any liquidation, dissolution or winding up of the Company, the holders of
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock are entitled to receive a preferential amount equal to $100 for each
share of Series B Preferred Stock, 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 Preferred Stock to the date of final
distribution in preference to any such distribution to the holders of the
common stock
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of the Company. In the event of any liquidation, dissolution or winding up of
the Company, the holders of Series E Preferred Stock and Series F Preferred
Stock are entitled to receive a preferential amount equal to $1,000 for each
share of Series E Preferred Stock and Series F Preferred Stock held plus all
dividends (whether or not earned or declared) accrued and unpaid on such
shares of 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 of the 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 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.
The Company may, at its option, on not less than 30 days' nor more than 60
days' prior notice, redeem any or all of the shares of Series E Preferred
Stock or Series F Preferred Stock, at a redemption price, payable in cash,
equal to $1,000 per share plus all dividends (whether or not earned or
declared) accrued and unpaid on the shares of the Series E Preferred Stock or
Series F Preferred Stock to the date fixed for redemption.
During the Convertibility Period (as defined below), holders of shares of
Series E Preferred Stock may convert any or all such shares into shares of
Class A Common Stock by delivery of a written notice to the Company not less
than two Business Days prior to the proposed Conversion Date (as defined
below). The number of shares of Class A Common Stock to be issued upon
conversion of a share of Series E Preferred Stock on any date (each, a
"Conversion Date") is calculated by dividing $1,000 plus an amount equal to
all dividends (whether or not earned or declared) accrued or unpaid on any
shares of Series E Preferred Stock being converted
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(calculated as of the relevant Conversion Date) by 95% of the current market
value of the Company Class A Common Stock. "Convertibility Period" means the
period beginning on April 1, 1995; provided that the Company has the right to
suspend the conversion rights with respect to the shares of Series E Preferred
Stock from April 1, 1995 through March 31, 1997 as long as it is in compliance
with certain financial covenants and is current on dividend payments with
respect to such Preferred Stock. In addition, the holders of the Series E
Preferred Stock have the right to convert shares of Series E Preferred Stock
to shares of Class A Common Stock in connection with various change in control
transactions involving the Company and has the right to require conversion of
the Series E Preferred Stock to Class A Common Stock on any day that the
closing price of the Class A Common Stock is less than $40.00 per share
(subject to adjustment).
Upon five days' written notice to the Company, the holders of Series E
Preferred Stock, at any time and from time to time, may exchange each share of
the Series E Preferred Stock, in whole or in part, for shares of Series F
Preferred Stock. In addition, if the holders of not less than 51% of the
outstanding shares of Series E Preferred Stock provide the Company with notice
that they intend to sell to a broker not less than $50,000,000 aggregate
liquidation preference of the Series F Preferred Stock, then the holders
providing such notice may require all holders of Series E Preferred Stock to
exchange their shares for shares of Series F Preferred Stock. In certain
circumstances, the shares of Series E Preferred Stock may be exchanged for
shares of additional preferred stock.
The holders of Series E Preferred Stock and Series F Preferred Stock, except
as otherwise required under Delaware law and as set forth in the Certificate
of Designations related thereto, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company. In the event that the Company (a) fails to declare or pay dividends
on the Series E Preferred Stock or Series F Preferred Stock for four quarterly
dividend payment dates or (b) breaches or violates the covenant contained in
the Certificate of Designations related thereto, the number of directors
constituting the Board of Directors shall be increased to permit the holders
of the Series E Preferred Stock and Series F Preferred Stock to elect one
member of the Board of Directors. Holders of a majority of the issued and
outstanding shares of Series E Preferred Stock or Series F Preferred Stock,
voting as one class together with the shares of any other class of Preferred
Stock then entitled to elect directors, shall thereupon have the exclusive
right to elect one member of the Board of Directors at any annual or special
meeting of stockholders or at a special meeting of the holders of Series E
Preferred Stock, Series F Preferred Stock and such Preferred Stock called for
such purpose.
Upon redemption or conversion, shares of Preferred Stock shall be cancelled.
Holders of Preferred 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.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement and of the Depositary Shares and
Depositary Receipts (as those terms are defined below) does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
form of Deposit Agreement and form of Depositary Receipts which are filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
GENERAL
The Company may, at its option, elect to offer fractional shares, rather
than full shares, of any series of Preferred Stock. Each such fractional share
of Preferred Stock will be represented by a depositary share (collectively,
the "Depositary Shares") pursuant to the terms of a Deposit Agreement (the
"Deposit Agreement") among a bank or trust company selected by the Company
(the "Depositary") and all holders from time to time of depositary receipts
issued thereunder (the "Depositary Receipts"). The Depositary Shares will be
evidenced by Depositary Receipts. Subject to the terms of the Deposit
Agreement, each owner of a Depositary
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Share will be entitled, proportionately, to all the rights, preferences and
privileges of the fractional share of Preferred Stock represented thereby
(including dividend, voting and liquidation rights), and will be subject to
all of the limitations of the fractional share of Preferred Stock represented
thereby, which are either summarized above under "Description of Capital
Stock" or set forth in the Prospectus Supplement relating to such series of
Preferred Stock.
ISSUANCE OF DEPOSITARY RECEIPTS AND WITHDRAWAL OF PREFERRED STOCK FROM DEPOSIT
Immediately following the issuance by the Company of the shares of any
series of Preferred Stock to be represented by Depositary Shares, the Company
will deposit such shares of Preferred Stock with the Depositary, which will
then issue and deliver the Depositary Receipts to the Company. The Company
will, in turn, deliver the Depositary Receipts to the purchasers of the
Preferred Stock. Depositary Receipts will be issued evidencing only whole
Depositary Shares.
Upon surrender of Depositary Receipts at the Corporate Office (as defined in
the Deposit Agreement) of the Depositary (or such other office as the
Depositary may designate), the owner of the Depositary Shares evidenced
thereby is entitled at such office to certificates evidencing the number of
shares of Preferred Stock (but only in whole shares of Preferred Stock)
represented by such Depositary Receipts. If the Depositary Receipts delivered
by the holder evidence a number of Depositary Shares in excess of the number
of whole shares of Preferred Stock to be withdrawn, the Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares representing such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such series of the Preferred Stock held by the Depositary. The
redemption price per Depositary Share will be equal to the applicable fraction
of the redemption price per share payable with respect to such series of the
Preferred Stock. If less than all the Depositary Shares are to be redeemed,
the Depositary Shares to be redeemed will be selected by lot or pro rata.
After the date fixed for redemption (which will be the same date as the
redemption date for the Preferred Stock), the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of Preferred
Stock underlying such holder's
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Depositary Shares. The Depositary will endeavor, insofar as practicable, to
vote the number of shares of Preferred Stock underlying such Depositary Shares
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of
Preferred Stock to the extent the Depositary does not receive specific
instructions from the holders of Depositary Shares relating to such shares.
AMENDMENT OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which imposes
or increases any fees, taxes, or other changes upon holders of Depositary
Receipts (other than taxes and other governmental charges, fees, and other
expenses payable by such holders as stated under "Charges of Depositary"), or
which otherwise prejudices any substantial existing right of holders of
Depositary Receipts, will not take effect as to outstanding Depositary
Receipts until the expiration of 30 days after notice of such amendment has
been mailed to the record holders of outstanding Depositary Receipts. Every
holder of Depositary Receipts at the time any such amendment becomes effective
shall be deemed to consent and agree to such amendment and to be bound by the
Deposit Agreement.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
that arise solely from the existence of the depositary arrangements. The
Company will pay the charges of the Depositary in connection with the initial
deposit of the Preferred Stock and any redemption of the Preferred Stock.
Holders of Depositary Shares will pay all other transfer and other taxes and
governmental charges, and, in addition, such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the Company which the Company is required to furnish
to the holders of the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceedings in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Shares
or other persons believed to be competent and on documents believed to be
genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY; TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary will be appointed by the Company within 45 days after delivery of
the notice of resignation or removal. The Deposit Agreement may be terminated
at the direction of the Company or by the Depositary if a period of 45 days
shall have expired after the Depositary has delivered to the Company written
notice of its election to resign and a successor depositary shall not have
been appointed. Upon termination of the Deposit Agreement, the Depositary will
discontinue the transfer of Depositary Receipts, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notice of such termination) or perform any further acts under the
Deposit Agreement except that the Depositary will continue to collect
dividends and other distributions pertaining to the Preferred Stock, will sell
rights, preferences or privileges as provided in the Deposit Agreement
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and will continue to deliver Preferred Stock certificates together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges, or other property in exchange for Depositary Receipts
surrendered. At any time after the expiration of two years from the date of
termination, the Depositary may sell the Preferred Stock and hold the proceeds
of such sale, without interest, for the benefit of the holders of Receipts who
have not then surrendered their Receipts. After making such sale, the
Depositary will be discharged from all obligations under the Deposit Agreement
except to account for such proceeds. In the event the Deposit Agreement is
terminated, the Company will use its best efforts to list the underlying
shares of Preferred Stock on any stock exchange on which such Depositary
Shares were listed.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants") as well as other types of Warrants to purchase
Securities. Warrants may be issued independently or together with any
Securities and may be attached to or separate from such Securities. The
Warrants are to be issued under warrant agreements (each a "Warrant
Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Warrants being offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants, including
the following: (1) the title of such Debt Warrants; (2) the aggregate number
of such Debt Warrants; (3) the price or prices at which such Debt Warrants
will be issued; (4) the currency or currencies, including composite currencies
or currency units, in which the price of such Debt Warrants may be payable;
(5) the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, and the procedures
and conditions relating to the exercise of such Debt Warrants; (6) the
designation and terms of any related Debt Securities with which such Debt
Warrants are issued, and the number of such Debt Warrants issued with each
such Debt Security; (7) the currency or currencies, including composite
currencies or currency units, in which the principal of (or premium, if any),
or interest, if any, on the Debt Securities purchasable upon exercise of such
Debt Warrants will be payable; (8) the date, if any, on and after which such
Debt Warrants and the related Debt Securities will be separately transferable;
(9) the principal amount of Debt Securities purchasable upon exercise of each
Debt Warrant, and the price at which and the currency, including composite
currency or currency unit, in which such principal amount of Debt Securities
may be purchased upon such exercise; (10) the date on which the right to
exercise such Debt Warrants shall commence, and the date on which such right
shall expire; (11) the maximum or minimum number of such Debt Warrants which
may be exercised at any time; (12) a discussion of material federal income tax
considerations, if any; and (13) any other terms of such Debt Warrants and
terms, procedures and limitations relating to the exercise of such Debt
Warrants.
Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement. Prior to the exercise of their Debt Warrants,
holders of Debt Warrants will not have any of the rights of holders of the
Debt Securities purchasable upon such exercise and will not be entitled to
payments of principal of (or premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.
OTHER WARRANTS
The Company may issue other Warrants. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of
which this Prospectus if being delivered: (1) the title of such Warrants; (2)
the Securities (which may include Preferred Stock or Class A Common Stock) for
which such
29
<PAGE>
Warrants are exercisable; (3) the price or prices at which such Warrants will
be issued; (4) the currency or currencies, including composite currencies or
currency units, in which the price of such Warrants may be payable; (5) if
applicable, the designation and terms of the Preferred Stock or Class A Common
Stock with which such Warrants are issued, and the number of such Warrants
issued with each such share of Preferred Stock or Class A Common Stock; (6) if
applicable, the date on and after which such Warrants and the related
Preferred Stock or Class A Common Stock will be separately transferable; (7)
if applicable, a discussion of material federal income tax considerations; and
(8) any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount or number of shares of Securities at such exercise price as
shall in each case be set forth in, or be determinable as set forth in, the
Prospectus Supplement relating to the Warrants offered thereby. Warrants may
be exercised at any time up to the close of business on the expiration date
set forth in the Prospectus Supplement relating to the Warrants offered
thereby. After the close of business on the expiration date, unexercised
Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented
by such warrant certificate are exercised, a new warrant certificate will be
issued for the remaining Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter, selling group or agent involved in the
offer and sale of the Securities will be named in the related Prospectus
Supplement. The Company has reserved the right to sell the Securities directly
to investors on its own behalf in those jurisdictions where it is authorized
to do so.
Underwriters may offer and sell the Securities at a fixed price or prices
that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Company also may, from time to time, authorize dealers, acting as the
Company's agents, to offer and sell the Securities upon such terms and
conditions as set forth in the related Prospectus Supplement. In connection
with the sale of the Securities, underwriters may receive compensation from
the Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Securities for whom they may act as
agent. Underwriters may sell the Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed
from time to time) from the purchasers for whom they may act as agents.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the related Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution towards certain civil
liabilities, including any liabilities under the Securities Act.
30
<PAGE>
If so indicated in the related Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit agreements by
certain institutions to purchase the Securities from the Company at the public
offering price set forth in the related Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in a Prospectus Supplement. Each Contract will be for
an amount specified in the applicable Prospectus Supplement. Institutions,
with whom Contracts, when authorized, may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but will in
all cases be subject to the approval of the Company. Contracts will not be
subject to any conditions except that (i) the purchase by an institution of
the Securities covered by Contracts will not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which
such institution is subject and (ii) if the Securities are being sold to
Underwriters, the Company shall have sold to such Underwriters such amount
specified in the applicable Prospectus Supplement.
Any Securities issued hereunder (other than Class A Common Stock) will be
new issues of securities with no established trading market. Any underwriters
or agents to or through whom such Securities are sold by the Company for
public offering and sale may make a market in such Securities, but such
underwriters or agents will not be obligated to do so and may discontinue any
market at any time without notice. No assurance can be given as to the
liquidity of the trading market for any such Securities.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with, and perform services for, the Company and certain
of its affiliates in the ordinary course of business.
VALIDITY OF THE SECURITIES
The validity of any Securities issued hereunder will be passed upon for the
Company by Sullivan & Cromwell, New York, New York, counsel to the Company.
Unless otherwise specified in the applicable Prospectus Supplement, the
validity of any Securities issued hereunder will be passed upon for any
underwriters by Shearman & Sterling, 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 as experts in accounting and auditing.
31
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
It is expected that the following expenses (all of which will be paid by the
Company) will be incurred in connection with the registration and distribution
of the Securities:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $344,828
Blue Sky fees and expenses...................................... *
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... *
Printing and Engraving Expenses................................. *
Trustee's and Depositary's Fees and Expenses.................... *
Miscellaneous................................................... *
--------
Total....................................................... $ *
========
</TABLE>
* All of these expenses except the Securities and Exchange Commission filing
fee represent estimates only.
ITEM 15. 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 Company'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 Company 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
II-1
<PAGE>
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.
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 Company 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 Company
has also entered into an agreement with Charles F. Dolan ("Mr. Dolan"), the
Chairman of the Company, pursuant to which Mr. Dolan has agreed to guarantee
the Company'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 Company. 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 Company 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
Company's Certificate of Incorporation provides for such limitation of
liability.
II-2
<PAGE>
ITEM 16. EXHIBITS.
**1.1
--Form of Underwriting Agreement for Debt Securities
*1.2
--Form of Underwriting Agreement for Preferred Stock
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)
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)
4.1B
--Certificate of Designations for the Series E Redeemable Exchangeable
Convertible Preferred Stock (incorporated herein by reference to the
Company's Report on Form 10-K/A for the year ended December 31, 1993,
filed on April 13, 1994)
4.1C
--Certificate of Designations for the Series F Redeemable Preferred
Stock (incorporated herein by reference to the Company's Report on Form
10-K/A for the year ended December 31, 1993, filed on April 13, 1994)
4.2
--Amendment to By-laws 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, 1994)
4.3
--Form of Certificate for shares of Common Stock (incorporated herein by
reference to the Company's Registration Statement on Form S-1, dated
January 17, 1986, File No. 33-1936)
*4.4
--Form of Senior Indenture between the Company and the Senior Trustee
**4.5
--Form of Subordinated Indenture between the Company and the
Subordinated Trustee
*4.6
--Form of Deposit Agreement
*4.7
--Form of Depositary Receipt
*4.8
--Form of Warrant Agreement
*4.9
--Form of Warrant Certificate
*5.1
--Opinion of Robert S. Lemle, Executive Vice President and General
Counsel
12--Computation of Ratio of Deficiency of Earnings to Fixed Charges and
Fixed Charges and Preferred Stock Dividends
23.1
--Consent of Robert S. Lemle, Executive Vice President and General
Counsel (contained in Exhibit 5.1)
23.2
--Consent of KPMG Peat Marwick LLP
24--Powers of Attorney (included on pages II-5 to II-6)
*25.1
--Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of the Senior Trustee under the Senior Indenture
II-3
<PAGE>
**25.2
--Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of the Subordinated Trustee under the Subordinated Indenture
--------
* To be filed as an exhibit to a Current Report on Form 8-K subsequent to the
effectiveness of this Registration Statement, in accordance with Item
601(b)(1) of Regulation S-K.
** To be filed by amendment prior to the effectiveness of this Registration
Statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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.
(5) 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 provisions described
in Item 15 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.
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 OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE
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 1ST DAY OF SEPTEMBER, 1995.
Cablevision Systems Corporation
/s/ Charles F. Dolan
By: _________________________________
Name: Charles F. Dolan
Title: Chairman of the Board of
Directors and 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
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
SEPTEMBER 1, 1995.
SIGNATURE TITLE
/s/ Charles F. Dolan Chairman of the Board of Directors and
------------------------------------- Chief Executive Officer (Principal
CHARLES F. DOLAN Executive Officer)
/s/ Barry J. O'Leary Senior Vice President--Finance and
------------------------------------- Treasurer (Principal Financial
BARRY J. O'LEARY Officer)
/s/ Jerry Shaw Vice President and Controller
------------------------------------- (Principal Accounting Officer)
JERRY SHAW
/s/ William J. Bell Vice Chairman and Director
-------------------------------------
WILLIAM J. BELL
II-5
<PAGE>
SIGNATURE TITLE
/s/ Marc A. Lustgarten Vice Chairman and Director
-------------------------------------
MARC A. LUSTGARTEN
/s/ Robert S. Lemle Executive Vice President, General
------------------------------------- Counsel, Secretary and Director
ROBERT S. LEMLE
/s/ Sheila A. Mahony Vice President and Director
-------------------------------------
SHEILA A. MAHONY
Director and Chairman of the Executive
------------------------------------- Committee
JOHN TATTA
Director
-------------------------------------
JAMES DOLAN
/s/ Patrick F. Dolan Director
-------------------------------------
PATRICK F. DOLAN
Director
-------------------------------------
FRANCIS F. RANDOLPH, JR.
/s/ Daniel T. Sweeney Director
-------------------------------------
DANIEL T. SWEENEY
Director
-------------------------------------
CHARLES D. FERRIS
/s/ Richard H. Hochman Director
-------------------------------------
RICHARD H. HOCHMAN
Director
-------------------------------------
VICTOR ORISTANO
/s/ A. Jerrold Perenchio Director
-------------------------------------
A. JERROLD PERENCHIO
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE NO.
-------- --------
<C> <S> <C>
**1.1 --Form of Underwriting Agreement for Debt Securities......
*1.2 --Form of Underwriting Agreement for Preferred Stock......
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)......................
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).................
4.1B --Certificate of Designations for the Series E Redeemable
Exchangeable Convertible Preferred Stock (incorporated
herein by reference to the Company's Report on Form 10-
K/A for the year ended December 31, 1993, filed on April
13, 1994)................................................
4.1C --Certificate of Designations for the Series F Redeemable
Preferred Stock (incorporated herein by reference to the
Company's Report on Form 10-K/A for the year ended
December 31, 1993, filed on April 13, 1994)..............
4.2 --Amendment to By-laws 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, 1994).............
4.3 --Form of Certificate for shares of Common Stock
(incorporated herein by reference to the Company's
Registration Statement on Form S-1, dated January 17,
1986, File No. 33-1936)..................................
*4.4 --Form of Senior Indenture between the Company and the
Senior Trustee...........................................
**4.5 --Form of Subordinated Indenture between the Company and
the Subordinated Trustee.................................
*4.6 --Form of Deposit Agreement...............................
*4.7 --Form of Depositary Receipt..............................
*4.8 --Form of Warrant Agreement...............................
*4.9 --Form of Warrant Certificate.............................
*5.1 --Opinion of Robert S. Lemle, Executive Vice President and
General Counsel..........................................
12 --Computation of Ratio of Deficiency of Earnings to Fixed
Charges and Fixed Charges and Preferred Stock Dividends..
23.1 --Consent of Robert S. Lemle, Executive Vice President and
General Counsel (contained in Exhibit 5.1)...............
23.2 --Consent of KPMG Peat Marwick LLP........................
24 --Powers of Attorney (included on pages II-5 to II-6).....
*25.1 --Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Senior Trustee under the
Senior Indenture.........................................
**25.2 --Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Subordinated Trustee under
the Subordinated Indenture...............................
</TABLE>
--------
* To be filed as an exhibit to a Current Report on Form 8-K subsequent to the
effectiveness of this Registration Statement, in accordance with Item
601(b)(1) of Regulation S-K.
** To be filed by amendment prior to the effectiveness of this Registration
Statement.
<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.......................... $(201,033) $(365,030)
Add:
Fixed charges per (B) below.............................. 162,783 302,681
Amortization of previously capitalized interest.......... 37 148
Deduct:
Interest capitalized during period....................... -- --
--------- ---------
Earnings for computation purposes (A).................... $ (38,213) $ (62,201)
========= =========
Fixed Charges:
Interest on indebtedness, expensed or capitalized,
including amortization of debt expense.................. 158,962 295,577
Portion of rents representative of the
interest factor......................................... 3,821 7,104
--------- ---------
Fixed Charges for computation purposes (B)................ $ 162,783 $ 302,681
========= =========
Ratio of earnings to fixed charges (A)/(B)................ -- --
Deficiency of earnings available to cover fixed
charges.................................................. $(200,966) $(364,882)
========= =========
Preferred stock dividends (C)............................. $ 4,918 $ 6,385
========= =========
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................... $(205,914) $(371,267)
========= =========
</TABLE>
<PAGE>
EXHIBIT 23.2
ACCOUNTANTS CONSENT
-------------------
The Board of Directors
Cablevision Systems Corporation:
We consent to the incorporation by reference in the registration
statement on Form S-3 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 reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Jericho, New York
September 1, 1995
