<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 8-K
___________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 10, 1996
CABLEVISION SYSTEMS CORPORATION
(Exact Name of Registrant as specified in its charter)
Delaware
(State of Incorporation)
1-9046 11-2776686
(Commission File Number) (IRS Employer
Identification Number)
One Media Crossways, Woodbury, New York 11797
(Address of principal executive offices)
Registrant's telephone number, including area code:
(516) 364-8450
<PAGE>
ITEM 5. OTHER EVENTS
- ---------------------
PENDING WARBURG TRANSACTIONS
On May 10, 1996, Cablevision Systems Corporation (the "Company") entered into
an agreement (the "Warburg Agreement") with Warburg, Pincus Investors, L.P.
("Warburg") to acquire from Warburg the interests that the Company does not
already own in A-R Cable Services, Inc. ("A-R Cable"), A-R Cable Partners,
Cablevision of Newark and Cablevision of Framingham Holdings, Inc. ("CFHI")
(each, a "Warburg Company," and collectively, the "Warburg Companies") for an
aggregate purchase price of $183 million (the "Pending Warburg Transactions").
See "Business--Other Cable Affiliates" in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "Form 10-K") for a
description of these affiliates. The transaction is subject to the receipt of
necessary regulatory approvals.
Under the Warburg Agreement, interests in each Warburg Company will be
purchased by the Company separately as the regulatory approvals related to the
purchase of such Warburg Company are received. With respect to any interest in a
Warburg Company that is not acquired by October 10, 1996, the allocated purchase
price for each such interest will be increased from and after October 10, 1996
by an interest factor of 8% per annum, compounded quarterly, until the earlier
of such date as the Company acquires the interests in such Warburg Company or
February 10, 1997. If any such purchases occur prior to October 10, 1996, the
purchase price for the relevant interests will be reduced by the same interest
factor. If by February 10, 1997, all conditions to the Company's purchase of
Warburg's interests in any one of the Warburg Companies (other than the receipt
of regulatory approvals and third party consents) have been satisfied but the
acquisition of such interests has not occurred, the Company will make a loan to
Warburg in respect of each such Warburg Company, secured by a pledge of such
interests, in the amount of the allocated purchase price therefor, plus the
accrued interest resulting from the interest factor adjustment discussed above.
If the Company does not make the required loan, Warburg will have the right to
commence a sale process with respect to such Warburg Company and will have a
preferential right to receive its purchase price from the proceeds of any such
sale.
The Pending Warburg Transactions will result in the Company increasing the
number of subscribers in cable television systems that are majority owned and
managed by the Company by approximately 422,000 subscribers to approximately
2,507,000 subscribers (as
<PAGE>
of March 31, 1996) and decreasing the number of subscribers in cable television
systems in which the Company has non-majority investments by the same amount to
approximately 245,000 subscribers (as of March 31, 1996). The funds to purchase
Warburg's interests are expected to be provided by bank borrowings by the
Company.
The Company intends to designate Cablevision of Newark (which served
approximately 48,000 subscribers as of March 31, 1996) as a member of the
Restricted Group (as defined in the Form 10-K) and intends to make A-R Cable, A-
R Cable Partners and CFHI a part of a group of unrestricted subsidiaries
("Unrestricted Cable") which consists primarily of Telerama, Inc., Cablevision
of the Midwest, Inc. and Cablevision of Cleveland, L.P. ("Cablevision of Ohio")
and Cablevision MFR, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(b) PRO FORMA FINANCIAL INFORMATION
CONDENSED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following condensed pro forma consolidated balance sheet as of
March 31, 1996 presents the Company's financial position as adjusted
to give effect to (i) the acquisition of the 80% partnership interest
in U.S. Cable Television Group, L.P. ("U.S. Cable") not owned by V
Cable, Inc. ("V Cable") and the refinancing of U.S. Cable and V Cable
indebtedness, (ii) the cancellation of 1,091,553 shares of treasury
stock, of which 1,041,553 shares were issued to a wholly owned
subsidiary of the Company in connection with the Company's acquisition
of Cablevision of Boston Limited Partnership ("Cablevision of Boston")
(the "Cancellation of Treasury Shares"), and (iii) the Pending Warburg
Transactions, the offering of the Company's 10 1/2% Senior
Subordinated Debentures due 2016 (the "Debentures") and the Company's
9 7/8% Senior Subordinated Notes due 2006 (the "Notes") and the
application of the net proceeds from such offerings, in each case as
if they had occurred as of that date. The following condensed pro
forma consolidated statement of operations for the year ended December
31, 1995 presents the Company's consolidated results of operations as
adjusted to give effect to (i) the Company's acquisition of
Cablevision of Boston on December 15, 1995 (the "Cablevision of Boston
Acquisition"), (ii) the redemption by the Company of its Series E
Redeemable Exchangeable Convertible Preferred Stock on November 2,
1995, the issuance in September 1995 of the Company's 11 3/4% Series G
Redeemable Exchangeable Preferred Stock (the "Series G Preferred
Stock"), the issuance in November 1995 of $300,000,000 of the
Company's 9 1/4% Senior Subordinated Notes due 2005 and the issuance
in November 1995 of $345,000,000 of the Company's 8 1/2% Series I
Cumulative Convertible Exchangeable Preferred Stock ("Series I
Preferred Stock") and the application of the net proceeds to the
Company from such offerings to repay bank indebtedness (the "1995
Refinancings"), (iii) the V Cable Transactions (as defined in the Form
10-K) and the offering of the Company's Series L Preferred Stock (the
"Series L Preferred Stock Offering") and the application of the net
proceeds therefrom, and (iv) the Pending Warburg Transactions and the
offering of the Debentures and the Notes and the application of the
proceeds from such offerings, in each case as if they had occurred at
the beginning of the period presented. The following condensed pro
forma consolidated statement of operations for the three months ended
March 31, 1996 presents the Company's consolidated results of
operations as adjusted to give effect to (i) the V Cable Transactions
and the Series L Preferred Stock Offering and the application of the
net proceeds therefrom and (ii) the Pending Warburg Transactions and
the offering of the Debentures and the Notes and the application of
the proceeds from such offerings, in each case as if they had occurred
at the beginning of the period presented.
The condensed pro forma consolidated financial statements should be
read in conjunction with the notes thereto and the historical
consolidated financial statements and notes thereto incorporated
herein by reference. The pro forma financial information has been
prepared for comparative purposes only and is not necessarily
indicative of what the actual financial position or results of
operations of the Company would have been had the transactions
occurred on the dates indicated nor does it purport to indicate the
future results of operations or the future financial condition of the
Company.
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<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
---------------------------------------------------
PENDING WARBURG
TRANSACTIONS
CANCELLATION OF AND OFFERING OF
V CABLE TREASURY THE NOTES
HISTORICAL TRANSACTIONS SHARES AND THE DEBENTURES PRO FORMA
----------- ------------ --------------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents.................. $ 28,017 $ 3 (1) $ $ 5,783 (5) $ 33,803
Accounts receivable
trade, net............. 84,842 904 (1) 2,974 (5) 88,720
Notes and other receiv-
ables.................. 17,461 372 (1) 1,581 (5) 19,414
Prepaid expenses and
other assets........... 25,075 726 (1) 1,315 (5) 27,116
Property, plant and
equipment, net......... 1,056,999 101,396 (1) 144,287 (5) 1,302,682
Investments in and ad-
vances to affiliates... 251,783 (70,000)(1) (11,282)(8) 170,501
Feature film inventory.. 138,019 138,019
Intangible assets, net.. 918,984 144,473 (3) 250,538 (6) 1,313,995
Deferred financing
costs, interest expense
and other costs, net... 71,926 4,600 (2) 1,602 (5) 63,065
(25,876)(2) 10,813 (7)
----------- --------- -------- --------- -----------
$ 2,593,106 $ 156,598 $ 407,611 $ 3,157,315
=========== ========= ======== ========= ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C> <C> <C> <C> <C>
Accounts payable........ $ 153,763 $ 11,035 (1) $ $ 22,951 (5) $ 187,749
Accrued liabilities..... 217,250 10,064 (1) 23,176 (5) 250,490
Accounts payable to af-
filiates............... 17,964 855 (1) 6,486 (5) 19,648
(5,657)(8)
Feature film rights pay-
able................... 127,499 127,499
Bank debt............... 1,019,026 130,660 (2) 104,020 (5) 1,492,654
288,600 (2) (205,572)(7)
155,920 (2)
Senior debt............. 414,660 (414,660)(2) 413,200 (5) 413,200
Subordinated deben-
tures.................. 923,627 399,385 (7) 1,323,012
Subordinated notes pay-
able................... 141,268 9,732 (5) 151,000
Obligation to relation
party.................. 188,713 188,713
Capital lease obliga-
tions and other debt... 9,286 9,286
----------- --------- -------- --------- -----------
3,213,056 182,474 767,721 4,163,251
----------- --------- -------- --------- -----------
Deficit investment in
affiliates............. 470,369 (467,849)(8) 2,520
----------- --------- -------- --------- -----------
Series G Preferred
Stock.................. 265,336 265,336
----------- --------- -------- --------- -----------
Series L Preferred
Stock.................. 659,238 659,238
----------- --------- -------- --------- -----------
Stockholders' deficiency:
Preferred stock........ 15 15
Common stock........... 259 (11)(4) 248
Paid-in capital........ 225,354 (60,381)(4) 107,739 (8) 272,712
Accumulated deficit.... (2,180,129) (25,876)(2) (2,206,005)
----------- --------- -------- --------- -----------
(1,954,501) (25,876) (60,392) 107,739 (1,933,030)
Less, treasury stock, at
cost (1,091,553
shares)................ (60,392) 60,392 (4) --
----------- --------- -------- --------- -----------
(2,014,893) (25,876) -- 107,739 (1,933,030)
----------- --------- -------- --------- -----------
$ 2,593,106 $ 156,598 $ -- $ 407,611 $ 3,157,315
=========== ========= ======== ========= ===========
</TABLE>
- --------
*See Note A of Notes to Condensed Pro Forma Consolidated Financial Statements.
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<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
------------------------------------------------------------
PENDING
V CABLE WARBURG
TRANSACTIONS TRANSACTIONS
AND SERIES L AND OFFERING
CABLEVISION PREFERRED OF THE NOTES
OF BOSTON 1995 STOCK AND THE
HISTORICAL ACQUISITION REFINANCINGS OFFERING DEBENTURES PRO FORMA
---------- ----------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $1,078,060 $ 59,818 (9) $ $ 76,568 (15) $159,458 (19) $1,373,904
---------- -------- -------- -------- -------- ----------
Operating expenses:
Technical.............. 412,479 27,315 (9) 34,895 (15) 61,501 (19) 536,190
Selling, general and
administrative........ 266,209 18,759 (9) 19,875 (15) 36,345 (19) 333,375
(2,100)(10) (5,713)(20)
Depreciation and amor-
tization.............. 319,929 8,189 (9) 36,329 (15) 81,696 (19) 427,270
10,730 (10) 1,216 (18) (30,819)(21)
---------- -------- -------- -------- -------- ----------
998,617 62,893 92,315 143,010 1,296,835
---------- -------- -------- -------- -------- ----------
Operating profit
(loss)................ 79,443 (3,075) (15,747) 16,448 77,069
Other income (expense):
Interest expense....... (313,850) (9,863)(9) (2,399)(12) (26,157)(15) (52,621)(19) (306,782)
3,104 (11) 40,771 (13) 84,003 (16) 1,412 (20)
(6,805)(14) (24,377)(22)
Interest income........ 1,963 211 (9) 70 (15) 170 (19) 2,414
Share of affiliates'
net loss.............. (93,024) 2,840 (15) 80,254 (23) (9,930)
Write-off of deferred
financing costs....... (5,517) (5,517)
Gain on sale of
programming and
affiliate interests... 35,989 35,989
Provision for preferen-
tial payment to re-
lated party........... (5,600) (5,600)
Minority interest...... (8,637) (8,637)
Miscellaneous, net..... (8,225) (231)(9) (241)(15) 5,556 (19) (3,141)
---------- -------- -------- -------- -------- ----------
Net income (loss)....... (317,458) (9,854) 31,567 44,768 26,842 (224,135)
Dividend requirements
applicable to preferred
stock.................. (20,249) (47,869)(13) (75,386)(17) (34,029)(19) (136,291)
7,213 (14) 34,029 (23)
---------- -------- -------- -------- -------- ----------
Net income (loss)
applicable to common
shareholders........... $ (337,707) $ (9,854) $ (9,089) $(30,618) $ 26,842 $ (360,426)
========== ======== ======== ======== ======== ==========
Net loss per common
share.................. $ (14.17) $ (14.72)
========== ==========
Average number of common
shares outstanding (in
thousands)............. 23,826 656 (9) 24,482
========== ======== ==========
</TABLE>
- --------
*See Note B of Notes to Condensed Pro Forma Consolidated Financial Statements.
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<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
----------------------------
PENDING
V CABLE WARBURG
TRANSACTIONS TRANSACTIONS
AND SERIES L AND OFFERING
PREFERRED OF THE NOTES
STOCK AND THE
HISTORICAL OFFERING DEBENTURES PRO FORMA
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Revenues.................. $ 304,165 $19,690(24) $ 40,985(28) $ 364,840
--------- ------- -------- ---------
Operating expenses:
Technical............... 128,690 9,456(24) 16,484(28) 154,630
Selling, general and ad-
ministrative........... 72,888 4,589(24) 9,784(28) 85,829
(1,432)(29)
Depreciation and amorti-
zation................. 84,694 8,537(24) 12,737(28) 107,424
1,205(27) 251(30)
--------- ------- -------- ---------
286,272 23,787 37,824 347,883
--------- ------- -------- ---------
Operating profit (loss)... 17,893 (4,097) 3,161 16,957
Other income (expense):
Interest expense........ (69,697) (6,357)(24) (12,679)(28) (83,007)
11,473(25) 507(29)
(6,254)(31)
Interest income......... 1,802 14(24) 57(28) 1,873
Share of affiliates' net
loss................... (20,968) 17,902(32) (3,066)
Write-off of deferred
financing costs........
Provision for preferen-
tial payment to related
party.................. (1,400) (1,400)
Minority interest....... (2,355) (2,355)
Miscellaneous, net...... (1,577) (43)(24) (87)(28) (1,707)
--------- ------- -------- ---------
Net income (loss)......... (76,302) 990 2,607 (72,705)
Dividend requirements ap-
plicable to preferred
stock.................... (24,378) (8,838)(26) (9,388)(28) (33,216)
9,388(32)
--------- ------- -------- ---------
Net income (loss) applica-
ble to common
shareholders............. $(100,680) $(7,848) $ 2,607 $(105,921)
========= ======= ======== =========
Net loss per common
share.................... $ (4.06) $ (4.27)
========= =========
Average number of common
shares outstanding (in
thousands)............... 24,810 24,810
========= =========
</TABLE>
- --------
* See Note C of Notes to Condensed Pro Forma Consolidated Financial Statements.
-5-
<PAGE>
NOTE A--NOTES TO CONDENSED PRO FORMA BALANCE SHEET AS OF MARCH 31, 1996
V CABLE TRANSACTIONS
(1) As a result of the proposed acquisition of the 80% of partnership interests
in U.S. Cable not already owned by V Cable, the assets and liabilities of
U.S. Cable will be combined with the Company's consolidated balance sheet
amounts. The adjustments referenced by this Note (1) reflect the
consolidation of such amounts as of the balance sheet date.
(2) In connection with the V Cable Transactions, the Company will (a) repay
existing V Cable indebtedness totalling $414,660,000 with the proceeds of
$130,660,000 under the Company's principal bank credit agreement (the
"Credit Agreement") and $288,600,000 under the new Cablevision of Ohio
credit facility and (b) repay additional existing U.S. Cable debt totalling
$151,920,000 and redeem outstanding U.S. Cable preferred stock amounting to
$4,000,000. Funds will be provided from a new U.S. Cable credit facility.
Deferred interest expense and financing costs of $25,876,000 were written
off in connection with the V Cable Transactions. The Company will incur
financing costs of $4,600,000 in connection with the new Cablevision of Ohio
credit facility.
(3) Represents the excess ($144,473,000) of the purchase price of U.S. Cable
over the value of the net liabilities assumed.
CANCELLATION OF TREASURY SHARES
(4) Represents the cancellation of 1,091,553 shares of treasury stock of which
1,041,553 shares were issued to a wholly-owned subsidiary of the Company in
connection with the Company's acquisition of Cablevision of Boston.
PENDING WARBURG TRANSACTIONS AND THE OFFERINGS OF THE NOTES AND THE DEBENTURES
(5) As a result of the Pending Warburg Transactions, the assets and liabilities
of the Warburg Companies will be combined with the Company's consolidated
balance sheet amounts. The adjustments referenced by this Note (5) reflect
the consolidation of such amounts as of the balance sheet date.
(6) Represents the excess ($250,538,000) of the purchase price of the interests
in the Warburg Companies not owned by the Company over the value of the net
liabilities assumed.
(7) Represents the issuance of the Debentures and the Notes, the repayment of
bank debt, the application of $183,000,000 of the proceeds to satisfy the
purchase price under the Warburg Agreement and the application of the
balance of the proceeds to pay financing costs.
(8) Represents the elimination of the Company's investment in the Warburg
Companies, the reclassification of intercompany amounts and the excess of
the value at March 31, 1996 ($214,439,000) of the Series A preferred stock
over the purchase price attributable to such preferred stock ($106,700,000).
NOTE B--NOTES TO CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1995
CABLEVISION OF BOSTON ACQUISITION
(9) As a result of the acquisition of Cablevision of Boston on December 15,
1995 (and related issuance of approximately 688,000 shares of the Company's
Class A Common Stock), the results of operations of Cablevision of Boston
will be combined with the Company's consolidated results of operations. The
adjustments referenced by this Note (9) reflect the consolidation of such
amounts for the period January 1, 1995 through December 14, 1995.
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<PAGE>
(10) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired of $10,976,000 for the
period, offset by the elimination of pre-acquisition amortization of
intangibles of $246,000 and the elimination from selling, general and
administrative expenses of management fees payable of $2,100,000 resulting
from the Cablevision of Boston Acquisition.
(11) Represents interest expense of $6,425,000 attributable to $76,583,000 of
bank debt (8.8% interest rate) reduced by pre-acquisition interest expense
of $9,529,000 incurred by Cablevision of Boston on its bank debt and debt
owed to Charles F. Dolan and the Company.
1995 REFINANCINGS
(12) Represents additional interest expense and amortization of deferred
financing costs in connection with the issuance of the Company's 9 1/4%
Senior Subordinated Notes due 2005 offset by a reduction of interest
expense resulting from the repayment of bank debt bearing interest at
8.8%.
(13) Represents a reduction in interest expense resulting from the repayment of
bank debt at a rate of 8.8% with the proceeds of the Series G Preferred
Stock and the Series I Preferred Stock and reflects the dividends payable
on the Series G Preferred Stock and the Series I Preferred Stock.
(14) Represents an increase in interest expense related to additional bank
borrowings at 8.8% used to redeem the Series E Preferred Stock and the
elimination of dividends payable on the Series E Preferred Stock.
V CABLE TRANSACTIONS AND THE SERIES L PREFERRED STOCK OFFERING
(15) As a result of the proposed acquisition of the 80% of partnership
interests in U.S. Cable not already owned by V Cable, the results of
operations of U.S. Cable will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (15)
reflect the consolidation of such amounts for the year ended December 31,
1995 and the elimination of the Company's share of losses in U.S. Cable
previously recorded on the equity basis.
(16) Represents the reduction in interest expense resulting from (i) the
repayment of $898,803,000 of V Cable debt and $214,000,000 of U.S. Cable
debt and (ii) the elimination of amortization of deferred interest and
financing costs related to the repayment of debt, offset by the increase
in interest expense and amortization of deferred financing costs related
to additional bank borrowings of $491,803,000.
(17) Represents the dividends payable on the Series L Preferred Stock.
(18) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired of $144,473,000, offset by
the elimination of pre-acquisition amortization of intangibles.
PENDING WARBURG TRANSACTIONS AND THE OFFERINGS OF THE NOTES AND THE DEBENTURES
(19) As a result of the Pending Warburg Transactions, the results of operations
of the Warburg Companies will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (19)
reflect the consolidations of such amounts for the year ended December 31,
1995.
(20) Represents the elimination of management fees and accrued interest thereon
earned by the Company and recorded on the books of the Warburg Companies.
These management fees and related interest had not been paid and the
Company had not reflected any accrual for such amounts in its financial
statements.
(21) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired offset by the elimination
of pre-acquisition amortization of intangibles.
(22) Represents estimated interest expense on $400,000,000 of debt incurred by
the Company in the offerings of the Debentures and the Notes (the
"Offerings"), partially offset by the decrease in interest expense
resulting from the repayment of bank debt with the portion of the proceeds
of the Offerings not being applied to the Pending Warburg Transactions
($183,000,000) and expenses/note discount ($11,428,000) of the Offerings,
-7-
<PAGE>
and the amortization of deferred financing costs and note discount incurred
in connection with the Offerings ($726,000).
(23) Represents the elimination of the net losses of the Warburg Companies
previously recorded by the Company using the equity method of accounting
and the elimination of the preferred stock dividends previously recorded
by A-R Cable.
NOTE C--NOTES TO CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 1996
V CABLE TRANSACTIONS AND THE SERIES L PREFERRED STOCK OFFERING
(24) As a result of the proposed acquisition of the 80% of partnership
interests in U.S. Cable not already owned by V Cable, the results of
operations of U.S. Cable will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (24)
reflect the consolidation of such amounts for the fiscal quarter ended
March 31, 1996 and the elimination of the Company's share of losses in
U.S. Cable previously recorded on the equity basis.
(25) Represents the reduction in interest expense resulting from (i) the
repayment of $414,660,000 of V Cable debt and $151,920,000 of U.S. Cable
debt and (ii) the elimination of amortization of deferred interest and
financing costs related to the repayment of debt, offset by the increase
in interest expense and amortization of deferred financing costs related
to additional bank borrowings of $520,180,000.
(26) Represents dividends payable on the Series L Preferred Stock for the
period prior to its issuance in February 1996.
(27) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired of $144,473,000 offset by
the elimination of pre-acquisition amortization of intangibles.
PENDING WARBURG TRANSACTIONS AND THE OFFERINGS OF THE NOTES AND THE DEBENTURES
(28) As a result of the Pending Warburg Transactions, the results of operations
of the Warburg Companies will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (28)
reflect the consolidations of such amounts for the fiscal quarter ended
March 31, 1996.
(29) Represents the elimination of management fees and accrued interest thereon
earned by the Company and recorded on the books of the Warburg Companies.
The Company had previously reserved all of such management fees and
accrued interest. These management fees and related interest had not been
paid and the Company had not reflected any accrual for such amounts in its
financial statements.
(30) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired offset by the elimination
of pre-acquisition amortization of intangibles.
(31) Represents estimated interest expense on $400,000,000 of the debt incurred
by the Company in the Offerings, partially offset by the decrease in
interest expense resulting from the repayment of bank debt with the portion
of the proceeds of the Offerings not being applied to the Pending Warburg
Transactions ($183,000,000) and expenses/note discount ($11,428,000) of the
Offerings, and the amortization of deferred financing costs and note
discount incurred in connection with the Offerings ($182,000).
(32) Represents the elimination of the net losses of the Warburg Companies
previously recorded by the Company using the equity method of accounting
and the elimination of preferred stock dividends previously recorded by
A-R Cable.
(c) EXHIBITS
(12) Computation of Ratio of Deficiency of Earnings to Fixed Charges and
Earnings to Fixed Charges and Preferred Stock Dividends; Computation of
Pro Forma Ratio Deficiency of Earnings to Fixed Charges.
(99) Master Stock Purchase Agreement, dated as of May 10, 1996, between Warburg,
Pincus Investors, L.P., a Delaware limited partnership, and Cablevision
Systems Corporation, a Delaware corporation.
-8-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
By: /s/ Barry J. O'Leary
-------------------------------
Dated: May 16, 1996
-9-
<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>
Three Months Ended
March 31, Year Ended December 31,
---------------------- ------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------- ----------- ----------
Earnings:
<S> <C> <C> <C> <C> <C> <C> <C>
Loss from continuing
operations................ $ (76,302) $ (98,502) $(317,458) $(315,151) ($246,782) ($250,503) $(227,199)
Add:
Fixed charges per (B)
below..................... 72,011 77,595 322,054 269,627 238,109 199,661 264,039
Amortization of previously
capitalized interest...... 19 18 74 148 138 74 75
Deduct:
Interest capitalized
during period............. -- -- -- -- -- -- --
Earnings for computation
purposes (A).............. $ (4,272) $ (20,889) $ 4,670 $ (45,376) $ (8,535) $ (50,768) $ 36,915
Fixed Charges:
Interest on indebtedness,
expensed or capitalized,
including amortization of
debt expense............... 69,697 75,728 313,850 263,299 232,434 194,628 258,794
Portion of rents
representative of the
interest factor............ 2,314 1,867 8,204 6,328 5,675 5,033 5,245
--------- --------- --------- --------- ---------- ---------- ---------
Fixed charges for
computation purposes (B).... $ 72,011 $ 77,595 $ 322,054 $ 269,627 $ 238,109 $ 199,661 $ 264,039
========= ========= ========= ========= ========== ========== =========
Ratio of earnings to fixed
charges (A)/(B)............. -- -- -- -- -- -- --
Deficiency of earnings
available to cover fixed
charges.................... $ (76,283) $ (98,484) $(317,384) $(315,003) $ (246,644) $ (250,429) $(227,124)
========= ========= ========= ========= ========== ========== =========
Preferred stock
dividends (C)............... $ 24,378 $ 2,471 $ 20,249 $ 6,385 $ 885 $ 885 $ 4,464
========= ========= ========= ========= ========== ========== =========
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............. $(100,661) $(100,955) $(337,633) $(321,388) $ (247,529) $ (251,314) $(231,588)
========= ========= ========= ========= ========== ========== =========
</TABLE>
<PAGE>
CABLEVISION SYSTEMS CORPORATION
COMPUTATION OF PRO FORMA RATIO OF
DEFICIENCY OF EARNINGS TO FIXED CHARGES
(FIXED CHARGES COVERAGE DEFICIENCIES)
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, December 31, 1995
------------ -----------------
<S> <C> <C>
(Dollar in thousands)
Earnings:
Loss from continuing operations..................... $ (72,705) $(224,135)
Add:
Fixed charges per (B) below......................... $ 85,951 $ 317,870
Amortization of previously capitalized interest..... 19 74
Deduct:
Interest capitalized during period.................. -- --
--------- ---------
Earnings for computation purposes (A)............... $ 13,265 $ 93,809
========= =========
Fixed Charges:
Interest on indebtedness, expensed or capitalized,
including amortization of debt expense............ 83,007 306,782
Portion of rents representative of the
interest factor................................... 2,944 11,088
--------- ---------
Fixed Charges for computation purposes (B)........... $ 85,951 $ 317,870
Ratio of earnings to fixed charges (A)/(B)........... -- --
========= =========
Deficiency of earnings available to cover fixed
charges............................................. $ (72,686) $(224,061)
========= =========
Preferred stock dividends (C)........................ $ 33,216 $ 136,291
========= =========
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............... $(105,902) $(360,352)
========= =========
</TABLE>
-2-
<PAGE>
EXHIBIT 99
MASTER STOCK PURCHASE AGREEMENT
Between
WARBURG, PINCUS INVESTORS, L.P.
AND
CABLEVISION SYSTEMS CORPORATION
DATED AS OF
MAY 10, 1996
<PAGE>
MASTER STOCK PURCHASE AGREEMENT
Master Stock Purchase Agreement (this "Agreement") dated as of this 10th
day of May 1996, between Warburg, Pincus Investors, L.P., a Delaware limited
partnership ("Stockholder"), and Cablevision Systems Corporation, a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Stockholder is the owner of (i) all the issued and outstanding
shares of capital stock (the "Stock") of each of WP Cable, Inc. and WP Nashoba
Cable, Inc., each a Delaware corporation (each a "Company" and, together, the
"Companies"), and (ii) 10,620.75 shares of Series A Participating Preferred
Stock, liquidation preference $10,000 per share (the "ARCS Shares"), of A-R
Cable Services, Inc., a Massachusetts corporation ("ARCS"), and 60 shares of
Common Stock, par value $0.01 per share, and 3,725.76 shares of Preferred Stock,
par value $0.01 per share (collectively, the "Framingham Shares" and, together
with the ARCS Shares, the "Shares"), of Cablevision of Framingham Holdings,
Inc., a Delaware corporation ("Framingham"); and
WHEREAS, Purchaser is desirous of purchasing from Stockholder the Stock and
the Shares on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, the Parties agree
as follows:
<PAGE>
1. PURCHASE AND SALE.
1.1. Purchase Prices for Stock and Shares. On the terms and subject to
------------------------------------
the conditions set forth in this Agreement, Stockholder hereby agrees to sell to
Purchaser, and Purchaser hereby agrees to purchase from Stockholder, the Stock
and the Shares at the following Purchase Prices (each, as it may be adjusted
pursuant to the provisions of this Agreement (including without limitation
pursuant to an Adjustment), a "Purchase Price"):
<TABLE>
<CAPTION>
DESCRIPTION PURCHASE PRICE
----------- --------------
<S> <C>
ARCS Shares $ 106,700,000
Stock of WP Cable, Inc. 37,000,000
Framingham Shares 7,500,000*
Stock of WP Nashoba Cable, Inc. 31,800,000
</TABLE>
- ---------------
* The Purchase Price for the Framingham Shares shall be this amount, reduced
by the amount of any outstanding principal and accrued and unpaid interest,
determined as of the Closing Date with respect to the Framingham Shares, on
the Framingham Partners Loan.
1.2 Deliveries at Closing. On each Closing Date corresponding to the
---------------------
purchase and sale herein contemplated of the Stock of a Company or the ARCS
Shares or the Framingham Shares (each, a "Closing"), Stockholder shall deliver
-------
to Purchaser, stock certificates representing all issued and outstanding Stock
in such Company, or the ARCS Shares or Framingham Shares, as the case may be,
duly endorsed and in form suitable for transfer to Purchaser (or one or more of
its designated Subsidiaries), and
-2-
<PAGE>
Purchaser shall deliver to Stockholder by wire transfer of immediately available
funds to an account designated by Stockholder the aggregate amount of the
Purchase Price, subject to Adjustment, with respect to such Company or such
Shares, as the case may be.
1.3. Purchase of Framingham Partners Loan. On the Closing Date with
------------------------------------
respect to the Framingham Shares and contemporaneous with the purchase and sale
thereof pursuant to Section 1.1, Purchaser shall purchase or cause to be
purchased from Stockholder, and Stockholder shall sell to Purchaser (or one or
more of its designated Subsidiaries), the $700,000 loan evidenced by the
Subordinated Note Due August 9, 2004, of Cablevision of Framingham, Inc. held by
Stockholder (the "Framingham Partners Loan") at a purchase price equal to the
------------------------
outstanding principal amount thereof plus accrued and unpaid interest, if any,
thereon.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.
Stockholder hereby represents and warrants to Purchaser as follows:
2.1. Due Organization. Stockholder is a limited partnership duly
----------------
organized, validly existing and in good standing under the laws of Delaware.
2.2. Authority, Validity and Enforceability. Stockholder has full
--------------------------------------
partnership and corporate power and authority to enter into this Agreement, to
perform all of its obligations hereunder, including without limitation to sell,
transfer, assign
-3-
<PAGE>
and deliver the Stock and the Shares to Purchaser and to consummate each of the
transactions contemplated hereby, including without limitation the transactions
contemplated by the Swap Agreement (collectively, the "Transactions"). This
------------
Agreement has been duly and validly executed and delivered by Stockholder and
constitutes the valid and binding obligation of Stockholder enforceable against
it in accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and subject to the application of equitable principles in any action.
2.3. Consents and Approvals. Except as set forth in Schedule 2.3, no
----------------------
consent or approvals of, notice to, or filing or registration with, any lender,
security holder or any other Person, or of, to, or with any court, regulatory
authority or other governmental authority, is required in connection with the
execution and delivery of this Agreement by Stockholder and its consummation of
the Transactions.
2.4. Non-contravention. The execution, delivery and performance by
-----------------
Stockholder of, and its compliance with the terms of, this Agreement and its
consummation of the Transactions does not and will not conflict with or result
in a breach or violation of any of its organizational and governance documents,
any of the terms, conditions or provisions of any material contract, document,
instrument or agreement to which it is a party, any law,
-4-
<PAGE>
governmental rule or regulation applicable to it, or any order, writ, injunction
or decree of any court or governmental authority binding on it or its
properties; and there is no condition, term or provision of any instrument,
document or agreement to which it is a party or under which it is obligated that
would prohibit, restrict or impair the consummation of the Transactions.
2.5. Absence of Proceedings. There are no actions or proceedings
----------------------
pending, or, to the best knowledge of Stockholder, threatened against or
affecting Stockholder or any of its properties or assets before any court or
administrative agency or arbitral tribunal or other body that are likely,
individually or in the aggregate, to have a material adverse effect on its
ability to carry out the Transactions.
2.6. Marketable Title. Purchaser will receive, on each Closing Date,
----------------
good, valid and marketable title to the Stock or the Shares, as the case may be,
to which such Closing Date relates, free and clear of all Liens.
2.7. Due Incorporation, Qualification and Authority. Each Company is
----------------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each Company has all requisite corporate power
and authority and, as of the Closing Date with respect to such Company, will
hold all licenses, permits and other required authorizations from governmental
authorities necessary to own its assets. As of such Closing Date, each Company
shall be duly qualified or licensed and in good standing as a foreign
corporation in each juris-
-5-
<PAGE>
diction wherein the character of its properties or the nature of the activities
conducted by it makes such qualification or licensing necessary. Neither the
certificate of incorporation nor the by-laws or other constituent document of
either of the Companies nor any agreement to which either of the Companies is
bound conflicts with or restricts the execution and delivery of this Agreement
by Stockholder or the consummation of the Transactions.
2.8. Capitalization. Each Company's authorized capitalization
--------------
consists solely of 1,000 shares of Common Stock, par value $.01 per share, of
which 227.27 shares with respect to WP Cable, Inc. and 100 shares with respect
to WP Nashoba Cable, Inc. (constituting all the issued and outstanding shares of
Stock of each such Company) are validly issued and outstanding, fully paid and
nonassessable. The Stock, which is the only issued and outstanding equity
securities of the Companies, and, except as described on Schedule 2.8, the
Shares are owned by Stockholder free and clear of all Liens. No Person is
entitled to any preemptive rights with respect to the purchase or sale of any
securities of either Company.
2.9. Assets of Companies. The assets of each Company consist solely
-------------------
of the interests described below, which assets are owned by such Company free
and clear of all Liens and are the only assets in which such Company has ever
held an interest:
-6-
<PAGE>
<TABLE>
<CAPTION>
COMPANY ASSETS
- ------- ------
<S> <C>
WP Cable Inc. The general partnership interest in CVN,
described in the CVN Partnership Agreement.
WP Nashoba (i) The general partnership in ARCP, described
Cable, Inc. in the Amended and Restated Agreement of
General Partnership of ARCP, dated as of
January 14, 1994 and amended as of June 30,
1994; and (ii) the $3,500,000 loan evidenced by
a Subordinated Note due July 1, 2002, of ARCP.
</TABLE>
2.10. Absence of Liabilities. Each Company has no debts,
----------------------
liabilities, or obligations whatsoever, whether known or unknown, fixed or
contingent other than such liabilities or obligations that may have accrued to
it solely in its capacity as a stockholder or partner, as the case may be,
holding the equity interest described with respect to such Company in Section
2.9.
2.11. Tax Returns. Except as set forth in Schedule 2.11 hereto, (a)
-----------
all Tax Returns that are required to be filed by or with respect to the
Companies have been duly filed, all such Tax Returns accurately reflect all the
relevant information received from Purchaser relating to the partnership
interest described with respect to such Company in Section 2.9, and all such Tax
Returns are true and complete in all material respects insofar as they relate to
items other than such partnership interest, (b) all Taxes shown to be due on the
Tax Returns referred to in clause (a) have been paid in full, (c) all
deficiencies asserted or assessments made as a result of any examinations of
such Tax Returns by federal, state or local taxing authorities have been paid in
full, and (d) no issues that
-7-
<PAGE>
have been raised by any taxing authority in connection with the examination of
any such Tax Returns are currently pending.
2.12. No Broker's or Finder's Fees. No brokerage commissions or
----------------------------
finder's fees have been incurred by Stockholder or any of its Affiliates in
connection with the sale of the Stock and the Shares to Purchaser or the
Transactions.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Stockholder as follows:
3.1. Accredited Investor. Purchaser is an "accredited investor"
-------------------
within the meaning of the Securities Act of 1933 (the "Securities Act") and is
acquiring the Stock and the Shares for its own account for investment purposes
only and not with a present view to, or for resale in connection with, any
distribution thereof in violation of the Securities Act. Purchaser acknowledges
its understanding that the offering and sale of the Stock and the Shares is
intended to be exempt from registration under the Securities Act by virtue of
Section 4(2) thereof.
3.2. Due Incorporation. Purchaser is a corporation duly organized,
-----------------
validly existing and in good standing under the laws of Delaware.
3.3 Authority, Validity and Enforceability. Purchaser has full
--------------------------------------
corporate power and authority to enter into this Agreement, to perform all its
obligations hereunder, including without limitation to consummate the
Transactions.
-8-
<PAGE>
This Agreement has been duly and validly executed and delivered by Purchaser and
constitutes the valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and subject to the application of equitable principles in any action.
3.4 Consents and Approvals. Except as set forth in Schedule 3.4, no
----------------------
consent or approvals of, notice to, or filing or registration with, any lender,
security holder or any other Person, or of, to, or with any court, regulatory
authority or other governmental authority, is required in connection with the
execution and delivery of this Agreement by Purchaser and its consummation of
the Transactions.
3.5 Non-contravention. The execution, delivery and performance by
-----------------
Purchaser of, its compliance with the terms of this Agreement and its
consummation of the Transactions does not and will not conflict with or result
in a breach or violation of any of its organizational and governance documents,
any of the terms, conditions or provisions of any material contract, document,
instrument or agreement to which it is a party, any law, governmental rule or
regulation applicable to it, or any order, writ, injunction or decree of any
court or governmental authority binding on it or its properties; and there is no
condition, term or provision of any instrument, document or
-9-
<PAGE>
agreement to which it is a party or under which it is obligated that would
prohibit, restrict or impair the consummation of the Transactions.
3.6 Absence of Proceedings. There are no actions or proceedings
----------------------
pending, or, to the best knowledge of Purchaser, threatened against or affecting
Purchaser or any of its properties or assets before any court or administrative
agency or arbitral tribunal or other body that are likely, individually or in
the aggregate, to have a material adverse effect on its ability to carry out the
Transactions.
3.7 Change of Control. Purchaser is not, as of the date of this
-----------------
Agreement, engaged in any negotiations that could reasonably be expected to
result in a Change of Control.
3.8 No Broker's or Finder's Fees. No brokerage commissions or
----------------------------
finder's fees have been incurred by Purchaser or any of its Affiliates in
connection with the sale of the Stock and the Shares to Purchaser or the
Transactions.
4. COVENANTS.
4.1. Prohibited Transactions. (a) Stockholder covenants and agrees
-----------------------
with Purchaser that, from the date of this Agreement through the Closing Date
with respect to each Company, without the consent of Purchaser:
(i) such Company shall not become a party to any merger or
consolidation or any agreement other than this Agreement;
-10-
<PAGE>
(ii) such Company shall not voluntarily dissolve, liquidate or wind
up its affairs or carry out any partial liquidation of its assets;
(iii) such Company shall not purchase or redeem any shares of its
capital stock or declare any dividend or make any distribution in cash or
property;
(iv) such Company shall not authorize, create or issue any shares of
capital stock or any options, warrants or other rights to acquire any capital
stock or any security convertible into or exercisable or exchangeable for any
capital stock;
(v) Stockholder shall not transfer, encumber, sell, assign or
otherwise dispose of any shares of capital stock of such Company or grant any
options, warrants or other rights to acquire any such stock or any security
convertible into or exercisable or exchangeable for any such capital stock;
(vi) such Company shall not sell, transfer, convey, pledge,
hypothecate or otherwise encumber or dispose of, enter into any agreement or
transaction to sell, transfer, convey, pledge, hypothecate or otherwise encumber
or dispose of, any of its assets; and
(vii) such Company shall not amend its Certificate of Incorporation
or By-Laws.
(b) Stockholder covenants and agrees with Purchaser that, from the
date of this Agreement through each Closing Date with respect to the Shares,
without the consent of Purchaser, Stockholder shall not transfer, encumber,
sell, assign or other-
-11-
<PAGE>
wise dispose of the Shares to which such Closing Date relates or, in the case of
the Closing Date with respect to the Framingham Shares, the Framingham Partners
Loan, or grant any options, warrants or other rights to acquire any such Shares,
or such loan, or any security convertible into or exercisable or exchangeable
for any such Shares or such loan.
4.2. Ordinary Course. Purchaser and Stockholder each covenants and
---------------
agrees that neither it nor any of its Affiliates will take any steps that would
cause, (a) from the date of this Agreement through the Closing Date with respect
to each Company (i) the business of CVN, in the case of the Closing Date with
respect to WP Cable, Inc., and (ii) the business of ARCP, in the case of the
Closing Date with respect to WP Nashoba Cable, Inc., to be conducted other than
in the ordinary and usual course, or (b) from the date of this Agreement through
each Closing Date with respect to the Shares, the business of the entity the
Shares of which are being purchased and sold on such Closing Date, to be
conducted other than in the ordinary and usual course, except in each case (a)
and (b), as may be necessary to give effect to the provisions of this Agreement.
4.3. Consummation of Swap. Purchaser and Stockholder each covenants
--------------------
and agrees to use its best efforts to cause the transactions contemplated by the
Purchase Agreement, dated August 10, 1993, by and among A-R Cable Services,
Inc., Purchaser and CSC Acquisition--MA, Inc. (the "Swap Agreement"), to be
consummated as promptly as possible.
-12-
<PAGE>
4.4. Registrations, Filings and Consents. Stockholder and Purchaser
-----------------------------------
will cooperate and use their respective best efforts, from time to time after
the date hereof and after each Closing Date, to promptly make all registrations,
filings and applications, to give all notices, consents, approvals and waivers,
and to obtain any governmental or other consents, approvals, orders,
qualifications and waivers deemed by Purchaser to be necessary or desirable to
facilitate the Transactions, including without limitation (but subject to the
rights of Stockholder pursuant to the proviso set forth in Section 9.3(a) of
this Agreement) (i) the waiver or amendment of any financial covenant applicable
under any credit agreement to which a Cable Operating Entity may be a party, and
(ii) the waiver by Stockholder of any rights it may have under any Operative
Agreement as the result of a financial covenant default by a Cable Operating
Entity under any credit agreement to which the Cable Operating Entity is a
party. Each Party periodically and from time to time on reasonable request by
the other Party, shall inform the other Party as to the status of any
applications or proceedings relating to any such consents, transfers, approvals,
orders, qualifications or waivers.
4.5. Payments Upon Change in Control. If a Change of Control of
-------------------------------
Purchaser occurs on or prior to the first anniversary of the date of this
Agreement, Purchaser shall be obligated to pay to Stockholder the sum of
$10,000,000 on the later of (i) the tenth Business Day following such Change of
Control and (ii) the
-13-
<PAGE>
Closing Date on which the last of the interests to be purchased hereunder are so
purchased and sold; provided, however, that if one or more, but not all,
-------- -------
possible Closing Dates under this Agreement has occurred prior to the date that
is nine (9) months after the date of this Agreement (the "Nine-Month Date"), the
"last Closing Date" referred to in this clause (ii) shall be the Nine-Month
Date.
4.6. Noncompete. For a period of five years following the date of
----------
this Agreement, neither Stockholder nor any of its Affiliates shall own,
operate, manage or control, or engage in or possess an interest in any other
business or venture that (i) owns, operates, manages or controls, any CATV
System or other business or operation providing the same or equivalent services
as the CATV Systems owned as of the date of this Agreement directly or
indirectly by a Cable Operating Entity or any of their respective Subsidiaries,
and (ii) operates wholly or partly within a franchise area with respect to which
a Cable Operating Entity or any of their respective Subsidiaries has the right
as of the date of this Agreement to operate a CATV System (a "Competing
---------
Business"); provided, however, that nothing contained in this Section 4.6 shall
-------- -------
prohibit any Person from (i) owning ten percent (10%) or less of the voting and
other securities of any publicly traded company or (ii) owning, operating,
managing, controlling, or engaging in or possessing any interest in any
Competing Business that is a Competing Business solely because it owns,
operates, manages or controls, a business or operation that
-14-
<PAGE>
delivers program services and reception to customers within any such franchise
area by means of a satellite distribution system, including without limitation
any direct broadcast satellite service.
4.7 Further Assurances. Each of the Parties shall, from time to time
------------------
after the date hereof and after each Closing Date, upon the request of the other
Party, duly execute, acknowledge and deliver or cause to be duly executed,
acknowledged and delivered, all such further instruments and documents
reasonably requested by the other Party to further effectuate the intents and
purposes of this Agreement, including without limitation (but subject in the
case of clause (ii) and (iii) below to the rights of Stockholder pursuant to the
proviso set forth in Section 9.3(a) of this Agreement) (i) the transactions
contemplated by the Swap Agreement, (ii) the waiver or amendment of any
financial covenant applicable under any credit agreement to which a Cable
Operating Entity may be a party, (iii) the waiver by Stockholder of any rights
it may have under any Operative Agreement as the result of a financial covenant
default by a Cable Operating Entity under any credit agreement to which the
Cable Operating Entity is a party, and (iv) the termination of the GECC Guaranty
and Pledge Agreement. In furtherance of the foregoing each Party agrees to use
good faith efforts to cause the conditions to the obligations of the other Party
to be satisfied.
-15-
<PAGE>
4.8 Termination of Agreements. The Parties agree that, upon each
-------------------------
Closing, the agreements entered into by the Parties or their Subsidiaries prior
to the date of this Agreement relating to the Cable Operating Entity issuing the
Shares, or to the Cable Operating Entity in which an interest is held by the
Company issuing the Stock, to which such Closing relates, which agreements are
listed on Schedule 4.8 (the "Operative Agreements"), shall terminate and be of
--------------------
no further effect. The Parties shall take all steps necessary to give effect,
and to cause their Subsidiaries to give effect, to this Section 4.8.
5. CONDITIONS TO PURCHASER'S OBLIGATIONS.
The obligations of Purchaser to purchase the Stock of a Company, the
ARCS Shares or the Framingham Shares, as the case may be (the "Transferred
-----------
Property"), pursuant to this Agreement at the Closing relating thereto are
- --------
subject, in the discretion of Purchaser, to the satisfaction of, or waiver by
Purchaser of, each of the following conditions:
5.1. Consents, etc., to Swap. On or prior to the first Closing Date
-----------------------
to occur, Stockholder and its Affiliates shall have given all consents,
approvals and waivers, made all filings and delivered all notices (including
without limitation all such consents, approvals, waivers, filings and notices to
be given or delivered to any lenders) necessary or desirable for the
consummation of the transactions contemplated by the Swap Agreement.
-16-
<PAGE>
5.2. Agreements and Conditions. On or before such Closing Date,
-------------------------
Stockholder shall have complied with and duly performed, in all material
respects, all agreements and conditions on its part required to be complied with
or performed pursuant to or in connection with this Agreement on or before such
Closing Date with respect to such Transferred Property and the Company, ARCS or
Framingham (the "Transferred Entity"), as the case may be, that issued such
------------------
Transferred Property.
5.3. Bring-Down of Representations and Warranties. The
--------------------------------------------
representations and warranties of Stockholder contained in this Agreement,
insofar as such Transferred Entity and Transferred Property is concerned, shall
be true and correct in all material respects on and as of such Closing Date,
with the same force and effect as though such representations and warranties had
been made on and as of such Closing Date.
5.4. No Legal Proceedings. No action shall have been instituted to
--------------------
restrain or prohibit the acquisition by Purchaser, or the conveyance by
Stockholder, of the Transferred Property being sold on such Closing Date.
5.5. Certificate. Purchaser shall have received a certificate dated
-----------
such Closing Date and executed by an officer of Stockholder to the effect that,
to the best of such officer's knowledge, each of the conditions expressed in
paragraphs 5.2 to 5.4 has been fulfilled.
5.6. Resignations. Stockholder shall have delivered to Purchaser the
------------
resignations of (i) each officer and director of
-17-
<PAGE>
such Company, (ii) in the case of the Closing relating to the ARCS Shares, the
Person then serving as the Warburg Director (as such term is defined in the
Letter Agreement) of A-R Cable Investments, Inc. and (iii) in the case of the
Closings relating to WP Cable, Inc., and WP Nashoba Cable, Inc., the WP
Representatives to the Partnership Committee of CVN and ARCP, respectively (as
such terms are defined in the partnership agreements of such partnerships).
5.7. Receipt of Approvals. On or prior to such Closing all consents
--------------------
and approvals described in Schedule 3.4 shall have been received, all filings
required to be made under the HSR Act shall have been made and the applicable
waiting period under the HSR Act shall have expired or been terminated.
6. CONDITIONS TO STOCKHOLDER'S OBLIGATIONS.
The obligations of Stockholder to sell the Transferred Property
pursuant to this Agreement at the Closing relating thereto are subject, in the
discretion of Stockholder, to the satisfaction of, or waiver by Stockholder of,
each of the following conditions:
6.1. Agreements and Conditions. On or before such Closing Date,
-------------------------
Purchaser shall have complied with and duly performed, in all material respects,
all agreements and conditions on its part required to be complied with or
performed pursuant to this Agreement on or before such Closing Date with
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<PAGE>
respect to such Transferred Property and the related Transferred Entity.
6.2. Bring-Down of Representations and Warranties. The
--------------------------------------------
representations and warranties of Purchaser contained in this Agreement, insofar
as such Transferred Entity and Transferred Property is concerned, shall be true
and correct in all material respects on and as of such Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of such Closing Date, except that the representation and warranty
of Purchaser set forth in Section 3.7 shall be deemed to have been made only on
and as of the date of this Agreement; provided, however, that if the
-------- -------
representation and warranty of Purchaser set forth in Section 3.7 shall not have
been true and correct in all material respects on and as of the date of this
Agreement, Purchaser shall be entitled to cure such defect by the payment to
Stockholder of the amount set forth in Section 4.5, and thereupon the accuracy
of such representation and warranty shall cease to be a condition to
Stockholder's obligations to sell Transferred Property pursuant to this
Agreement.
6.3. No Legal Proceedings. No action shall have been instituted to
--------------------
restrain or prohibit the acquisition by Purchaser, or the conveyance by
Stockholder, of the Transferred Property being sold on such Closing Date.
6.4. Certificate. Stockholder shall have received a certificate
-----------
dated such Closing Date and executed by an officer of
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<PAGE>
Purchaser to the effect that, to the best of such officer's knowledge, each of
the conditions expressed in Paragraphs 6.1 to 6.3 has been fulfilled.
6.5. Receipt of Approvals. On or prior to such Closing, all consents
--------------------
and approvals described in Schedule 2.3 shall have been received, all filings
required to be made under the HSR Act shall have been made and the applicable
waiting period under the HSR Act shall have expired or been terminated.
6.6 ARCS Shares Closing. In the case of the Closing with respect to
-------------------
the ARCS Shares, the Closings or an extension of a Loan with respect to the
Stock and the Framingham Shares shall have occurred prior or contemporaneous
thereto.
7. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION.
7.1. All representations, warranties and covenants of Stockholder
and Purchaser contained in this Agreement shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, except that the representation and warranty of Purchaser set forth in
Section 3.7 shall not survive any Closing.
7.2.(a) Stockholder shall indemnify and hold harmless Purchaser and
its officers, directors, agents and Affiliates from and against any and all
Damages (other than Damages consisting of Taxes, for which liability,
responsibility and indemnification provisions are set forth in Section 7.3)
arising out of or based upon or with respect to (i) the failure of any
representation and
-20-
<PAGE>
warranty made by Stockholder in this Agreement to be true and correct on the
date of this Agreement and on the Closing Date to which such representation and
warranty relates, and (ii) any failure to perform duly and punctually any
covenant, agreement or undertaking on the part of Stockholder contained in this
Agreement.
(b) Purchaser shall indemnify and hold harmless Stockholder and its
officers, directors, partners, agents and Affiliates from and against any and
all Damages (other than Damages consisting of Taxes, for which liability,
responsibility and indemnification provisions are set forth in Section 7.3)
arising out of or based upon or with respect to (i) the failure of any
representation and warranty made by Purchaser in this Agreement (other than the
representation and warranty set forth in Section 3.7, which shall not survive
any Closing) to be true and correct on the date of this Agreement and on the
Closing Date to which such representation and warranty relates, (ii) any failure
to perform duly and punctually any covenant, agreement or undertaking on the
part of Purchaser contained in this Agreement and (iii) claims arising out of
the activities of a Transferred Entity that (x) occur on or after the Closing or
on or after the extension of a Loan with respect to such Transferred Entity (y)
do not give rise to an indemnification claim against Stockholder pursuant to
Section 7.2(a) or Section 7.3, and have not otherwise been caused by Stockholder
or any of its officers, directors,
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<PAGE>
partners, agents or Affiliates, and (z) result in Damages payable by Stockholder
with respect to such Transferred Entity.
7.3. (a) Stockholder shall indemnify and hold harmless Purchaser for
all Taxes imposed on any Company or for which any Company may otherwise be
liable for any taxable year or period that ends on or before the Closing Date
with respect to such Company and, with respect to any taxable year or period
beginning before and ending after such Closing Date, the portion of such taxable
year or period ending on and including such Closing Date; provided, however,
-------- -------
that the indemnification provided in this Section 7.3(a) shall apply to any
Taxes only to the extent attributable to a breach of the representations and
warranties contained in Section 2.9 or Section 2.11. Stockholder shall be
entitled to any refund of Taxes of such Company received for such periods to the
extent that such refund relates to a Tax Return filed by Stockholder on or
before the Closing Date with respect to such Company; and Purchaser shall
otherwise be entitled to any such refund.
(b) Purchaser shall be liable for and indemnify Stockholder for (i)
Taxes imposed on any Company for any taxable year or period that begins after
the Closing Date with respect to such Company and, with respect to any taxable
year or period beginning before and ending after such Closing Date, the portion
of such taxable year or period beginning after such Closing Date, (and Purchaser
shall be entitled to any refund of Taxes of such Company received for such
periods) and (ii) in the case of (x) a
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<PAGE>
Sale of CATV System Assets, (y) the assets of a Transferred Entity pursuant to
Section 9.2(a), or (z) the distribution of the net proceeds of any Sale pursuant
to Section 9.2(b), Taxes, if any, imposed on Stockholder or any of its direct or
indirect partners, or on any Transferred Entity for which Taxes Stockholder or
any of its direct or indirect partners are held liable, with respect to any
taxable gain resulting from such Sale (after, in the case of subclauses (x) and
(y) above, offsetting such gain by any available losses of the Transferred
Entity that holds a direct or indirect interest in such CATV System Assets) or
the distribution of such net proceeds to the extent and only to the extent such
Taxes exceed the Taxes that would have been imposed on Stockholder as a result
of the Sale, prior to any such Sale of CATV System Assets, of the Stock or
Shares, as the case may be, of such Transferred Entity.
(c) Whenever it is necessary to determine the liability for Taxes of
a Company for a portion of a taxable year or period that begins before and ends
after the Closing Date with respect to such Company, such determination shall be
made by assuming that the Company had a taxable year or period that ended at the
close of business on such Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis.
(d) After each Closing Date, Purchaser and Stockholder shall
cooperate fully, as reasonably requested by the other
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<PAGE>
Party, in connection with the preparation and filing of any Tax Returns with
respect to the Company to which such Closing Date relates and in preparing for
and conducting any audits of, or disputes with any taxing authorities regarding,
any Tax Returns of such Company.
(e) Stockholder shall be liable for all transfer taxes arising from
the sale of the Transferred Property.
(f) The obligations of the Parties set forth in this Section 7.3
shall be unconditional and absolute and shall remain in effect without
limitation as to time.
8. MISCELLANEOUS.
8.1. Expenses. Each of the Parties covenants and agrees to bear all
--------
costs and expenses it incurs in connection with the transactions contemplated by
this Agreement unless otherwise expressly provided herein; provided, however,
-------- -------
that the Parties shall share equally the obligation to pay all filing fees
related to any filings required under the HSR Act.
8.2. Benefit of Parties; Assignment. This Agreement shall be binding
------------------------------
upon, inure to the benefit of and be enforceable by the respective successors
and assigns of the Parties; provided, however, that neither Party shall assign
-------- -------
its rights or delegate its obligations hereunder to any other Person without the
prior written consent of the other Party; provided, further, that Purchaser may
-------- -------
assign its rights hereunder, in whole or in part, to (i) a lender for collateral
security purposes and
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<PAGE>
(ii) to one or more Subsidiaries of Purchaser; provided, however, that Purchaser
-------- -------
shall remain liable for its obligations under this Agreement.
8.3. No Third-Party Beneficiaries. This Agreement is for the sole
----------------------------
benefit of the Parties hereto and nothing herein expressed or implied to the
contrary or otherwise shall give or be construed to give any other Person any
legal, equitable or other rights hereunder except as expressly provided in
Sections 7.2(a) and 7.2(b).
8.4. Entire Agreement. This Agreement contains the entire
----------------
understanding of the Parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the Parties with
respect to its subject matter. This Agreement may be amended only by a written
instrument duly executed by the Parties.
8.5. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.
8.6. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the internal laws of the State of New
York without giving any effect to principles of conflicts of laws.
8.7. Notices. All notices hereunder shall be in writing and shall be
-------
deemed to have been given at the time when mailed by registered or certified
mail, addressed to the address
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<PAGE>
below stated of the Party to which notice is given, or to such changed address
as such Party may have fixed by notice:
To Stockholder: Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017
Attn: David A. Tanner
-with a copy to-
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
Attn: Susan O. Posen, Esq.
To Purchaser: Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Attn: General Counsel
-with a copy to-
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: John P. Mead, Esq.
provided, however, that any notice of change of address shall be effective only
- -------- -------
upon receipt.
8.8. Non-Recourse. Notwithstanding anything contained in this
------------
Agreement to the contrary, it is expressly understood and agreed by the Parties
that each and every representation, undertaking and agreement made in this
Agreement on the part of Purchaser or Stockholder was not made or intended to be
made as a personal or individual representation, undertaking or agreement on the
part of the incorporator or any stockholder, director, officer, agent or
partner, past, present or future, of Purchaser or Stockholder, or any of them,
and no personal or individual liability or responsibility is assumed by and no
recourse at any
-26-
<PAGE>
time shall be asserted or enforced against, any such incorporator, stockholder,
director, officer, agent or partner, past, present or future, of Purchaser or
Stockholder or any of them, all of which recourse (whether in common law, in
equity, by statute or otherwise) is hereby forever waived and released.
8.9. Exclusive Remedy. The exclusive remedy of each Party with
----------------
respect to (i) any failure of a representation and warranty made by the other
Party in this Agreement to be true and correct on the date of this Agreement and
on the Closing Date to which such representation and warranty relates, and (ii)
any failure of the other Party to perform duly and punctually any covenant,
agreement or undertaking on its part contained in this Agreement shall be as
expressly set forth in Section 7, except that (x) Purchaser shall have (A) the
right to seek specific performance or other equitable relief with respect to
Stockholder's obligations under this Agreement, without the necessity of proving
the inadequacy of money damages as a remedy and (B) the rights contemplated by
Section 9.3(c) and (y) the remedies expressly provided in Section 9.3 shall
constitute the sole and exclusive basis for and means of recourse between the
parties with respect to a Default. Each Party expressly waives any and all
other rights or causes of action it or any of its officers, directors, partners,
agents and Affiliates may have against the other Party now or in the future
under any laws, regulations or otherwise.
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<PAGE>
8.10 Confidentiality; Public Announcements.
-------------------------------------
(a) Stockholder acknowledges that it and certain of its Affiliates
have received and, prior to the Closing with respect to each Cable Operating
Entity, may continue to receive information regarding the business and
operations of such Cable Operating Entity, Purchaser and their respective
Subsidiaries (the "Confidential Information"). Stockholder has taken and shall
continue to take appropriate steps to insure that it and its partners,
employees, representatives and agents keep such information confidential;
provided, however, that Stockholder may disclose Confidential Information if it
- -------- -------
has received the written opinion of counsel that such disclosure is required by
applicable law.
(b) Each of the Parties agrees that, except as otherwise required by
law, it shall consult with the other Party before issuing any press release or
otherwise making any public statement with respect to the Transactions or the
other Party or its Affiliates and shall not issue any press release or make any
public statements with respect to the Transactions or the other Party or its
Affiliates without the prior approval of the other Party, it being understood
-- ----------------
that, each Party shall be free to issue additional press releases or make
additional public statements the substance of which, insofar as it relates to
the Transactions or the other Party or its Affiliates, has previously been
included in a press release or public statement approved by such other Party.
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<PAGE>
8.11. Intent of Parties. The Parties intend that nothing in this
-----------------
Agreement shall be deemed to require either Party to cause a Cable Operating
Entity to take any action or cause to be taken any action that would otherwise
require approval of applicable franchise authorities prior to the time such
approval is obtained.
9. EXTENSION OF LOAN; SALES TO THIRD PARTIES.
9.1. Loan to Stockholder. (a) If on or prior to the Nine-Month Date,
-------------------
Purchaser has not delivered to Stockholder the Purchase Price with respect to
Transferred Property for which the conditions to Purchaser's obligations set
forth in Section 5 have been and continue to be satisfied, other than the
receipt of Governmental Authorizations from State or local authorities and
required consents and approvals from, and notices to, lenders and counterparties
to contracts, in each case described in Schedule 3.4, then on the Nine-Month
Date Purchaser or one or more of its designated Subsidiaries shall extend a loan
to Stockholder in an amount equal to such Purchase Price (each, a "Loan").
----
(b) At any time and from time to time prior to the Nine-Month Date,
upon ten Business Days' notice to Stockholder, Purchaser may extend a Loan to
Stockholder in the amount of the Purchase Price with respect to any Transferred
Property; provided, however, that Purchaser shall have no right under this
-------- -------
Section 9.1(b) to extend a Loan with respect to the ARCS Shares unless the
Closings or an extension of a Loan with respect to the
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<PAGE>
Stock and the Framingham Shares shall have occurred prior or contemporaneous
thereto; and provided, further, that all filings required to be made under the
-------- -------
HSR Act shall have been made and the applicable waiting period under the HSR Act
shall have expired or been terminated and, with respect to a Loan to be secured
by ARCS Shares, the GECC Guaranty and Pledge Agreement shall have been
terminated.
(c) Each Loan shall be evidenced by a promissory note substantially
in the form set forth as Exhibit 9.1(a) and shall be secured by a first priority
perfected security interest in (i) in the case of a Loan made in respect of the
Purchase Price for the Stock of WP Cable, Inc., such Stock and WP Cable Inc.'s
partnership interest in CVN; (ii) in the case of a Loan made in respect of the
Purchase Price for the Stock of WP Nashoba Cable, Inc., such Stock and WP
Nashoba Cable, Inc.'s partnership interest in ARCP and ownership interest in the
$3,500,000 Subordinated Note described in Section 2.9; (iii) in the case of a
Loan made in respect of the Purchase Price for the Framingham Shares, such
Shares and Stockholder's ownership interest in the Framingham Partners Loan; and
(iv) in the case of a Loan made in respect of the Purchase Price for the ARCS
Shares, such Shares, all as further set forth in a pledge agreement (the form of
which is set forth in Exhibit 9.1(c) (the "Pledge Agreement")), which shall be
----------------
executed by Stockholder, as of the date on the Loan to which it relates is made,
and delivered by Stockholder to Purchaser, along with the promissory note
relating to such Loan
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<PAGE>
and such further instruments and documents as may be requested by Purchaser (or
its designated Subsidiary) pursuant to Section 4(c) of the Pledge Agreement,
simultaneous with the extension by Purchaser of such Loan. Each Loan otherwise
shall be nonrecourse to Stockholder.
9.2 Actions by Purchaser After Loan Extension. (a) Following the
-----------------------------------------
extension by Purchaser of a Loan pursuant to Section 9.1, Purchaser, acting in
its sole discretion, may, in addition to its other rights under this Agreement,
(i) sell, or cause the sale of, the Transferred Entity to which such Loan
relates, the assets of such Transferred Entity, or the assets of any CATV System
("CATV System Assets") in which such Transferred Entity holds a direct or
------------------
indirect interest, at such price and on such terms as Purchaser shall determine
including by means of a sale in which Purchaser or one or more of its
subsidiaries is the buyer (each, a "Sale") or (ii) enter into any refinancing
----
of all or any portion of the indebtedness of or relating to such Transferred
Entity or any assets in which such Transferred Entity holds a direct or indirect
interest, on such terms as Purchaser shall determine (a "Refinancing").
-----------
Stockholder shall cooperate fully in any Sale or Refinancing and shall execute
and deliver all consents, approvals, waivers, instruments and documents of sale
that Purchaser, in its discretion, determines to be necessary or desirable in
connection with such Sale or Refinancing, including without limitation any such
consents, approvals, waivers, instruments and documents requested by
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<PAGE>
Purchaser prior to the extension of such Loan (such consents, approvals,
waivers, instruments and documents to be conditioned on the extension of such
Loan), and Stockholder hereby consents, on behalf of itself and its Affiliates,
to each such Sale and Refinancing; provided, however, that Stockholder shall not
-------- -------
be required to deliver any representations and warranties or enter into any
covenants or undertakings in connection with a Sale or Refinancing that would be
reasonably likely to result in Stockholder incurring liability to a third party
that would exceed its potential liability under Sections 7 and 9.3 of this
Agreement to Purchaser and Purchaser's officers, directors, agents and
Affiliates under this Agreement had the Transferred Property to which such Loan
relates been sold to Purchaser as contemplated by Section 1.
(b) The net proceeds of any Sale of Shares or Stock with respect to
which a Loan has been extended and remains outstanding (including any such Sale
to Purchaser pursuant to Section 1, in which case Purchaser may offset the
Purchase Price of such Shares or Stock against the amount owing with respect to
the Loan relating to such Shares or Stock) or of any partnership interest or
asset constituting Collateral shall constitute Proceeds to be delivered solely
to Purchaser for application to the repayment of the Loan pursuant to the terms
of the Pledge Agreement. The net proceeds of any Sale of CATV System Assets in
which a Cable Operating Entity holds a direct or indirect interest shall be used
by such Cable Operating Entity for such
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<PAGE>
purposes as may be determined by the manager of such Cable Operating Entity,
acting in its sole discretion; provided, however, that in the event any such
-------- -------
amounts are distributed to or on behalf of Stockholder or any Company, by means
of dividend or distribution, in liquidation or upon dissolution or otherwise,
such amounts shall constitute Proceeds to be delivered solely to Purchaser for
application to the repayment of the Loan pursuant to the terms of the Pledge
Agreement.
(c) Upon Purchaser's receipt of Proceeds pursuant to Section 9.2(b),
Purchaser shall deliver to Stockholder a written instrument, in form reasonably
satisfactory to Stockholder, discharging Stockholder from its repayment
obligations under the Loan relating to such Proceeds to the extent of (i) in the
case of Proceeds arising from a Sale of all (or the last remaining portion) of
the Stock or all (or the last remaining portion) of the Shares, as the case may
be, of the Transferred Entity to which such Loan relates, the entire principal
and interest outstanding under such Loan, (ii) in the case of Proceeds arising
from a Sale of a portion of the Stock or the Shares, as the case may be, of the
Transferred Entity to which such Loan relates, that proportion of the principal
and interest outstanding under such Loan that bears the same relationship to the
total principal and interest outstanding as such Stock or Shares, as the case
may be, bears to the total Stock or Shares constituting Collateral under such
Loan immediately prior to such Sale, and (iii) in the case of Proceeds arising
from a Sale of CATV System Assets in
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<PAGE>
which the Transferred Entity to which such Loan relates holds a direct or
indirect interest, (x) that proportion of the principal and interest outstanding
under such Loan that Purchaser determines bears the same relationship to the
total principal and interest outstanding as the value of such CATV System Assets
bears to the value of all CATV System Assets in which such Transferred Entity
holds a direct or indirect interest immediately prior to such Sale or (y) upon
the Sale of all or the last remaining CATV System Assets in which such
Transferred Entity holds a direct or indirect interest, the entire principal and
interest under such Loan. Thereupon, Purchaser automatically shall be
discharged from its payment obligations with respect to the Purchase Price to
which such Loan relates to the extent of an amount equal to the amount
discharged under such Loan. Notwithstanding the foregoing, in the event that
Stockholder receives proceeds from any such Sale of Shares or Stock, whether
pursuant to the operation of the UCC (as such term is defined in the Pledge
Agreement) or otherwise, the amount of which exceeds the Purchase Price with
respect to such Shares or Stock, the amount of such excess shall be paid over to
Purchaser as an incentive fee in consideration of Purchaser's facilitation of
the Transactions. Stockholder's obligation to pay over such excess shall be
secured by a pledge to Purchaser of Stockholder's right title and interest in
such excess.
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<PAGE>
9.3. Waiver and Reinstatement of Selling
-----------------------------------
Procedures.
-----------
(a) Stockholder and Purchaser hereby irrevocably waive (subject only
to the provisions of Sections 9.3(b) and (c)) their rights under the selling
procedures set forth in (i) Exhibit V to the Letter Agreement; (ii) Article IV
of the Nashoba Agreement, dated as of June 30, 1994, between Stockholder and
Purchaser (the "Nashoba Agreement"); (iii) Article IV of the Stockholder
-----------------
Agreement, dated as of August 8, 1994, between Stockholder and Purchaser (the
"Framingham Agreement"); and (iv) Section 7.6 of the CVN Partnership Agreement,
- ---------------------
as each such agreement may be amended through the last Closing Date under this
Agreement (the "Selling Procedures"); provided, however, that, notwithstanding
------------------ -------- -------
the foregoing, in the event that, prior to the Closing or the extension of a
Loan with respect to the ARCS Shares, ARCS breaches the financial covenants set
forth in Section 6.3 of the GECC Loan Agreement (as such term is defined in the
Letter Agreement), and either (i) Purchaser does not cure such breach by making
a Category I Capital Contribution (as such term is defined in the GECC Loan
Agreement), and such breach results in the acceleration of the maturity of the
indebtedness thereunder and such indebtedness becoming due and payable prior to
its stated maturity, or (ii) Stockholder makes such Category I Capital
Contribution pursuant to Paragraph I.A. of the Letter Agreement, Stockholder
shall have the right, acting pursuant to Paragraph
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<PAGE>
V.A. of the Letter Agreement, to commence the Selling Procedures set forth in
Exhibit V thereto.
(b) If (i) Purchaser fails to fulfill its obligations to extend a
Loan pursuant to Section 9.1(a) with respect to any Transferred Property (a
"Default"), or (ii) a sale and purchase of any Transferred Property has not
- --------
occurred on or prior to the Nine-Month Date because of a failure of the
conditions to Purchaser's obligations set forth in Section 5.7 consisting of a
failure to obtain all required consents and approvals from, and notices to,
lenders under bank credit facilities of Purchaser, the waiver of the Parties set
forth in Section 9.3(a) shall be rescinded insofar as it relates to such
Transferred Property and Stockholder immediately shall have the right to
commence the Selling Procedures solely with respect to (x) if such Transferred
Property is Stock, the Cable Operating Entity in which the Company issuing such
Stock holds an interest and (y) if such Transferred Property is Shares, the
Cable Operating Entity issuing such Shares; provided, however, that in
-------- -------
connection with any Selling Procedures commenced pursuant to this Section
9.3(b), Purchaser shall have no right of first offer or right to deliver any
Sale Deferral Notice (as such term is defined in the relevant Selling
Procedures) and shall be deemed for purposes of such Selling Procedures to be a
Bidding Stockholder (in the case of Selling Procedures relating to ARCS), a
Bidding Partner (in the case of Selling Procedures relating to CVN) or a Bidding
Party (in the case of Selling Procedures relating to Framingham or
-36-
<PAGE>
ARCP), as such terms are defined in the relevant Selling Procedures; and
provided, further, that, notwithstanding to the contrary any provisions set
- -------- -------
forth or referred to in such Selling Procedures governing the distribution of
sale proceeds, the net proceeds (after the payment of all sales related
expenses) of each sale pursuant to any Selling Procedures commenced pursuant to
this Section 9.3(b) shall be distributed, after repayment of all obligations of
the Cable Operating Entity to which such Selling Procedures relate (including
without limitation (A) obligations for the repayment of indebtedness (including
without limitation obligations to repay lenders and, in the case of Selling
Procedures commenced with respect to ARCS, obligations to repay Purchaser for
subordinated general and administrative expenses with respect to ARCS but
excluding amounts owed to Purchaser with respect to (x) in the case of Selling
Procedures commenced with respect to ARCP, its Partner Loan (as such term is
defined in the Nashoba Agreement) and (y) in the case of Selling Procedures
commenced with respect to the Framingham Shares, the $300,000 loan evidenced by
the Subordinated Note Due August 9, 2004 of Cablevision of Framingham, Inc.),
(B) obligations to repay Purchaser or any of its Affiliates for any other
accrued and unpaid general and administrative expenses or any unpaid management
fees and any interest due thereon in each case pursuant to any applicable
agreement described on Exhibit 4.8 (but only to the extent such amounts were
permitted to be paid on
-37-
<PAGE>
a current basis prior to the commencement of such Selling Procedures) and (C)
any required reserves), as follows:
First, to Stockholder in an amount equal to the Purchase Price for
-----
such Transferred Property (but without reference to any amounts owing with
respect to the Purchase Price for any other Transferred Property under this
Agreement); and
Second, to Purchaser in the amount of any remaining proceeds, without
------
right of counterclaim with respect to, or set-off against, any other
amounts owing by Purchaser under this Agreement, which rights Stockholder
irrevocably waives in their entirety.
Notwithstanding anything to the contrary in this Agreement,
Stockholder shall have no right to apply any amounts otherwise distributable to
Purchaser pursuant to the foregoing procedures with respect to any Transferred
Property to the payment of any amounts payable under this Agreement with respect
to any other Transferred Property; and Stockholder's right to commence Selling
Procedures pursuant to this Section 9.3(b) with respect to the ARCS Shares, the
Framingham Shares, or the Stock of either Company, as the case may be, and its
obligations with respect to the application of the net proceeds of any sale
pursuant to such Selling Procedures, shall be separate and distinct from its
rights and obligations arising under this Section 9.3(b) with respect to any
other Transferred Property.
(c) If (i) a sale and purchase of Transferred Property has not
occurred on or prior to the Nine-Month Date because of Stockholder's failure to
comply with and duly perform in all material respects all agreements and
conditions required on its part to be complied with or performed or because of
any other
-38-
<PAGE>
failure of the conditions to Purchaser's obligations set forth in Section 5
(other than (x) a failure to receive Governmental Authorizations from State or
local authorities described in Schedule 3.4, in which case Purchaser shall be
obligated to extend a Loan pursuant to Section 9.1(a), or (y) a failure of the
conditions set forth in Section 5.7 consisting of a failure to obtain all
required consents and approvals from, and notices to, lenders under bank credit
facilities of Purchaser, in which case Stockholder shall have the rights set
forth in Section 9.3(b)(ii)) and (ii) Purchaser has not extended a Loan pursuant
to Section 9.1(b) with respect to such Transferred Property, the waiver of the
Parties set forth in Section 9.3(a) shall be rescinded and the Operative
Agreements relating to such Transferred Property thenceforward shall operate in
accordance with their terms, except that with respect to CVN Purchaser shall
have, in addition to its other rights set forth herein and in the Selling
Procedures included in Section 7.6 of the CVN Partnership Agreement, the right
to deliver a sale deferral notice (as defined in such Agreement) delaying the
commencement of any offering for sale of CVN to a date not later than the first
anniversary of the Nine-Month Date; provided, however, that if such sale and
-------- -------
purchase of Transferred Property has not occurred solely because of a failure of
the condition set forth in Section 5.4 and such failure is caused other than by
Stockholder, or any of its officers, directors, partners, agents or
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<PAGE>
Affiliates, Purchaser shall have no right to deliver such a sale deferral
notice).
10. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
meanings set forth or as referenced below:
"Adjustment" of a Purchase Price shall mean that (A) if the Closing Date to
----------
which such Purchase Price relates occurs (or a Loan is extended with
respect to such Purchase Price) prior to the Five-Month Date, such Purchase
Price shall be reduced by discounting such Purchase Price at the rate of
eight percent (8%) per annum, compounded quarterly, for the actual number
of days remaining between such Closing Date and the Five-Month Date and (B)
if such Closing Date occurs (or a Loan is extended with respect to such
Purchase Price) subsequent to the Five-Month Date, such Purchase Price
shall be increased at the rate of eight percent (8%) per annum, compounded
quarterly, for the actual number of days elapsed between the Five-Month
Date and such Closing Date; provided, however, that (i) upon the extension
-------- -------
of a Loan to Stockholder, no further Adjustment shall be made to the
Purchase Price to which such Loan relates; and (ii) no further Adjustment
shall be made to any Purchase Price on or after the Nine-Month Date unless
the conditions set forth in Section 5 to Purchaser's obligations to
purchase Transferred Property have been and continue to be satisfied and
Purchaser fails to effect such purchase, in which case the Purchase Price
with respect to such Transferred Property shall continue to be subject to
Adjustment until the date that is nine months after the Nine-Month Date
and, thereafter, no further Adjustment to such Purchase Price shall be
made.
"Affiliate" with respect to any Person means any other Person controlling,
---------
controlled by or under common control with such Person.
"ARCS" shall have the meaning set forth in the recitals.
----
"ARCS Shares" shall have the meaning set forth in the recitals.
-----------
"ARCP" shall mean A-R Cable Partners, a Delaware general partnership .
----
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<PAGE>
"Associate" shall have the meaning set forth in the Letter Agreement.
---------
"Broker" shall have the meaning set forth in the Letter Agreement.
------
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
------------
on which banks in New York City are authorized or obligated by law or
executive order to close.
"Cable Operating Entity" shall mean ARCS, ARCP, CVN or Framingham, as the
----------------------
context requires.
"CATV System" means a cable network for distribution of television, other
-----------
audio-visual and/or FM radio signals (broadcast, closed circuit or
otherwise) to viewers within a particular area, which right to broadcast is
franchised or otherwise authorized, including all assets used by such CATV
System in the ordinary course of business, which assets shall include
without limitation all municipal, state and federal franchises, licenses,
authorizations and permits relating to such CATV System, all contracts,
leases, easements and agreements pertaining to such business and the
operation thereof, all subscriber accounts and customer and trade accounts
receivable arising out of or relating to such CATV System, all personal
property, including without limitation cash and cash equivalents, plant and
equipment, vehicles and furniture and other personal property used in
connection with the business of such CATV System, all real property,
together with all improvements, fixtures, easements, rights of way,
leasehold and other interests in real property owned and relating to such
CATV System, all patents, tradenames, trademarks, service marks, or
copyrights necessary, used, owned or held for use with respect to a CATV
System, and all other assets owned or leased and used in the operation of
such CATV System, all contracts and agreements with the subscribers
thereof, all subscriber lists, all inventories of materials and supplies
relating to the CATV System, and all designs, maps, plans, diagrams, books
and records (including without limitation such records relating to the CATV
System as are contained in any computer media) relating to such CATV
System.
"CATV System Assets" shall have the meaning set forth in Section 9.2(a).
------------------
"Change of Control" with respect to Purchaser shall be deemed to have
-----------------
occurred at the time (A) any Person, other than one comprised solely of
members of the Dolan Group or any employee benefit plan sponsored by
Purchaser (or one of its Subsidiaries), shall purchase any common stock of
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<PAGE>
Purchaser (or securities convertible into or exchangeable for such common
stock), provided that after consummation of such purchase, the Person in
question is the "beneficial owner" (which term shall have the meaning set
forth in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of the combined voting power of the then
outstanding voting securities of Purchaser; (B) there shall occur (1) a
reorganization, merger, consolidation, recapitalization, exchange offer,
purchase of assets or other transaction, in each case, with respect to
which the Persons who were the beneficial owners of Purchaser immediately
prior to such a transaction do not, immediately after consummation thereof,
beneficially own more than 50% of the combined voting power of the then
outstanding voting securities of the reorganized, merged, recapitalized or
resulting entity, or (2) a liquidation or dissolution of Purchaser; or (C)
Purchaser shall own or manage CATV Systems serving in the aggregate less
than 500,000 subscribers.
"Closing" shall have the meaning set forth in Section 1.2.
-------
"Closing Date" with respect to the Stock of a Company, the ARCS Shares or
------------
the Framingham Shares, as the case may be, shall mean the date that is five
Business Days after the delivery by Purchaser to Stockholder of a notice in
writing stating that (i) all consents, transfers, approvals, orders,
qualifications and waivers contemplated by Schedule 3.4 hereof with respect
to the purchase and sale hereunder of such Stock or Shares, as the case may
be, have been obtained and (ii) in the case of the Closing Date with
respect to the ARCS Shares, the Closings with respect to the Stock and the
Framingham Shares shall have occurred prior to, or simultaneous with, the
Closing with respect to the ARCS Shares.
"Code" means the Internal Revenue Code of 1986, as from time to time
----
amended or replaced.
"Collateral" shall have the meaning set forth in the Pledge Agreement.
----------
"Companies" and "Company" each shall have the meaning set forth in the
--------- -------
recitals.
"CVN" shall mean Cablevision of Newark, a New York general partnership.
---
"CVN Partnership Agreement" shall mean the Partnership Agreement of CVN,
-------------------------
dated as of October 18, 1991 between CSC Gateway Corporation and WP Cable,
Inc., as amended through the last Closing Date pursuant to this Agreement.
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<PAGE>
"Damages" shall mean any and all losses, fines, penalties, costs,
-------
deficiencies, liabilities, obligations, judgments, settlements (including
without limitation settlement amounts), claims, demands or damages,
including without limitation reasonable out-of-pocket costs, expenses,
costs of investigation, consultant or experts fees and attorneys' fees,
including but not limited to any such costs, expenses and attorneys' fees
incurred in enforcing the right of an indemnified party to indemnification
against any indemnifying party or in connection with any judicial appeal
with respect thereto.
"Default" shall have the meaning set forth in Section 9.3(b).
-------
"Dolan Group" shall mean (i) Charles F. Dolan, any spouse, child, child of
-----------
a spouse, parent, grandchild or other descendant of Charles F. Dolan (where
applicable in each of the foregoing instances, whether natural or adopted),
and any other intestate distributee, heir or legatee of Charles F. Dolan;
(ii) any trust of which there are no principal beneficiaries other than any
of the Persons described in clause (i) above or any partnerships, limited
liability companies or corporations of which there are no partners, members
or stockholders other than the Persons described in clause (i) above; (iii)
any legal representative, guardian or conservator of any of the Persons
described in clause (i) above; (iv) the intestate estate of any of the
Persons described in clause (i) above; and (v) The Dolan Family Foundation,
a New York not-for-profit corporation.
"Five-Month Date" shall mean the date that is five (5) months after the
---------------
date of this Agreement.
"Framingham" shall have the meaning set forth in the recitals.
----------
"Framingham Partners Loan" shall have the meaning set forth in Section 1.2.
------------------------
"Framingham Shares" shall have the meaning set forth in the recitals.
-----------------
"GECC Guaranty and Pledge Agreement" means the Non-Recourse Guaranty and
----------------------------------
Pledge Agreement dated as of May 11, 1992, as amended through the date of
this Agreement, between Stockholder and General Electric Capital
Corporation.
"Governmental Authorizations" means all governmental licenses, franchises,
---------------------------
permits, approvals and other
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governmental authorizations reasonably necessary for the ownership or
operation of a CATV System.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as from time to time in effect prior to the Closing.
"Letter Agreement" means the Letter Agreement, dated February 12, 1992, by
----------------
and among Stockholder, Purchaser and ARCS, as amended to the Closing Date
with respect to the ARCS Shares.
"Lien" means any lien, charge, mortgage, security interest, claim, option,
----
restriction or encumbrance, actual or contingent, affecting any tangible or
intangible assets to be transferred pursuant to this Agreement.
"Loan" shall have the meaning set forth in Section 9.1.
----
"Nashoba Agreement" shall have the meaning set forth in Section 9.3(a).
-----------------
"Nine-Month Date" shall have the meaning set forth in Section 4.5.
---------------
"Operative Agreements" shall have the meaning set forth in Section 4.8.
--------------------
"Party" shall mean Stockholder or Purchaser, as the context requires.
-----
"Person" means any individual, partnership, corporation, association, trust
------
or entity, and the heirs, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.
"Pledge Agreement" shall have the meaning set forth in Section 9.1(c).
----------------
"Proceeds" shall have the meaning set forth in the Pledge Agreement.
--------
"Purchase Price" shall have the meaning set forth in Section 1.1.
--------------
"Sale" shall have the meaning set forth in Section 9.2(a).
----
"Shares" shall have the meaning set forth in the recitals.
------
"Stock" shall have the meaning set forth in the recitals.
-----
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<PAGE>
"Subsidiary" means, with respect to any Person (the "parent"), any
----------
corporation, association or other business entity of which securities or
other ownership interests representing more than 50% of the ordinary voting
power are, at the time as of which any determination is being made, owned
or controlled by the parent or one or more Subsidiaries of the parent or by
the parent and one or more Subsidiaries of the parent.
"Swap Agreement" has the meaning set forth in Section 4.3.
--------------
"Taxes" shall mean all federal, state or local income, gross receipts,
-----
windfall profits, severance, property, production, sales, use, license,
excise, franchise, employment, withholding or similar taxes imposed on the
income, properties or operations of a Person, together with any interest,
additions or penalties with respect thereto and any interest in respect of
such additions or penalties.
"Tax Returns" shall mean all reports and returns required to be filed with
-----------
respect to the Taxes.
"Transactions" shall have the meaning set forth in Section 2.2.
------------
"Transferred Entity" shall have the meaning set forth in Section 5.2.
------------------
"Transferred Property" shall have the meaning set forth in the introductory
--------------------
paragraph to Section 5.
(b) References herein to a specific Section or Schedule shall refer,
respectively, to a Section or Schedule of this Agreement unless the express
context otherwise requires.
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed on the day and year first above written.
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By:
---------------------------------
General Partner
CABLEVISION SYSTEMS CORPORATION
By:
---------------------------------
Name:
Title:
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