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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---------- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________to _________________.
Commission File Number: 1-9046
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Cablevision Systems Corporation
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(Exact name of registrant as specified in its charter)
Delaware 11-2776686
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Media Crossways, Woodbury, New York 11797
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 364-8450
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Class A Common Stock
Name of each exchange on which registered: American Stock Exchange
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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Aggregate market value of voting stock held by nonaffiliates of the registrant
based on the closing price at which such stock was sold on the American Stock
Exchange on March 15, 1996: $745,341,699
Number of shares of common stock outstanding as of March 15, 1996:
Class A Common Stock - 14,340,782
Class B Common Stock - 11,572,709
Documents incorporated by reference - The Company intends to file with the
Securities and Exchange Commission, not later than 120 days after the close of
its fiscal year, a definitive proxy statement or an amendment on Form 8 to this
report containing the information required to be disclosed under Part III of
Form 10-K.
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TABLE OF CONTENTS
Page
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PART I
Item 1. Business. 3
2. Properties. 28
3. Legal Proceedings. 28
4. Submission of Matters to a Vote of
Security Holders. 28
PART II
5. Market for the Registrant's Common Equity
and Related Stockholder Matters. 29
6. Selected Financial Data. 31
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 33
8. Consolidated Financial Statements. 48
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. 89
PART III
10. Directors and Executive Officers of the *
Registrant.
11. Executive Compensation. *
12. Security Ownership of Certain Beneficial
Owners and Management. *
13. Certain Relationships and Related
Transactions. *
PART IV
14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 89
* These items are omitted because the registrant intends to file with the
Securities and Exchange Commission, not later than 120 days after the close
of its fiscal year, a definitive proxy statement or an amendment on Form 8
to this report containing the information required to be disclosed under
Part III of Form 10-K.
(2)
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PART I
ITEM 1. BUSINESS
THE COMPANY
Cablevision Systems Corporation, a Delaware corporation and its majority
owned subsidiaries (the "Company") own and operate cable television systems
in six states with approximately 2,061,000 subscribers at December 31, 1995.
The Company also has ownership interests in and/or manages other cable
television systems which served an aggregate of approximately 662,000
subscribers at December 31, 1995 and has interests in companies that produce
and distribute national and regional programming services and that provide
advertising sales services for the cable television industry. The Company
was formed in 1985 to effect a reorganization of its predecessors.
Cable television is a service that delivers multiple channels of television
programming to subscribers who pay a monthly fee for the services they
receive. Television and radio signals are received over-the-air or via
satellite delivery by antennas, microwave relay stations and satellite earth
stations and are modulated, amplified and distributed over a network of
coaxial and fiber optic cable to the subscribers' television sets. Cable
television systems typically are constructed and operated pursuant to
non-exclusive franchises awarded by local governmental authorities for
specified periods of time.
The Company's cable television systems offer varying levels of service which
may include, among other programming, local broadcast network affiliates and
independent television stations, satellite-delivered "superstations" such as
WTBS (Atlanta), certain other news, information and entertainment channels
such as CNN, CNBC, ESPN, MTV, and certain premium services such as HBO,
Showtime, The Movie Channel and Cinemax.
The Company's cable television revenues are derived principally from monthly
fees paid by subscribers. In addition to recurring subscriber revenues, the
Company derives revenues from installation charges, from the sales of
pay-per-view movies and events, and from the sale of advertising time on
advertiser supported programming. Certain services and equipment provided by
substantially all of the Company's cable television systems are subject to
regulation. See "Business - Cable Television Operations - Regulation - 1992
Cable Act."
For financing purposes, the Company is structured as a restricted group and
an unrestricted group of subsidiaries. The restricted group consists of
Cablevision Systems Corporation and certain of its subsidiaries, including
Cablevision of New York City ("CNYC") and, as of December 15, 1995, a
subsidiary holding the cable television assets previously a part of
Cablevision of Boston Limited Partnership ("Cablevision of Boston") (the
"Restricted Group"). The unrestricted group of subsidiaries consists
primarily of V Cable, Inc. ("V Cable"), Cablevision MFR, Inc. ("Cablevision
MFR"), and Rainbow Programming Holdings, Inc. (including Rainbow Advertising
Sales Corporation ("Rainbow
(3)
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Advertising"), American Movie Classics Company ("AMCC") and SportsChannel
Associates (New York) ("SportsChannel New York")) (collectively, "Rainbow
Programming"). In addition, the Company has an unrestricted group of
investments, consisting of investments in A-R Cable Services, Inc. ("A-R
Cable"), U.S. Cable Television Group, L.P. ("U.S. Cable"), Cablevision of
Framingham Holdings, Inc. ("CFHI"), A-R Cable Partners and Cablevision of
Newark.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources" for a discussion of the
financing of the Company including a discussion of restrictions on
investments by the Restricted Group.
The Company's consolidated cable television systems are concentrated in the
New York City greater metropolitan area (74.6% of the Company's total
subscribers) and the greater Cleveland metropolitan area (14.8% of total
subscribers). The Company believes that its cable systems on Long Island
comprise the largest group of contiguous cable television systems under
common ownership in the United States (measured by number of subscribers).
RECENT DEVELOPMENTS
V CABLE TRANSACTIONS
On February 2, 1996, the Company entered into an agreement, as amended, (the
"GECC Agreement") with General Electric Capital Corporation ("GECC"),
pursuant to which the Company plans to effect a reorganization and
recapitalization relating to its V Cable subsidiary. As of December 31,
1995, V Cable served approximately 378,000 subscribers, principally in the
suburbs of Cleveland, Ohio and on Long Island. As part of this
reorganization and recapitalization, (i) On March 18, 1996 the Company paid
$500 million of V Cable debt and $70 million of U.S. Cable debt, together
with accrued interest, with proceeds from the Company's issuance in February
1996 of $650 million aggregate liquidation preference of 11-1/8% Series L
Redeemable Exchangeable Preferred Stock (the "Series L Preferred Stock");
(ii) all remaining indebtedness of V Cable (which would have amounted to $399
million at December 31, 1995 after giving effect to the March 18, 1996
repayment of $500 million) will be paid with the remainder of the proceeds of
the Series L Preferred Stock, additional borrowings under the Restricted
Group's credit agreement and from funds available under a new Cablevision of
Ohio credit facility, referred to below; (iii) the Company will contribute
its North Coast Cable television system (which served approximately 88,000
subscribers in the Cleveland metropolitan area as of December 31, 1995),
which is currently part of the Company's Restricted Group, to a new
unrestricted subsidiary, Cablevision of Ohio which will also hold V Cable's
Ohio cable television systems and Cablevision of Ohio will enter into a new
$450 million credit facility with a group of banks; (iv) the Long Island
cable television systems of V Cable (161,000 subscribers as of December 31,
1995) will be designated as part of the Company's Restricted Group and the
balance of the debt owed to GECC associated with those systems will be repaid
with the proceeds of Restricted Group borrowings under the Company's credit
agreement; and (v) the 80% interest in U.S. Cable (which served
(4)
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approximately 242,000 subscribers as of December 31, 1995), including U.S.
Cable's 19% interest in VC Holdings, will be acquired for an aggregate
additional cost of $151 million which will be raised through a separate bank
facility (U.S. Cable will be part of the Company's Unrestricted Group).
NEW CABLEVISION OF OHIO CREDIT FACILITY
As part of the V Cable reorganization and recapitalization, the Company will
combine its existing North Coast Cable television system and the Ohio cable
television systems of V Cable into Cablevision of Ohio, which will be a
wholly-owned subsidiary of the Company and a member of the Unrestricted
Group. A group of banks has committed to provide a $450 million credit
facility to Cablevision of Ohio, consisting of a $375 million nine-year
reducing revolving credit facility and a $75 million 9-1/2 year term loan.
In connection with the consummation of the reorganization and
recapitalization of V Cable, Cablevision of Ohio expects to draw
approximately $289 million under the $450 million credit facility which will
be used to repay outstanding V Cable debt to GECC and to repay Restricted
Group debt assumed by Cablevision of Ohio in connection with the contribution
of North Coast Cable.
U.S. CABLE ACQUISITION
On March 18, 1996, the Company contributed $70 million of proceeds of the
Series L Preferred Stock mentioned above to U.S. Cable. U.S. Cable applied
the $70 million to the prepayment to GECC of a portion of the indebtedness
under its credit facility.
The GECC Agreement contemplates that following the receipt of any required
franchise and regulatory approvals, the U.S. Cable partnership will (i)
redeem the 80% of U.S. Cable's partnership interests not already owned by V
Cable for approximately $4 million, (ii) refinance the remaining $151 million
of U.S. Cable indebtedness payable to GECC. The funds to redeem the
partnership interest and to repay indebtedness owed to GECC will be provided
by a drawdown under a $175 million credit facility arranged with a new group
of banks. As part of the acquisition of the 80% interest in U.S. Cable which
the Company does not already own, the Company will acquire the 19% interest
in VC Holdings currently held by U.S. Cable.
There can be no assurance that the V Cable reorganization, including the
acquisition of U.S. Cable partners' interests, will be consummated or will be
consummated in the form presently contemplated.
OFFERINGS AND ACQUISITION
In February 1996, the Company issued 6,500,000 depositary shares,
representing 65,000 shares of 11-1/8% Series L Preferred Stock with an
aggregate liquidation preference of $650 million. The depository shares are
exchangeable, in whole but not in part, at the option of the Company, on or
after April 1, 1996, for the Company's 11-1/8% Senior Subordinated Debentures
due 2008. The Company is required to redeem the Series L
(5)
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Preferred Stock on April 1, 2008 at a redemption price equal to the
liquidation preference of $10,000 per share plus accumulated and unpaid
dividends. The Series L Preferred Stock is redeemable at various redemption
prices beginning at 105.563% at any time on or after April 1, 2003, at the
option of the Company, with accumulated and unpaid dividends thereon to the
date of redemption. The net proceeds of approximately $626 million was used
to repay $570 million of V Cable and U.S. Cable indebtedness in connection
with the V Cable Transactions, as discussed above, with the balance of
approximately $56 million initially used to repay borrowings under the
Company's Credit Agreement. Such amount is expected to be reborrowed at the
time of consummation of the V Cable Transactions, which is expected to occur
during the third quarter of 1996.
On December 15, 1995, the Company acquired the interests in Cablevision of
Boston that it did not previously own. Cablevision of Boston served
approximately 146,300 subscribers on the date of acquisition. In connection
with the acquisition, Cablevision of Boston became a member of the Restricted
Group, all outstanding subordinated advances made by the Company to
Cablevision of Boston became intercompany indebtedness and, effective
December 15, 1995, the results of operations of Cablevision of Boston are
consolidated with those of the Company. See "Consolidated Cable Affiliates -
Cablevision of Boston".
In November 1995, the Company issued 13,800,000 depositary shares
representing 1,380,000 shares of 8-1/2% Series I Cumulative Convertible
Exchangeable Preferred Stock with an aggregate liquidation preference of $345
million (the "Series I Preferred Stock"). The depositary shares are
convertible into shares of the Company's Class A Common Stock at an initial
conversion price of $67.44 per share of Class A Common Stock. The Company
applied the net proceeds of approximately $334 million to the repayment of
Restricted Group bank indebtedness.
Also in November 1995, the Company issued $300 million aggregate principal
amount of 9-1/4% Senior Subordinated Notes due 2005 (the "2005 Notes"). The
Company applied the net proceeds of approximately $292 million of the 2005
Notes to the repayment of Restricted Group bank indebtedness.
In September 1995, the Company issued 2,500,000 shares of its 11-3/4% Series
G Redeemable Exchangeable Preferred Stock with an aggregate liquidation
preference of $250 million (the "Series G Preferred Stock"). The net
proceeds of approximately $239 million were initially used to repay bank
borrowings.
(6)
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CABLE TELEVISION OPERATIONS
GENERAL.
As of December 31, 1995, the Company's consolidated cable television systems
served approximately 2,061,000 subscribers in New York, Ohio, Connecticut,
New Jersey, Michigan, and Massachusetts.
The following table sets forth certain statistical data regarding the
Company's cable television operations (1). During 1995 Cablevision of
Boston, formerly an unconsolidated affiliate, became part of the Restricted
Group and Cablevision of Chicago was sold. During 1994 CNYC and North Coast
Cable became part of the Restricted Group.
<TABLE>
<CAPTION>
As of December 31,
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1995 1994 1993
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<S> <C> <C> <C>
Homes passed (2):
Restricted group. . . . . . . . 2,549,000 2,139,000 1,086,000
Unrestricted group. . . . . . . 779,000 760,000 509,000
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Company consolidated. . . . . . 3,328,000 2,899,000 1,595,000
--------- --------- ---------
--------- --------- ---------
Managed unconsolidated cable
affiliates. . . . . . . . . . 988,000 1,427,000 2,181,000
--------- --------- ---------
--------- --------- ---------
Basic service subscribers: . . . . . . . .
Restricted group. . . . . . . . 1,512,000 1,243,000 815,000
Unrestricted group. . . . . . . 549,000 525,000 350,000
--------- --------- ---------
Company consolidated. . . . . . 2,061,000 1,768,000 1,165,000
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Managed unconsolidated cable
affiliates. . . . . . . . . . 662,000 861,000 1,067,000
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Average number of premium units per. . . .
basic subscriber:. . . . . . . . . . . .
Restricted group. . . . . . . . 2.2 2.2 1.8
Unrestricted group. . . . . . . 1.1 1.0 1.3
Company consolidated. . . . . . 1.9 1.8 2.2
Managed unconsolidated cable
affiliates . . . . . . . . . . 1.1 1.2 2.0
Average revenue per basic subscriber (3):.
Restricted group. . . . . . . . $38.82 $38.29 $38.01
Unrestricted group. . . . . . . $32.45 $31.72 $30.56
Company consolidated. . . . . . $37.07 $36.33 $36.59
Managed unconsolidated cable
affiliates. . . . . . . . . . $28.68 $29.71 $32.50
</TABLE>
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(1) No information is provided in this table for any period in which
an entity was not a consolidated subsidiary of the Company.
(2) Homes passed is based upon homes actually marketed and does not
include multiple dwelling units passed by the cable plant that
are not connected to it.
(3) Based on recurring service revenues for the last month of the
period, excluding installation charges and certain other
non-recurring revenues such as pay-per-view, advertising and home
shopping revenues. See "Business - Cable Television Operations -
Subscriber Rates and Services; Marketing and Sales".
(7)
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SUBSCRIBER RATES AND SERVICES; MARKETING AND SALES.
The Company's cable television systems offer a package of services, generally
marketed as "Family Cable", which includes, among other programming,
broadcast network local affiliates and independent television stations,
satellite-delivered "superstations" and certain other news, information and
entertainment channels such as CNN, CNBC, ESPN and MTV. For additional
charges, the Company's cable television systems provide certain premium
services such as HBO, Showtime, The Movie Channel and Cinemax, which may be
purchased either individually (in conjunction with Family Cable) or in
combinations or in tiers.
In addition, the Company's cable television systems offer a basic package
which includes broadcast network local affiliates and public, educational or
governmental channels and certain public leased access channels.
The Company offers premium services on an individual basis and as components
of different "tiers". Successive tiers include additional premium services
for additional charges that reflect discounts from the charges for such
services if purchased individually. For example, in most of the Company's
cable systems, subscribers may elect to purchase Family Cable plus one, two
or three premium services with declining incremental costs for each
successive tier. In addition, most systems offer a "Rainbow" package
consisting of between five and seven premium services, and a "Rainbow Gold"
package consisting of between eight and ten premium services.
In certain areas with sufficient system capacity, the Company has branded a
new product offering called OptimumTV. OptimumTV, which includes a minimum
of 77 analog channels, offers the Basic and Family packages noted above, as
well as premium services, and a group of three new packages containing
premium networks and ad-supported news, information and entertainment
channels. Depending upon the market, OptimumTV offers customers anywhere
from 20 to 30 new cable channels, including additional pay-per-view channels
that offer new films and sporting events on a transactional basis.
Since its existing cable television systems are substantially fully built,
the Company's sales efforts are primarily directed toward increasing
penetration and revenues in its franchise areas. The Company sells its cable
television services through door-to-door selling supported by telemarketing,
direct mail advertising, promotional campaigns and local media and newspaper
advertising.
Certain services and equipment (converters which are leased to subscribers)
provided by substantially all of the Company's cable television systems are
subject to regulation. See "Business - Cable Television Operations -
Regulation - 1992 Cable Act."
SYSTEM CAPACITY.
The Company is engaged in an ongoing effort to upgrade the technical
capabilities of its cable plant and to increase channel capacity for the
delivery of additional programming
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and new services. The Company's cable television systems have a minimum
capacity of 35 channels and 85% of its subscribers are currently served by
systems having a capacity of at least 52 channels. As a result of currently
ongoing upgrades, the Company expects that by December 1996 approximately 70%
of its subscribers will be served by systems having a capacity of at least 77
channels. A substantial portion of the system upgrades either completed or
underway will utilize fiber optic cable.
PROGRAMMING.
Adequate programming is available to the Company from a variety of sources.
Program suppliers' compensation is typically a fixed, per subscriber monthly
fee based, in most cases, either on the total number of subscribers of the
cable systems of the Company and certain of its affiliates, or on the number
of subscribers subscribing to the particular service. The Company's
programming contracts are generally for a fixed period of time and are
subject to negotiated renewal. The Company's cable programming costs have
increased in recent years and are expected to continue to increase due to
additional programming being provided to most subscribers, increased costs to
produce or purchase cable programming and other factors. Management believes
that the Company will continue to have access to programming services at
reasonable price levels.
FRANCHISES.
The Company's cable television systems are operated primarily under
nonexclusive franchise agreements with local governmental franchising
authorities, in some cases with the approval of state cable television
authorities. Franchising authorities generally charge a fee of up to 5%
based on a percentage of certain revenues of the franchisee. In 1995
franchise fee payments made by the Company aggregated approximately 4% of
total revenues.
The Company's franchise agreements are generally for a term of ten to fifteen
years from the date of grant, although recently renewals have often been for
five to ten year terms. Some of the franchises grant the Company an option
to renew. Except for the Company's franchise for the Town of Brookhaven, New
York which expired in 1991, the expiration dates for the Company's ten
largest franchises range from 1995 to 2001. In certain cases, including the
Town of Brookhaven, the Company is operating under temporary licenses while
negotiating renewal terms with the franchising authorities. Franchises
usually require the consent of the franchising authority prior to the sale,
assignment, transfer or change in ownership or operating control of the
franchisee.
The Cable Communications Policy Act of 1984 (the "1984 Cable Act") and the
Cable Television Consumer Protection and Competition Act of 1992 (the "1992
Cable Act") provide significant procedural protections for cable operators
seeking renewal of their franchises. See "Business - Cable Television
Operations -Regulation". In connection with a renewal, a franchising
authority may impose different and more stringent terms. The Company has
never lost a franchise as a result of a failure to obtain a renewal.
(9)
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COMPETITION.
The Company's cable television systems generally compete with the direct
reception of broadcast television signals by antenna and with other methods
of delivering television signals to the home for a fee. The extent of such
competition depends upon the number and quality of the signals available by
direct antenna reception as compared to the number and quality of signals
distributed by the cable system. The Company's cable television systems also
compete to varying degrees with other communications and entertainment media,
including movies, theater and other entertainment activities.
The recently adopted Telecommunications Act of 1996 ("1996 Telecom Act")
signed into law on February 8, 1996, repeals the 1984 Act prohibition against
telco-cable cross-ownership and provides that a local exchange telephone
company may provide video programming directly to subscribers through a
variety of means, including (1) as a radio-based (MMDS or DBS) multichannel
video programming distributor; (2) as a cable operator, fully subject to the
franchising, rate regulation and other provisions of the 1984 and 1992 Cable
Acts; and (3) through an "open video system" that is certified by the FCC to
be offering nondiscriminatory access to a portion of its channel capacity for
unaffiliated program distributors, subject only to selected portions of the
regulations applicable to cable operators. A local telephone company also
may provide the "transmission of video programming" on a common carrier
basis. Telephone companies in several of the Company's franchise areas have
applied for franchises to offer cable service fully subject to the 1984 and
1992 Cable Acts.
The 1996 Telecom Act also prohibits a telephone company or a cable system
operator in the same market from acquiring each other, except in limited
circumstances, such as areas of smaller population.
Cable television also competes with the home video industry. Owners of
videocassette recorders are able to rent many of the same movies, special
events and music videos that are available on certain premium services. The
availability of videocassettes has affected the degree to which the Company
is able to sell premium service units and pay-per-view offerings to some of
its subscribers.
Multipoint distribution services ("MDS"), which deliver premium television
programming over microwave superhigh frequency channels received by
subscribers with a special antenna, and multichannel multipoint distribution
service ("MMDS"), which is capable of carrying four channels of television
programming, also compete with certain services provided by the Company's
cable television systems. By acquiring several MMDS licenses or subleasing
from several MMDS operators and holders of other types of microwave licenses,
a single entity can increase channel capacity to a level more competitive
with cable systems. MDS and MMDS systems are not required to obtain a
municipal franchise, are less capital intensive, require lower up-front
capital expenditures and are subject to fewer local and FCC regulatory
requirements than cable systems. The ability of MDS and MMDS systems to
serve homes and to appeal to consumers is affected by their less extensive
channel capacity and the need for unobstructed line of sight
(10)
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over-the-air transmission. The Company competes with MDS and MMDS operators
generally in its metropolitan service areas.
Satellite master antenna systems ("SMATV") generally serve large multiple
dwelling units. The FCC has preempted all state and local regulation of
SMATV operations. SMATV is limited to the buildings within which the
operator has received permission from the building owner to provide service.
The FCC has recently streamlined its MDS regulations and opened substantially
more microwave channels to MDS and SMATV operators, which could increase the
strength of their competition with cable television systems. The Company
competes with SMATV operators primarily in the New York City metropolitan
service area. The 1996 Telecom Act amends the definition of cable system to
exclude facilities that do not use public rights-of-way (e.g., SMATV
operators serving multiple buildings not under common ownership or control),
thus exempting such facilities from franchise and other requirements
applicable to cable operators.
In January 1993, the FCC proposed establishing a new local multipoint
distribution service ("LMDS", sometimes referred to as "cellular cable") in
the virtually unused 28 GHz band of the electromagnetic spectrum that could
be used to offer multichannel video in competition with cable systems, as
well as two-way communications services. The FCC has proposed issuing two
LMDS licenses per market, using auctions or lotteries to select licensees.
Suite 12 Group, the originator of this service, currently holds an
experimental license and has constructed a video transmission service using
the 28 Ghz band in a portion of the Company's New York City service area.
The 1984 Cable Act specifically legalized, under certain circumstances,
reception by private home earth stations of satellite-delivered cable
programming services. By law, dish owners have the right to receive
broadcast superstations and network affiliate transmissions in return for a
compulsory copyright fee. Cable programmers have developed new marketing
efforts to reach these viewers. Direct broadcast satellite ("DBS") systems
currently permit satellite transmissions from the low-power C-Band to be
received by antennae approximately 60 to 72 inches in diameter at the
viewer's home. New higher power DBS systems providing transmissions over the
Ku-Band permit the use of smaller receiver antennae and thus may be more
appealing to customers. Four DBS systems are now operational in the United
States. Both C-Band and Ku-Band DBS delivery of television signals are
competitive alternatives to cable television.
Other technologies supply services that may compete with certain services
provided by cable television. These technologies include translator stations
(which rebroadcast signals at different frequencies at lower power to improve
reception) and low-power television stations (which operate on a single
channel at power levels substantially below those of most conventional
broadcasters and, therefore, reach a smaller service area).
The full extent to which developing media will compete with cable television
systems may not be known for several years. There can be no assurance that
existing, proposed or as yet undeveloped technologies will not become
dominant in the future and render cable television systems less profitable or
even obsolete. In particular, certain major telephone
(11)
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companies have demonstrated an interest in acquiring cable television systems
or providing video services to the home through fiber optic technology.
Changes in the laws and regulations mentioned above governing telephone
companies could allow these companies in the future to provide information
and entertainment services to the home.
Although substantially all the Company's cable television franchises are
non-exclusive, most franchising authorities have granted only one franchise
in an area. Other cable television operators could receive franchises for
areas in which the Company operates or a municipality could build a competing
cable system. One company has applied for and obtained a franchise to build
and operate a competing cable television system in several communities in
Connecticut in which the Company currently holds a cable franchise. This
franchise is subject to cancellation if the holders do not provide by August
1996, evidence of their ability to finance the construction of the cable
system. The Company has challenged the grant of this franchise in state
court. As mentioned above, telephone companies in several of the Company's
franchise areas have applied for franchises to offer cable service. The 1992
Cable Act described below prohibits municipalities from unreasonably refusing
to grant competitive franchises and facilitates the franchising of second
cable systems or municipally-owned cable systems. See "Regulation - 1992
Cable Act," below.
REGULATION.
1984 CABLE ACT. In 1984, Congress enacted the 1984 Cable Act, which set
uniform national guidelines for cable regulation under the Communications Act
of 1934. While several of the provisions of the 1984 Cable Act have been
amended or superseded by the 1992 Cable Act and/or the 1996 Telecom Act, each
described below, other provisions of the 1984 Act, including the principal
provisions relating to the franchising of cable television systems, remain in
place. The 1984 Cable Act authorizes states or localities to franchise cable
television systems but sets limits on their franchising powers. It sets a
ceiling on cable franchise fees of 5% of gross revenues and prohibits
localities from requiring cable operators to carry specific programming
services. The 1984 Cable Act protects cable operators seeking franchise
renewals by limiting the factors a locality may consider and requiring a due
process hearing before denial. The 1984 Cable Act does not, however, prevent
another cable operator from being authorized to build a competing system.
The 1992 Cable Act prohibits franchising authorities from granting exclusive
cable franchises and from unreasonably refusing to award an additional
competitive franchise.
The 1984 Cable Act allows localities to require free access to public,
educational or governmental channels, but sets limits on the number of
commercial leased access channels cable television operators must make
available for potentially competitive services. The 1984 Cable Act prohibits
obscene programming and requires the sale or lease of devices to block
programming considered offensive.
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1992 CABLE ACT. On October 5, 1992, Congress enacted the 1992 Cable Act
which represents a significant change in the regulatory framework under which
cable television systems operate.
After the effective date of the 1984 Cable Act, and prior to the enactment of
the 1992 Cable Act, rates for cable services were unregulated for
substantially all of the Company's systems. The 1992 Cable Act reintroduced
rate regulation for certain services and equipment provided by most cable
systems in the United States, including substantially all of the Company's
systems. On April 1, 1993, the FCC adopted rules implementing the rate
regulation provisions of the 1992 Cable Act. While several of the provisions
of the 1992 Cable Act have been amended or superseded by the 1996 Telecom
Act, other provisions remain in place.
The 1992 Cable Act requires each cable system to establish a basic service
package consisting, at a minimum, of all local broadcast signals and all
non-satellite delivered distant broadcast signals that the cable system
wishes to carry, and all public, educational and governmental access
programming. The rates for the basic service package are subject to
regulation by local franchising authorities. Under the FCC's April 1, 1993
rate regulation rules, a cable operator whose per channel rates as of
September 30, 1992 exceeded an FCC established benchmark was required to
reduce its per channel rates for the basic service package by up to 10%
unless it could justify higher rates on the basis of its costs. On February
22, 1994, after reconsideration, the FCC ordered a further reduction of 7% in
rates for the basic service tier in effect on September 30, 1992, for an
overall reduction of 17% from those rates. The amount of this 17% decrease
that is below a new per channel benchmark need not be implemented pending
completion of FCC studies of the costs of below-benchmark cable systems. In
the interim, however, the amount of the 17% decrease that is below this
benchmark must be computed by the cable system and must be offset against
otherwise allowable rate increases by these systems. Franchise authorities
(local municipalities or state cable television regulators) are also
empowered to regulate the rates charged for the installation and lease of the
equipment used by subscribers to receive the basic service package (including
a converter box, a remote control unit and, if requested by a subscriber, an
addressable converter box or other equipment required to access programming
offered on a per channel or per program basis), including equipment that may
also be used to receive other packages of programming, and the installation
and monthly use of connections for additional television sets. The FCC's
rules require franchise authorities to regulate rates for equipment and
connections for additional television sets on the basis of an actual cost
formula developed by the FCC, plus a return of 11.25%. No additional charge
is permitted for the delivery of regulated services to additional sets unless
the operator incurs additional programming costs in connection with the
delivery of such services to multiple sets.
The FCC may, in response to complaints by a subscriber, municipality or other
governmental entity, reduce the rates for service packages other than the
basic service package if it finds that such rates are unreasonable. The FCC
will in response to complaints also regulate, on the basis of actual cost,
the rates for equipment used only to receive these higher packages. Services
offered on a per channel or per program basis or
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packages comprised only of services that are also available on a per channel
or per program basis are not subject to rate regulation by either
municipalities or the FCC. The FCC on February 22, 1994 adopted criteria to
assess whether certain discounted packages of "a la carte" or per channel
offerings should be regulated as a tier of services by the FCC or should be
treated as unregulated per channel offerings.
The regulations adopted by the FCC on April 1, 1993, including the original
rate benchmarks, became effective on September 1, 1993. The new rate
regulations adopted by the FCC on February 22, 1994, including the new
benchmarks, became effective in May, 1994.
The FCC's rules provide that, unless a cable operator can justify higher
rates on the basis of its costs, increases in the rates charged by the
operator for the basic service package or any other regulated package of
service may not exceed an inflation indexed amount, plus increases in certain
costs beyond the cable operator's control, such as taxes, franchise fees and
increased programming costs that exceed the inflation index. A cable
operator may not pass through to subscribers any amounts paid by the operator
on or before October 6, 1994, to broadcast stations for the retransmission of
their signals. Increases in retransmission fees above those in effect on that
day may be passed through to subscribers. As part of the implementation of
its rate regulations, the FCC froze all cable service rates until May 15,
1994 and provided cable operators with the option to defer refund liabilities
by continuing rates in effect until July 15, 1994. The Company elected to
defer its refund liabilities.
On February 22, 1994, the FCC adopted guidelines for cost-of-service showings
that establish a regulatory framework pursuant to which a cable television
operator may attempt to justify rates in excess of the benchmarks. Such
justification would be based upon (i) the operator's costs in operating a
cable television system (including certain operating expenses, depreciation
and taxes) and (ii) a return on the investment the operator has made to
provide regulated cable television services in such system (such investment
being referred to as its "ratebase", which includes working capital and
certain costs associated with the construction of such system). The
guidelines (1) create a rebuttable presumption that excludes from a cable
television operator's ratebase any "excess acquisition costs" (equal to the
excess of the purchase price for a cable television system over the original
construction cost of such system, or its book value at the time of
acquisition), (2) include in the rate base the costs associated with certain
intangibles such as franchise rights and customer lists, and (3) set a
uniform rate of return for regulated cable television service of 11.25% after
taxes. The interim guidelines originally included a "productivity offset
feature" that could reduce otherwise justifiable rate increases based on a
claimed increase in a cable television system's operational efficiencies.
The FCC dropped this proposal in September, 1994.
On November 10, 1994, the FCC reversed its policy regarding rate regulation
of packages of a la carte services. A la carte services that are offered in
a package will now be subject to rate regulation by the FCC. In light of the
uncertainty created by the various criteria that the FCC previously applied
to a la carte packages, the FCC, in those cases in which
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it was not clear how the FCC's previous criteria should have been applied to
the package at issue, and where only a "small number" of channels were moved
from a previously regulated tier to the package, will allow cable operators
to treat existing packages as new product tiers ("NPT") as discussed below.
The FCC, in addition to revising its rules governing a la carte channels,
also on November 10, 1994 revised its regulations governing the manner in
which cable operators may charge subscribers for new cable programming
services. The FCC instituted a three-year flat fee mark-up plan for charges
relating to new channels of cable programming services in addition to the
present formula for calculating the permissible rate for new services.
Commencing on January 1, 1995, operators may charge for new channels of cable
programming services added after May 14, 1994 at a markup of up to 20 cents
per channel over actual programming costs, but may not make adjustments to
monthly rates for these new services totaling more than $1.20, plus an
additional 30 cents solely for programming license fees, per subscriber over
the first two years of the three-year period. Cable operators may charge an
additional 20 cents in the third year only for channels added in that year.
Cable operators electing to use the 20 cent per channel adjustment may not
take a 7.5% mark-up on programming cost increases, which is permitted under
the FCC's current rate regulations. The FCC requested further comment on
whether cable operators should continue to receive the 7.5% mark-up on
increases in license fees on existing programming services.
Additionally, the FCC will permit cable operators to offer NPTs at rates
which they elect so long as, among other conditions, other service tiers that
are subject to rate regulation are priced in conformity with applicable FCC
regulations and cable operators do not remove programming services from
existing service tiers and offer them on the NPT.
Under the 1992 Cable Act, systems may not require subscribers to purchase any
service package other than the basic service package as a condition of access
to video programming offered on a per channel or per program basis. Cable
systems are allowed up to ten years to the extent necessary to implement the
necessary technology to facilitate this access. Substantially all of the
Company's systems are currently capable of implementing the technology
mandated by the 1992 Cable Act.
In addition, the 1992 Cable Act (i) requires cable programmers under certain
circumstances to offer their programming to present and future competitors of
cable television such as MMDS, SMATV and DBS, and prohibits new exclusive
contracts with program suppliers without FCC approval, (ii) directs the FCC
to set standards for limiting the number of channels that a cable television
system operator could program with programming services controlled by such
operator, (iii) bars municipalities from unreasonably refusing to grant
additional competitive franchises, (iv) requires cable television operators
to carry ("Must Carry") all local broadcast stations (including home shopping
broadcast stations), or, at the option of a local broadcaster, to obtain the
broadcaster's prior consent for retransmission of its signal ("Retransmission
Consent"), (v) requires cable television operators to obtain the consent of
any non-local broadcast station prior to retransmitting its signal, and (vi)
regulates the ownership by cable operators of
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other media such as MMDS and SMATV. In connection with clause (ii) above
concerning limitations on affiliated programming, the FCC has established a
40% limit on the number of channels of a cable television system that can be
occupied by programming services in which the system operator has an
attributable interest and a national limit of 30% on the number of households
that any cable company can serve. In connection with clause (iv) above
concerning retransmission of a local broadcaster's signals, a substantial
number of local broadcast stations are currently carried by the Company's
cable television systems and have elected to negotiate with the Company for
Retransmission Consent. Although the Company has obtained Retransmission
Consent agreements with all broadcast stations it currently carries, a number
of these agreements are temporary in nature and the potential remains for
discontinuation of carriage if an agreement is not renewed following their
expiration. Renewal periods for several of these agreements expire in
October 1996.
The FCC has imposed new regulations under the 1992 Cable Act in the areas of
customer service, technical standards, equal employment opportunity, privacy,
rates for leased access channels, obscenity and indecency, disposition of a
customer's home wiring and compatibility between cable systems and other
consumer electronic equipment such as "cable ready" television sets and
videocassette recorders.
A number of lawsuits have been filed in federal court challenging the
constitutionality of various provisions of the 1992 Cable Act. A challenge
to the constitutionality of the 1992 Cable Act's Must Carry rules was denied
by a federal court in April 1993. On appeal, the United States Supreme Court
returned this decision to the lower court for further proceedings. The lower
court again upheld the Must Carry rules, but this decision is on appeal to
the Supreme Court. Most other challenged provisions of the 1992 Cable Act
have been upheld at the federal district court level, including provisions
governing rate regulation and retransmission consent, and appeal of the rate
regulation decision was unsuccessful. The Company cannot predict the outcome
of any of the foregoing litigation affecting the 1992 Cable Act.
1996 TELECOM ACT. The 1996 Telecom Act deregulates the rates for non-basic
tiers of service provided by all cable operators after March 31, 1999 and
immediately deregulates the upper tier rates of entities that operate small
cable systems as defined under the statute. It permits regulated equipment
rates to be computed by aggregating costs of broad categories of equipment at
the franchise, system, regional or company level. The 1996 Telecom act
eliminates the right of individual subscribers to file rate complaints with
the FCC concerning certain nonbasic cable programming service tiers.
The 1992 Cable Act provided that all rate regulation, for both the upper
tiers and for basic service, is eliminated when a cable system is subject to
"effective competition" from another multichannel video programming provider
such as MMDS, DBS, a telephone company, or a combination of all of these.
The 1996 Telecom Act expanded the definition of "effective competition" to
include instances in which a local telephone company or its affiliate (or a
multichannel video programming distributor using the facilities of a
telephone company or its affiliates) offers comparable video programming
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directly to subscribers by any means (other than DBS) in the cable operator's
franchise area. Since telephone companies are providing or planning to
provide video services in several of the Company's franchise areas, this
provision will allow the Company greater flexibility in packaging and pricing
its product in those markets.
The 1996 Telecom Act also eliminates the uniform rate structure requirements
of the 1992 Cable Act for cable operators in areas subject to effective
competition or to video programming offered on a per channel or per program
basis, and allows non-uniform bulk discount rates to be offered to multiple
dwelling units.
OTHER FCC REGULATION. In addition to the rules and regulations promulgated
by the FCC under the 1984 Cable Act, the 1992 Cable Act and the 1996 Telecom
Act, the FCC has promulgated other rules affecting the Company. FCC rules
require that cable systems black out certain network and sports programming
on imported distant broadcast signals upon request. The FCC also requires
that cable systems delete syndicated programming carried on distant signals
upon the request of any local station holding the exclusive right to
broadcast the same program within the local television market and, in certain
cases, upon the request of the copyright owner of such programs. These rules
affect the diversity and cost of the Company's programming options for its
cable systems.
FCC regulation also includes matters regarding restrictions on origination
and cablecasting by cable system operators; application of the rules
governing political broadcasts; customer service; home wiring and limitations
on advertising contained in nonbroadcast children's programming.
Implementing provisions of the 1993 Budget Act, the FCC has adopted
requirements for payment of annual "regulatory fees". For 1994, cable
television systems were required to pay regulatory fees of $0.37 per
subscriber, which may be passed on to subscribers as "external cost"
adjustments to basic cable service. This fee was increased to $0.51 per
subscriber for 1995, and may be further increased in 1996. Fees are also
assessed for other licenses, including licenses for business radio, cable
television relay systems (CARS) and earth stations, which, however, may not
be collected directly from subscribers.
The FCC has the authority to regulate utility company rates for cable rental
of pole and conduit space. States can establish preemptive regulations in
this area, and the states in which the Company's cable television systems
operate have done so. The 1996 Telecom Act modifies the current pole
attachment provisions of the Communications Act by requiring that utilities
provide cable systems and telecommunications carriers with nondiscriminatory
access to any pole, conduit or right-of-way controlled by the utility. The
FCC is required to adopt new regulations to govern the charges for pole
attachments used by companies providing telecommunications services,
including cable operators. These regulations are likely to increase the rates
charged to cable companies providing voice and data, in addition to video
services. These new pole attachment regulations will not become effective,
however, until five years after enactment of the 1996 Telecom Act, and any
increase in attachment rates resulting from the FCC's new regulations will be
phased in equal annual increments over a period of five years.
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The FCC's technical guidelines for signal leakage became substantially more
stringent in 1990, requiring upgrading expenditures by the Company. Two-way
radio stations, microwave-relay stations and satellite earth stations used by
the Company's cable television systems are licensed by the FCC.
FEDERAL COPYRIGHT REGULATION. There are no restrictions on the number of
distant broadcast television signals that cable television systems can
import, but cable systems are required to pay copyright royalty fees to
receive a compulsory license to carry them. The United States Copyright
Office has increased the royalty fee from time to time. The FCC has
recommended to Congress the abolition of the compulsory licenses for cable
television carriage of broadcast signals. Any such action by Congress could
adversely affect the Company's ability to obtain such programming and could
increase the cost of such programming.
CABLE TELEVISION CROSS-MEDIA OWNERSHIP LIMITATIONS. In addition to the
prohibition on telephone company-cable cross-ownership, now removed by the
1996 Telecom Act, the 1984 Cable Act prohibited any person or entity from
owning broadcast television and cable properties in the same market. The
1992 Cable Act imposed limits on new acquisitions of SMATV or MMDS systems by
cable operators in their franchise areas. The 1996 Telecom Act repeals the
statutory ban on cable-broadcast station cross-ownership to permit common
ownership or control of a television station and a cable system with
overlapping service areas. The 1996 Telecom Act leaves in place, however,
the cable system-television station cross-ownership restriction contained in
the FCC's rules and does not prejudge the Commission's review of the
regulation, which will occur this year. The 1996 Telecom Act also directs
the FCC to revise its existing regulations concerning broadcast network-cable
cross-ownership to permit common control of both a television network and a
cable system. The 1996 Telecom Act removes the statutory ban on cable-MMDS
cross-ownership on any cable operator in a franchise area where one cable
operator is subject to effective competition.
STATE AND MUNICIPAL REGULATION OF CABLE TELEVISION. Regulatory
responsibility for essentially local aspects of the cable business such as
franchisee selection, system design and construction, safety, and consumer
services remains with either state or local officials and, in some
jurisdictions, with both. The 1992 Cable Act expanded the factors that a
franchising authority can consider in deciding whether to renew a franchise
and limits the damages for certain constitutional claims against franchising
authorities for their franchising activities. New York law provides for
comprehensive state-wide regulation, including approval of transfers of cable
franchises and consumer protection legislation. State and local franchising
jurisdiction is not unlimited, however, and must be exercised consistently
with the provisions of the 1984 Cable Act and the 1992 Cable Act. Among the
more significant restrictions that the Cable Act imposes on the regulatory
jurisdiction of local franchising authorities is a 5% ceiling on franchise
fees and mandatory renegotiation of certain franchise requirements if
warranted by changed circumstances.
TELECOMMUNICATIONS REGULATION. The 1996 Telecom Act removes barriers to
entry in the local telephone market that is now monopolized by the BOCs and
other local exchange
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carriers by preempting state and local laws that restrict competition and by
requiring incumbent local exchange telephone companies to provide
nondiscriminatory access and interconnection to potential competitors, such
as cable operators and long distance companies. At the same time, the new
law eliminates the Modified Final Judgment and permits the BOCs to enter the
market for long distance service (through a separate subsidiary) after they
satisfy a "competitive checklist." The 1996 Telecom Act also permits
interstate utility companies to enter the telecommunications market for the
first time.
The 1996 Telecom Act also eliminates or streamlines many of the requirements
applicable to local exchange carriers, and requires the FCC and states to
review universal service programs and encourage access to advanced
telecommunications services provided by all entities, including cable
companies, by schools, libraries and other public institutions. The FCC and,
in some cases, states are required to conduct numerous rulemaking proceedings
to implement these provisions.
CONSOLIDATED CABLE AFFILIATES
V CABLE. In February 1996, the Company entered into the GECC Agreement
pursuant to which the Company plans to effect a reorganization and
recapitalization relating to V Cable and U.S. Cable. For a description see
"Recent Developments - V Cable Transactions" above and Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources". For a description of V Cable's debt at
December 31, 1995 see Note 4 of Notes to Financial Statements.
CABLEVISION OF BOSTON. On December 15, 1995, the Company acquired the
interests in Cablevision of Boston that it did not previously own pursuant to
an agreement entered into by the Company and Cablevision of Boston. In
connection with the acquisition, the limited partners (other than the
Company) of Cablevision of Boston received 682,454 shares (of which 680,266
shares were issued by December 31, 1995) of the Company's Class A Common
Stock and the Company paid approximately $83 million, (including fees and
expenses) primarily with funds borrowed under the Company's Credit Agreement,
to repay existing Cablevision of Boston indebtedness and to make certain
payments to Charles F. Dolan, ("Mr. Dolan") referred to below. Upon
consummation of the acquisition, Cablevision of Boston became a member of the
Restricted Group and all outstanding subordinated advances made by the
Company to Cablevision of Boston became intercompany indebtedness. Mr.
Dolan, a former general partner of Cablevision of Boston and the Chairman of
the Board of the Company, received 7,357 shares of the Company's Class A
Common Stock and approximately $20.8 million in cash to repay a portion of
Cablevision of Boston's indebtedness to him in connection with the
acquisition. The Company and its affiliates (other than Cablevision of
Boston's former general partners and their affiliates) received 1,041,553
shares of the Company's Class A Common Stock (such shares are reflected as
treasury shares at December 31, 1995) and assumed approximately $42.9 million
of intercompany indebtedness referred to above. As part of the acquisition
of Cablevision of Boston, the Company entered into an agreement with Mr.
Dolan with respect to his 0.5% general partnership interest in Cablevision of
Brookline
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Limited Partnership ("Cablevision of Brookline"), a partnership
affiliated with Cablevision of Boston. The Company acquired the remaining
99.5% of the partnership interests in Cablevision of Brookline in the
acquisition of Cablevision of Boston. Under the agreement, the Company has a
right of first refusal to acquire Mr. Dolan's general partnership interest
and a right to acquire such interest on the earlier to occur of Mr. Dolan's
death or January 1, 2002 at the greater of $10,000 or the book value of such
interest. Mr. Dolan's estate has the right to put the interest to the
Company at the same price. Additionally, in the event of a change of control
of the Company or Cablevision of Brookline, Mr. Dolan will have the right to
put his general partnership interest in Cablevision of Brookline to the
Company at the greater of (i) prices declining from $3.9 million for the year
ended December 15, 1996 to $10,000 for the year ended December 15, 2002 and
(ii) the book value of such interest.
CABLEVISION MFR. In August 1994, Cablevision MFR, Inc. ("Cablevision MFR"),
a wholly-owned subsidiary of the Company, acquired substantially all of the
assets of Monmouth Cablevision Associates, L.P. ("Monmouth Cablevision") and
Riverview Cablevision Associates, L.P. ("Riverview Cablevision")
(collectively, "Monmouth/Riverview") consisting of cable television systems
in New Jersey. The operations of Monmouth Cablevision and Riverview
Cablevision are consolidated with those of the Company as of the date of
acquisition. The aggregate purchase price for the two New Jersey systems was
$391.2 million. Approximately $237.8 million of such purchase price was
financed by a senior credit facility of newly formed subsidiaries of
Cablevision MFR secured solely by the assets of the systems. The remaining
$153.4 million of such purchase price was paid with cash of approximately
$12.1 million and the issuance, by Cablevision MFR, of subordinated
promissory notes (the "MFR Notes") totalling $141.3 million due in 1998 and
bearing interest at 6% until the third anniversary and 8% thereafter
increasing to 8% and 10%, respectively, if the Company exercises its option
to pay interest in shares of the Company's Class A common stock.
Principal and interest on the Cablevision MFR promissory notes, which may be
paid in cash or, under certain circumstances at the Company's option, in
shares of the Company's Class A common stock, are guaranteed by the Company.
The Company's obligations under the guarantees rank pari passu with the
Company's public subordinated debt. In certain circumstances, Cablevision
MFR may extend the maturity date of the promissory notes until 2003 for
certain additional consideration. In the event the maturity is so extended,
the interest and principal of such notes may thereafter be paid only in cash.
CABLEVISION CLEVELAND. In March, 1994, Cablevision of Cleveland, L.P.
("Cablevision Cleveland"), a partnership comprised of subsidiaries of the
Company, purchased substantially all of the assets and assumed certain
liabilities of North Coast Cable Limited Partnership, which operates a cable
television system in Cleveland, Ohio (the "North Coast Cable Acquisition").
The net cash purchase price for interests not previously owned by the Company
(and excluding excess liabilities assumed by the Company) aggregated
approximately $103.4 million including expenses. The cost of the acquisition
was financed principally by borrowings under the Company's Credit Agreement.
Cablevision Cleveland was part of the Restricted Group at December 31, 1995.
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CABLEVISION OF NEW YORK CITY. In July 1992, the Company acquired (the "CNYC
Acquisition") substantially all of the remaining interests in Cablevision of
New York City - Phase I through Phase V ("CNYC"), the operator of a cable
television system that is under development in The Bronx and parts of
Brooklyn, New York. Prior to the CNYC Acquisition, the Company had a 15%
interest in CNYC and Mr. Dolan owned the remaining interests. Mr. Dolan
remains a partner in CNYC, with a 1% interest and the right to certain
preferential payments.
CNYC holds franchises that permit construction of the franchised areas in
specified phases. Construction of the systems in the Brooklyn and The Bronx
franchises has been substantially completed.
Under the agreement between the Company and Mr. Dolan, a new limited
partnership ("CNYC LP") was formed and holds 99% of the partnership interests
in CNYC. The remaining 1% interest in CNYC is owned by the existing
corporate general partner, Cablevision Systems New York City Corporation,
which is a wholly-owned subsidiary of the Company. Subsidiaries of the
Company own a 1% general partnership interest and a 98% limited partnership
interest in CNYC LP and Mr. Dolan retains a 1% limited partnership interest
in CNYC LP plus certain preferential rights. Mr. Dolan's preferential rights
entitle him to an annual cash payment (the "Annual Payment") of 14%
multiplied by the outstanding balance of his "Minimum Payment". The Minimum
Payment is $40.0 million and is to be paid to Mr. Dolan prior to any
distributions from CNYC LP to partners other than Mr. Dolan. In addition,
Mr. Dolan has the right, exercisable on December 31, 1997, and as of the
earlier of (1) December 31, 2000 and (2) December 31 of the first year after
1997 during which CNYC achieves an aggregate of 400,000 subscribers, to
require the Company to purchase (Mr. Dolan's "put") his interest in CNYC LP.
The Company has the right to require Mr. Dolan to sell his interest in CNYC
LP to the Company (the Company's "call") during the three-year period
commencing one year after the expiration of Mr. Dolan's second put. In the
event of a put, Mr. Dolan will be entitled to receive from the Company the
Minimum Payment, any accrued but unpaid Annual Payments, a guaranteed return
on certain of his investments in CNYC LP and a Preferred Payment defined as a
payment (not exceeding $150.0 million) equal to 40% of the Appraised Equity
Value (as defined) of CNYC LP after making certain deductions including a
deduction of a 25% compound annual return on approximately 85% of the
Company's investments with respect to the construction of Phases III, IV and
V of CNYC and 100% of certain of the Company's other investments in CNYC,
including Mr. Dolan's Annual Payment. In the event the Company exercises its
call, the purchase price will be computed on the same basis as for a put
except that there will be no payment in respect of the Appraised Equity Value
amount.
The Company has the right to make payment of the put or call exercise price
in the form of shares of the Company's Class B Common Stock or, if Mr. Dolan
so elects, Class A Common Stock, except that all Annual Payments must be paid
in cash to the extent permitted under the Company's Credit Agreement (as
defined below). Under the Credit Agreement, the Company is currently
prohibited from paying the Preferred Payment in
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cash and, accordingly, without the consent of the bank lenders, would be
required to pay it in shares of the Company's Common Stock.
The Company has agreed to invest in CNYC LP sufficient funds to permit CNYC
LP to make the required Annual Payments to Mr. Dolan. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Restricted Group."
OTHER CABLE AFFILIATES
A-R CABLE. In May 1992, the Company and A-R Cable consummated a
restructuring and refinancing transaction that had the effect of retiring a
substantial portion of A-R Cable's subordinated debt and reducing the
Company's economic and voting interest in A-R Cable. See Note 2 of Notes to
Consolidated Financial Statements.
CABLEVISION OF NEWARK. Cablevision of Newark is a partnership 25% owned and
managed by the Company and 75% owned by an affiliate of Warburg Pincus,
operating cable television systems located in Newark and South Orange, New
Jersey. The Company manages the operations of Cablevision of Newark for a
fee equal to 3-1/2% of gross receipts, as defined, plus reimbursement of
certain costs and an allocation of certain selling, general and
administrative expenses.
U.S. CABLE. In connection with the V Cable Reorganization, V Cable acquired
for $20.0 million a 20% interest in U.S. Cable. See Note 2 of Notes to
Financial Statements. The Company manages the properties of U.S. Cable under
management agreements that provide for cost reimbursement, including an
allocation of overhead charges.
In February 1996, the Company entered into the GECC Agreement, as amended,
pursuant to which the Company plans to effect a reorganization and
recapitalization relating to V Cable and U.S. Cable. For a further
description see "Business - Recent Developments - V Cable Transactions".
A-R CABLE PARTNERS. In June 1994, A-R Cable Partners, a partnership
comprised of subsidiaries of the Company and E.M. Warburg, Pincus & Co., Inc.
completed the purchase of certain assets of Nashoba Communications, a group
of three limited partnerships, for a purchase price of approximately $90.5
million of which $46.7 million was provided by a senior credit facility
secured by the assets of such systems. The remainder of the purchase price
was provided by equity contributions and subordinated loans from the partners
in A-R Cable Partners. The Company provided $11.9 million for its 30%
interest in A-R Cable Partners and $1.5 million in loans. The Company
manages the operations of A-R Cable Partners pursuant to a management
agreement which provides for a fee equal to 3-1/2% of gross receipts, as
defined, plus reimbursement of certain costs and an allocation of certain
selling, general and administrative expenses.
CABLEVISION OF FRAMINGHAM. In August 1994, Cablevision of Framingham
Holdings, Inc. ("CFHI"), a corporation owned by the Company and E.M. Warburg,
Pincus Investors,
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L.P., acquired substantially all of the assets of Framingham Cablevision
Associates, L.P. ("Framingham Cablevision") consisting of cable television
systems in Massachusetts. The aggregate purchase price, including fees and
expenses, for Framingham Cablevision's assets was $37.5 million.
Approximately $22.7 million of such purchase price was financed by a senior
credit facility of a wholly-owned subsidiary of CFHI secured by the assets of
such system. Approximately $9.7 million of such purchase price was paid by
the issuance by CFHI of a promissory note, guaranteed by the Company, (the
"CFHI Note") due in 1998 and bearing interest at 6% until the third
anniversary and 8% thereafter (increasing to 8% and 10%, respectively, if
interest is paid in shares of the Company's Class A Common Stock). The
remaining amount was financed by loans and capital contributions from its
stockholders, of which the Company provided approximately $1.3 million as a
capital contribution and $0.3 million as a loan for its 30% interest in CFHI.
The Company manages the operations of CFHI pursuant to a management
agreement which provides for a fee equal to 3-1/2% of gross receipts, as
defined, plus reimbursement of certain costs and an allocation of certain
selling, general and administrative expenses.
CABLEVISION OF CHICAGO. Cablevision of Chicago owned cable television
systems operating in the suburban Chicago area. The Company did not have a
material ownership interest in Cablevision of Chicago but had loans and
advances outstanding to Cablevision of Chicago in the amount of $12.3 million
(plus accrued interest which the Company had fully reserved). In August
1995, Cablevision of Chicago sold its cable television systems to Continental
Cablevision, Inc. and the loans from the Company to Cablevision of Chicago,
together with accrued interest reserved by the Company, were repaid in full.
Accordingly, the Company recognized a net gain of approximately $15.3 million
representing the accrued interest which the Company had reserved.
PROGRAMMING OPERATIONS
GENERAL.
The Company conducts its programming activities through Rainbow Programming,
its wholly owned subsidiary, and through subsidiaries of Rainbow Programming
in partnership with certain unaffiliated entities, including National
Broadcasting Company, Inc. ("NBC") and Liberty Media Corporation. Rainbow
Programming's businesses include eight regional SportsChannel services, four
national entertainment services (American Movie Classics Company ("AMCC"),
Bravo Network ("Bravo") Much Music ("MM") and the Independent Film Channel
("IFC")), Rainbow News 12 (regional news services serving the suburban areas
surrounding New York City) and the sports services of Prime SportsChannel
Networks (Prime Network and NewSport). Rainbow Programming also owns an
interest in Madison Square Garden Corporation ("MSG") (discussed below).
Rainbow Programming acts as managing partner for each of these programming
businesses, other than MSG (which is managed jointly with ITT) and
SportsChannel Florida Associates (which is managed by Front Row
Communications, Inc.), and reflects its share of the profits or losses in
these businesses using the equity method of accounting
(23)
<PAGE>
except for AMCC, SportsChannel New York and News 12 Long Island, whose
operations are consolidated with those of the Company. Certain of Rainbow
Programming's programming interests are held through Rainbow Program
Enterprises ("RPE"), which is substantially wholly owned by Rainbow
Programming.
In March 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership among
subsidiaries of Rainbow Programming and subsidiaries of ITT Corporation, a
Delaware corporation ("ITT"), acquired the business and assets of MSG in a
transaction in which MSG merged with and into MSG Holdings. MSG owns the
Madison Square Garden Arena and the adjoining Paramount Theater, the New York
Rangers professional hockey team, the New York Knicks professional basketball
team and the Madison Square Garden Network, a sports programming network with
over five million subscribers. The purchase price paid by MSG Holdings for
MSG was $1,009.1 million. The name of MSG Holdings has been changed to
Madison Square Garden, L.P.
MSG Holdings funded the purchase price of the acquisition through (i)
borrowings of $289.1 million under a $450 million credit agreement among MSG
Holdings, various lending institutions and Chemical Bank as administrative
agent, (ii) an equity contribution from Rainbow Programming of $110 million,
and (iii) an equity contribution from ITT of $610 million. ITT, Rainbow
Programming and the Company are parties to an agreement made as of August 15,
1994 as amended, (the "Bid Agreement") that, as amended, provides Rainbow
Programming the right to acquire interests in MSG Holdings from ITT
sufficient to equalize the interests of ITT and Rainbow Programming in MSG
Holdings by making certain scheduled payments totalling $250 million (plus
interest on any unpaid portion thereof) on specified dates up to and
including March 17, 1997. Rainbow Programming may acquire all or part of
such interests in MSG Holdings through (i) the payment of cash to ITT, (ii)
the delivery to ITT, at the option of the Company, of common or preferred
stock of the Company (together with the commitment of a nationally recognized
underwriter to promptly purchase such common or preferred stock for cash), or
a combination of cash and common or preferred stock (with such a commitment),
or (iii) the delivery to ITT, at the option of ITT, subject to certain
conditions and in lieu of payment of a limited amount of the required cash or
common or preferred stock for the purchase of a portion of such interests, of
certain designated programming interests of Rainbow Programming. If any
scheduled payment is not made on the applicable due date, then Rainbow
Programming will forfeit (a) its right to equalize the interests in MSG
Holdings and (b) certain minority rights. The Company and Rainbow
Programming may fund the interest payments on the unpaid portion of the $250
million amount required to equalize the interests of ITT and Rainbow
Programming in MSG Holdings from available cash balances or from funds
available from the Restricted Group's principal bank credit agreement.
Accordingly, the Company funded an approximate $29 million interest payment
on March 11, 1996 from funds available under the Restricted Group's principal
bank credit agreement. If certain conditions are met and Rainbow Programming
has forfeited its right to equalize the interests in MSG Holdings, then
Rainbow Programming will also have the right to require ITT to purchase all
of Rainbow Programming's interest in MSG Holdings for an amount equal to (i)
the price paid by Rainbow Programming for
(24)
<PAGE>
such interest plus (ii) all interest paid by Rainbow Programming on the
unpaid portion of the $250 million of scheduled payments (as described above).
Initially MSG Holdings will be managed on a 50-50 basis by Rainbow
Programming and ITT. If, as discussed above, Rainbow Programming does not
equalize its ownership interest in MSG Holdings, its management role will be
effectively eliminated. Rainbow Programming also has the right to
voluntarily relinquish any power to direct the management and policies of MSG
Holdings.
In connection with obtaining the consent of the National Hockey League (the
"NHL") and the National Basketball Association ("NBA") to the indirect
transfers of the New York Rangers and the New York Knickerbockers,
respectively, resulting from the merger, the Company and Rainbow Programming
entered into agreements with the NHL and the NBA, agreeing, among other
things, to conduct themselves in accordance with the relevant rules of each
league.
In July 1995 Rainbow Programming consummated the purchase of NBC's interests
in SportsChannel New York and Rainbow News 12 Company for approximately $95.5
million, giving Rainbow Programming a 100% interest in SportsChannel New York
and Rainbow News 12 Company. The purchase was financed by an additional
drawdown of $94 million under Rainbow Programming's $202 million amended and
restated credit facility and by a $2.5 million equity contribution from the
Company for the balance of the purchase price and related fees.
In July 1994, the proceeds of the initial $105 million loan under the
original Rainbow Programming facility plus $76 million of equity from the
Company were used to purchase Liberty Media Corporation's 50% interest in
AMCC giving Rainbow Programming a 75% ownership interest in AMCC.
Rainbow Programming's financing needs have been funded by the Restricted
Group's investments in and advances to Rainbow Programming, by sales of
equity interests in the programming businesses and, through separate,
external debt financing. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources".
COMPETITION.
There are numerous programming services with which Rainbow Programming
competes for cable television system distribution and for subscribers,
including network television, other national and regional cable services,
independent broadcast television stations, television superstations, the home
videocassette industry, and developing pay-per-view
(25)
<PAGE>
services. Rainbow Programming and the other programming services are
competing for limited channel capacity and for inclusion in the basic service
tier of the systems offering their programming services. Many of these
program distributors are large, publicly-held companies which have greater
financial resources than Rainbow Programming.
Rainbow Programming also competes for the availability of programming,
through competition for telecast rights to films and competition for rights
agreements with sports teams. The Company anticipates that such competition
will increase as the number of programming distributors increases.
In general, the programming services offered by Rainbow Programming compete
with other forms of television-related services and entertainment media on
the basis of the price of services, the variety and quality of programming
offered and the effectiveness of Rainbow Programming's marketing efforts.
REGULATION.
Cable television program distributors such as Rainbow Programming are not
regulated by the FCC under the Communications Act of 1934. To the extent
that regulations and laws, either presently in force or proposed, hinder or
stimulate the growth of the cable television and satellite industries, the
business of Rainbow Programming will be directly affected. As discussed
above under "Business - Cable Television Operations - Regulation", the 1992
Cable Act limits in certain ways the Company's ability to freely manage the
Rainbow Programming services or carry the Rainbow Programming services on
their affiliates' systems and imposes or could impose other regulations on
the Rainbow Programming companies. The "program access" provisions of the
1992 Cable Act require that Rainbow Programming services be sold, under
certain circumstances, to multichannel video programming providers that
compete with the Company's local cable systems. The 1996 Telecom Act extends
the program access requirements of the 1992 Cable Act to a telephone company
that provides video programming by any means directly to subscribers, and to
programming in which such a company holds an attributable ownership interest,
thus allowing the Company's cable systems similar access to programming
developed by their telephone company competitors.
The 1984 Cable Act prohibits localities from requiring carriage of specific
programming services, providing a more open market for Rainbow Programming
and other cable program distributors. The 1984 Cable Act limits the number
of commercial leased access channels that a cable television operator must
make available for potentially competitive services but the 1992 Cable Act
empowers the FCC to set the rates and conditions for such leased access
channels. The reimposition of the FCC's rules requiring blackout of
syndicated programming on distant broadcast signals for which a local
broadcasting station has an exclusive contract opened new channels for
Rainbow Programming's services.
Satellite common carriers, from whom Rainbow Programming and its affiliates
obtain transponder channel time to distribute their programming, are directly
regulated by the FCC. All common carriers must obtain from the FCC a
certificate for the construction
(26)
<PAGE>
and operation of their interstate communications facilities. Satellite
common carriers must also obtain FCC authorization to utilize satellite
orbital slots assigned to the United States by the World Administrative Radio
Conference. Such slots are finite in number, thus limiting the number of
carriers that can provide satellite service and the number of channels
available for program producers and distributors such as Rainbow Programming
and its affiliates. Nevertheless, there are at present numerous competing
satellite services that provide transponders for video services to the cable
industry.
All common carriers must offer their communications service to Rainbow
Programming and others on a nondiscriminatory basis (including by means of a
lottery). A satellite carrier cannot unreasonably discriminate against any
customer in its charges or conditions of carriage.
ADVERTISING SERVICES
Rainbow Advertising sells advertising time to national, regional and local
advertisers on behalf of the Company's cable television systems and
SportsChannel and Rainbow News 12 programming services, as well as on behalf
of unaffiliated cable television systems.
OTHER AFFILIATES
ATLANTIC PUBLISHING. Atlantic Cable Television Publishing Corporation
("Atlantic Publishing") holds a minority equity interest and a debt interest
in a company that publishes a weekly cable television guide which is offered
to the Company's subscribers and to other unaffiliated cable television
operators. As of December 31, 1995, the Company had advanced an aggregate of
approximately $16.7 million to Atlantic Publishing, reflecting approximately
$1.0 million, $0.6 million and $0.5 million, net, paid back during 1995, 1994
and 1993, respectively. The Company has written off all of its advances to
Atlantic Publishing other than $2.4 million. Atlantic Publishing is owned by
a trust for certain Dolan family members; however, the Company has the option
to purchase Atlantic Publishing for an amount equal to the owner's net
investment therein plus interest. The current owner has made only a nominal
investment in Atlantic Publishing to date.
RADIO STATION WKNR. The Company is the owner of Cleveland Radio Associates
("WKNR"), an AM radio station serving the Cleveland metropolitan area with an
all-sports format.
EMPLOYEES AND LABOR RELATIONS
As of December 31, 1995, the Company had 4,934 full-time, 567 part-time and
300 temporary employees. There are no collective bargaining agreements with
employees of the Company. The Company believes that its relations with its
employees are satisfactory.
(27)
<PAGE>
ITEM 2. PROPERTIES
The Company generally leases the real estate where its business offices,
microwave receiving antennae, earth stations, transponders, microwave towers,
warehouses, headend equipment, hub sites, program production studios and
access studios are located. Significant leasehold properties include
fourteen business offices, comprising the Company's headquarters located in
Woodbury, New York with approximately 291,000 square feet of space, and the
headend sites. The Company believes its properties are adequate for its use.
The Company generally owns all assets (other than real property) related to
the cable television operations of the Restricted Group, including its
program production equipment, headend equipment (towers, antennae, electronic
equipment and satellite earth stations), cable system plant (distribution
equipment, amplifiers, subscriber drops and hardware), converters, test
equipment, tools and maintenance equipment. Similarly, the unconsolidated
entities managed by the Company generally own such assets related to their
cable television operations. The Company generally leases its service and
other vehicles.
Substantially all of the assets of the Restricted Group, V Cable, VC Holding
and Cablevision MFR are pledged to secure borrowings under their respective
credit agreements.
ITEM 3. LEGAL PROCEEDINGS
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that such lawsuits will have a material adverse
impact on the financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
(28)
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), is traded on the American Stock Exchange under the symbol "CVC".
The following table sets forth the high and low sales prices for the last two
years of Class A Common Stock as reported by the American Stock Exchange for
the periods indicated.
<TABLE>
<CAPTION>
1995 1994
------------- -------------
Quarter High Low High Low
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First 58-3/4 48-7/8 67-7/8 52-3/8
Second 63-3/4 52-1/4 52-7/8 39
Third 69-3/4 58 61-3/8 45-7/8
Fourth 61 49-3/4 59-7/8 45-7/8
</TABLE>
As of March 15, 1996, there were 915 holders of record of Class A Common Stock.
There is no public trading market for the Company's Class B Common Stock, par
value $.01 per share ("Class B Common Stock"). As of March 15, 1996, there were
25 holders of record of Class B Common Stock.
DIVIDENDS. The Company has not paid any dividends on shares of Class A or Class
B Common Stock. The Company intends to retain earnings to fund the growth of
its business and does not anticipate paying any cash dividends on shares of
Class A or Class B Common Stock in the foreseeable future.
The Company may pay cash dividends on its capital stock only from surplus as
determined under Delaware law. Holders of Class A and Class B Common Stock are
entitled to receive dividends equally on a per share basis if and when such
dividends are declared by the Board of Directors of the Company from funds
legally available therefor. No dividend may be declared or paid in cash or
property on shares of either Class A or Class B Common Stock unless the same
dividend is paid simultaneously on each share of the other class of common
stock. In the case of any stock dividend, holders of Class A Common Stock are
entitled to receive the same percentage dividend (payable in shares of Class A
Common Stock) as the holders of Class B Common Stock receive (payable in shares
of Class B Common Stock). The Company paid $4.4 million of cash dividends on
the Series I Preferred Stock and $7.8 million of dividends in additional shares
of Series G Preferred Stock. The Company is restricted from paying dividends on
its preferred stock (other than on the Company's 8% Series C Cumulative
Preferred Stock) under the provisions of its senior credit agreement if a
default has occurred and is continuing under such agreement. Additionally, the
Company's senior subordinated debt instruments may restrict the payment of
dividends in respect of any shares of capital stock in certain circumstances.
(29)
<PAGE>
Dividends may not be paid in respect of shares of Class A or Class B Common
Stock unless all dividends due and payable in respect of the preferred stock of
the Company have been paid or provided for. Further, dividends may not be paid
in respect of shares of Class A or Class B Common Stock under the Company's
senior credit agreement. See Item 7.-"Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources-
Restricted Group."
(30)
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL AND STATISTICAL DATA
The operating and balance sheet data included in the following selected
financial data have been derived from the consolidated financial statements of
the Company. Acquisitions made by the Company were accounted for under the
purchase method of accounting and, accordingly, the acquisition costs were
allocated to the net assets acquired based on their fair value, except for
assets previously owned by Mr. Dolan or affiliates of Mr. Dolan which were
recorded at historical cost. Acquisitions are reflected in operating, balance
sheet and statistical data from the time of acquisition. The operating data for
1992 reflects the deconsolidation of the Company's A-R Cable subsidiary for
reporting purposes, effective January 1, 1992. The selected financial data
presented below should be read in conjunction with the financial statements of
the Company and notes thereto included in Item 8 of this Report.
<TABLE>
<CAPTION>
Cablevision Systems Corporation
-------------------------------------------------------------
December 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues....................................... $1,078,060 $ 837,169 $ 666,724 $ 572,487 $ 603,272
Operating expenses
Technical.................................... 412,479 302,885 241,877 204,449 213,059
Selling, general and administrative.......... 266,209 195,942 172,687 120,356 121,527
Restructuring charge......................... - 4,306 - - -
Depreciation and amortization................ 319,929 271,343 194,904 168,538 215,326
---------- --------- --------- --------- --------
Operating profit............................... 79,443 62,693 57,256 79,144 53,360
Other income (expense):
Interest expense, net........................ (311,887) (261,781) (230,327) (193,379) (257,189)
Share of affiliates' net loss................ (93,024) (82,864) (61,017) (47,278) (23,780)
Gain (loss) on sale of programming and
affiliate interests, net.................... 35,989 - (330) 7,053 15,505
Gain on sale of marketable securities, net... - - - 733 5,806
Provision for loss on Olympics venture....... - - - (50,000) -
Loss on sale of preferred stock.............. - - - (20,000) -
Write off of deferred financing costs........ (5,517) (9,884) (1,044) (12,284) -
Loss on redemption of debentures............. - (7,088) - - -
Settlement of litigation and
related matters............................. - - - (5,655) (9,677)
Provision for preferential payment
to related party............................ (5,600) (5,600) (5,600) (2,662) -
Minority interest.....................,,,.... (8,637) (3,429) 3,000 - -
Miscellaneous, net........................... (8,225) (7,198) (8,720) (6,175) (11,224)
---------- --------- --------- --------- --------
Net loss....................................... (317,458) (315,151) (246,782) (250,503) (227,199)
Preferred dividend requirement................. (20,249) (6,385) (885) (885) (4,464)
---------- --------- --------- --------- --------
Net loss applicable to common shareholders..... $ (337,707) $(321,536) $(247,667) $(251,388) $(231,663)
---------- --------- --------- --------- --------
---------- --------- --------- --------- --------
Net loss per common share...................... $ (14.17) $ (13.72) $ (10.83) $ (11.17) $ (10.32)
---------- --------- --------- --------- --------
---------- --------- --------- --------- --------
Average number of common shares outstanding
(in thousands)................................ 23,826 23,444 22,859 22,512 22,446
---------- --------- --------- --------- --------
---------- --------- --------- --------- --------
Cash dividends declared per common share....... $ - $ - $ - $ - $ -
---------- --------- --------- --------- --------
---------- --------- --------- --------- --------
</TABLE>
(31)
<PAGE>
<TABLE>
<CAPTION>
Cablevision Systems Corporation
-------------------------------------------------------------
December 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................ $2,502,305 $2,176,413 $1,327,418 $1,251,157 $1,475,672
Total debt.................................. 3,157,107 3,169,236 2,235,499 2,004,452 2,211,056
Deficit investment in affiliates............ 453,935 393,637 325,732 251,679 -
Redeemable preferred stock.................. 257,751 - - - 32,094
Stockholders' deficiency.................... (1,891,676) (1,818,535) (1,503,244) (1,250,248) (932,428)
STATISTICAL DATA:
Homes passed by cable....................... 3,328,000 2,899,000 2,240,000 2,019,000 2,005,000
Basic service subscribers................... 2,061,000 1,768,000 1,379,000 1,262,000 1,372,000
Basic service subscribers as a percentage of
homes passed............................... 61.9% 61.0% 61.6% 62.5% 68.4%
Number of premium television units.......... 3,990,000 3,208,000 3,003,000 2,802,000 2,326,000
Average number of premium units per basic
subscriber at period end................... 1.9 1.8 2.2 2.2 1.7
Average monthly revenue per basic
subscriber (1).............................. $37.07 $36.33 $36.59 $37.64 $34.43
</TABLE>
- ------------------------
(1) Based on recurring service revenues divided by average subscribers for
the month of December.
(32)
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RECENT ACQUISITIONS AND RESTRUCTURINGS
The Company's high levels of interest expense and depreciation and amortization,
largely associated with acquisitions made by the Company in the past, have had
and will continue to have a negative impact on the reported results of the
Company. Consequently, the Company expects to report substantial net losses for
at least the next several years.
1995 ACQUISITIONS In July 1995, the Company, through its wholly-owned
subsidiary Rainbow Programming, purchased NBC's interests in SportsChannel New
York and Rainbow News 12 Company, giving Rainbow Programming a 100% interest in
these companies. In December 1995, the Company acquired the interests in
Cablevision of Boston that it did not previously own and upon consummation of
the acquisition, Cablevision of Boston became a member of the Restricted Group.
The foregoing acquisitions will be referred to as the "1995 Acquisitions".
1994 ACQUISITIONS In March 1994, the Company completed the North Coast Cable
Acquisition. In July 1994, the Company through Rainbow Programming, purchased
an additional 50% interest in AMCC giving Rainbow Programming a 75% ownership
interest in AMCC and in August 1994, the Company consummated the acquisition of
Monmouth Cablevision and Riverview Cablevision. The foregoing acquisitions will
collectively be referred to as the "1994 Acquisitions".
The 1995 Acquisitions and the 1994 Acquisitions will collectively be referred to
as the "Acquisitions".
For a description of the Company's recent acquisitions and restructurings, see
Item 1 - "Business - Recent Developments, - Consolidated Cable Affiliates" and -
"Other Cable Affiliates" and Note 2 of Notes to Consolidated Financial
Statements.
(33)
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
Years Ended December 31,
-------------------------------------
1995 1994
------------------ ------------------ (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues................................................ $1,078,060 100% $ 837,169 100% $ 240,891
Operating expenses:
Technical.............................................. 412,479 38 302,885 36 (109,594)
Selling, general & administrative...................... 266,209 25 195,942 23 (70,267)
Restructuring charge................................... - - 4,306 1 4,306
Depreciation and amortization.......................... 319,929 30 271,343 32 (48,586)
--------- --------- --------
Operating profit........................................ 79,443 7 62,693 8 16,750
Other income (expense):
Interest expense, net.................................. (311,887) (29) (261,781) (31) (50,106)
Share of affiliates' net loss.......................... (93,024) (9) (82,864) (10) (10,160)
Gain on sale of affiliate interests, net............... 35,98 3 - - 35,989
Write off of deferred financing costs.................. (5,517) - (9,884) (1) 4,367
Loss on redemption of debt............................. - - (7,088) (1) 7,088
Provision for preferential payment to related party.... (5,600) - (5,600) (1) -
Minority interest...................................... (8,637) (1) (3,429) - (5,208)
Miscellaneous.......................................... (8,225) (1) (7,198) (1) (1,027)
--------- --------- --------
Net loss................................................ $(317,458) (29)% $(315,151) (38)% $ (2,307)
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1)................................... $399,372 $334,036
Currently payable interest expense, net................. 254,930 208,685
Net cash provided by operating activities (2)........... 154,715 126,625
Net cash used in investing activities (2)............... 551,234 953,870
Net cash provided by financing activities (2)........... 400,501 825,651
</TABLE>
(1) Operating profit before depreciation and amortization is presented
here to provide additional information about the Company's ability
to meet future debt service, capital expenditures and working
capital requirements. Operating profit before depreciation and
amortization should be considered in addition to and not as a
substitute for net income and cash flows as indicators of financial
performance and liquidity as reported in accordance with generally
accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows".
(34)
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 VERSUS YEAR ENDED DECEMBER 31, 1994.
REVENUES for the year ended December 31, 1995 increased $240.9 million (29%) as
compared to net revenues for the prior year. Approximately $148.0 million (18%)
of the increase was attributable to the Acquisitions; approximately $64.3
million (8%) to internal growth of over 145,800 in the average number of
subscribers during the year; and approximately $28.6 million (3%) resulted from
higher revenue per subscriber as a result of rate increases and to increases in
other revenue sources such as advertising and pay per view.
TECHNICAL EXPENSES for 1995 increased $109.6 million (36%) over the 1994
amount. Approximately 19% was attributable to the Acquisitions with the
remaining 17% attributable to increased costs directly associated with the
growth in subscribers and revenues discussed above, as well as to increases
in programming rates for certain of the Company's cable television services.
As a percentage of revenues, technical expenses increased 2% during 1995 as
compared to 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $70.3 million (36%)
for 1995 as compared to the 1994 level. Approximately 18% was directly
attributable to the Acquisitions. The remaining 18% increase resulted from
higher customer service, administrative and sales and marketing costs. As a
percentage of revenues, selling, general and administrative expenses
increased 1% in 1995 compared to 1994.
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased $65.3 million
(20%) to $399.4 million for 1995 from $334.0 million (including a $4.3
million restructuring charge) for 1994. The 1995 increases were primarily
the result of the Acquisitions. Operating profit before depreciation and
amortization is presented here to provide additional information about the
Company's ability to meet future debt service, capital expenditures and
working capital requirements. Operating profit before depreciation and
amortization should be considered in addition to and not as a substitute for
net income and cash flows as indicators of financial performance and
liquidity as reported in accordance with generally accepted accounting
principles.
DEPRECIATION AND AMORTIZATION EXPENSE increased $48.6 million (18%) during
1995 as compared to 1994 primarily as a result of the Acquisitions.
Increased depreciation charges on capital expenditures made during 1995 and
1994 were completely offset by decreased amortization expense, primarily the
result of certain intangible assets which became fully amortized during the
periods.
NET INTEREST EXPENSE increased $50.1 million (19%) during 1995 compared to
1994. Approximately $29.8 million (11%) of the increase was attributable to
the Acquisitions. The remaining increase of 8% was due to higher average
debt balances (including borrowings of $110 million in March 1995 to acquire
an interest in MSG) and higher interest rates in 1995 compared to 1994, and
to the increasing accretion of interest on certain components of V Cable's
debt which require no current cash outlays.
(35)
<PAGE>
SHARE OF AFFILIATES' NET LOSSES of $93.0 million for 1995 and $82.9 million
for 1994 consist primarily of the Company's share of net losses in certain
cable affiliates, primarily A-R Cable ($83.1 million in 1995 and $81.9
million in 1994), and the Company's net share of the profits and losses in
certain programming businesses in which the Company has varying ownership
interests, whose net losses amounted to $9.9 million in 1995 and $1.0 million
in 1994.
GAIN ON SALE OF AFFILIATE INTERESTS in 1995 resulted from the collection of
previously reserved interest, net of certain expenses, of $15.3 million on
advances to Cablevision of Chicago, a cable television affiliate which was
sold during 1995, and to a gain of $20.7 million on the sale of the Company's
interests in a programming partnership.
WRITE OFF OF DEFERRED FINANCING COSTS in 1995 relates primarily to costs
associated with former credit facilities of subsidiaries of the Company which
are now members of the Restricted Group's Credit Agreement and to costs
associated with Rainbow Programming's original $105 million credit facility
which was replaced in January 1995 with a new $202 million facility.
PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY in 1995 consists of the
expensing of $5.6 million representing the amount due with respect to an
annual payment made in connection with the CNYC Acquisition in 1992.
MINORITY INTEREST in 1995 represents NBC's share of the net income of AMCC.
(36)
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
Years Ended December 31,
-------------------------------------
1994 1993
------------------ ------------------ (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues.............................................. $ 837,169 100% $ 666,724 100% $ 170,445
Operating expenses:
Technical............................................ 302,885 36 241,877 36 (61,008)
Selling, general & administrative.................... 195,942 23 172,687 26 (23,255)
Restructuring charge................................. 4,306 1 - - (4,306)
Depreciation and amortization........................ 271,343 32 194,904 29 (76,439)
--------- --------- --------
Operating profit...................................... 62,693 8 57,256 9 5,437
Other income (expense):
Interest expense, net................................ (261,781) (31) (230,327) (35) (31,454)
Share of affiliates' net loss........................ (82,864) (10) (61,017) (9) (21,847)
Gain (loss) on sale of programming interests, net.... - - (330) - 330
Write off of deferred financing costs................ (9,884) (1) (1,044) - (8,840)
Loss on redemption of debt........................... (7,088) (1) - - (7,088)
Provision for preferential payment to
related party....................................... (5,600) (1) (5,600) (1) -
Minority interest.................................... (3,429) - 3,000 - (6,429)
Miscellaneous........................................ (7,198) (1) (8,720) (1) 1,522
--------- --------- --------
Net loss.............................................. $(315,151) (38)% $(246,782) (37)% $(68,369)
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1)................................. $334,036 $252,160
Currently payable interest expense, net............... 208,685 182,225
Net cash provided by operating activities (2)......... 126,625 85,822
Net cash used in investing activities (2)............. 953,870 243,022
Net cash provided by financing activities (2)......... 825,651 167,423
</TABLE>
(1) Operating profit before depreciation and amortization is presented
here to provide additional information about the Company's ability
to meet future debt service, capital expenditures and working
capital requirements. Operating profit before depreciation and
amortization should be considered in addition to and not as a
substitute for net income and cash flows as indicators of financial
performance and liquidity as reported in accordance with generally
accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows".
(37)
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 VERSUS YEAR ENDED DECEMBER 31, 1993.
REVENUES for the year ended December 31, 1994 increased $170.4 million (26%) as
compared to net revenues for the prior year. Approximately $105.0 million (16%)
of the increase was attributable to the 1994 Acquisitions; approximately $58.4
million (9%) to internal growth of 129,200 in the average number of subscribers
during the year; and approximately $23.6 million (4%) resulted from an increase
in other revenue sources such as advertising. These increases were partially
offset by a decrease of approximately $16.6 million (3%) attributable to lower
revenue per subscriber resulting primarily from rate reductions effected in
compliance with FCC regulations and to subscribers purchasing, on average, lower
levels of service.
TECHNICAL EXPENSES for 1994 increased $61.0 million (25%) over 1993.
Approximately 16% was attributable to 1994 Acquisitions; the remaining 9% was
attributable to increased costs directly associated with the growth in
subscribers and revenues discussed above. As a percentage of net revenues,
technical expenses remained relatively constant during 1994 as compared to 1993.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $23.3 million (13%) in
1994 as compared to the 1993 level. Increases of $27.3 million (15%) directly
attributable to the 1994 Acquisitions, $11.8 million (7%) relating to the
Company's growing New York City operations and $5.6 million (3%) resulting from
other general cost increases were partially offset by a $21.4 million (12%)
decrease in net expenses incurred in connection with incentive stock plans,
primarily due to a decrease in the market price of the Company's Class A Common
stock at December 31, 1994 compared to its market price at December 31, 1993.
The net decrease in such stock plan expenses reflects a charge of $13.2 million
made in the fourth quarter of 1994 attributable to the Company's cash settlement
of executive stock options granted under the Company's Employee Stock Plan. See
Note 10 of Notes to Consolidated Financial Statements.
RESTRUCTURING CHARGE The Company recorded a one time charge in the first quarter
of 1994 to provide for employee severance and related costs, resulting from a
restructuring of its operations. This restructuring was undertaken in response
to recent FCC mandated rate reductions in substantially all of the Company's
cable television systems.
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased $81.9 million
(32%) to $334.0 million in 1994 from $252.2 million in 1993. The increase was
comprised of $39.8 million (16%) attributable to the 1994 Acquisitions, with the
remaining increase resulting from the combined effect of the revenue and expense
changes discussed above. Operating profit before depreciation and amortization
is presented here to provide additional information about the Company's ability
to meet future debt service, capital expenditures and working capital
requirements. Operating profit before depreciation and amortization should be
considered in addition to and not as a substitute for net income and cash flows
as indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(38)
<PAGE>
DEPRECIATION AND AMORTIZATION EXPENSE increased $76.4 million (39%) during 1994
as compared to 1993. Approximately $53.3 million (27%) of this increase was a
direct result of the 1994 Acquisitions. The remaining $23.1 million (12%)
increase consisted of increased depreciation charges (including $12.6 million
(6%) for CNYC) relating to capital expenditures made throughout 1994 and 1993
offset partially by a decrease in amortization expense due to certain intangible
assets becoming fully amortized.
NET INTEREST EXPENSE increased $31.5 million (14%) during 1994 compared to
1993. Approximately $26.0 million (11%) of the increase is attributable to
the 1994 Acquisitions. The remaining increase of $5.5 million was the
combined result of the increasing accretion of interest on certain components
of V Cable's debt and the net effect of the Company's issuances of senior
subordinated debentures during 1993, the proceeds of which bore generally
higher average interest rates than the bank debt they replaced.
SHARE OF AFFILIATES' NET LOSSES increased $21.8 million (36%) in 1994
compared to 1993. Such amounts consist primarily of the Company's share in
the net losses of certain cable affiliates which, for the years ended
December 31, 1994 and 1993, amounted to $81.9 million and $69.8 million,
respectively, and in the net (income) or losses of certain programming
businesses (in which the Company has varying ownership interests) which
aggregated $1.0 million and $(8.8) million for the respective 1994 and 1993
years.
MINORITY INTEREST in 1994 represents NBC's 25% share in the net income of
AMCC from the date that the Company purchased its additional 50% interest in
AMCC and therefore began consolidating AMCC's results of operations. See
Note 4 of Notes to Consolidated Financial Statements. In 1993 minority
interest represents U.S. Cable's share of losses in a subsidiary of V Cable,
limited to its $3.0 million investment.
OTHER ITEMS
During 1994, the Company wrote off net deferred financing charges of
approximately $9.9 million associated with the Company's former credit
facility. The Company entered into a new $1.5 billion Restricted Group Credit
facility on October 14, 1994. See "Liquidity and Capital Resources", below,
and Note 4 of Notes to Consolidated Financial Statements.
In November 1994, the Company incurred a loss of $7.1 million related to the
redemption of its $200 million Senior Subordinated Reset Debentures (the
"Reset Debentures"). The loss reflects the payment of a $2.0 million premium
over the face amount; the write off of $4.5 million in unamortized deferred
finance costs incurred in connection with their issuance in November, 1988;
and $0.6 million representing the unamortized portion of their original issue
discount.
In connection with the CNYC Acquisition, the Company expensed $5.6 million in
1994 representing the amount due with respect to the Annual Payment. For the
year ended December 31, 1994, the Company has provided for an additional
$100.3 million due Mr. Dolan in respect of the Preferred Payment that would
be due him as further described under "Business - Cable Television Operations
- - Consolidated Cable Affiliates -
(39)
<PAGE>
Cablevision of New York City". The additional provision is based on
management's estimate of the Appraised Equity Value of the system at December
31, 1994 and has been charged to par value in excess of capital contributed
in the accompanying consolidated financial statements. The total amount due
Mr. Dolan as of December 31, 1994 in respect of the Preferred Payment
amounted to $150 million. See Note 8 of Notes to Consolidated Financial
Statements.
EXPECTED IMPACT OF ACCOUNTING STANDARDS NOT YET ADOPTED
In March and October 1995 the Financial Accounting Standards Board issued its
Statements No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," and 123, "Accounting for
Stock-Based Compensation," respectively.
Statement 121 establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. Management does not expect that
the adoption of Statement 121, effective January 1, 1996, will have a
significant impact on the Company's financial position or results of
operations.
Statement 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans and transactions in which an entity
issues its equity instruments to acquire goods and services from
nonemployees. Management currently intends to continue accounting for
stock-based compensation awarded to employees using the intrinsic value based
method of accounting prescribed by APB Opinion 25, "Accounting for Stock
Issued to Employees" and to present, beginning in 1996, the pro forma net
income and earnings per share disclosures as if the fair value method defined
in Statement 123 had been applied.
INFLATION. The effects of inflation on the Company's costs have generally
been offset by increases in subscriber rates.
LIQUIDITY AND CAPITAL RESOURCES
For financing purposes, the Company is structured as the Restricted Group,
consisting of Cablevision Systems Corporation and certain of its subsidiaries
(including Cablevision of Boston as of December 15, 1995) and an unrestricted
group of certain subsidiaries which includes V Cable, Rainbow Programming and
Cablevision MFR.
The Restricted Group has executed limited recourse guarantees with respect to
A-R Cable and V Cable, as described below, and has guaranteed the MFR Notes
and the CFHI Note. Otherwise, the Restricted Group does not guarantee the
indebtedness of any unrestricted subsidiary nor does any unrestricted
subsidiary guarantee the indebtedness of the Restricted Group.
(40)
<PAGE>
The following table presents selected unaudited historical results of
operations and other financial information related to the captioned groups or
entities for the year ended December 31, 1995. Unrestricted Cable consists
of V Cable and Cablevision MFR. Rainbow Programming (including Rainbow
Advertising, SportsChannel New York and AMCC) is included in "Other
Unrestricted Subsidiaries".
<TABLE>
<CAPTION>
Other
Restricted Unrestricted Unrestricted Total
Group Cable Subsidiaries Company
----------- ------------ ------------ -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Revenues $ 679,025 $ 226,130 $ 172,905 $1,078,060
Operating expenses:
Technical 267,929 85,927 58,623 412,479
Selling, general and
administrative 125,773 33,110 107,326 266,209
Depreciation and
amortization 168,067 124,488 27,374 319,929
---------- ---------- --------- ----------
Operating profit (loss) $117,256 $ (17,395) $ (20,418) $ 79,443
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Currently payable
interest expense $159,302 $ 78,362 $ 17,266 $ 254,930
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Total interest expense $162,340 $ 132,264 $ 19,246 $ 313,850
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Senior debt $567,249 $1,094,003 $ 238,034 $1,899,286
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Subordinated debt $923,608 $ 141,268(2) $ - $1,064,876
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Obligation to related
party $192,945(1) $ - $ - $ 192,945
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Deficit investment in
affiliates $451,933 $ - $ 2,002 $ 453,935
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Redeemable Exchangeable
Preferred Stock $257,751 $ - $ - $ 257,751
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Capital expenditures $234,516 $ 43,707 $ 9,095 $ 287,138(3)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Ending Cable subscribers 1,512,000 549,000 - 2,061,000
---------- ---------- --------- ----------
---------- ---------- --------- ----------
</TABLE>
- -----------------
(1) Obligation of NYC LP Corp., a wholly-owned Restricted Group subsidiary,
relating to the CNYC Acquisition.
(2) Guaranteed by the Restricted Group.
(3) Includes intercompany elimination of $180.
(41)
<PAGE>
RESTRICTED GROUP
In February 1996, the Company issued 6,500,000 depositary shares,
representing 65,000 shares of 11-1/8% Series L Preferred Stock with an
aggregate liquidation preference of $650 million. The net proceeds of
approximately $626 million was used to repay $570 million of V Cable and U.S.
Cable indebtedness in connection with the V Cable Transactions, (see Item 1.
"Business - Recent Developments - V Cable Transactions") with the balance of
$56 million initially used to repay borrowings under the Company's Credit
Agreement. Such amount is expected to be reborrowed at the time of
consummation of the V Cable Transactions, which is expected to occur during
the third quarter of 1996.
In December 1995, the Company acquired the interests in Cablevision of Boston
that it did not previously own. In connection with the acquisition of
Cablevision of Boston, the Company paid approximately $83 million primarily
with funds borrowed under the Credit Agreement and upon consummation of the
acquisition of Cablevision of Boston, Cablevision of Boston became a member
of the Restricted Group and all outstanding subordinated advances made by the
Company to Cablevision of Boston became intercompany indebtedness. See
"Consolidated Cable Affiliates - Cablevision of Boston".
In November 1995, the Company issued 13,800,000 depositary shares
representing 1,380,000 shares of 8-1/2% Series I Preferred Stock with an
aggregate liquidation preference of $345 million. The depositary shares are
convertible into shares of the Company's Class A Common Stock at an initial
conversion price of $67.44 per share of Class A Common Stock. The Company
applied the net proceeds of approximately $334 million to the repayment of
bank indebtedness.
Also in November 1995, the Company issued $300 million aggregate principal
amount of 9-1/4% Senior Subordinated Notes due 2005 (the "2005 Notes"). The
Company applied the net proceeds of approximately $292 million to the
repayment of bank indebtedness.
In September 1995, the Company issued 2,500,000 shares of its 11-3/4% Series
G Redeemable Exchangeable Preferred Stock with an aggregate liquidation
preference of $100 per share (the "Series G Preferred Stock"). The net
proceeds of approximately $239 million were initially used to repay bank
debt. The Company reborrowed $103 million on October 26, 1995 to redeem its
outstanding Series E Preferred Stock.
On March 18, 1996, the Restricted Group had total usage under its $1.5
billion credit agreement (including the credit facility for Cablevision of
New Jersey, collectively the "Credit Agreement") of $573 million and letters
of credit of $17 million issued on behalf of the Company. Unrestricted and
undrawn funds available to the Restricted Group under the Credit Agreement
amounted to approximately $910 million at March 18, 1996. The Credit
Agreement consists of a $250 million Term Loan and $1.250 billion Reducing
Revolver facilities aggregating $1.5 billion. The Term Loan has a final
maturity of June 30, 2003 and begins amortizing on a scheduled quarterly
basis on June 30, 1997 with 24% being amortized by December 31, 1998. The
Reducing Revolver facilities have final maturities on June 30, 2003 and the
facilities begin to reduce on December 31, 1996. The
(42)
<PAGE>
Credit Agreement contains certain financial covenants that may limit the
Restricted Group's ability to utilize all of the undrawn funds available
thereunder, including covenants requiring the Restricted Group to maintain
certain financial ratios and restricting the permitted uses of borrowed funds.
As of March 18, 1996 the Company had entered into interest exchange (swap and
interest rate cap) agreements with several of their banks on a notional
amount of $120 million, on which the Company pays a fixed rate of interest
and receives a variable rate of interest for specified periods, with an
average maturity of two and one half years. The average effective annual
interest rate on all bank debt outstanding as of February 29, 1996 was
approximately 8.1%.
The Restricted Group, excluding CNYC, made capital expenditures of
approximately $150.2 million in 1995 and $147.5 million in 1994, primarily in
connection with system rebuilds and upgrades, the expansion of existing cable
plant to pass additional homes and other general capital needs. CNYC made
capital expenditures of $84.3 million in 1995 and $103.5 million in 1994.
The cable systems located in New York State that are owned by the Restricted
Group are subject to agreements, as amended, (the "New York Upgrade
Agreements") with the New York State Commission on Cable Television (the "New
York Cable Commission"). The New York Upgrade Agreements applicable to the
Restricted Group requires the substantial upgrade of its systems to a 750
MHz capacity by the end of 1998 subject to certain minor exceptions. As part
of this planned upgrade of the Restricted Group's New York systems, the
Company expects to use fiber optic cable extensively in its trunk and
distribution networks. The Company believes that the remaining portion of
the upgrade, as of December 31, 1995, will cost up to an additional $195
million. The Company intends to upgrade certain other of its Restricted
Group systems as well as certain systems in the unrestricted group. The
Company anticipates that the capital costs of these additional upgrades may
be substantial.
Under the CNYC purchase agreement, the Restricted Group has guaranteed
certain payments to Mr. Dolan, consisting of an annual payment of $5.6
million (the "Annual Payment") a $40 million minimum payment (the "Minimum
Payment") and a preferred payment (not to exceed $150 million) based upon an
appraised value of CNYC (the "Preferred Payment"). The Minimum Payment and
the Preferred Payment are each payable in cash or common stock at the
Company's election. Under the Credit Agreement, the Company is currently
prohibited from paying amounts in respect of the Preferred Payment in cash.
During 1995 the Restricted Group contributed $26 million to Monmouth/Riverview
which was used by Monmouth/Riverview to reduce bank debt. In addition,
the Restricted Group contributed $8.7 million to Cablevision MFR in order for
Cablevision MFR to make cash interest payments on its promissory notes.
(43)
<PAGE>
The Company believes that, for the Restricted Group, internally generated
funds together with funds available under its existing Credit Agreement will
be sufficient through 1997 to meet its debt service and preferred stock
dividend requirements including amortization requirements under the Credit
Agreement, and to fund its planned capital expenditures.
The Company intends to incur additional expenditures to sufficiently upgrade
its plant to significantly increase its analog channel capacity and add new
digital channel capacity that will facilitate the startup of such adjunct
businesses as information services, video on demand and near video on demand,
and residential telephony. To successfully roll out these adjunct new
businesses significantly beyond the initial development phases, the Company
will require additional capital from the sale of equity in the capital
markets or to a strategic investor.
Any further acquisitions and/or other investments by the Company will be
funded by undrawn borrowing capacity and by possible increases in the amount
available under the Credit Agreement, additional borrowings from other
sources, and/or possible future sales of debt, equity or equity related
securities.
The senior secured indebtedness incurred by A-R Cable and V Cable is
guaranteed by the Restricted Group, but recourse against the Restricted Group
is limited solely to the common stock of A-R Cable and of V Cable pledged to
A-R Cable's and V Cable's senior secured lenders, respectively. The
Cablevision MFR and CFHI promissory notes are guaranteed by the Company and
the obligations under the guarantees rank pari passu with the Company's
public subordinated debt. The promissory notes are payable in cash or, at
the Company's option through the first anniversary of the notes, in shares of
the Company's Class A Common Stock.
Under the terms of its Credit Agreement, as amended, the Company is permitted
to make unspecified investments of up to $250 million, subject to increase at
the Company's election arising from issuance of preferred stock, which
includes any future investment in Rainbow Programming and in any other
unrestricted subsidiaries or affiliates.
The terms of the instruments governing A-R Cable's, V Cable's, and
Cablevision MFR's indebtedness prohibit transfer of funds (except for certain
payments, related to corporate overhead allocations, by A-R Cable, V Cable
and Cablevision MFR and payments pursuant to income tax allocation agreements
with respect to V Cable and Cablevision MFR) from A-R Cable, V Cable,
Cablevision MFR and CFHI to the Restricted Group and are expected to prohibit
such transfer of funds for the foreseeable future. The Restricted Group does
not expect that such limitations on transfer of funds or payments will have
an adverse effect on the ability of the Company to meet its obligations.
V CABLE
In connection with the V Cable Transactions (see "Business-Recent
Developments-V Cable Transactions"), on March 18, 1996 the Company made a
$570 million capital contribution to V Cable which was used to repay $570
million of debt and accrued interest owed to
(44)
<PAGE>
GECC under the V Cable, VC Holding and US Cable credit facilities. The
Company obtained the $570 capital contribution from the net proceeds
(approximately $626 million) of the Series L Preferred Stock issued in
February 1996. The contributions made by the Company were applied as
follows: 1) approximately $500 million was used to repay a portion of V
Cable and VC Holding debt (including certain U.S. Cable debt assumed by V
Cable) leaving a balance outstanding of $415.1 million and, 2) approximately
$70 million was contributed by V Cable and VC Holding to repay a portion of
US Cable's debt and accrued interest leaving a balance outstanding of
approximately $151 million of U.S. Cable debt.
Upon the repayment of V Cable's, VC Holding's and US Cable's debt referenced
above, each Company's credit agreement was amended to reflect such
prepayments and the cross-guarantees, cross-collateralization and
cross-default provisions previously in each agreement were amended and/or
terminated. The amended credit agreements expire on December 31, 2001. The
amended VC Holding credit agreement provides for a $409 million term loan and
a $125 million revolving loan. The term loan requires principal repayments
commencing in 1999. On March 18, 1996, VC Holding had approximately $6
million outstanding under its revolving line and had letters of credit issued
for approximately $1 million. Accordingly, unrestricted and undrawn funds
under the VC Holding revolving line amounted to approximately $118 million.
The amended VC Holding credit agreement contains certain financial covenants
that may limit VC Holding's ability to utilize all of the undrawn funds
available thereunder, including covenants requiring VC Holding to maintain
certain financial ratios and restricting the permitted uses of borrowed funds.
V Cable made capital expenditures of approximately $27.3 million during 1995
and $20.0 million during 1994, primarily in connection with the expansion of
existing cable plant to pass additional homes and for system upgrades and
other general capital needs. The New York Upgrade Agreement applicable to V
Cable required that by the end of 1995, the substantial upgrade of its
systems in New York State to 77 channel capacity be completed. This
requirement was met and certified by the State of New York in 1995. V Cable
plans to make significant capital expenditures for its Ohio properties over
the next several years in order to upgrade or rebuild its plant and increase
capacity. VC Holding believes that internally generated funds together with
funds available under the amended credit agreements will be sufficient
through June 30, 1997 to meet its debt service requirements and to fund its
capital expenditures through such date.
MONMOUTH AND RIVERVIEW
Monmouth/Riverview are party to a credit facility, as amended on May 12,
1995, with a group of banks led by Nations Bank of Texas, N.A., as agent (the
"Monmouth/Riverview Credit Facility"). The maximum amount available to
Monmouth/Riverview under the Monmouth/Riverview Credit Facility is $285
million with a final maturity at June 30, 2003. The facility is a reducing
revolving loan, with scheduled facility reductions beginning on March 31,
1996 resulting in a 15% reduction by December 31, 1998. As
(45)
<PAGE>
of March 18, 1996, Monmouth/Riverview had outstanding bank borrowings of
$194.7 million. Unrestricted and undrawn funds available to
Monmouth/Riverview under the Monmouth/Riverview Credit Facility amounted to
approximately $90.3 million at March 18, 1996. The Monmouth/Riverview Credit
Facility contains certain financial covenants that may limit
Monmouth/Riverview's ability to utilize all of the undrawn funds available
thereunder, including covenants requiring Monmouth/Riverview to maintain
certain financial ratios. Under the terms of the Monmouth/Riverview Credit
Facility, Monmouth/Riverview is prohibited from transferring funds to
Cablevision MFR. The weighted average interest rate on all bank indebtedness
as of December 31, 1995 was approximately 8.1%.
As of March 18, 1996, Monmouth Cablevision and Riverview Cablevision have
entered into interest rate swap and cap agreements with several banks on a
notional amount of $130 million on which the Company pays a fixed rate of
interest and receives a variable rate of interest for specified period,with
an average maturity of approximately one year.
The Company believes that for Monmouth/Riverview, internally generated funds
together with funds available under its existing credit agreement, will be
sufficient to meet its debt service requirements including its amortization
requirements and to fund its capital expenditures through 1997.
On August 8, 1994, Cablevision MFR issued promissory notes totalling $141.3
million, due in 1998 and bearing interest at 6% until the third anniversary
and 8% thereafter (increasing to 8% and 10%, respectively, if interest is
paid in shares of the Company's Class A Common Stock). Principal and
interest on the notes is payable at Cablevision MFR's election, in cash or in
shares of the Company's Class A Common Stock. The promissory notes are
guaranteed by the Company and the obligations under the guarantee rank pari
passu with the Company's public subordinated debt. In certain circumstances,
Cablevision MFR may extend the maturity date of the promissory notes until
2003 for certain additional consideration.
RAINBOW PROGRAMMING
On January 27, 1995, Rainbow entered into an amended and restated credit
facility with Toronto-Dominion (Texas), Inc., and Canadian Imperial Bank of
Commerce, as co-agents, and a group of banks for $202 million of which $108
million was drawn on such date to refinance Rainbow Programming's original
$105 million credit facility. On July 12, 1995 Rainbow Programming
consummated the purchase of NBC's interests in SportsChannel New York and
Rainbow News 12 Company for approximately $95.5 million, giving Rainbow
Programming a 100% interest in SportsChannel New York and Rainbow News 12
Company. The purchase was financed by an additional drawdown of $94 million
under Rainbow Programming's $202 million amended and restated credit facility
and by a $2.5 million equity contribution from the Company for the balance of
the purchase price and related fees.
(46)
<PAGE>
In July 1994, the proceeds of the initial $105 million loan under the
original facility plus $76 million of equity from the Company were used to
purchase Liberty Media Corporation's 50% interest in AMCC giving Rainbow
Programming a 75% ownership interest in AMCC. The credit facility is payable
in full at maturity on December 31, 1996 and bears interest at varying rates
based upon the banks' Base Rate or Eurodollar Rate, as defined in the credit
agreement. Repayment of the loan is anticipated to be made by Rainbow
Programming from one or a combination of the following: (i) internally
generated funds; (ii) refinancing the existing Rainbow Programming $202
million credit facility; (iii) refinancing the existing $51 million credit
agreement of AMCC ($36 million outstanding as of December 31, 1995); (iv) the
sale of equity interests in, or assets of, the programming businesses; and
(v) investments or advances from the Restricted Group. The loan is secured
by a pledge of the Company's stock in Rainbow Programming and is guaranteed
by the subsidiaries of Rainbow Programming as permitted.
Rainbow Programming's financing needs have been funded by the Restricted
Group's investments in and advances to Rainbow Programming, by sales of
equity interests in the programming businesses and through separate external
debt financing. The Company expects that the future cash needs of Rainbow
Programming's current programming partnerships will increasingly be met by
internally generated funds, although certain of such partnerships will at
least in the near future rely to some extent upon their partners (including
Rainbow Programming) for certain cash needs. The partners' contributions may
be supplemented through the sale of additional equity interests in, or
through the incurrence of indebtedness by, such programming businesses.
On March 10, 1995, MSG Holdings, L.P. ("Holdings"), a partnership between a
subsidiary of Rainbow Programming and a subsidiary of ITT Corporation, a
Delaware corporation ("ITT"), acquired Madison Square Garden Corporation
("MSG") in a transaction in which MSG merged with and into Holdings. The
purchase price paid by Holdings for MSG was $1,009.1 million. See
Item 1.-"Business -Programming Operations".
(47)
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS.
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report . . . . . . . . . . . . . . . . 49
Consolidated Balance Sheets - December 31, 1995 and 1994 . . 50
Consolidated Statements of Operations - years
ended December 31, 1995, 1994 and 1993. . . . . . . . . . 52
Consolidated Statements of Stockholders' Deficiency -
years ended December 31, 1995, 1994 and 1993 . . . . . . . 53
Consolidated Statements of Cash Flows - years ended
December 31, 1995, 1994 and 1993. . . . . . . . . . . . . 54
Notes to Consolidated Financial Statements . . . . . . . . . 56
(48)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cablevision Systems Corporation
We have audited the accompanying consolidated balance sheets of Cablevision
Systems Corporation and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders' deficiency
and cash flows for each of the years in the three-year period ended December
31, 1995. In connection with our audits of the consolidated financial
statements, we also audited the financial statement schedule listed in Item
14(a)(2). These consolidated financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Cablevision Systems Corporation and subsidiaries at December 31, 1995 and
1994, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1995, in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule referred to above, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Jericho, New York
March 18, 1996
(49)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS 1995 1994
---- ----
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . $ 15,332 $ 11,350
Accounts receivable trade (less allowance for
doubtful accounts of $12,678 and $10,087) . . . . . . 100,506 72,881
Notes receivable affiliates. . . . . . . . . . . . . . - 2,143
Notes and other receivables. . . . . . . . . . . . . . 16,762 14,280
Prepaid expenses and other assets. . . . . . . . . . . 19,353 20,794
Property, plant and equipment, net . . . . . . . . . . 1,026,355 886,028
Investments in affiliates. . . . . . . . . . . . . . . 141,345 42,954
Advances to affiliates . . . . . . . . . . . . . . . . 6,909 36,681
Feature film inventory . . . . . . . . . . . . . . . . 143,916 129,496
Franchises, net of accumulated amortization of
$314,218 and $240,609 . . . . . . . . . . . . . . . . 363,077 436,686
Affiliation agreements, net of accumulated
amortization of $20,598 and $6,053. . . . . . . . . . 124,848 139,097
Excess costs over fair value of net assets
acquired and other intangible assets, net of
accumulated amortization of $518,178 and $469,620 . . 468,133 290,931
Deferred financing, acquisition and other
costs, net of accumulated amortization of
$23,899 and $18,422. . . . . . . . . . . . . . . . . . 47,673 50,949
Deferred interest expense, net of accumulated
amortization of $42,142 and $28,095. . . . . . . . . . 28,096 42,143
---------- ----------
$2,502,305 $2,176,413
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to
consolidated financial statements.
(50)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . $ 156,470 $ 120,627
Accrued liabilities:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,908 39,322
Payroll and related benefits. . . . . . . . . . . . . . . . . . 47,997 34,085
Franchise fees. . . . . . . . . . . . . . . . . . . . . . . . . 21,980 19,179
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,125 86,047
Accounts payable to affiliates. . . . . . . . . . . . . . . . . . 12,708 22,273
Feature film rights payable . . . . . . . . . . . . . . . . . . . 128,000 110,542
Bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992,469 1,335,419
Senior debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 898,803 862,440
Subordinated debentures . . . . . . . . . . . . . . . . . . . . . 923,608 623,534
Subordinated notes payable. . . . . . . . . . . . . . . . . . . . 141,268 141,268
Obligation to related party . . . . . . . . . . . . . . . . . . . 192,945 193,079
Capital lease obligations and other debt. . . . . . . . . . . . . 8,014 13,496
----------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 3,682,295 3,601,311
----------- ----------
Deficit investment in affiliates. . . . . . . . . . . . . . . . . 453,935 393,637
----------- ----------
Series G Redeemable Exchangeable Preferred Stock . . . . . . . . . 257,751 -
----------- ----------
Commitments and contingencies
Stockholders' deficiency:
8% Series C Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, 110,622 shares issued
($100 per share liquidation preference). . . . . . . . . . . . 1 1
8% Series D Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, none issued ($100 per
share liquidation preference). . . . . . . . . . . . . . . . . - -
Series E Redeemable Exchangeable Convertible Preferred
Stock, $.01 par value, 100,000 shares authorized, 100,000
shares issued at December 31, 1994 ($1,000 per share
liquidation preference). . . . . . . . . . . . . . . . . . . . - 1
8-1/2% Series I Cumulative Convertible Exchangeable Preferred
Stock, $.01 par value, 1,380,000 shares authorized,
1,380,000 shares issued at December 31, 1995 ($250
per share liquidation preference). . . . . . . . . . . . . . . 14 -
Class A Common Stock, $.01 par value, 50,000,000 shares
authorized, 14,210,599 and 11,850,242 shares issued. . . . . . 142 119
Class B Common Stock, $.01 par value,
20,000,000 shares authorized, 11,572,709 and
11,787,622 shares issued . . . . . . . . . . . . . . . . . . . 116 118
Paid-in capital (par value in excess of
capital contributed) . . . . . . . . . . . . . . . . . . . . . 247,671 (74,016)
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . (2,079,228) (1,741,521)
----------- ----------
(1,831,284) (1,815,298)
Less treasury stock, at cost (1,091,553 and
50,000 shares) . . . . . . . . . . . . . . . . . . . . . . . . (60,392) (3,237)
----------- ----------
Total stockholders' deficiency . . . . . . . . . . . . . . . . . (1,891,676) (1,818,535)
----------- ----------
$ 2,502,305 $2,176,413
----------- ----------
----------- ----------
</TABLE>
See accompanying notes
to consolidated financial statements.
(51)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues (including affiliate amounts of
$7,087, $8,290 and $7,558). . . . . . . . . $1,078,060 $ 837,169 $ 666,724
---------- --------- ---------
Operating expenses:. . . . . . . . . . . . . .
Technical (including affiliate amounts of
$37,756, $20,232 and $26,732). . . . . . . 412,479 302,885 241,877
Selling, general and administrative
(including affiliate amounts of $0,
$(1,003) and $(1,479)) . . . . . . . . . . . 266,209 195,942 172,687
Restructuring charge. . . . . . . . . . . . . - 4,306 -
Depreciation and amortization . . . . . . . . 319,929 271,343 194,904
---------- --------- ---------
998,617 774,476 609,468
---------- --------- ---------
Operating profit. . . . . . . . . . . . . . . 79,443 62,693 57,256
---------- --------- ---------
Other income (expense):. . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . (313,850) (263,299) (232,434)
Interest income (including affiliate amounts
of $468, $493 and $567) . . . . . . . . . . 1,963 1,518 2,107
Share of affiliates' net loss . . . . . . . . (93,024) (82,864) (61,017)
Gain (loss) on sale of programming and
affiliate interests, net. . . . . . . . . . 35,989 - (330)
Write off of deferred financing costs . . . . (5,517) (9,884) (1,044)
Loss on redemption of debentures. . . . . . . - (7,088) -
Provision for preferential payment to
related party . . . . . . . . . . . . . . . (5,600) (5,600) (5,600)
Minority interest . . . . . . . . . . . . . . (8,637) (3,429) 3,000
Miscellaneous, net. . . . . . . . . . . . . . (8,225) (7,198) (8,720)
---------- --------- ---------
(396,901) (377,844) (304,038)
---------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . (317,458) (315,151) (246,782)
Dividend requirements applicable to
preferred stock. . . . . . . . . . . . . . . (20,249) (6,385) (885)
---------- --------- ---------
Net loss applicable to common shareholders . . $ (337,707) $(321,536) $(247,667)
---------- --------- ---------
---------- --------- ---------
Net loss per common share. . . . . . . . . . . $ (14.17) $ (13.72) $ (10.83)
---------- --------- ---------
---------- --------- ---------
Average number of common shares outstanding
(in thousands) . . . . . . . . . . . . . . . 23,826 23,444 22,859
---------- --------- ---------
---------- --------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(52)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
Years Ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Paid-in Capital
(Par Value
Series C Series E Series I Class A Class B in Excess
Preferred Preferred Preferred Common Common of Capital Accumulated Treasury
Stock Stock Stock Stock Stock Contributed) Deficit Stock Total
--------- --------- --------- ------- ------- ------------- ----------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1992 . . $ 1 $ - $ - $ 102 $ 124 $ (78,157) $(1,172,318) $ - $(1,250,248)
Net loss. . . . . . . . . . - - - - - - (246,782) - (246,782)
Cost of acquisitions. . . . - - - 2 - (11,977) - - (11,975)
Employee stock
transactions . . . . . . . - - - 2 2 9,879 - - 9,883
Purchase of treasury
stock. . . . . . . . . . . - - - - - - - (3,237) (3,237)
Conversion of Class B to
Class A. . . . . . . . . . - - - 2 (2) - - - -
Preferred dividend
requirement. . . . . . . . - - - - - - (885) - (885)
----- ----- ---- ---- ---- -------- ----------- -------- ----------
Balance December 31, 1993. . 1 - - 108 124 (80,255) (1,419,985) (3,237) (1,503,244)
Net loss . . . . . . . . . - - - - - - (315,151) - (315,151)
Issuance of Series E
preferred stock . . . . . - 1 - - - 98,406 - - 98,407
Cost of acquisition. . . . - - - - - (101,600) - - (101,600)
Employee stock
transactions. . . . . . . - - - 5 - 9,433 - - 9,438
Conversion of Class B to
Class A . . . . . . . . . - - - 6 (6) - - - -
Preferred dividend
requirements. . . . . . . - - - - - - (6,385) - (6,385)
----- ----- ---- ---- ---- -------- ----------- -------- ----------
Balance December 31, 1994. . 1 1 - 119 118 (74,016) (1,741,521) (3,237) (1,818,535)
Net loss . . . . . . . . . - - - - - - (317,458) - (317,458)
Issuances of preferred
stock . . . . . . . . . . - - 14 - - 323,317 - - 323,331
Redemption of Series E
preferred stock . . . . . - (1) - - - (103,002) - - (103,003)
Employee stock
transactions. . . . . . . - - - 5 - 7,715 - - 7,720
Payment for acquisition,
net . . . . . . . . . . . - - - 16 - 93,657 - (57,155) 36,518
Conversion of Class B to
Class A . . . . . . . . . - - - 2 (2) - - - -
Preferred dividend
requirements. . . . . . . - - - - - - (20,249) - (20,249)
----- ----- ---- ---- ---- -------- ----------- -------- ----------
Balance December 31, 1995. . $ 1 $ - $ 14 $142 $116 $247,671 $(2,079,228) $(60,392) $(1,891,676)
----- ----- ---- ---- ---- -------- ----------- -------- ----------
----- ----- ---- ---- ---- -------- ----------- -------- ----------
</TABLE>
See accompanying notes
to consolidated financial statements.
(53)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . $(317,458) $(315,151) $(246,782)
--------- --------- ---------
Adjustments to reconcile net loss to
net cash provided by
operating activities:
Depreciation and amortization. . . . . . 319,929 271,343 194,904
Share of affiliates' net loss. . . . . . 93,024 82,864 61,017
Minority interest. . . . . . . . . . . . 8,637 3,429 (3,000)
(Gain) loss on sale of programming
and affiliates interests, net. . . . . (35,989) - 330
Write off of deferred financing
costs. . . . . . . . . . . . . . . . . 5,517 9,884 1,044
Loss on redemption of debentures . . . . - 7,088 -
Loss on sale of equipment, net . . . . . 4,077 3,844 2,106
Amortization of deferred financing . . . 5,320 4,844 3,950
Amortization of deferred interest
expense. . . . . . . . . . . . . . . . 14,047 14,048 14,047
Amortization of debenture discount . . . 74 148 138
Accretion of interest on debt. . . . . . 39,479 35,574 32,074
Change in assets and liabilities,
net of effects of acquisitions:
Increase in accounts receivable
trade. . . . . . . . . . . . . . . . (17,200) (3,923) (6,888)
Decrease in notes receivable
affiliates . . . . . . . . . . . . . 357 715 812
(Increase) decrease in notes and
other receivables. . . . . . . . . . (2,421) (3,076) 753
(Increase) decrease in prepaid
expenses and other assets. . . . . . (3,189) (8,675) 1,058
Decrease in advances to
affiliates . . . . . . . . . . . . . 3,994 1,326 3,275
Increase (decrease) in feature
film inventory . . . . . . . . . . . (14,420) 7,760 -
Increase in accounts payable . . . . . 24,685 19,069 27,070
Increase (decrease) in accrued
liabilities. . . . . . . . . . . . . 22,412 (2,126) 48,463
Decrease in accrued obligation,
Olympics venture . . . . . . . . . . - - (50,000)
Increase (decrease) in accounts
payable to affiliates. . . . . . . . (2,746) 6,037 1,451
Increase (decrease) in feature
film rights payable 6,586 (8,397) -
--------- --------- ---------
Total adjustments. . . . . . . . . . . . . 472,173 441,776 332,604
--------- --------- ---------
Net cash provided by operating
activities . . . . . . . . . . . . . . . 154,715 126,625 85,822
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures. . . . . . . . . . . . (287,138) (284,858) (214,604)
Payments for acquisitions, net of
cash acquired. . . . . . . . . . . . . . (293,902) (673,611) (31,201)
Proceeds from sale of programming and
affiliate interests . . . . . . . . . . . 32,850 - 543
Proceeds from sale of equipment . . . . . . 1,873 1,515 3,643
(Increase) decrease in investments
in affiliates, net. . . . . . . . . . . . (3,901) 3,457 (425)
Additions to intangible assets, net . . . . (1,016) (373) (978)
--------- --------- ---------
Net cash used in investing activities. . . (551,234) (953,870) (243,022)
--------- --------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(54)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 and 1993
(Dollars in thousands)
(continued)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Issuance of bank debt to finance acquisitions . . . . . . . . . . . . . . . $ 293,902 $ 542,608 $ -
Proceeds from bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . 425,916 965,654 197,286
Repayment of bank debt. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,062,768) (698,435) (373,479)
Proceeds from senior debt . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 2,500 25,750
Repayment of senior debt. . . . . . . . . . . . . . . . . . . . . . . . . . (13,116) (8,500) (23,750)
Redemption of debentures. . . . . . . . . . . . . . . . . . . . . . . . . . - (202,000) -
Issuance of subordinated notes payable and other debt. . . . . . . . . . . - 145,268 -
Issuance of subordinated debentures . . . . . . . . . . . . . . . . . . . . 300,000 - 348,396
Net proceeds from issuances of redeemable
exchangeable convertible preferred stock . . . . . . . . . . . . . . . . . 573,331 98,407 -
Redemption of redeemable exchangeable
convertible preferred stock. . . . . . . . . . . . . . . . . . . . . . . . (103,003) - -
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . (12,498) (6,385) (885)
Issuance of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . 7,720 9,438 9,883
Purchase of treasury stock. . . . . . . . . . . . . . . . . . . . . . . . . - - (3,237)
Obligation to related party . . . . . . . . . . . . . . . . . . . . . . . . (134) - 5,600
Payments on capital lease obligations and other debt . . . . . . . . . . . (6,583) (2,678) (2,682)
Additions to deferred financing and other . . . . . . . . . . . . . . . . . (12,266) (20,226) (15,459)
----------- --------- ---------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . 400,501 825,651 167,423
----------- --------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . 3,982 (1,594) 10,223
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . 11,350 12,944 2,721
----------- --------- ---------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . $ 15,332 $ 11,350 $ 12,944
----------- --------- ---------
----------- --------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(55)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per amounts)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY AND RELATED MATTERS
Cablevision Systems Corporation and its majority-owned subsidiaries (the
"Company") own and operate cable television systems. The Company also has
ownership interests in and manages other cable television systems and has
interests in companies that produce and distribute national and regional
programming services and that provide advertising sales services for the
cable television industry. The Company's revenues are derived principally
from the provision of cable television services, which include recurring
monthly fees paid by subscribers. For financing purposes, Cablevision
Systems Corporation and certain of its subsidiaries are structured as a
restricted group and an unrestricted group (see Note 4).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Cablevision
Systems Corporation and its majority-owned subsidiaries. The Company's
interests in less than majority-owned entities and its 100% common stock
interest in A-R Cable Services, Inc. (see Note 2) are carried on the equity
method. Advances to affiliates are recorded at cost, adjusted when
recoverability is doubtful. All significant intercompany transactions and
balances are eliminated in consolidation.
REVENUE RECOGNITION
The Company recognizes cable television and programming revenues as services
are provided to subscribers. Advertising revenues are recognized when
commercials are telecast.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including construction materials, are carried
at cost, which includes all direct costs and certain indirect costs
associated with the construction of cable television transmission and
distribution systems, and the costs of new subscriber installations.
FEATURE FILM INVENTORY
Rights to feature film inventory acquired under license agreements along with
the related obligations are recorded at the contract value. Costs are
amortized on the straight-line
(56)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
method over either the contract period or the intended number of days to be
aired. Amounts payable during the five years subsequent to December 31, 1995
related to feature film telecast rights amount to $20,994 in 1996, $23,126 in
1997, $16,505 in 1998, $15,320 in 1999 and $13,790 in 2000.
DEFERRED FINANCING COSTS
Costs incurred to obtain debt are deferred and amortized, on the
straight-line basis, over the life of the related debt.
FRANCHISES, AFFILIATION AGREEMENTS AND OTHER INTANGIBLE ASSETS
Franchises are amortized on the straight-line basis over the average
remaining terms (7 to 11 years) of the franchises at the time of acquisition.
Affiliation agreements are amortized on a straight-line basis over an
average life of approximately 10 years. Other intangible assets are
amortized on the straight-line basis over the periods benefited (2 to 10
years), except that excess costs over fair value of net assets acquired are
being amortized on the straight line basis over periods ranging from 5 to 20
years. The Company assesses the recoverability of such excess costs based
upon undiscounted anticipated future cash flows of the businesses acquired.
INCOME TAXES
Income taxes are provided based upon the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
the liability method of accounting for deferred income taxes and permits the
recognition of deferred tax assets, subject to an ongoing assessment of
realizability.
LOSS PER SHARE
Net loss per common share is computed based on the average number of common
shares outstanding after giving effect to dividend requirements on the
Company's preferred stock. Common stock equivalents were not included in the
computation as their effect would be to decrease net loss per share.
(57)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company
considers short-term investments with a maturity at date of purchase of three
months or less to be cash equivalents. The Company paid cash interest
expense of approximately $252,344, $198,535 and $173,073 during 1995, 1994
and 1993, respectively. During 1995, 1994 and 1993, the Company's noncash
investing and financing activities included capital lease obligations of
$1,086, $4,020 and $2,695, respectively, incurred when the Company entered
into leases for new equipment; obligations to related party of $101,460 and
$19,019 during 1994 and 1993 (see Note 8), respectively; Series G preferred
stock dividend requirements in 1995 of $7,751 (See Note 5); the issuance in
1995 of 687,623 shares of the Company's Class A Common Stock (fair value of
$37,733) for the acquisition of Cablevision of Boston (See Note 2); and the
issuance in 1993 of 164,051 shares of the Company's Class A Common Stock
(fair value of $10,725) for the remaining interests in Cablevision of
Connecticut (see Note 2).
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 consolidated financial
statements to conform to the 1995 presentation.
(58)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 2. ACQUISITIONS, DISPOSITIONS AND RESTRUCTURINGS
ACQUISITIONS
1995 ACQUISITIONS:
In March 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership among
subsidiaries of Rainbow Programming Holdings, Inc., a wholly-owned subsidiary
of the Company, ("Rainbow Programming") and subsidiaries of ITT Corporation,
a Delaware corporation ("ITT"), acquired the business and assets of Madison
Square Garden Corporation ("MSG") in a transaction in which MSG merged with
and into MSG Holdings. The purchase price paid by MSG Holdings for MSG was
$1,009,100. MSG Holdings funded the purchase price of the acquisition
through (i) borrowings of $289,100 under a $450,000 credit agreement among
MSG Holdings, various lending institutions and Chemical Bank as
administrative agent, (ii) an equity contribution from Rainbow Programming of
$110,000, and (iii) an equity contribution from ITT of $610,000. ITT, Rainbow
Programming and the Company are parties to an agreement made as of August 15,
1994, as amended, (the "Bid Agreement") that provides Rainbow Programming the
right to acquire interests in MSG Holdings from ITT sufficient to equalize
the interests of ITT and Rainbow Programming in MSG Holdings by making
certain scheduled payments totalling $250,000 (plus interest on any unpaid
portion thereof) on specified dates up to and including March 17, 1997.
Rainbow Programming may acquire all or part of such interests in MSG Holdings
through (i) the payment of cash to ITT, (ii) the delivery to ITT, at the
option of the Company, of common or preferred stock of the Company (together
with the commitment of a nationally recognized underwriter to promptly
purchase such common or preferred stock for cash), or a combination of cash
and common or preferred stock (with such a commitment), or (iii) the delivery
to ITT, at the option of ITT, subject to certain conditions and in lieu of
payment of a limited amount of the required cash or common or preferred stock
for the purchase of a portion of such interests, of certain designated
programming interests of Rainbow Programming. If any scheduled payment is
not made on the applicable due date, then Rainbow Programming will forfeit
(a) its right to equalize the interests in MSG Holdings and (b) certain
minority rights. The Company funded an approximate $29,000 interest payment
on March 11, 1996 from funds available under the Restricted Group's principal
bank credit agreement. If certain conditions are met and Rainbow Programming
has forfeited its right to equalize the interests in MSG Holdings, then
Rainbow Programming will also have the right to require ITT to purchase all
of Rainbow Programming's interest in MSG Holdings for an amount equal to (i)
the price paid by Rainbow Programming for such interest plus (ii) all
interest
(59)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
paid by Rainbow Programming on the unpaid portion of the $250,000 of
scheduled payments (as described above).
In July 1995, Rainbow Programming consummated the purchase from National
Broadcasting Company ("NBC") of the approximate 50% interests in each of
SportsChannel Associates (New York) ("SportsChannel New York") and Rainbow
News 12 Company ("Rainbow News 12") that NBC owned for approximately $95,500,
giving Rainbow Programming a 100% interest in SportsChannel New York and
Rainbow News 12. The purchase was financed by an additional drawdown of
$94,000 under Rainbow Programming's $202,000 amended and restated credit
facility and by a $2,500 equity contribution from the Company for the balance
of the purchase price and related fees.
In December 1995, the Company acquired the interests in Cablevision of Boston
Limited Partnership ("Cablevision of Boston") that it did not previously own
pursuant to an agreement entered into by the Company and Cablevision of
Boston. In connection with the acquisition, the limited partners (other than
the Company) of Cablevision of Boston received approximately 680,266 shares
of the Company's Class A Common Stock valued at $37,329 and the Company paid
approximately $83,456 for the repayment of bank debt, fees and expenses and
to fund payments to Charles F. Dolan ("Mr. Dolan"), as described below,
primarily with funds borrowed under the Company's Credit Agreement. Upon
consummation of the acquisition, Cablevision of Boston became a member of the
Restricted Group (see Note 4). Mr. Dolan, a former general partner of
Cablevision of Boston and the Chairman of the Board of the Company, received
7,357 shares of the Company's Class A Common Stock valued at $404 and
approximately $20,782 in cash to repay a portion of Cablevision of Boston's
indebtedness to him. In connection with the acquisition, the Company
received 1,041,553 shares of its Class A Common Stock valued at $57,155 (such
shares are reflected as treasury shares at December 31, 1995). As part of
the acquisition of Cablevision of Boston, the Company acquired 99.5% of the
partnership interests in Cablevision of Brookline Limited Partnership
("Cablevision of Brookline"), a partnership affiliated with Cablevision of
Boston, and entered into an agreement with Mr. Dolan with respect to his
remaining 0.5% general partnership interest in Cablevision of Brookline,
whereby the Company has a right of first refusal to acquire such interest
through January 1, 2002.
(60)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The acquisition of Cablevision of Boston and the purchase of interests in
SportsChannel New York and Rainbow News 12 were accounted for as purchases
with the operations of these companies being consolidated with those of the
Company as of the acquisition dates. The excess of the purchase price over
the book value of assets acquired approximates $210,976 ($115,759 for the
acquisition of Cablevision of Boston and $95,217 for the acquisition of
SportsChannel New York and Rainbow News 12) and will be allocated to the
specific assets acquired when independent appraisals are completed. For
purposes of the 1995 consolidated financial statements, the excess purchase
price has been recorded as excess costs over fair value of net assets
acquired and is being amortized over an average period of approximately 10
years.
1994 ACQUISITIONS:
In March 1994, Cablevision of Cleveland, L.P. ("Cablevision Cleveland"), a
partnership whose partners are subsidiaries of the Company, purchased
substantially all of the assets and assumed certain liabilities of North
Coast Cable Limited Partnership, which operates a cable television system in
Cleveland, Ohio (the "North Coast Cable Acquisition"). The operations of
North Coast Cable are consolidated with those of the Company as of the date
of acquisition. The net cash purchase price for interests not previously
owned by the Company (and excluding excess liabilities assumed by the
Company) aggregated approximately $103,359 including expenses. The cost of
the acquisition was financed principally by borrowings under the Company's
credit agreement.
In June 1994, A-R Cable Partners, a partnership comprised of subsidiaries of
the Company and E.M. Warburg, Pincus & Co., Inc. completed the purchase of
certain assets of Nashoba Communications, a group of three limited
partnerships, for a purchase price of approximately $90,500, of which
approximately $47,000 was provided by a senior credit facility secured by the
assets of such systems. The remainder of the purchase price was provided by
equity contributions and subordinated loans from the partners in A-R Cable
Partners. The Company provided approximately $12,000 for its 30% interest in
A-R Cable Partners and $1,500 in loans.
In July 1994, Rainbow Programming purchased an additional 50% interest in
American Movie Classics Company ("AMCC") for a purchase price of
approximately $181,000, increasing Rainbow Programming's interest in AMCC to
approximately 75%. The results of AMCC's operations are consolidated with
those of the Company as of the date of acquisition. The acquisition was
financed with a separate $105,000 credit facility entered into by Rainbow
Programming and by borrowings under the Company's credit agreement of
approximately $76,000 which was contributed to Rainbow Programming.
(61)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
In August 1994, Cablevision MFR, Inc. ("Cablevision MFR"), a wholly-owned
subsidiary of the Company, acquired substantially all of the assets of
Monmouth Cablevision Associates, L.P. ("Monmouth Cablevision") and Riverview
Cablevision Associates, L.P. ("Riverview Cablevision") consisting of cable
television systems in New Jersey. The operations of Monmouth Cablevision and
Riverview Cablevision are consolidated with those of the Company as of the
date of acquisition. The aggregate purchase price for the two New Jersey
systems was $391,215. Approximately $237,800 of such purchase price was
financed by a senior credit facility of newly formed subsidiaries of
Cablevision MFR secured solely by the assets of the systems. The remaining
$153,415 of such purchase price was paid with cash of approximately $12,147
and the issuance, by Cablevision MFR, of subordinated promissory notes (the
"MFR Notes") totalling $141,268 due in 1998.
Also in August 1994, Cablevision of Framingham Holdings, Inc. ("CFHI"), a
corporation owned 30% by the Company and 70% by E.M. Warburg, Pincus
Investors, L.P., acquired substantially all of the assets of Framingham
Cablevision Associates, L.P. ("Framingham Cablevision") consisting of cable
television systems in Massachusetts. The aggregate purchase price, including
fees and expenses, for Framingham Cablevision's assets was $37,517.
Approximately $22,700 of the purchase price was financed by a senior credit
facility of a wholly-owned subsidiary of CFHI secured by the assets of
Framingham Cablevision; approximately $9,732 was paid by the issuance by CFHI
of a promissory note, guaranteed by the Company, due in 1998 and the
remaining amount was financed by capital contributions and loans to CFHI from
its stockholders. The Company provided a capital contribution of
approximately $1,320 and $300 as a loan for its 30% interest in CFHI.
The acquisitions of North Coast Cable, AMCC, Monmouth Cablevision and
Riverview Cablevision were accounted for as purchases whereby the acquisition
costs were allocated to the various assets acquired and liabilities assumed
based upon their respective fair values. The excess of the purchase price
over the book value of net assets acquired of these entities, aggregating
$625,946, has been allocated to the specific assets acquired based on
independent appraisals as follows:
Plant and equipment $ 31,200
Affiliation agreements 145,150
Franchises 362,301
Excess cost over fair value of
net assets acquired 87,295
---------
$ 625,946
---------
---------
(62)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
1993 ACQUISITIONS:
In December 1986, the Company had purchased substantially all the limited
partnership interests in Cablevision of Connecticut. In November 1993, the
Company purchased the remaining interests in exchange for 164,051 shares of
the Company's Class A Common Stock which had a fair market value of
approximately $10,725. Such amount was charged to excess cost over fair
value of net assets acquired and is being amortized over the remaining
original amortization period.
In November 1993, the Company purchased the business of CATV Enterprises,
Inc. ("CATV") in Riverdale, The Bronx, New York following the expiration of
CATV's temporary permit to operate its cable television system in Riverdale.
The cost of $8,500 is included in excess cost over fair value of net assets
acquired.
PRO FORMA RESULTS OF OPERATIONS
The following unaudited pro forma condensed results of operations are
presented for the years ended December 31, 1995 and 1994 as if the
acquisition of Cablevision of Boston had occurred on January 1, 1995 and
1994, respectively, and as if the acquisitions of Monmouth Cablevision and
Riverview Cablevision; the purchase of the 50% interest in AMCC; and the
North Coast Cable Acquisition had occurred on January 1, 1994.
Years Ended December 31,
------------------------
1995 1994
---- ----
Net revenues $1,137,878 $1,001,187
---------- ----------
---------- ----------
Net loss $ (327,312) $ (369,137)
---------- ----------
---------- ----------
Net loss per common share $ (14.20) $ (15.56)
---------- ----------
---------- ----------
The proforma information presented above gives effect to certain adjustments,
including the amortization of acquired intangible assets and increased
interest expense on acquisition debt. The proforma information has been
prepared for comparative purposes only and does not purport to indicate the
results of operations which would actually have occurred had the acquisitions
been made at the beginning of the periods indicated, or which may occur in
the future.
(63)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
DISPOSITIONS
In July 1995, Rainbow Programming sold a minority general partnership
interest in Courtroom Television Network to NBC for cash totalling $5,000.
The Company recognized a net gain of $20,662 on the sale.
In August 1995, Cablevision of Chicago ("Cablevision of Chicago"), an
affiliate of the Company, sold its cable television systems to Continental
Cablevision, Inc. The Company did not have a material ownership interest in
Cablevision of Chicago but had loans and advances outstanding to Cablevision
of Chicago in the amount of $12,346 (plus accrued interest which the Company
had fully reserved). The Company recognized a net gain of approximately
$15,327 on the sale, representing the accrued interest which the Company had
reserved.
RESTRUCTURINGS
V CABLE, INC.
On December 31, 1992, the Company consummated a significant restructuring and
reorganization (the "V Cable Reorganization") involving its subsidiary, V
Cable, Inc. ("V Cable"), U.S. Cable Television Group, L.P. ("U.S. Cable") and
General Electric Capital Corporation ("GECC"), V Cable's principal creditor.
In the V Cable Reorganization, V Cable acquired a 20% interest in U.S. Cable
for $20,000 and U.S. Cable acquired a 19% non-voting interest in a newly
incorporated subsidiary of V Cable that holds substantially all of V Cable's
assets ("VC Holding") for $3,000. As a result, V Cable owns an effective
84.8% interest in VC Holding. GECC has provided long-term credit facilities
to each of V Cable, VC Holding and U.S. Cable, secured in each case by the
assets of the borrower and in most cases cross-collateralized by the assets
of the other two entities. The credit facilities are non-recourse to the
Company other than with respect to the common stock of V Cable owned by the
Company (see Note 4). The Company accounts for its investment in U.S. Cable
using the equity method of accounting and, accordingly, recorded its share of
losses in U.S. Cable for 1995, 1994 and 1993 amounting to $2,840, $8,594 and
$8,566, respectively. Also in 1993, included in the accompanying
consolidated statements of operations is U.S. Cable's share of losses in VC
Holding, limited to its $3,000 investment described above.
In February 1996, the Company entered into an agreement with GECC (the "GECC
Agreement"), as amended in March 1996, pursuant to which the Company plans to
effect a reorganization and recapitalization relating to V Cable and U.S.
Cable (See Note 14).
(64)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
A-R CABLE. In 1992 the Company and A-R Cable Services, Inc. ("A-R Cable")
consummated a restructuring and refinancing transaction (the "A-R Cable
Restructuring"). Among other things, this transaction involved an additional
$45,000 investment in A-R Cable by the Company to purchase a new Series B
Preferred Stock and the purchase of a new Series A Preferred Stock in A-R
Cable by Warburg Pincus Investors, L.P. ("Warburg Pincus") for $105,000.
After the receipt of certain regulatory approvals, the Company will have a
40% economic and voting interest in A-R Cable. As a result of the A-R Cable
Restructuring, the Company no longer has financial or voting control over A-R
Cable's operations. For reporting purposes, the Company accounts for its
investment in A-R Cable using the equity method of accounting whereby the
Company records 100% of the net losses of A-R Cable since it continues to own
100% of A-R Cable's outstanding common stock.
Included in share of affiliates' net loss in the accompanying consolidated
statements of operations for the years ended December 31, 1995, 1994 and 1993
is $72,257, $67,092 and $56,420, respectively, representing A-R Cable's net
loss plus dividend requirements for the Series A Preferred Stock of A-R
Cable, which is not owned by the Company. Included in deficit investment in
affiliates is $442,940 and $374,423 at December 31, 1995 and 1994,
respectively, representing A-R Cable losses and external dividend
requirements recorded by the Company in excess of amounts invested by the
Company therein. At December 31, 1995 and 1994 and for the years then ended,
A-R Cable's total assets, liabilities (including preferred stock) and net
revenues amounted to $222,831 and $246,125; $738,581 and $681,717; $113,292
and $107,026, respectively.
The Company continues to guarantee the debt of A-R Cable to GECC under a
limited recourse guarantee wherein recourse to the Company is limited solely
to the common and Series B Preferred Stock of A-R Cable owned by the Company.
The Company manages A-R Cable under a management agreement that provides for
cost reimbursement, an allocation of overhead charges and a management fee of
3-1/2% of gross receipts, as defined, with interest on unpaid amounts thereon
at a rate of 10% per annum. The 3-1/2% fee and interest thereon is payable
by A-R Cable only after repayment in full of its senior debt and certain
other obligations. Under certain circumstances, the fee is subject to
reduction to 2-1/2% of gross receipts.
During 1995 and 1994, Warburg Pincus purchased additional shares
of Series A Preferred Stock for a cash investment of $210 and
$998, respectively, and CSC purchased additional shares of Series
B Preferred Stock for a cash investment of $3,740 and $427,
respectively.
(65)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
After May 11, 1997, either Warburg Pincus or the Company may irrevocably
cause the sale of A-R Cable, subject to certain conditions. In certain
circumstances, Warburg Pincus may cause the sale of A-R Cable prior to that
date. Upon the sale of A-R Cable, the net sales proceeds, after repayment of
all outstanding indebtedness and other liabilities, will be used as follows:
first, to repay Warburg Pincus' investment in the Series A Preferred Stock;
second, to repay the Company's investment in the Series B Preferred Stock;
third, to repay the accumulated unpaid dividends on the Series A Preferred
Stock (19% annual rate); fourth, to repay the accumulated unpaid dividends on
the Series B Preferred Stock (12% annual rate); fifth, to pay the Company for
all accrued and unpaid management fees together with accrued but unpaid
interest thereon; sixth, pro rata 60% to the Series A Preferred Stockholders,
4% to the Series B Preferred Stockholders and 36% to the common
stockholder(s).
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following items, which are
depreciated or amortized primarily on a straight-line basis over the
estimated useful lives shown below:
<TABLE>
<CAPTION>
December 31,
---------------------- Estimated
1995 1994 Useful Lives
---- ---- -------------
<S> <C> <C> <C>
Cable television transmission
and distribution systems:
Converters . . . . . . . . . . . . . . . . $ 329,091 $ 270,660 3 to 5 years
Headends . . . . . . . . . . . . . . . . . 85,763 66,583 6 to 9 years
Distribution systems . . . . . . . . . . . 1,127,836 963,545 10 to 15 years
Program, service and test
equipment . . . . . . . . . . . . . . . . 105,759 80,384 4 to 7 years
Microwave equipment. . . . . . . . . . . . 5,442 5,082 7 1/2 years
Construction in progress (including
materials and supplies) . . . . . . . . . 74,499 54,709 -
Furniture and fixtures . . . . . . . . . . . 26,038 20,758 5 to 12 years
Transportation equipment . . . . . . . . . . 41,352 33,508 2 to 12 years
Building and building improvements . . . . . 23,033 19,446 22 to 39 years
Leasehold improvements . . . . . . . . . . . 41,939 34,627 Term of lease
Land and land improvements . . . . . . . . . 9,118 8,995 -
1,869,870 1,558,297
---------- ----------
Less accumulated depreciation and
amortization . . . . . . . . . . . . . . . 843,515 672,269
---------- ----------
$1,026,355 $ 886,028
---------- ----------
---------- ----------
</TABLE>
(66)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 4. DEBT
BANK DEBT
RESTRICTED GROUP
For financing purposes, Cablevision Systems Corporation and certain of its
subsidiaries (including Cablevision of Boston as of December 15, 1995) are
collectively referred to as the "Restricted Group". On October 14, 1994, the
Restricted Group entered into new $1.5 billion credit facilities (the "Credit
Agreement") with a group of banks led by Toronto-Dominion (Texas), as agent.
The Credit Agreement consists of a $400,000 Term Loan and Reducing Revolver
facilities aggregating $1,100,000. The Term Loan has a final maturity of
June 30, 2003 and begins amortizing on a scheduled quarterly basis on June
30, 1997. The Reducing Revolver facilities begin to reduce on December 31,
1996 and have a final maturity of June 30, 2003. The total amount of bank
debt outstanding at December 31, 1995 and 1994 was $559,244 and $956,419,
respectively. As of December 31, 1995, approximately $20,400 was restricted
for certain letters of credit issued for the Company.
Unrestricted and undrawn funds available to the Restricted Group under the
Credit Agreement amounted to approximately $929,600 at December 31, 1995.
The Credit Agreement contains certain financial covenants that may limit the
Restricted Group's ability to utilize all of the undrawn funds available
thereunder. The Credit Agreement contains various restrictive covenants,
among which are limitations on the amount of investments that may be made in
affiliated entities and certain other subsidiaries, the maintenance of
various financial ratios and tests, and limitations on various payments,
including preferred dividends. The Company is restricted from paying any
dividends on its common stock. The Company was in compliance with the
covenants of its Credit Agreements at December 31, 1995.
Interest on outstanding amounts may be paid, at the option of the Company,
based on various formulas which relate to the prime rate, rates for
certificates of deposit or other prescribed rates. In addition, the Company
has entered into interest rate swap agreements with several banks on a
notional amount of $270,000 as of December 31, 1995 whereby the Company pays
a fixed rate of interest and receives a variable rate. Interest rates and
terms vary in accordance with each of the agreements. The Company enters
into interest
(67)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
rate swap agreements to hedge against interest rate risk, as required by its
credit agreements, and therefore accounts for these agreements as hedges of
floating rate debt, whereby interest expense is recorded using the revised
rate, with any fees or other payments amortized as yield adjustments. As of
December 31, 1995, the interest rate agreements expire at various times
through the year 2000 and have a weighted average life of approximately two
years. The Company is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swap agreements; however, the
Company does not anticipate nonperformance by the counterparties. The
weighted average interest rate on all bank indebtedness was 8.6% and 8.2% on
December 31, 1995 and 1994, respectively. The Company is also obligated to
pay fees of 3/8 of 1% per annum on the unused loan commitment and from 1-3/8%
to 1-5/8% per annum on letters of credit issued under the Credit Agreement.
Substantially all of the assets of the Restricted Group (excluding the assets
of CNYC), amounting to approximately $1,356,100 at December 31, 1995, have
been pledged to secure the borrowings under the Credit Agreement.
CABLEVISION MFR
Cablevision MFR and its subsidiaries, Monmouth Cablevision and Riverview
Cablevision, are party to a credit facility with a group of banks led by
Nations Bank of Texas, N.A., as agent (the "MFR Credit Facility"). The
maximum amount available to Cablevision MFR under the MFR Credit Facility is
$285,000 with a final maturity at June 30, 2003. The facility is a reducing
revolving loan, with scheduled facility reductions beginning on March 31,
1996 resulting in a 15% reduction by December 31, 1998. As of December 31,
1995, Cablevision MFR had outstanding bank borrowings of $195,200.
Unrestricted and undrawn funds available to Cablevision MFR under the MFR
Credit Facility amounted to approximately $89,800 at December 31, 1995. The
MFR Credit Facility contains certain financial covenants that may limit
Cablevision MFR's ability to utilize all of the undrawn funds available
thereunder, including covenants requiring Cablevision MFR to maintain certain
financial ratios. Under the terms of the MFR Credit Facility, Monmouth
Cablevision and Riverview Cablevision are prohibited from transferring funds
to the Company. The loan is secured by a pledge of the Company's stock in
Cablevision MFR and substantially all of Cablevision MFR's assets which
amounted to approximately $324,800 at December 31, 1995. Monmouth
Cablevision and Riverview Cablevision have entered into interest rate swap
and cap agreements with several banks on a notional amount of $130,000 as of
December 31, 1995, whereby Monmouth Cablevision and
(68)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Riverview Cablevision pay a fixed rate of interest and receive a variable
rate. Monmouth Cablevision and Riverview Cablevision account for their
interest rate swap and cap agreements as hedging of floating rate debt, as
may be required under the MFR Credit Facility whereby interest expense is
recorded using the revised rate, with any fees or other payments amortized as
yield adjustments. Cablevision MFR is exposed to credit loss in the event of
nonperformance by the other parties to the agreements; however, Cablevision
MFR does not anticipate nonperformance by the counterparties. The interest
rate agreements expire in 1997. The weighted average interest rate on all
bank indebtedness was approximately 8.1% and 8.3%, on December 31, 1995 and
1994, respectively. The MFR Credit Facility contains various restrictive
covenants with which Cablevision MFR was in compliance or had obtained
waivers of compliance at December 31, 1995.
RAINBOW PROGRAMMING
In July 1994, Rainbow Programming entered into a $105,000 credit facility
with a group of banks. At December 31, 1994, $105,000 was outstanding under
this facility. On January 27, 1995 Rainbow Programming entered into an
amended and restated credit facility for $202,000, the entire amount of which
was outstanding on December 31, 1995. The credit facility is payable on
December 31, 1996 and bears interest at varying rates based upon the banks'
Base Rate or LIBOR Rate, as defined in the credit agreement. The loan is
secured by a pledge of the Company's stock in Rainbow Programming and is
guaranteed by the subsidiaries of Rainbow Programming as permitted. The
weighted average interest rate during 1995 and 1994 was 8.7% and 7.8%,
respectively. The credit agreement contains various restrictive covenants
with which Rainbow Programming was in compliance at December 31, 1995.
AMERICAN MOVIE CLASSICS COMPANY
AMCC is party to a loan agreement (the "AMCC Loan Agreement") with a group of
banks (with the Toronto Dominion Bank as Lead Bank). The AMCC Loan
Agreement, which permits maximum borrowings of $51,025 and matures on June
30, 1998, is comprised of a $36,025 term loan and a $15,000 revolver. At
December 31, 1995 and 1994, there were no borrowings under the revolver and
an outstanding balance of $36,025 and $44,000, respectively under the term
loan. Borrowings under the AMCC Loan Agreement bear interest at varying
rates above the Lead Bank's Base, CD or LIBOR rate depending on the ratio of
debt to cash flow, as defined in the Loan Agreement. AMCC has entered into
an interest rate swap agreement on a notional amount of $20,000 under which
AMCC pays a fixed rate and receives a variable rate. The interest rate swap
agreement expires on October 6, 1997. AMCC is exposed to credit loss in the
event of
(69)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
nonperformance by the other parties to the interest rate swap agreement;
however, it does not anticipate nonperformance by the counterparties. At
December 31, 1995 and 1994 the weighted average interest rate on bank
indebtedness approximated 6.8% and 7.3%, respectively. Substantially all of
the assets of AMCC, amounting to $165,576 at December 31, 1995, have been
pledged to secure the borrowings under the AMCC Loan Agreement. The AMCC
Loan Agreement contains various restrictive covenants with which AMCC was in
compliance at December 31, 1995.
SENIOR DEBT
Under the credit agreement between V Cable and GECC (the "V Cable Credit
Agreement"), GECC has provided a term loan (the "V Cable Term Loan") in the
amount of $20,000 to V Cable, which accretes interest at a rate of 10.62%
compounded semi-annually until December 31, 1997 (the reset date). In
addition, GECC has extended to VC Holding a $505,000 term loan (the "Series A
Term Loan), a $25,000 revolving line of credit (the "Revolving Line") and a
$202,554 term loan (the "Series B Term Loan"), all of which comprise the VC
Holding Credit Agreement. Interest on the Series A Term Loan and on any
amounts drawn under the Revolving Line of credit is payable currently.
Interest on the Series B Term Loan accretes at a rate of 10.62% compounded
semi-annually until December 31, 1997 (the reset date) and is payable in full
on December 31, 2001. At December 31, 1995 and 1994, amounts outstanding
under the V Cable Term Loan, the Series A Term Loan and the Series B Term
Loan were $27,288 and $24,606; $501,884 and $505,000; and 272,272 and
$245,507, respectively. There were no amounts outstanding under the
Revolving Line at December 31, 1995 and 1994. Unrestricted and undrawn funds
available to VC Holding at December 31, 1995 amounted to $24,105.
Interest rates on $254,000 of the Series A Term Loan are fixed at 10.12%
through December 31, 1997. The remaining $247,884 bears interest at rates
based on either GECC's Index Rate (as defined) or LIBOR plus applicable
percentages. Interest on any borrowings under the Revolving Line is paid
based on either GECC's Index Rate (as defined) or LIBOR plus applicable
percentages which vary depending upon certain prescribed financial ratios.
Scheduled quarterly principal payments on the Series A Term Loan commence
June 30, 1997 and continue through December 31, 2001.
V Cable has agreed to assume, on December 31, 1997, approximately $121,000 of
debt of U.S. Cable, which amount is subject to adjustment, upward or
downward, depending on U.S. Cable's ratio of debt to cash flow (as defined)
in 1997 and thereafter. Included in Senior Debt at December 31, 1995 and 1994
is $97,359 and $87,327, respectively,
(70)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
representing the present value of debt of U.S. Cable to be assumed in 1997.
The difference at December 31, 1995 of approximately $23,641 will be charged
to interest expense during the period from January 1, 1996 to December 31,
1997. The effective interest rate on this debt is approximately 11%. This
debt matures on December 31, 2001. Amortization of deferred interest expense
in connection with the assumption of U.S. Cable's debt, which is being
amortized on a straight line basis through December 31, 1997, amounted to
$14,047, $14,048 and $14,047 in 1995, 1994 and 1993, respectively.
The debt of V Cable and VC Holding is guaranteed by, and secured by a pledge
of all of the assets of, V Cable, VC Holding and each of their subsidiaries,
including a pledge of all direct and indirect ownership interests in such
subsidiaries. U.S. Cable's debt is also guaranteed and cross-collateralized
by each of V Cable, VC Holding and each of their subsidiaries. All of the V
Cable, VC Holding and U.S. Cable credit facilities are non-recourse to the
Company other than with respect to the common stock of V Cable owned by the
Company. Substantially all of the assets of V Cable, amounting to
approximately $391,600 at December 31, 1995, have been pledged to secure
borrowings under the V Cable and VC Holding Credit Agreements. At December
31, 1995 V Cable's liabilities exceeded its assets by approximately $551,800.
The V Cable and VC Holding Credit Agreements contain various restrictive
covenants, among which are the maintenance of certain financial ratios,
limitations regarding certain transactions, prohibitions against the transfer
of funds to the parent company (except for reimbursement of certain
expenses), and limitations on levels of permitted capital expenditures. V
Cable and VC Holding were in compliance or had obtained waivers of compliance
with all of the covenants of their loan agreements at December 31, 1995.
(71)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
SUBORDINATED DEBENTURES
In November 1995, the Company issued $300,000 principal amount of 9-1/4%
Senior Subordinated Notes due 2005 (the "2005 Notes"). The 2005 Notes are
redeemable at the Company's option, in whole or in part, on November 1, 2000,
November 1, 2001 and November 1, 2002 at the redemption price of 104.625%,
103.1% and 101.5%, respectively, of the principal amount and thereafter at
100% of the principal amount, in each case together with accrued interest to
the redemption date. The indenture under which the 2005 Notes were issued
contains various covenants, which are generally less restrictive than those
contained in the Company's Credit Agreement, with which the Company was in
compliance at December 31, 1995. The net proceeds of approximately $292,200
were used to reduce bank borrowings.
In October 1994, the Company redeemed its $200,000 face amount 12-1/4% Senior
Subordinated Reset Debentures due November 15, 2003, (the "Reset
Debentures"). In connection with the redemption, the Company paid a premium
over face amounting to $2,000, incurred a loss of $605 representing the
unamortized portion of the original issue discount and wrote off $4,483 of
deferred finance costs. The total loss incurred related to the redemption of
the Reset Debentures amounted to $7,088.
In February 1993, the Company issued $200,000 face amount ($198,930 and
$198,867 amortized amounts at December 31, 1995 and 1994, respectively) of
its 9-7/8% Senior Subordinated Debentures due 2013 (the "2013 Debentures").
The 2013 Debentures are redeemable, at the Company's option, on February 15,
2003, February 15, 2004, February 15, 2005 and February 15, 2006 at the
redemption price of 104.80%, 103.60%, 102.40% and 101.20%, respectively, of
the principal amount and thereafter at the redemption price of 100% of the
principal amount, in each case together with accrued interest to the
redemption date. The indenture under which the 2013 Debentures were issued
contains various covenants, which are generally less restrictive than those
contained in the Company's Credit Agreement, with which the Company was in
compliance at December 31, 1995.
Also in 1993, the Company issued $150,000 face amount ($149,678 and $149,667
amortized amounts at December 31, 1995 and 1994, respectively) of its 9-7/8%
Senior Subordinated Debentures due 2023 (the "2023 Debentures"). The 2023
Debentures are redeemable, at the Company's option, on and after April 1,
2003 at the redemption price of 104.938% reducing ratably to 100% of the
principal amount on and after April 1, 2010, in each case together with
accrued interest to the redemption date. The indenture under
(72)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
which the 2023 Debentures were issued contains various covenants, which are
generally less restrictive than those contained in the Company's Credit
Agreement, with which the Company was in compliance at December 31, 1995.
In April 1992, the Company issued $275,000 of its 10-3/4% Senior Subordinated
Debentures due 2004 (the "2004 Debentures"). The 2004 Debentures are
redeemable, at the Company's option, on April 1, 1997 and April 1, 1998 at
the redemption price of 103.071% and 101.536%, respectively, of the principal
amount, and on April 1, 1999 and thereafter at the redemption price of 100%
of the principal amount, in each case together with accrued interest to the
redemption date. The Indenture under which the 2004 Debentures were issued
contains various covenants, which are generally less restrictive than those
contained in the Company's Credit Agreement, with which the Company was in
compliance at December 31, 1995. The Indenture requires a sinking fund
providing for the redemption on April 1, 2002 and April 1, 2003 of $68,750
principal amount of the 2004 Debentures, at a redemption price equal to 100%
of the principal amount, plus accrued interest to the redemption date.
SUBORDINATED NOTES PAYABLE
In connection with the acquisition of Monmouth Cablevision and Riverview
Cablevision, in August 1994, Cablevision MFR issued promissory notes
totalling $141,268, due in 1998 and bearing interest at 6% until the third
anniversary and 8% thereafter (increasing to 8%and 10% respectively, if
interest is paid in shares of the Company's Class A Common Stock). Principal
and interest on the notes is payable, at Cablevision MFR's election, in cash
or in shares of the Company's Class A Common Stock. The promissory notes are
guaranteed by the Company and the obligations under the guarantee rank pari
passu with the Company's subordinated debentures. In certain circumstances,
Cablevision MFR may extend the maturity date of the promissory notes until
2003 for certain additional consideration.
(73)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
SUMMARY OF FIVE YEAR DEBT MATURITIES
Total amounts payable by the Company and its subsidiaries under its various
debt obligations, including capital leases, during the five years subsequent
to December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Restricted Cablevision Rainbow
Group V Cable MFR Programming AMCC Total
---------- ------- ----------- ----------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
1996 $ 2,810 $ - $ - $202,000 $16,995 $221,805
1997 38,796 18,000 - - 12,980 69,776
1998 61,953 20,000 141,268 - 6,050 229,271
1999 84,455 30,000 - - - 114,455
2000 92,000 40,000 41,300 - - 173,300
</TABLE>
NOTE 5. PREFERRED STOCK
In November 1995, the Company issued 13,800,000 depositary shares
representing 1,380,000 shares of 8-1/2% Series I Cumulative Convertible
Exchangeable Preferred Stock (the "Series I Preferred Stock") with an
aggregate liquidation preference of $345,000. The depositary shares are
convertible into shares of the Company's Class A Common Stock, at any time
after January 8, 1996 at the option of the holder, at an initial conversion
price of $67.44 per share of Class A Common Stock subject to adjustment under
certain conditions. The Series I Preferred Stock is exchangeable into 8-1/2%
Convertible Subordinated Debentures due 2007, at the option of the Company,
in whole but not in part, on or after January 1, 1998 at a rate of $25.00
principal amount of exchange debentures for each depositary share. The
Series I Preferred Stock is redeemable at the option of the Company, in whole
or in part, on November 1, 1999, November 1, 2000, and November 1, 2001 and
thereafter at 102.8%, 101.4% and 100.0%, respectively, of the principal
amount plus accrued and unpaid dividends thereon. The net proceeds of the
Series I Preferred Stock of approximately $334,200 were used to repay bank
borrowings. The Company paid a cash dividend of approximately $4,399 in 1995.
(74)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
In September 1995, the Company issued 2,500,000 shares of its $.01 par value
11-3/4% Series G Redeemable Exchangeable Preferred Stock (the "Series G
Preferred Stock") with an aggregate liquidation preference of $100 per share.
The Company is required to redeem the Series G Preferred Stock on October 1,
2007 at a redemption price per share equal to the liquidation preference of
$100 per share, plus accrued and unpaid dividends thereon. Before October 1,
2000, dividends may, at the option of the Company, be paid in cash or by
issuing fully paid and nonassessable shares of Series G Preferred Stock with
an aggregate liquidation preference equal to the amount of such dividends.
On and after October 1, 2000, dividends must be paid in cash. The terms of
the Series G Preferred Stock permit the Company, at its option, after January
1, 1996, to exchange the Series G Preferred Stock for the Company's 11-3/4%
Senior Subordinated Debentures due 2007 in an aggregate principal amount
equal to the aggregate liquidation preference of the shares of Series G
Preferred Stock. The net proceeds of approximately $239,300 were initially
used to repay bank debt. In 1995, the Company satisfied its dividend
requirements by issuing 77,510 additional shares of Series G Preferred Stock.
In October, 1995, the Company borrowed approximately $103,000 under its
Credit Agreement to redeem its outstanding Series E Redeemable Exchangeable
Convertible Preferred Stock (the "Series E Preferred Stock") in the principal
amount of $100,000 along with accrued dividends. The Company paid cash
dividends on the Series E Preferred Stock during 1995 and 1994 of
approximately $7,213 and $5,500, respectively.
The holders of the Company's 8% Series C Cumulative Preferred Stock ("Series
C Preferred Stock") may require the Company to redeem for cash at any time
commencing December 31, 1997 all or a portion of the outstanding shares of
the Series C Preferred Stock. The Company has the right, upon notice to the
holders requesting redemption, to convert all or a part of such shares into
shares of Class B Common Stock. If, in the future, holders require the
Company to redeem their Series C Preferred Stock, it is the Company's
intention to convert such shares into Class B Common Stock. The Company paid
cash dividends on the Series C Preferred Stock during each of 1995 and 1994
of $885.
(75)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 6. INCOME TAXES
The Company and its majority-owned subsidiaries file consolidated federal
income tax returns. At December 31, 1995 the Company had consolidated net
operating loss carry forwards for tax purposes of approximately $1,023,586,
which expire between 2001 and 2010.
The tax effects of temporary differences which give rise to significant
portions of deferred tax assets or liabilities and the corresponding
valuation allowance at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
DEFERRED ASSET (LIABILITY)
Depreciation and amortization......... $ (45,358) $ (74,833)
Receivables from affiliates........... 19,179 19,312
Benefit plans......................... 11,025 15,046
Allowance for doubtful accounts....... 5,202 3,192
Deficit investment in affiliate....... 226,662 200,111
Benefits of tax loss carry forwards... 429,906 364,522
Other................................. 2,180 8,643
--------- ---------
Net deferred tax assets............. 648,796 535,993
Valuation allowance................... (648,796) (535,993)
--------- ---------
$ - $ -
--------- ---------
--------- ---------
</TABLE>
The Company has provided a valuation allowance for the total amount of net
deferred tax assets since realization of these assets was not assured due
principally to the Company's history of operating losses.
(76)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 7. OPERATING LEASES
The Company leases certain office, production and transmission facilities
under terms of leases expiring at various dates through 2004. The leases
generally provide for fixed annual rentals plus certain real estate taxes and
other costs. Rent expense for the years ended December 31, 1995, 1994 and
1993 amounted to $16,823, $12,036 and $10,849, respectively.
In addition, the Company rents space on utility poles for its operations.
The Company's pole rental agreements are for varying terms, and management
anticipates renewals as they expire. Pole rental expense for the years ended
December 31, 1995, 1994 and 1993 amounted to approximately $7,790, $6,947 and
$6,177, respectively. The minimum future annual rentals for all operating
leases during the next five years, including pole rentals from January 1,
1996 through December 31, 2000, and thereafter, at rates now in force are
approximately: 1996, $20,480; 1997, $18,377; 1998, $16,315; 1999, $14,386;
2000, $12,677; thereafter, $8,800.
NOTE 8. AFFILIATE TRANSACTIONS
The Company has affiliation agreements with certain cable television
programming companies, including MSG Holdings, varying ownership interests in
which were held, directly or indirectly, by Rainbow Programming during the
three years ended December 31, 1995. Rainbow Programming's investment in
these programming companies is accounted for on the equity method of
accounting. Accordingly, the Company recorded income (losses) of
approximately $(9,930), $(1,007) and $8,828 in 1995, 1994 and 1993,
respectively, representing its percentage interests in the results of
operations of these programming companies. Such amounts include $4,304 and
$5,656 for 1994 and 1993, respectively, of the Company's share of the net
income of AMCC prior to its consolidation with the Company in July 1994. In
addition, such amounts include $(3,293), $(175) and $5,240 for 1995, 1994 and
1993, respectively, of the Company's share of net income (losses) in
SportsChannel New York and Rainbow News 12 prior to their consolidation with
the Company in July 1995. At December 31, 1995 and 1994, the Company's
investment in these programming companies amounted to approximately $134,969
and $30,096, respectively. Costs incurred by the Company for programming
services provided by these non-consolidated affiliates and included in
technical expense for the years ended December 31, 1995, 1994 and 1993
amounted to approximately $37,756, $20,232 and $26,732, respectively. At
December 31, 1995 and 1994, amounts due from certain of these programming
affiliates aggregated $584 and $62, respectively, and are included in
advances to affiliates. Also, at December 31, 1995 and 1994 amounts
(77)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
due to certain of these affiliates, primarily for programming services
provided to the Company, aggregated $12,607 and $13,731, respectively, and
are included in accounts payable to affiliates.
Summarized combined financial information relating to these programming
companies at December 31, 1995, 1994 and 1993 and for the years then ended is
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current assets.......... $ 73,232 $ 97,184 $133,060
-------- -------- --------
-------- -------- --------
Noncurrent assets....... $ 47,357 $ 33,815 $126,826
-------- -------- --------
-------- -------- --------
Current liabilities..... $ 60,286 $ 64,000 $ 93,071
-------- -------- --------
-------- -------- --------
Noncurrent liabilities.. $ 16,490 $ 6,257 $123,184
-------- -------- --------
-------- -------- --------
Net revenues............ $240,518 $270,676 $363,727
-------- -------- --------
-------- -------- --------
Net income (loss)....... $ (5,490) $ 3,473 $ 39,423
-------- -------- --------
-------- -------- --------
</TABLE>
In 1992 the Company acquired from Mr. Dolan substantially all of the
interests in Cablevision of New York City ("CNYC") that it did not previously
own. Mr. Dolan remains a 1% partner in CNYC and is entitled to certain
preferential payments. Mr. Dolan's preferential rights entitle him to an
annual cash payment (the "Annual Payment") of 14% multiplied by the
outstanding balance of his "Minimum Payment". The Minimum Payment is $40,000
and is to be paid to Mr. Dolan prior to any distributions to partners other
than Mr. Dolan. In addition, Mr. Dolan has the right, exercisable beginning
on December 31, 1997, to require the Company to purchase his interest. Mr.
Dolan would be entitled to receive from the Company the Minimum Payment, any
accrued but unpaid Annual Payments, a guaranteed return on certain of his
investments in CNYC and a Preferred Payment defined as a payment (not
exceeding $150,000) equal to 40% of the Appraised Equity Value (as defined)
of CNYC after making certain deductions. Based upon estimates for accounting
purposes of the Appraised Equity Value of CNYC made by the Company, the
maximum amount of the Preferred Payment was accrued during 1992 through 1994
as an additional obligation to Mr. Dolan relating to the Company's purchase
of CNYC, which has also been charged to par value in excess of capital
contributed. The total amount owed to Mr. Dolan at December 31, 1995 of
approximately $192,945 in respect of the Preferred Payment, the Minimum
Payment and the Annual Payment reflects a reduction of approximately $3,955
at December 31, 1995 representing Mr. Dolan's obligation to reimburse the
Company in connection with certain claims paid or owed by CNYC.
(78)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
During 1995, 1994 and 1993, the Company made advances to or incurred costs on
behalf of other affiliates engaged in providing cable television, cable
television programming, and related services. Amounts due from these
affiliates amounted to $6,325 and $6,591 at December 31, 1995 and 1994,
respectively and are included in advances to affiliates.
Cablevision of Newark, a partnership 25% owned and managed by the Company and
75% owned by an affiliate of Warburg Pincus, owns cable television systems
located in Newark and South Orange, New Jersey. The Company's share of the
net losses of Cablevision of Newark amounted to $2,957, $3,631 and $4,206 in
1995, 1994 and 1993, respectively.
In connection with its 30% interest in A-R Cable Partners (see note 2), the
Company recorded its share of the losses of A-R Cable Partners amounting to
$3,505 for 1995 and $1,886 for the period from acquisition through December
31, 1994.
Also, in connection with its 30% interest in CFHI (see note 2), the Company
recorded its share of the losses of CFHI amounting to $1,535 for 1995 and
$654 from the date of acquisition through December 31, 1994.
The Company manages the operations of Cablevision of Newark, A-R Cable, A-R
Cable Partners and CFHI for a fee equal to 3-1/2% of gross receipts, as
defined, plus reimbursement of certain costs and an allocation of certain
selling, general and administrative expenses. In certain cases, interest is
charged on unpaid amounts. For 1995, 1994 and 1993, such management fees,
expenses and interest amounted to approximately $8,816, $6,576 and $5,677,
respectively, of which $6,918, $5,536 and $4,845, respectively, were reserved
by the Company.
In connection with the V Cable Reorganization (see Note 2), V Cable acquired
for $20,000, a 20% interest in U.S. Cable. The Company manages the
properties of U.S. Cable under management agreements that provide for cost
reimbursement, including an allocation of overhead charges. For 1995, 1994
and 1993, such cost reimbursement amounted to $5,621, $5,803 and $4,894,
respectively, which included an allocation of overhead charges of $2,881,
$2,720 and $2,604, respectively.
(79)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 9. BENEFIT PLANS
The Company maintains the CSSC Supplemental Benefit Plan (the "Benefit Plan")
for the benefit of certain officers and employees of the Company. As part of
the Benefit Plan, the Company established a nonqualified defined benefit
pension plan, which provides that, upon attaining normal retirement age, a
participant will receive a benefit equal to a specified percentage of the
participant's average compensation, as defined. All participants are 100%
vested in the Benefit Plan. Net periodic pension cost for the years ended
December 31, 1995, 1994 and 1993 amounted to $(9), $103 and $368,
respectively. At December 31, 1995 and 1994, the fair value of Benefit Plan
assets exceeded the projected benefit obligation by approximately $2,119 and
$1,772, respectively.
In addition, the Company accrues a liability in the amount of 7% of certain
officers' and employees' compensation, as defined. Each year the Company also
accrues for the benefit of these officers and employees interest on such
amounts. The officer or employee will receive such amounts upon termination
of employment. All participants are 100% vested in this plan. The cost
associated with this plan for the years ended December 31, 1995, 1994 and
1993 was approximately $495, $337 and $497, respectively.
The Company maintains a Pension and 401(K) Savings Plan (the "Plan"), to
permit employees of the Company and its affiliates to make contributions to
the Plan on a pre-tax salary reduction basis in accordance with the
provisions of Section 401(K) of the Internal Revenue Code. The Company
contributes 1-1/2% of eligible employees' annual compensation, as defined, to
the defined contribution portion of the Plan (the "Pension Plan") and an
equivalent amount to the Section 401(K) portion of the Plan (the "Savings
Plan"). Employees may voluntarily contribute up to 15% of eligible
compensation, subject to certain restrictions, to the Savings Plan, with an
additional matching contribution by the Company of 1/4 of 1% for each 1%
contributed by the employee, up to a maximum contribution by the Company of
1/2 of 1% of eligible base pay. Employee contributions are fully vested as
are employer base contributions to the Savings Plan. Employer contributions
to the Pension Plan and matching contributions to the Savings Plan become
vested in years three through seven. The cost associated with these plans
was approximately $4,287, $3,125 and $2,905 for the years ended December 31,
1995, 1994 and 1993, respectively.
(80)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 10. STOCK BENEFIT PLANS
The Company maintains an Employee Stock Plan (the "Stock Plan") under which
the Company is authorized to issue a maximum of 3,500,000 shares. Pursuant
to its terms, no awards may be granted under the Stock Plan after December 5,
1995. The Company granted under the Stock Plan incentive stock options,
nonqualified stock options, restricted stock, conjunctive stock appreciation
rights, stock grants and stock bonus awards. The exercise price of stock
options could not be less than the fair market value per share of class A
common stock on the date the option is granted and the options expire no
longer than ten years from date of grant. Conjunctive stock appreciation
rights permit the employee to elect to receive payment in cash, either in
lieu of the right to exercise such option or in addition to the stock
received upon the exercise of such option, equal to the difference between
the fair market value of the stock as of the date the right is exercised, and
the exercise price.
Under the Stock Plan, during 1995 the Company issued options to purchase
43,600 shares of Class A common stock, stock appreciation rights related to
43,600 shares under option and stock awards of 7,100 common shares. The
options and related conjunctive stock appreciation rights are exercisable at
$52.125 per share and vest in 33-1/3% annual increments beginning from the
date of grant. The stock awards vest 100% in May 1998.
Under the Stock Plan, during 1994 the Company issued options to purchase
525,400 shares of Class A common stock, stock appreciation rights related to
525,400 shares under option and stock awards of 68,400 common shares. Of the
options and related conjunctive stock appreciation rights, 95,400 are
exercisable at $42.00 per share and vest in 25% annual increments beginning
from the date of grant and 430,000 options and conjunctive rights are
exercisable at $56.50 per share and are currently vested. The stock awards
vest 100% in May 1998.
(81)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
In November 1994, the Company entered into agreements with three employees to
pay the value, as of that date, of options exercised with respect to 405,000
shares of the Company's Class A Common Stock, and to replace those options
with a combination of stock appreciation rights and newly issued options,
with the exercise price set at the market price of such stock on that date.
In accordance with the agreement, one-third of the value of the exercised
options was paid in cash with the remaining portion payable in equal
installments on November 18, 1995 and November 18, 1996. Accordingly, the
Company recorded expense related to the purchase of these options amounting
to $13,215 in 1994, representing the cash payment of approximately $4,673 and
a liability for future payments, included in accounts payable to affiliates
in the accompanying consolidated financial statements, amounting to
approximately $8,542 at December 31, 1994. In November 1995, at the
Company's option, final payments relating to these agreements were made.
Under the Stock Plan, during 1993 the Company issued options to purchase
15,225 shares of class A common stock, stock appreciation rights related to
15,225 shares under option and stock awards of 10,225 common shares. The
options and related conjunctive stock appreciation rights are exercisable at
various prices ranging from $27.625 to $38.25 per share in 25% and 33% annual
increments beginning from the date of grant. The stock awards vest 100% by
May 1996.
On February 13, 1996 the Company's Board of Directors adopted, subject to the
approval of the Company's stockholders, the 1996 Employee Stock Plan (the
"1996 Plan") under which, the Company would be authorized to issue a maximum
of 2,500,000 shares. Under the 1996 Plan, the Company would be able to grant
incentive stock options, nonqualified stock options, restricted stock,
conjunctive stock appreciation rights, stock grants and stock bonus awards.
The other terms of the 1996 Plan are substantially identical to those of the
Stock Plan except that under the 1996 Plan the Compensation Committee would
have the authority, in its discretion, to add performance criteria as a
condition to any employee's exercise of an award granted under the 1996 Plan.
(82)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Stock transactions under the Stock Plan are as follows:
<TABLE>
<CAPTION>
Shares Stock
Under Appreciation Stock Available Option
Option Rights Awards For Grant Price Range
-------- ------------ ------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 2,322,126 943,726 358,475 24,669 $14.50-$37.13
Granted 15,225 15,225 10,225 (25,450) $27.63-$38.25
Exercised/issued (478,582) (84,017) (15,000) $14.50-$36.00
Cancelled (124,074) (19,989) (28,050) 152,124 $16.63-$37.13
--------- -------- ------- --------
Balance, December 31, 1993 1,734,695 854,945 325,650 151,343 $14.50-$38.25
Granted 525,400 525,400 68,400 (593,800) $42.00-$56.50
Exercised/issued (358,528) (161,952) (48,430) - $14.50-$36.00
Cancelled (434,390) (59,866) (109,241) 543,631 $16.63-$42.00
--------- --------- ------- --------
Balance, December 31, 1994 1,467,177 1,158,527 236,379 101,174 $14.50-$56.50
Granted 43,600 43,600 7,100 (50,700) $52.13
Exercised/issued (418,102) (55,764) 17,302 - $14.50-$42.00
Cancelled (40,343) (32,026) (115,231) 155,574 $16.63-$42.00
--------- --------- -------- --------
Balance, December 31, 1995 1,052,332 1,114,337 145,550 206,048 $14.50-$56.50
--------- --------- -------- --------
--------- --------- -------- --------
</TABLE>
At December 31, 1995, options for approximately 749,000 shares were
exercisable. As a result of the stock awards, bonus awards, stock
appreciation rights and the expensing of the cash payment made for certain
executive stock options, the Company expensed approximately $7,757, $6,814
and $28,234 in 1995, 1994 and 1993, respectively. The 1994 amount reflects a
credit of approximately $6,401 primarily resulting from a decline in the
market price of the Company's Class A Common Stock.
(83)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 11. COMMITMENTS AND CONTINGENCIES
The Company, through Rainbow Programming, has entered into several contracts
with professional and other sports teams relating to cable television
programming including rights agreements. Amounts payable under these
contracts during the five years subsequent to December 31, 1995 amount to
$36,767 in 1996, $32,098 in 1997, $33,122 in 1998, $31,568 in 1999 and
$23,790 in 2000.
In addition, Rainbow Programming has guaranteed rights payments to several
professional sports teams relating to certain affiliated sports programming
companies. Amounts guaranteed on behalf of such affiliated sports
programming companies during the five years subsequent to December 31, 1995
amount to $10,126 in 1996, $9,133 in 1997, $3,681 in 1998, $2,578 in 1999 and
$340 in 2000.
The Company and its cable television affiliates have an affiliation agreement
with a program supplier whereby the Company is obligated to make Base Rate
Annual Payments, as defined and subject to certain adjustments pursuant to the
agreement, through 2004. The Company would be contingently liable for its
proportionate share of Base Rate Annual Payments, based on subscriber usage,
of approximately $10,848 in 1996; $11,241 in 1997; $11,646 in 1998; 12,065 in
1999 and for the years 2000 through 2004, such payments would increase by
percentage increases in the Consumer Price Index, or five percent, whichever
is less, over the prior year's Base Rate Annual Payment.
The Company has employment agreements with certain of its executive officers
expiring at various dates through December 31, 1997. The agreements provide
for minimum annual salaries and, in certain cases, additional amounts and
acceleration of certain stock options, stock appreciation rights and stock
awards in the event of a change in control of the Company, as defined in the
agreements. Aggregate minimum payments under the salary portion of these
agreements amount to $1,230 in 1996 and $2,130 in 1997.
The Company does not provide post-retirement benefits to any of its employees.
(84)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 12. OTHER MATTERS
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that the resolution of these lawsuits will have a
material adverse impact on the financial position of the Company.
The Company recorded a one time charge of $4,306 during 1994 to provide for
severance and related costs, attributable entirely to terminated employees,
resulting from a restructuring of its operations. Substantially all of such
amounts were paid during 1994.
NOTE 13. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL
INSTRUMENTS
CASH AND CASH EQUIVALENTS, TRADE ACCOUNTS RECEIVABLE, NOTES AND OTHER
RECEIVABLES, ACCOUNTS PAYABLE, ACCRUED LIABILITIES, ACCOUNTS PAYABLE TO
AFFILIATES, FEATURE FILM RIGHTS PAYABLE AND OBLIGATION TO RELATED PARTY
The carrying amount approximates fair value due to the short maturity of these
instruments.
BANK DEBT, SENIOR DEBT, SUBORDINATED DEBENTURES, SUBORDINATED NOTES PAYABLE AND
REDEEMABLE EXCHANGEABLE PREFERRED STOCK
The fair values of each of the Company's long-term debt instruments and
redeemable preferred stock are based on quoted market prices for the same or
similar issues or on the current rates offered to the Company for instruments
of the same remaining maturities.
INTEREST RATE SWAP AGREEMENTS
The fair values of interest rate swap agreements are obtained from dealer
quotes. These values represent the estimated amount the Company would receive
or pay to terminate agreements, taking into consideration current interest
rates and the current creditworthiness of the counterparties.
(85)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The fair value of the Company's financial instruments are summarized as
follows:
<TABLE>
<CAPTION>
December 31, 1995
---------------------------
Carrying Estimated
Amount Fair Value
---------- -----------
<S> <C> <C>
Long term debt instruments:
Bank debt $ 992,469 $ 992,469
Senior debt 898,803 898,803
Subordinated debentures 923,608 972,125
Subordinated notes payable 141,268 135,400
Redeemable exchangeable preferred stock 257,751 266,772
---------- ----------
$3,213,899 $3,265,569
---------- ----------
---------- ----------
Interest rate swap and cap agreements:
In a net payable position $ - $ 11,055
---------- ----------
---------- ----------
</TABLE>
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
NOTE 14. SUBSEQUENT EVENTS
In February 1996, the Company entered into the GECC Agreement, as amended,
pursuant to which the Company plans to effect a reorganization and
recapitalization relating to V Cable and U.S. Cable (the "V Cable
Transactions"). The terms of the V Cable transactions provide for, among
other things, (i) the payment of all existing indebtedness of V Cable
(amounting to $899,000 at December 31, 1995); (ii) the formation of a new
unrestricted subsidiary ("Cablevision of Ohio") which will enter into a
separate $450,000 credit facility with a group of banks; and (iii) the
outside interests in U.S. Cable which the Company does not already own will be
acquired, facilitated by another separate bank credit facility of $151,000. On
March 18, 1996, approximately $500,000 of V Cable indebtedness and $70,000 of
U.S. Cable indebtedness (which includes accrued interest in both cases) was
paid with funds made available from the proceeds of the Company's issuance of
Series L Preferred Stock, described below. The remaining indebtedness of
V Cable and U.S. Cable will be paid from borrowings under the Credit Agreement
and from funds available under the new credit facilities mentioned above. The
new credit facilities contain certain financial covenants that may limit the
utilization of undrawn funds
(86)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
available thereunder, including requirements to maintain certain financial
ratios and restrictions on permitted uses of borrowed funds. It is expected
that the V Cable Transactions will be consummated during the third quarter of
1996.
Also in February 1996, the Company issued 6,500,000 depositary shares,
representing 65,000 shares of 11-1/8% Series L Redeemable Exchangeable
Preferred Stock (the "Series L Preferred Stock"). The depositary shares are
exchangeable, in whole but not in part, at the option of the Company, on or
after April 1, 1996, for the Company's 11-1/8% Senior Subordinated Debentures
due 2008. The Company is required to redeem the Series L Preferred Stock on
April 1, 2008 at a redemption price equal to the liquidation preference of
$10,000 per share plus accumulated and unpaid dividends. The Series L
Preferred Stock is redeemable at various redemption prices beginning at
105.563% at any time on or after April 1, 2003, at the option of the Company,
with accumulated and unpaid dividends thereon to the date of redemption.
(87)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 15. INTERIM FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of selected quarterly financial data for the years
ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, TOTAL
------------------ ------------------ ------------------ ------------------- ---------------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- --------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............... $ 245,401 $176,087 $263,734 $192,090 $278,158 $ 223,468 $290,767 $ 245,524 $1,078,060 $ 837,169
Operating expenses..... 231,696 154,934 252,695 166,511 249,603 195,818 264,623 257,213 998,617 774,476
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
Operating profit
(loss)................ $ 13,705 $ 21,153 $ 11,039 $ 25,579 $ 28,555 $ 27,650 $ 26,144 $ (11,689) $ 79,443 $ 62,693
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
Net loss applicable to
common shareholders... $(100,973) $(57,348) $(99,384) $(56,557) $(44,033) $ (68,925) $(93,317) $(138,706) $ (337,707) $(321,536)
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
Net loss per common
share................. $ (4.27) $ (2.46) $ (4.18) $ (2.42) $ (1.85) $ (2.93) $ (3.88) $ (5.87) $ (14.17) $ (13.72)
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
--------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
</TABLE>
(88)
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
The information called for by Item 10, Directors and Executive Officers of the
Registrant, Item 11, Executive Compensation, Item 12, Security Ownership of
Certain Beneficial Owners and Management and Item 13, Certain Relationships and
Related Transactions, is hereby incorporated by reference to the Company's
definitive proxy statement for its Annual Meeting of Shareholders anticipated
to be held in June, 1996 or if such definitive proxy statement is not filed
with the Commission prior to April 30, 1996, to an amendment to this report on
Form 10-K filed under cover of Form 10-K/A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULE, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. The financial statements as indicated in the index is set forth on
page 48.
2. Financial Statement schedule:
Page
No.
-----
Schedule supporting consolidated financial statements:
Schedule II - Valuation and Qualifying Accounts.......... 90
Schedules other than that listed above have been omitted, since they are
either not applicable, not required or the information is included elsewhere
herein.
3. Independent auditors report and accompanying financial statements of
A-R Cable Services, Inc. are filed as part of this report on page 91.
4. The Index to Exhibits is on page 110.
(b) Reports on Form 8-K:
The Company filed reports on Form 8-K during the last quarter of the fiscal
period covered by this report on October 16, 1995 and November 7, 1995.
(89)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance at
Beginning Charged to Costs Charged to Deductions- Balance at
of Period and Expenses Other Accounts Write-Offs End of Period
----------- ---------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Allowance for doubtful
accounts.................... $10,087 $14,551 $ - $(11,960) $12,678
------- ------- ----- --------- -------
------- ------- ----- --------- -------
YEAR ENDED DECEMBER 31, 1994
Allowance for doubtful
accounts.................... $ 5,055 $11,849 $ - $ (6,817) $10,087
------- ------- ----- --------- -------
------- ------- ----- --------- -------
YEAR ENDED DECEMBER 31, 1993
Allowance for doubtful
accounts.................... $ 3,232 $ 9,138 $ - $ (7,315) $ 5,055
------- ------- ----- --------- -------
------- ------- ----- --------- -------
</TABLE>
(90)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of
Cablevision Systems Corporation)
Consolidated Financial Statements
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
(91)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
A-R Cable Services, Inc.
We have audited the accompanying consolidated balance sheets of A-R Cable
Services, Inc. (a wholly-owned subsidiary of Cablevision Systems Corporation)
and subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholder's deficiency and cash
flows for each of the years in the three-year period ended December 31, 1995.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of A-R Cable Services,
Inc. and subsidiaries at December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Jericho, New York
March 18, 1996
(92)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................... $ 25 $ 41
Accounts receivable trade (less allowance for
doubtful accounts of $376 and $321).................... 2,089 1,345
Notes and other receivables............................. 1,179 1,616
Prepaid expenses........................................ 661 621
Property, plant and equipment, net...................... 113,787 107,004
Subscriber lists, net of accumulated amortization of
$60,800 and $53,760.................................... - 7,040
Franchises, net of accumulated amortization of
$240,200 and $226,707.................................. - 13,493
Excess costs over fair value of net assets acquired,
net of accumulated amortization of $69,290 and $60,683. 103,226 111,833
Deferred financing and other costs, net of accumulated
amortization of $7,563 and $6,295...................... 1,864 3,132
-------- --------
$222,831 $246,125
-------- --------
-------- --------
</TABLE>
See accompanying notes to
consolidated financial statements.
(93)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Accounts payable............................... $ 15,714 $ 14,175
Accrued liabilities:
Interest...................................... 5,316 6,475
Payroll and related benefits.................. 2,167 1,677
Franchise fees................................ 1,607 1,424
Insurance..................................... 1,262 942
Other......................................... 5,338 5,461
Amounts payable to affiliates, net............. 293 238
Due to parent.................................. 17,799 11,325
Senior term loan............................... 410,000 400,575
Capital lease obligations...................... 10 71
Subscriber deposits............................ 705 782
Deferred income taxes.......................... - 6,082
--------- ---------
Total liabilities............................. 460,211 449,227
--------- ---------
Commitments and contingencies
Preferred Stock - Series A..................... 205,051 170,812
--------- ---------
Preferred Stock - Series B..................... 73,319 61,678
--------- ---------
Stockholder's deficiency:
Common stock $.50 par value, 20,000 shares
authorized, 19,000 shares issued and
outstanding................................. 9,500 9,500
Paid-in capital............................... 41,350 41,350
Accumulated deficit........................... (566,600) (486,442)
--------- ---------
Total stockholder's deficiency.............. (515,750) (435,592)
--------- ---------
$ 222,831 $246,125
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(94)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenues (including affiliate amounts of
$1,268, $1,306 and $1,090)................. $113,292 $107,026 $108,711
-------- -------- --------
Operating expenses:
Technical expenses (including affiliate
amounts of $3,260, $2,246 and $2,787)..... 43,808 38,269 38,316
Selling, general and administrative
expenses (including affiliate amounts
of $7,628, $7,262 and $7,174)............. 26,104 22,592 24,664
Depreciation and amortization.............. 46,100 64,695 63,731
-------- -------- --------
116,012 125,556 126,711
-------- -------- --------
Operating loss........................... (2,720) (18,530) (18,000)
Other income (expense):
Interest expense, net (including affiliate
amounts of $1,110, $659 and $244)......... (41,408) (33,572) (27,894)
Loss on retirement of debt................. - - (390)
Miscellaneous, net......................... (182) (799) (792)
-------- -------- --------
Net loss before income tax benefit.......... (44,310) (52,901) (47,076)
Income tax benefit.......................... 6,082 14,045 14,168
-------- -------- --------
Net loss.................................... (38,228) (38,856) (32,908)
-------- -------- --------
Dividend requirements applicable to:
Series A Preferred Stock................... (34,029) (28,236) (23,512)
Series B Preferred Stock................... (7,901) (6,749) (5,998)
-------- -------- --------
(41,930) (34,985) (29,510)
-------- -------- --------
Net loss applicable to common stockholder... $(80,158) $(73,841) $(62,418)
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes
to consolidated financial statements.
(95)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIENCY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
Common Stock
-------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1992......... 19,000 9,500 40,500 (350,183) (300,183)
Preferred dividend requirements.. - - - (29,510) (29,510)
Net loss......................... - - - (32,908) (32,908)
Capital contributions............ - - 850 - 850
------ ------ ------- ----------- ---------
Balance December 31, 1993......... 19,000 9,500 41,350 (412,601) (361,751)
Preferred dividend requirements.. - - - (34,985) (34,985)
Net loss......................... - - - (38,856) (38,856)
------ ------ ------- ----------- ---------
Balance December 31, 1994......... 19,000 9,500 41,350 (486,442) (435,592)
Preferred dividend requirements.. - - - (41,930) (41,930)
Net loss......................... - - - (38,228) (38,228)
------ ------ ------- ----------- ---------
Balance December 31, 1995......... 19,000 $9,500 $41,350 $(566,600) $(515,750)
------ ------ ------- ----------- ---------
------ ------ ------- ----------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(96)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss............................................ $(38,228) $(38,856) $(32,908)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Income tax benefit................................ (6,082) (14,045) (14,168)
Depreciation and amortization..................... 46,100 64,695 63,731
Amortization of deferred financing costs.......... 1,268 1,630 1,577
Loss on retirement of debt........................ - - 390
(Gain) loss on sale of equipment.................. (29) 165 (104)
Change in assets and liabilities:
Decrease (increase) in accounts receivable trade.. (744) 24 24
Decrease (increase) in notes and other
receivables...................................... 437 (92) (463)
Decrease (increase) in prepaid expenses........... (40) 26 (32)
Increase (decrease) in accounts payable........... 1,539 (391) 5,298
Increase (decrease) in accrued liabilities........ (289) 3,051 3,800
Increase (decrease) in amounts payable to
affiliates, net.................................. 55 (364) (192)
Increase in due to parent......................... 6,474 4,134 4,292
Decrease in subscriber deposits................... (77) (91) (77)
-------- -------- --------
Total adjustments................................ 48,612 58,742 64,076
-------- -------- --------
Net cash provided by operating activities........ 10,384 19,886 31,168
-------- -------- --------
Cash flows from investing activities:
Capital expenditures................................ (24,635) (24,404) (25,220)
Proceeds from sale of equipment..................... 921 322 242
-------- -------- --------
Net cash used in investing activities.............. $(23,714) $(24,082) $(24,978)
-------- -------- --------
</TABLE>
See accompanying notes
to consolidated financial statements.
(97)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(in thousands)
(continued)
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from senior debt......................... $ 23,000 $ 9,500 $ 39,639
Repayments of senior debt......................... (13,575) (6,425) (17,500)
Redemption of subordinated notes payable.......... - - (28,793)
Proceeds from issuance of Series A Preferred
Stock............................................ 210 998 -
Proceeds from issuance of Series B Preferred
Stock............................................ 3,740 427 -
Capital contributions............................. - - 850
Repayment of capital lease obligations............ (61) (161) (299)
Additions to deferred financing and other costs... - (500) (206)
-------- ------- -------
Net cash provided by (used in) financing
activities...................................... 13,314 3,839 (6,309)
-------- ------- -------
Net decrease in cash and cash equivalents.......... (16) (357) (119)
Cash and cash equivalents at beginning of year..... 41 398 517
-------- ------- -------
Cash and cash equivalents at end of year........... $ 25 $ 41 $ 398
-------- ------- -------
-------- ------- -------
</TABLE>
See accompanying notes
to consolidated financial statements.
(98)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY AND RELATED MATTERS
A-R Cable Services, Inc. ("A-R Cable" or the "Company"), a wholly-owned
subsidiary of Cablevision Systems Corporation ("CSC") or ("Parent"), was
organized for the purpose of constructing and operating cable television
systems. The Company's revenues are derived principally from its cable
television operations which include recurring monthly fees paid by subscribers.
In May 1992, the Company and CSC consummated a restructuring and refinancing
transaction. In connection with this restructuring, Warburg, Pincus
Investors, L.P. ("Warburg Pincus") purchased a new Series A Preferred Stock
of the Company for a cash investment of $105,000, and CSC purchased a new
Series B Preferred Stock of the Company for a cash investment of $45,000. In
addition, General Electric Capital Corporation ("GECC") provided the Company
with an additional $70,000 under a secured revolving credit line.
In connection with Warburg Pincus' investment in the Company, upon the receipt
of certain franchise approvals, Warburg Pincus will be permitted to elect three
of the six members of the Company's board of directors, will have approval
rights over certain major corporate decisions of the Company and will be
entitled to 60% of the vote on all matters on which holders of capital stock
are entitled to vote (other than the election of directors). CSC (through a
wholly-owned subsidiary) continues to own the common stock, as well as the
Series B Preferred Stock, and CSC continues to manage the Company under a
management agreement that provides for cost reimbursement, an allocation of
overhead charges and a management fee of 3-1/2% of gross receipts, as defined,
with interest on unpaid annual amounts thereon at a rate of 10% per annum. The
3-1/2% fee is payable by the Company only after repayment in full of its senior
debt and certain other obligations. Under certain circumstances, the fee is
subject to reduction to 2-1/2% of gross receipts.
After May 11, 1997, either Warburg Pincus or CSC may irrevocably cause the sale
of the Company, subject to certain conditions. In certain circumstances,
Warburg Pincus may cause the sale of the Company prior to that date. If
Warburg Pincus initiates the sale, CSC will have the right to purchase the
Company through an appraisal procedure. CSC's purchase right may be forfeited
in certain circumstances. Upon the sale of the Company, the net sales
proceeds, after repayment of all outstanding indebtedness and other
liabilities, will be used as follows: first, to repay Warburg Pincus'
investment in
(99)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
the Series A Preferred Stock; second, to repay CSC's investment in the Series B
Preferred Stock; third, to repay the accumulated unpaid dividends on the
Series A Preferred Stock (19% annual rate); fourth, to repay the accumulated
unpaid dividends on the Series B Preferred Stock (12% annual rate); fifth, to
pay CSC for all accrued and unpaid management fees together with accrued but
unpaid interest thereon; sixth, pro rata 60% to the Series A Preferred
Stockholders, 4% to the Series B Preferred Stockholders and 36% to the common
stockholder(s).
During 1995 and 1994, Warburg Pincus purchased additional shares of the new
Series A Preferred Stock for a cash investment of $210 and $998, respectively,
and CSC purchased additional shares of the new Series B Preferred Stock for a
cash investment of $3,740 and $427, respectively. The Series A Preferred Stock
is entitled to a 19% annual dividend. The Series B Preferred Stock is
entitled to a 12% annual dividend. Dividends on the Series A and Series B
Preferred Stock are not payable until the repayment in full of all outstanding
indebtedness to GECC (see Note 3).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany balances and transactions have been eliminated in
consolidation.
REVENUE RECOGNITION
The Company recognizes revenues as cable television services are provided to
subscribers.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including construction materials, are recorded
at cost, which includes all direct costs and certain indirect costs associated
with the construction of cable television transmission and distribution
systems, and the costs of new subscriber installations.
Property, plant and equipment are being depreciated over their estimated useful
lives using the straight-line method. Leasehold improvements are amortized
over the shorter of their useful lives or the term of the related leases.
(100)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
DEFERRED FINANCING COSTS
Costs incurred to obtain debt are deferred and amortized on the straight-line
basis over the life of the related debt.
SUBSCRIBER LISTS, FRANCHISES, AND EXCESS COSTS OVER FAIR VALUE OF NET ASSETS
ACQUIRED
Subscriber lists were amortized on the straight-line basis over varying periods
during which subscribers were expected to remain connected to the system
(averaging approximately 8 years). Franchises are amortized on the
straight-line basis over the original average remaining term of the
franchises (approximately 7 years). Excess costs over fair value of net
assets acquired are being amortized over 20 years on the straight-line basis.
The Company assesses the recoverability of such excess costs based upon
undiscounted anticipated future cash flows of the businesses acquired.
INCOME TAXES
The Company is not a member of the CSC consolidated group for federal tax
purposes and, accordingly, files a separate federal income tax return on
behalf of itself and its consolidated subsidiaries. Income taxes are
provided based upon the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), which requires
the liability method of accounting for deferred income taxes and permits the
recognition of deferred tax assets, subject to an ongoing assessment of
realizability.
CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company
considers short-term investments with a maturity at date of purchase of three
months or less to be cash equivalents. The Company paid cash interest expense
of approximately $40,300, $26,672 and $25,030 during the years ended
December 31, 1995, 1994 and 1993, respectively. The Company's noncash
investing and financing activities included preferred stock dividend
requirements of $41,930, $34,985 and $29,510 in 1995, 1994 and 1993,
respectively.
(101)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following items which are
depreciated over the estimated useful lives shown below:
<TABLE>
<CAPTION>
December 31,
------------------ Estimated
1995 1994 Useful Lives
-------- -------- -------------
<S> <C> <C> <C>
Distribution systems.............. $220,728 $199,702 5-15 years
Machinery and equipment........... 6,654 6,038 5-7 years
Furniture and fixtures............ 1,472 1,327 7 years
Vehicles.......................... 7,816 7,256 4 years
Buildings......................... 2,137 2,047 25 years
Leasehold improvements............ 1,326 1,273 Life of lease
Land.............................. 920 920 -
-------- --------
241,053 218,563
Less accumulated depreciation
and amortization................. 127,266 111,559
-------- --------
$113,787 $107,004
-------- --------
-------- --------
</TABLE>
NOTE 3. SENIOR TERM LOAN
The Company's outstanding borrowings under its senior term loan and revolving
lines of credit (the "Senior Term Loan") with GECC amounted to $410,000 and
$400,575 at December 31, 1995 and 1994, respectively. The facility consists of
a $285,000 senior term loan, $95,000 in special funding advances and a $45,000
revolving line of credit. The senior term loan and revolving line of credit
are non-amortizing and mature on December 30, 1997. The special funding
advances require amortization, amounting to $3,750 per quarter, commencing
January 1, 1997, with the balance due on December 31, 1997. Aggregate undrawn
funds available under the revolving line of credit at December 31, 1995
amounted to approximately $15,000 of which $200 was restricted for certain
letters of credit issued on behalf of the Company.
(102)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
Interest rates on $410,000 of the Senior Term Loan are at floating rates based
on either GECC's LIBOR (as defined in the agreement) or Index Rate plus
applicable percentages, which vary depending upon certain prescribed financial
ratios. The weighted average interest rate approximated 9.2% at
December 31, 1995.
Substantially all of the assets of the Company have been pledged to secure the
borrowings under the Senior Term Loan agreement.
The Senior Term Loan agreement contains various restrictive covenants, among
which are the maintenance of certain financial ratios, limitations regarding
certain transactions by the Company, prohibitions against the transfer of funds
to the parent company (except for reimbursement of certain expenses) and
limitations on levels of permitted capital expenditures. The Company was in
compliance with all of the covenants of its Senior Term Loan agreement at
December 31, 1995.
NOTE 4. INCOME TAXES
The Company's tax returns for the years 1984 to 1989 have been examined by the
Internal Revenue Service and certain issues related to the amortization of
intangible assets are being appealed by the Company. Management believes that
any settlement arising out of this examination will not have a material adverse
effect on the financial position of the Company.
At December 31, 1995, the Company had a net operating loss carry forward of
approximately $231,087, which expires in varying amounts from 2003 to 2010.
Due to the 1992 transaction (Note 1), the Company underwent an ownership
change within the meaning of Internal Revenue Code Section 382 which limits
the amount of net operating loss carry forward from the period prior to the
transaction that can be utilized to offset any taxable income in periods
subsequent to the transaction. Therefore, of the $231,087 of net operating
loss carry forwards for tax purposes, $201,588 is restricted and $29,499 is
currently available.
Usage of the $201,588 net operating loss carry forward is limited to a fixed
annual amount, calculated using the Federal long-term tax-exempt rate times
the value of the Company prior to the ownership change. This amount is
increased in any year in which the Company recognizes any built in gain from
the sale of assets owned prior to the ownership change. Based on this formula,
none of the $201,588 restricted net operating loss carry forward would
currently be available to the Company.
(103)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
The tax effects of temporary differences which give rise to significant
portions of deferred tax assets or liabilities and the corresponding
valuation allowance at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Deferred Asset (Liability) 1995 1994
- -------------------------- -------- --------
<S> <C> <C>
Depreciation and amortization........... $(15,534) $(23,760)
Benefit plans........................... 340 674
Allowance for doubtful accounts......... 169 148
Benefits of tax loss carry forwards..... 87,813 82,705
Other................................... (338) (701)
-------- --------
Net deferred tax assets............... 72,450 59,066
Valuation allowance..................... (72,450) (65,148)
-------- --------
Net deferred tax liabilities.......... $ - $ (6,082)
-------- --------
-------- --------
</TABLE>
The Company has provided a valuation allowance of $72,450 for deferred tax
assets since realization of these assets was not assured due to the Company's
history of operating losses. Also, in connection with the acquisition of the
Company by CSC in January 1988, the Company recorded certain fair value
adjustments net of their tax effects. In accordance with SFAS 109, these
assets have been adjusted to their remaining pre tax amounts at January 1,
1993, the date the Company adopted SFAS 109. Amortization of these amounts in
1995, 1994 and 1993 resulted in the recognition of income tax benefits of
$6,082, $14,045 and $14,168, respectively.
NOTE 5. AFFILIATE TRANSACTIONS
The Company has an agreement with CSC whereby the Company is managed by CSC in
exchange for a management fee of 3-1/2% of gross receipts, as defined. Interest
on unpaid amounts accumulates at a rate of 10% per annum. Such management fees
amounted to $3,963, $3,738 and $3,801 in 1995, 1994 and 1993, respectively, and
interest thereon amounted to $1,110, $659 and $244 in 1995, 1994 and 1993,
respectively.
The Company is also charged for cost reimbursement and an allocation of certain
selling, general and administrative expenses by CSC. For the years ended
December 31, 1995, 1994 and 1993 these cost reimbursements and expense
allocations approximated $3,665, $3,524 and $3,373, respectively. In
accordance with certain restrictive covenants contained in its Senior Term
Loan agreement, the Company may not pay in excess of
(104)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
specified amounts, subject to certain escalation provisions, of allocated
corporate overhead expenses charged by CSC in any fiscal year. In addition,
CSC also provided certain programming services to the Company during 1995.
At December 31, 1995 and 1994, the total balance due CSC for management fees,
interest, cost reimbursement, allocated expenses and certain programming
services amounted to $17,799 and $11,325, respectively.
CSC has interests in several companies engaged in providing cable television
services and programming services to the cable television industry, including
the Company. During 1995, 1994 and 1993, the Company was charged approximately
$3,260, $2,246 and $2,787, respectively, by these companies for these services
and the total amount due these companies as of December 31, 1995 and 1994 was
$293 and $238, respectively.
NOTE 6. BENEFIT PLANS
CSC maintains a Pension and 401(K) Savings Plan (the "Plan"), to permit
employees of CSC and its affiliates to make contributions to the Plan on a
pre-tax salary reduction basis in accordance with the provisions of
Section 401(K) of the Internal Revenue Code. The Company contributes 1-1/2%
of eligible employees' annual compensation, as defined, to the defined
contribution portion of the Plan (the "Pension Plan") and an equivalent amount
to the section 401(K) portion of the Plan (the "Savings Plan"). Employees may
voluntarily contribute up to 15% of eligible compensation, subject to certain
restrictions, to the Savings Plan, with an additional matching contribution by
the Company of 1/4 of 1% for each 1% contributed by the employee, up to a
maximum contribution by the Company of 1/2 of 1%. Employee contributions are
fully vested as are employer base contributions to the Savings Plan. Employer
contributions to the Pension Plan and matching contributions to the Savings
Plan become vested in years three through seven. Total expense related to
these plans for the years ended December 31, 1995, 1994 and 1993 was
approximately $375, $334 and $339, respectively.
The Company does not provide any postretirement benefits to its employees.
(105)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
NOTE 7. OPERATING LEASES
The Company leases certain office, production, satellite transponder, and
transmission facilities under terms of operating leases expiring at various
dates. The leases generally provide for fixed annual rentals plus certain
real estate taxes and other costs. Rent expense for the years ended
December 31, 1995, 1994 and 1993 was approximately $1,110, $1,240 and $842,
respectively.
In addition, the Company rents space on utility poles for its operations. The
Company's pole rental agreements are for varying terms, and management
anticipates renewals as they expire. Pole rental expense for the years ended
December 31, 1995, 1994 and 1993 was approximately $2,311, $1,745 and $1,507,
respectively.
The minimum future annual rentals for all operating leases, including pole
rentals, from January 1, 1996 through December 31, 2000 at rates now in force
are approximately: 1996, $3,124; 1997, $2,694; 1998, $2,448; 1999, $2,322;
2000, $2,320.
NOTE 8. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
CASH AND CASH EQUIVALENTS, TRADE ACCOUNTS RECEIVABLE, NOTES AND OTHER
RECEIVABLES, ACCOUNTS PAYABLE, ACCRUED LIABILITIES, ACCOUNTS PAYABLE TO
AFFILIATES AND DUE TO PARENT
The carrying amount approximates fair value because of the short maturity of
these instruments.
SENIOR TERM LOAN
The fair values of the Company's long-term debt instruments are based on
quoted market prices for the same or similar issues or on the current rates
offered to the Company for instruments of the same remaining maturities.
(106)
<PAGE>
A-R CABLE SERVICES, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(continued)
The fair value of the Company's financial instruments are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1995
--------------------
Carrying Estimated
Amount Fair Value
-------- ----------
<S> <C> <C>
Long term debt instruments:
Senior term loans.................... $410,000 $410,000
-------- --------
-------- --------
</TABLE>
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
NOTE 9. COMMITMENTS AND CONTINGENCIES
CSC and its cable television affiliates, including the Company, have an
affiliation agreement with a program supplier whereby CSC and its cable
television affiliates are obligated to make Base Rate Annual Payments, as
defined and subject to certain adjustments pursuant to the agreement, through
2004. The Company would be contingently liable for its proportionate share of
Base Rate Annual Payments, based on subscriber usage, of approximately $1,059
in 1996; $1,097 in 1997; $1,137 in 1998; $1,178 in 1999 and for the years 2000
through 2004, such payments would increase by percentage increases in the
Consumer Price Index, or five percent, whichever is less, over the prior
year's Base Annual Payment.
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that the resolution of these lawsuits will have a
material adverse impact on the financial position of the Company.
(107)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on the
19th day of March, 1996.
Cablevision Systems Corporation
By: /s/ William J. Bell
-----------------------
Name: William J. Bell
Title: Vice Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Francis F. Randolph, Jr., Marc A. Lustgarten and
Robert S. Lemle, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him in his
name, place and stead, in any and all capacities, to sign this report, and file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons in the
capacities and on the dates indicated.
Name Title Date
---- ----- -----
/s/ James L. Dolan Chief Executive Officer and Director March 19, 1996
- --------------------- (Principal Executive Officer)
James L. Dolan
/s/ Barry J. O'Leary Senior Vice President-Finance and March 19, 1996
- --------------------- Treasurer (Principal Financial
Barry J. O'Leary Officer)
/s/ William J. Bell Vice Chairman and Director March 19, 1996
- --------------------- (Principal Accounting Officer)
William J. Bell
(108)
<PAGE>
SIGNATURES
(continued)
<TABLE>
<S> <C> <C>
/s/ Charles F. Dolan Chairman of the Board of Directors March 19, 1996
- -----------------------------
Charles F. Dolan
/s/ Marc A. Lustgarten Vice Chairman and Director March 19, 1996
- -----------------------------
Marc A. Lustgarten
/s/ Robert S. Lemle Executive Vice President, General March 19, 1996
- ----------------------------- Counsel, Secretary and Director
Robert S. Lemle
/s/ Sheila A. Mahony Senior Vice President and Director March 19, 1996
- -----------------------------
Sheila A. Mahony
/s/ John Tatta Director and Chairman of the March 19, 1996
- ----------------------------- Executive Committee
John Tatta
/s/ Patrick F. Dolan Director March 19, 1996
- -----------------------------
Patrick F. Dolan
/s/ Francis F. Randolph, Jr. Director March 19, 1996
- -----------------------------
Francis F. Randolph, Jr.
/s/ Daniel T. Sweeney Director March 19, 1996
- -----------------------------
Daniel T. Sweeney
/s/ Charles D. Ferris Director March 19, 1996
- -----------------------------
Charles D. Ferris
/s/ Richard H. Hochman Director March 19, 1996
- -----------------------------
Richard H. Hochman
/s/ Victor Oristano Director March 19, 1996
- -----------------------------
Victor Oristano
</TABLE>
(109)
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- -----
3.1 --Certificate of Incorporation of the Registrant (incorporated
herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 dated January 17, 1986,
File No. 33-1936 (the "S-1")).
3.1A --Amendment to Certificate of Incorporation and complete copy
of amended and restated Certificate of Incorporation
(incorporated herein by reference to Exhibits 3.1A(i) and
3.1A(ii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989 (the "1989 10-K")).
3.1B --Certificate of Designations for the Series E Redeemable
Exchangeable Convertible Preferred Stock (incorporated herein
by reference to the Company's Report on form 10-K/A for the
year ended December 31, 1993, filed on April 13, 1994).
3.1C --Certificate of Designations for the Series F Redeemable
Preferred Stock (incorporated herein by reference to the
Company's Report on Form 10-K/A for the year ended December 31,
1993, filed on April 13, 1994).
3.1D --Certificate of Designations for the Series G Redeemable
Exchangeable Preferred Stock (incorporated herein by reference
to Exhibit 3.1D to the Company's Registration Statement on
Form S-4, File No. 33-62717).
3.1E Certificate of Designations for the Series H Redeemable
Exchangeable Preferred Stock (incorporated by reference to
Exhibit 4.1E to the Company's Registration Statement on
Form S-4, File No. 33-63691).
3.1F --Certificate of Designations for the Series I Cumulative
Convertible Exchangeable Preferred Stock (incorporated by
reference to Exhibit 99.3 to the Company's Current Report on
Form 8-K filed November 7, 1995).
3.1G --Certificate of Designations for the Series L Redeemable
Exchangeable Preferred Stock.
3.2 --By-laws of the Registrant (incorporated herein by reference
to Exhibit 3.2 to the S-1).
(110)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- -----
3.2A --Amendment to By-laws and complete copy of amended and
restated By-laws (incorporated herein by reference to
Exhibit 3.2 to the 1989 10-K).
3.2B --Amendment to By-laws and complete copy of amended and
restated By-laws (incorporated herein by reference to
Exhibit 3.2B to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 (the "1992 10-K").
3.2C --Amendment to By-laws and complete copy of amended and
restated By-laws (incorporated herein by reference to
Exhibit 3.2C to the Company's Annual Report on Form 10-K405
for the fiscal year ended December 31, 1994).
3.2D --Amendment to By-laws of the Registrant and complete copy of
amended and restated By-laws (incorporated herein by reference
to Exhibit 3.2D to the Company's Registration Statement on
Form S-4, File No. 33-62717).
4.1 --Indenture dated as of April 1, 1992 relating to the
Registrant's $275,000,000 10 3/4% Senior Subordinated
Debentures due April 1, 2004 (incorporated herein by
reference to Exhibit 4.2 to the 1992 10-K).
4.2 --Indenture dated as of February 15, 1993 relating to the
Registrant's $200,000,000 9 7/8% Senior Subordinated
Debentures due February 15, 2013 (incorporated herein by
reference to Exhibit 4.3 to the 1992 10-K).
4.3 --Indenture dated as of April 1, 1993 relating to the
Registrant's $150,000,000 9 7/8% Senior Subordinated
Debentures due 2023 (incorporated by reference to the
Conpany's Registration Statement on Form S-4, File No.
33-61814).
4.4 --Supplemental indenture dated as of November 1, 1995 between
the Company and the Bank of New York, Trustee, to the indenture
dated November 1, 1995 (incorporated by reference to
Exhibit 99.6 to the Company's Current Report on Form 8-K filed
November 1, 1995).
(111)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- -----
4.5 --Registration Rights Agreement, dated September 26, 1995,
between the Registrant and Bear, Stearns & Co., Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Morgan Stanley & Co., Incorporated
(incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-4, Registration No. 33-63691).
4.6 --Registration Rights Agreement, dated February 15, 1996
between the Registrant and Bear, Stearns & Co., Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
and Morgan Stanley & Co., Incorporated
10.1 --Registration Rights Agreement between Cablevision Systems
Company and the Registrant (incorporated herein by reference
to Exhibit 10.1 of the S-1).
10.2 --Registration Rights Agreement between CSC Holdings Company
and the Registrant (incorporated herein by reference to
Exhibit 10.2 to the S-1).
10.3 --Form of Right of First Refusal Agreement between Dolan and
the Registrant (incorporated herein by reference to
Exhibit 10.4 to the S-1).
10.4 --Supplemental Benefit Plan of the Registrant (incorporated
herein by reference to Exhibit 10.7 to the S-1)
10.5 --Cablevision Money Purchase Pension Plan, and Trust Agreement
dated as of December 1, 1983 between Cablevision Systems
Development Company and Dolan and Tatta, as Trustees
(incorporated herein by reference to Exhibit 10.8 to the S-1)
10.6 --Amendment to the Cablevision Money Purchase Pension Plan
adopted November 6, 1992 (incorporated herein by reference to
Exhibit 10.6A to the 1992 10-K).
(112)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.7 --Employment Agreement between Charles F. Dolan and the
Registrant dated January 27, 1986 (incorporated herein by
reference to Exhibit 10.9 to the S-1)
10.8 --Amended and Restated Agreement dated as of June 1, 1983
between SportsChannel Associates and Cablevision Systems
Holdings Company (incorporated herein by reference to
Exhibit 10.11 to the S-1)
10.9 --Lease Agreement dated as of October 9, 1978 between
Cablevision Systems Development Company and Industrial and
Research Associates Co. and amendment dated June 21, 1985
between Industrial and Research Associates Co. and Cablevision
Company (incorporated herein by reference to Exhibit 10.18 to
the S-1)
10.10 --Lease Agreement dated May 1, 1982 between Industrial and
Research Associates Co. and Cablevision Systems Development
Company (incorporated herein by reference to Exhibit 10.19 to
the S-1)
10.11 --Agreement of Sublease dated as of July 9, 1982 between
Cablevision Systems Development Company and Ontel
Corporation (incorporated herein by reference to Exhibit 10.20
to the S-1)
(113)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- -----
10.12 --Agreement of Sublease dated as of June 21, 1985 between
Grumman Data Systems Corporation and Cablevision Company
(incorporated herein by reference to Exhibit 10.21 to
the S-1)
10.13 --Agreement dated as of June 21, 1985 between Industrial and
Research Associates Co., Grumman Data Systems Corporation and
Cablevision Company (incorporated herein by reference to
Exhibit 10.22 to the S-1)
10.14 --Lease Agreement dated as of June 21, 1985 between Industrial
and Research Associates Co. and Cablevision Company
(incorporated herein by reference to Exhibit 10.23 to the S-1)
10.15 --Lease Agreement dated as of February 1, 1985 between
Cablevision Company and County of Nassau (incorporated herein
by reference to Exhibit 10.24 to the S-1)
10.16 --Lease Agreement dated as of January 1, 1981 between
Cablevision Systems Development Company and Precision Dynamics
Corporation and amendment dated January 15, 1985 between
Cablevision Company and Nineteen New York Properties Limited
Partnership (incorporated herein by reference to Exhibit 10.25
to the S-1)
10.17 --Option Certificate for 840,000 Shares Issued Pursuant to the
1986 Nonqualified Stock Option Plan of the Registrant
(incorporated herein by reference to Exhibit 10.29 to the S-1)
10.18 --New Ventures Agreement, dated as of April 20, 1989, among the
Registrant and certain of its subsidiaries, and National
Broadcasting Company, Inc. and certain of its subsidiaries
(incorporated herein by reference to Exhibit 2.3 to the
April 1989 8-K)
10.19 --Purchase and Reorganization Agreement dated as of December 20,
1991 between the Registrant and Charles F. Dolan (incorporated
herein by reference to Exhibit 2(c) to the January 1992 8-K).
(114)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.20 --Amendment No. 1 dated as of March 28, 1992 to Purchase and
Reorganization Agreement dated as of December 20, 1991
between the Registrant and Charles F. Dolan (incorporated
herein by reference to Exhibit 2(g) to the March 1992 Form 8).
10.21 --Letter Agreement dated February 12, 1992, among the
Registrant, A-R Cable Services, Inc. and Warburg Pincus
Investors, L.P. (incorporated herein by reference to
Exhibit 28(a) to the Registrant's Current Report on Form 8-K
under the Securities Exchange Act of 1934 dated February 21,
1992 (the "February 1992 8-K")).
10.22 --Letter Agreement dated February 12, 1992 among the Registrant,
A-R Cable Services, Inc. and General Electric Capital
Corporation (incorporated herein by reference to Exhibit 28(b)
to the February 1992 8-K).
10.23 --Letter Agreement dated February 12, 1992 among the Registrant
and A-R Cable Services, Inc. (incorporated herein by reference
to Exhibit 28(b) to the February 1992 8-K).
10.24 --Non-Competition Agreement, dated as of December 31, 1992,
among V Cable, Inc., VC Holding, Inc. and the Registrant, for
the benefit of V Cable, Inc., VC Holding, Inc. and General
Electric Capital Corporation (incorporated herein by reference
to Exhibit 10.37 to the 1992 10-K).
10.25 --Non-Competition Agreement, dated as of December 31, 1992,
between U.S. Cable Television Group, L.P. and the Registrant,
for the benefit of U.S. Cable Television Group, L.P. and
General Electric Capital Corporation (incorporated herein by
reference to Exhibit 10.38 to the 1992 10-K).
10.26 --CSC Nonrecourse Guaranty and Pledge Agreement, dated as of
December 31, 1992, between the Registrant and General Electric
Capital Corporation, as Agent for the Lenders (incorporated
herein by reference to Exhibit 10.39 to the 1992 10-K).
(115)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.27 --U.S. Cable Investment Agreement, dated as of June 30, 1992,
among V Cable, Inc., V Cable GP, Inc., U.S. Cable Television
Group, L.P. and U.S. Cable Partners (incorporated herein by
reference to Exhibit 10.40 to the 1992 10-K).
10.28 --Newco Investment Agreement, dated as of December 31, 1992,
among VC Holding, Inc., V Cable, Inc. and U.S. Cable Television
Group (incorporated herein by reference to Exhibit 10.41 to the
1992 10-K).
10.29 --Senior Loan Agreement, dated as of December 31, 1992, among
V Cable, Inc., the Lenders named therein and General Electric
Capital Corporation, as Agent for the Lenders and as Lender
(incorporated herein by reference to Exhibit 10.42 to the
1992 10-K).
10.30 --Cablevision Systems Corporation Amended and Restated Employee
Stock Plan (incorporated herein by reference to Exhibit 10.46
to the 1992 10-K).
10.31 --Cablevision Systems Corporation 401(K) Savings Plan
(incorporated herein by reference to Exhibit 10.47 to the 1992
10-K).
10.32 --Fourth Amended and Restated Credit Agreement, dated as of
June 18, 1993, among Cablevision of New York City - Phase I
L.P., Cablevision Systems New York City Corporation,
Cablevision of New York City- Master L.P., each of the Banks
signatory thereto, The Chase Manhattan Bank (National
Association) as Agent and The First National Bank of Chicago and
CIBC, Inc. each as Co-Agent (incorporated herein by reference
to Exhibit 10.49 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1993).
(116)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.33 --Asset Purchase Agreement, dated as of July 23, 1993, by and
between Cablevision of Cleveland, L.P. and North Coast Cable
Limited Partnership (incorporated herein by reference to
Exhibit 10.50 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1993).
10.34 --Master Agreement, dated as of October 26, 1993, between
Cablevision MFR, Inc., Monmouth Cablevision Associates,
Framingham Cablevision Associates and Riverview Cablevision
Associates, L.P. (incorporated herein by reference to
Exhibit 10.51 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1993 (the "September
1993 10-Q").
10.35 --Asset Purchase Agreement, dated as of October 26, 1993,
between Monmouth Cablevision Associates and Cablevision MFR,
Inc. (incorporated herein by reference to Exhibit 10.52 to the
September 1993 10-Q).
10.36 --Asset Purchase Agreement, dated as of October 26, 1993,
between Framingham Cablevision Associates, Limited Partnership
and Cablevision MFR, Inc. (incorporated herein by reference to
Exhibit 10.53 to the September 1993 10-Q).
10.37 --Asset Purchase Agreement, dated as of October 26, 1993 between
Riverview Cablevision Associates, L.P. and Cablevision MFR, Inc.
(incorporated herein by reference to Exhibit 10.54 to the
September 1993 10-Q).
10.38 --Asset Purchase Agreement among A-R Cable Partners, Nashoba
Communications Limited Partnership, Nashoba Communications
Limited Partnership No. 7 and Nashoba Communications of
Belmont Limited Partnership dated as of November 5, 1993
(incorporated herein by reference to Exhibit 10.55 to the
September 1993 10-Q).
10.39 --Loan Agreement, dated as of June 30, 1994 among Rainbow
Programming Holdings, Inc., the Guarantors as defined therein,
Toronto-Dominion Bank, the other banks party thereto and
Toronto-Dominion (Texas), Inc., as Agent (incorporated herein
by reference to Exhibit 10.58 to the Company's June 30,
1994 10-Q).
(117)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.40 --Acquisition Agreement and Plan of Merger and Reorganization,
dated as of June 14, 1994, among Cablevision of Boston Limited
Partnership, Cablevision of Boston, Inc., Charles F. Dolan,
Cablevision Systems Boston Corporation, Cablevision Systems
Corporation, COB, Inc., Cablevision Systems Services Corporation
and Cablevision Finance Limited Partnership (incorporated herein
by reference to Exhibit 10.59 to the Company's June 30,
1994 10-Q).
10.41 --Credit Agreement, dated as of June 15, 1994, among Cablevision
of Framingham, Inc., the several lenders parties thereto, The
Chase Manhattan Bank, N.A., as Agent and CIBC Inc., as Co-Agent
(incorporated herein by reference to Exhibit 10.60 to the
Company's June 30, 1994 10-Q).
10.42 --Amendment No. 1, dated as of August 8, 1994, to the Credit
Agreement, dated as of June 15, 1994, among Cablevision of
Framingham, Inc., the several lenders parties thereto, the
Chase Manhattan Bank, N.A., as Agent and CIBC, Inc., as
Co-Agent (incorporated herein by reference to Exhibit 10.61 to
the Company's June 30, 1994 10-Q).
10.43 --Asset Purchase Agreement, dated as of October 26, 1993,
between Monmouth Cablevision Associates and Cablevision MFR,
Inc. as amended by Amendment No. 1 thereto, dated as of
April 6, 1994 and Amendment No. 2 thereto, dated as of June 3,
1994 (restated) (incorporated herein by reference to
Exhibit 10.62 to the Company's June 30, 1994 10-Q).
10.44 --Asset Purchase Agreement, dated as of October 26, 1993,
between Riverview Cablevision Associates, Limited Partnership,
and Cablevision MFR, Inc., as amended by Amendment No. 1
thereto, dated as of April 6, 1994 and Amendment No. 2 thereto,
dated as of June 3, 1994 (restated) (incorporated herein by
reference to Exhibit 10.63 to the Company's June 30, 1994 10-Q).
(118)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.45 --Asset Purchase Agreement, dated as of October 26, 1993,
between Framingham Cablevision Associates, Limited
Partnership, and Cablevision MFR, Inc., as amended and
assigned to Cablevision Framingham Holdings, Inc. by
Amendment No. 1 thereto, dated as of April 6, 1994, and as
further amended by Amendment No. 2 thereto, dated as of
June 3, 1994 (restated) (incorporated herein by reference to
Exhibit 10.64 to the Company's June 30, 1994 10-Q).
10.46 --Credit Agreement, dated as of June 15, 1994 (the "Credit
Agreement"), by and among Cablevision MFR, Inc., Cablevision
of Riverview, Inc. and Cablevision of Monmouth, Inc., the
Lenders from time to time party thereto and NationsBank of
Texas, N.A., as Administrative Lender (incorporated herein by
reference to Exhibit 10.65 to the Company's June 30, 1994 10-Q).
10.47 --Agreement, dated as of August 15, 1994 among ITT Corporation,
the Registrant and Rainbow Programming Holdings, Inc.
(incorporated herein by reference to Exhibit 10.65 of the
Registrants report on Form 8-K dated September 21, 1994).
10.48 --Amendment Agreement, dated as of September 12, 1994 among ITT
Corporation, the Registrant and Rainbow Programming Holdings,
Inc. (incorporated herein by reference to Exhibit 10.66 of the
Registrants report on Form 8-K dated September 21, 1994).
10.49 --Agreement and Plan of Merger, (the "MSG Merger Agreement")
dated as of August 27, 1994 among Viacom Inc., Paramount
Communications Realty Corporation, ITT Corporation, Rainbow
Garden Corporation and MSG Holdings, Inc. (incorporated herein
by reference to Exhibit 10.67 of the Registrants report on
Form 8-K dated September 21, 1994).
(119)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.50 --Fourth Amended and Restated Credit Agreement, dated as of
October 14, 1994 (the "Credit Agreement"), among Cablevision
Systems Corporation, the Restricted Subsidiaries (as defined
therein) banks party thereto, Toronto Dominion (Texas), Inc.,
as Agent, and Bank of Montreal, Chicago Branch, The Bank of
New York, The Bank of Nova Scotia, The Canadian Imperial Bank
of Commerce and NationsBank of Texas, N.A., as Co-Agents
(incorporated herein by reference to Exhibit 10.68 to the
Company's September 30, 1994 10-Q).
10.51 --First Amended and Restated Credit Agreement, dated as of
October 14, 1994, among Cablevision of New Jersey, Inc.,
Cablevision Systems Corporation, the banks party thereto,
Toronto Dominion (Texas), Inc., as Agent and Bank of Montreal,
Chicago Branch, The Bank of New York, The Bank of Nova Scotia,
The Canadian Imperial Bank of Commerce and NationsBank of Texas,
N.A., as Co-Agents (incorporated herein by reference to
Exhibit 10.69 to the Company's September 30, 1994 10-Q).
10.52 --Amendment No. 1 to the Credit Agreement (incorporated herein
by reference to Exhibit 10.61 to the Company's Annual Report
on Form 10-K405 for the fiscal year ended December 31, 1994).
10.53 --Amendment No. 1 to First Amended and Restated Credit
Agreement, dated as of October 14, 1994, among Cablevision of
New Jersey, Inc., Cablevision Systems Corporation, the banks
party thereto, Toronto Dominion (Texas), Inc., as Agent and
Bank of Montreal, Chicago Branch, The Bank of New York, The Bank
of Nova Scotia, The Canadian Imperial Bank of Commerce and
NationsBank of Texas, N.A., as Co-Agents (incorporated herein
by reference to Exhibit 10.62 to the Company's Annual Report
on Form 10-K405 for the fiscal year ended December 31, 1994).
(120)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.54 --Amended and Restated Loan Agreement, dated as of January 27,
1995 among Rainbow Programming Holdings, Inc., the guarantors
(as defined therein), Toronto Dominion (Texas) Inc. and
Canadian Imperial Bank of Commerce, as co-agents and Toronto
Dominion (Texas), Inc., as administrative agent (incorporated
herein by reference to Exhibit 10.63 to the Company's Annual
Report on Form 10-K405 for the fiscal year ended December 31,
1994).
10.55 --Amendment No. 1 dated as of March 10, 1995 to the MSG Merger
Agreement (incorporated herein by reference to Exhibit 10.64 to
the Company's Annual Report on Form 10-K405 for the fiscal year
ended December 31, 1994).
10.56 --Amendment No. 2 dated as of March 10, 1995 to the MSG Merger
Agreement (incorporated herein by reference to Exhibit 10.65 to
the Company's Annual Report on Form 10-K405 for the fiscal year
ended December 31, 1994).
10.57 --Agreement and undertaking, dated as of March 10, 1995 from MSG
Holdings, LP, MSG Eden Corporation, the Registrant, Rainbow
Programming Holdings, Inc., Rainbow Garden Corporation, Garden
L.P. Holdings Corp., ITT Corporation, ITT Eden Corp. in favor of
the National Basketball Association (the "NBA"), the member
terms of the NBA, NBA Properties, Inc., the NBA Market Extension
Partnership and Planet Insurance, Ltd. (incorporated herein by
reference to Exhibit 10.66 to the Company's Annual Report on
Form 10-K405 for the fiscal year ended December 31, 1994).
10.58 --Consent Agreement, dated as of March 10, 1995 by and among the
National Hockey League, MSG Holdings, L.P., MSG Eden
Corporation, ITT Eden Corporation, ITT MSG Inc., ITT
Corporation, Garden L.P. Holdings Corp., Rainbow Garden
Corporation, Rainbow Programming Holdings Inc. and the
Registrant (incorporated herein by reference to Exhibit 10.67
to the Company's Annual Report on Form 10-K405 for the fiscal
year ended December 31, 1994).
(121)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- -----
10.59 --Amendment to consulting agreement dated as of November 28,
1994 between the Company and John Tatta (incorporated herein
by reference to Exhibit 10.68 to the Company's Annual Report
on Form 10-K405 for the fiscal year ended December 31, 1994).
10.60 --Employment Agreement, dated as of November 30, 1994, between
the Registrant and William J. Bell (incorporated herein by
reference to Exhibit 10.69 to the Company's Annual Report on
Form 10-K405 for the fiscal year ended December 31, 1994).
10.61 --Employment Agreement, dated as of November 30, 1994, between
the Registrant and Marc A. Lustgarten (incorporated herein by
reference to Exhibit 10.70 to the Company's Annual Report on
Form 10-K405 for the fiscal year ended December 31, 1994).
10.62 --Employment Agreement, dated as of November 30, 1994, between
the Registrant and Robert S. Lemle (incorporated herein by
reference to Exhibit 10.71 to the Company's Annual Report on
Form 10-K405 for the fiscal year ended December 31, 1994).
10.63 --Amendment No. 2 and Waiver, dated as of September 28, 1995 to
the Credit Agreement.
10.64 --Amendment No. 3 and Waiver, dated as of November 7, 1995, to
the Credit Agreement.
10.65 --Amendment No. 4 and Waiver, dated as of March 4, 1996, to the
Credit Agreement.
10.66 --Amended and Restated Senior Loan Agreement, dated as of
March 15, 1996, among U.S. Cable Television Group, L.P., the
Lenders named therein and General Electric Capital Corporation,
as Agent and Lender.
(122)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
10.67 --Amended and Restated Loan Agreement, dated as of March 15,
1996, among VC Holding, Inc., the Lenders named therein and
General Electric Capital Corporation, as Agent and Lender.
10.68 Partnership interests Redemption Agreement, dated as of
March 15, 1996, among U.S. Cable Television Group, L.P., U.S.
Cable Partners, Pompadur Trust No. 1, The Rule Trust, dated
June 11, 1987, Elliot H. Stein, I. Martin Pompadur and General
Electric Capital Corporation.
10.69 Second Amended and Restated Agreement of Limited Partnership of
U.S. Cable Television Group, L.P., dated as of March 15, 1996.
10.70 --Cablevision Systems Corporation 1996 Employee Stock Plan.
22 --Subsidiaries of the Registrant
23.1 --Consent of Independent Auditors
27 --Financial Data Schedule
28.1 --Form of Guarantee and Indemnification Agreement among Dolan,
the Registrant and directors and officers of the Registrant
(incorporated herein by reference to Exhibit 28 to the S-1)
(123)
<PAGE>
CERTIFICATE OF VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF OF THE 11 1/8% SERIES L
REDEEMABLE EXCHANGEABLE
PREFERRED STOCK
OF
CABLEVISION SYSTEMS CORPORATION
__________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
__________________________
I, William J. Bell, Vice Chairman of Cablevision Systems Corporation
(the "corporation"), a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, DO HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation as amended of said corporation, said Board of
Directors, at a meeting duly called and held on February 13, 1996, adopted a
resolution providing for the issuance of One Hundred Fifteen Thousand (115,000)
authorized shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock,
which resolution is as follows:
WHEREAS, the Board of Directors of the corporation (the "Board of
Directors") is authorized, within the limitations and restrictions stated in the
Certificate of Incorporation, as amended, to fix by resolution or resolutions
the designation of each series of preferred stock and the powers, designations,
preferences and relative participating, optional or other rights, if any, or the
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution or resolutions of the Board of Directors under the General
Corporation Law of Delaware; and
<PAGE>
2
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares constituting such series;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such
series of preferred stock on the terms and with the provisions herein set forth:
I. CERTAIN DEFINITIONS.
As used herein, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
"Additional Preferred Stock" has the meaning specified in Article
Fourth of the corporation's Certificate of Incorporation.
"Board of Directors" means the Board of Directors of the corporation.
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York
City are authorized or required by law to close.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Change of Control" means any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation)
the result of which is that Dolan ceases (i) to elect a majority of the
Board of Directors of the Corporation or (ii) to be the "beneficial owner"
(as defined in Rule 13(d)(3) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of at least 50% of the aggregate voting power
of the voting stock of the corporation.
"Change of Control Redemption Price" has the meaning specified in
Section VI(A)(iii) hereof.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the corporation.
"Class B Common Stock" means the Class B Common Stock, par value $.01
per share, of the corporation.
<PAGE>
3
"Common Stock" means the Class A Common Stock and the Class B Common
Stock and any other class of common stock hereafter authorized by the
corporation from time to time.
"Contingent Redemption Price" has the meaning specified in Section
VI(A)(ii) hereof.
"Corporation" or "corporation" means Cablevision Systems Corporation.
"Dividend Default" has the meaning specified in Section VII(G)(i)(a)
hereof.
"Dividend Payment Date" means each January 1, April 1, July 1 and
October 1 of each year on which dividends shall be paid or are payable, any
Redemption Date and any other date on which dividends in arrears may be
paid.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means, with respect to the dividend payable on
each Dividend Payment Date, the close of business on the fifteenth day
immediately preceding such Dividend Payment Date, or such other record date
as may be designated by the Board of Directors with respect to the dividend
payable on such Dividend Payment Date; PROVIDED, HOWEVER, that such record
date may not be more than 60 days or less than ten days prior to such
Dividend Payment Date.
"Dolan" shall mean Mr. Charles F. Dolan, his spouse, his descendants
or any spouse of any such descendants, and trusts for the benefit of, inter
alia, him, his spouse, his descendants or any spouse of any such
descendants, and any estate, testamentary trust, or executor,
administrator, conservator or legal or personal representative of any of
the foregoing, or any partnership, limited liability company, corporation
or similar entity all the owners of which are comprised of one or more of
the foregoing.
"Exchange Date" has the meaning specified in Section VIII(A) hereof.
"Exchange Debentures" shall mean the 11 1/8% Senior Subordinated
Debentures due 2008 of the corporation into which the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock are exchangeable at the option of
the corporation.
"Exchange Indenture" has the meaning specified in Section VII(D)
hereof.
"Exchange Notice" has the meaning specified in Section VIII(A) hereof.
<PAGE>
4
"Holder" means a registered holder of shares of 11 1/8% Series L
Redeemable Exchangeable Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on and
including the Original Issue Date and ending on and including March 31,
1996.
"Junior Securities" has the meaning specified in Section III(A)(i)
hereof.
"Liquidation Preference" means the Original Liquidation Preference,
plus an amount equal to all accumulated and unpaid dividends from and after
the Dividend Payment Date on which such dividends were to be paid. The
Liquidation Preference of a share of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock will increase by the amount of dividends that
accumulate on such share on a Dividend Payment Date and will decrease only
to the extent such dividends are actually paid, all as provided in Section
IV hereof. Notwithstanding the foregoing, in determining the amount to be
paid on a Redemption Date or Exchange Date or the amount of shares to be
issued in payment of a dividend on a Dividend Payment Date, Liquidation
Preference shall not be deemed to include any dividends to the extent such
dividends are to be paid on such date in accordance with the requirements
of this Certificate of Designations.
"Make-Whole Premium" means, with respect to a share of 11 1/8% Series
L Redeemable Exchangeable Preferred Stock, (a) the present value of (i) all
dividends unpaid and accumulating until April 1, 2003 (assuming payment
thereof in cash on the applicable Dividend Payment Date for purposes of
this calculation) and (ii) the Liquidation Preference and any applicable
optional redemption premium therefor payable on such date for such share
(in each case assuming payment thereof on April 1, 2003), computed using a
discount rate equal to the Treasury Rate plus 50 basis points, less (b) the
Original Liquidation Preference.
"Mandatory Redemption Date" means April 1, 2008.
"Mandatory Redemption Price" has the meaning specified in Section
VI(B) hereof.
"Optional Redemption Price" has the meaning specified in Section
VI(A)(i) hereof.
"Original Issue Date" means the date on which shares of 11 1/8% Series
L Redeemable Exchangeable Preferred Stock were first issued by the
corporation.
<PAGE>
5
"Original Liquidation Preference" means $10,000 per share of 11 1/8%
Series L Redeemable Exchangeable Preferred Stock.
"Parity Securities" has the meaning specified in Section III(A)(ii)
hereof.
"Person" means any individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
"Quarterly Dividend Period" means the quarterly period commencing on
and including a Dividend Payment Date and ending on and including the day
immediately preceding the next subsequent Dividend Payment Date.
"Rainbow Spin-off" means the payment of any dividend by the
corporation or the making by the corporation of any other distribution or
the consummation of an exchange offer, or any combination of the foregoing,
which results in all or a portion of the capital stock of Rainbow
Programming Holdings, Inc. or any successor to the assets or equity
interests thereof, or of another entity, holding only assets that were held
by Rainbow Programming Holdings, Inc. immediately prior to the acquisition
thereof by such entity, being held by all or any portion of the
shareholders of the corporation.
"Redemption Date" has the meaning specified in Section VI(C)(i)(e)
hereof.
"Redemption Default" has the meaning specified in Section VII(G)(i)(b)
hereof.
"Redemption Notice" has the meaning specified in Section VI(C)(i)
hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Securities" has the meaning specified in Section III(A)(iii)
hereof.
"Series C Preferred Stock" means the 8% Series C Cumulative Preferred
Stock of the corporation.
"Series D Preferred Stock" means the 8% Series D Cumulative Preferred
Stock of the corporation.
<PAGE>
6
"Series G Preferred Stock" means the 11 3/4% Series G Redeemable
Exchangeable Preferred Stock of the corporation.
"Series H Preferred Stock" means the 11 3/4% Series H Redeemable
Exchangeable Preferred Stock of the corporation to be established and
issued in exchange for shares of the Series G Preferred Stock.
"Series I Preferred Stock" means the 8 1/2% Series I Cumulative
Convertible Exchangeable Preferred Stock of the Corporation.
"Series M Preferred Stock" means the 11 1/8% Series M Redeemable
Exchangeable Preferred Stock of the corporation to be established and
issued in exchange for shares of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock.
"Strategic Equity Investor" means a corporation or entity with an
equity market capitalization, a net asset value or annual revenues of at
least $1.0 billion that owns and operates businesses in the
telecommunications, information systems, entertainment, cable or similar or
related industries.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%)
of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof.
"Transfer Agent" means The First National Bank of Boston or any
successor transfer agent.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date fixed for
redemption of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock
or, if such Statistical Release is no longer published, any publicly
available source of similar market data with a constant maturity most
nearly equal to the then remaining period to the Mandatory Redemption Date
of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock; PROVIDED,
HOWEVER, that if such period of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given,
the Treasury Rate shall be obtained by linear interpolation (calculated to
the nearest one-twelfth of a year) from
<PAGE>
7
the weekly average yields of United States Treasury securities for which
such yields are given.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means The Bank of New York, as Trustee under the Exchange
Indenture, or any successor Trustee appointed in accordance with the terms
of the Exchange Indenture.
"Voting Rights Triggering Event" has the meaning specified in Section
VII(G)(i) hereof.
II. DESIGNATION.
The series of preferred stock authorized hereunder shall be designated
as the "11 1/8% Series L Redeemable Exchangeable Preferred Stock". The number
of shares constituting such series shall be 115,000. The par value of the 11
1/8% Series L Redeemable Exchangeable Preferred Stock shall be $.01 per share of
11 1/8% Series L Redeemable Exchangeable Preferred Stock, and the initial
liquidation preference of the 11 1/8% Series L Redeemable Exchangeable Preferred
Stock shall be $10,000 per share.
III. RANKING.
(A) The 11 1/8% Series L Redeemable Exchangeable Preferred Stock
shall rank, with respect to dividends and distributions upon the liquidation,
dissolution or winding-up of the corporation:
(i) senior to all classes or series of Common Stock of the
corporation and any Capital Stock, including any series of Additional
Preferred Stock hereafter created by the Board of Directors, the terms of
which Capital Stock or Additional Preferred Stock do not expressly provide
that it ranks senior to or on a parity with the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock as to dividends and distributions upon
liquidation, dissolution or winding-up of the corporation (collectively
referred to as "Junior Securities");
(ii) on a parity with the Series C Preferred Stock, the Series D
Preferred Stock, the Series G Preferred Stock, the Series H Preferred
Stock, the Series I Preferred Stock and any Capital Stock, including any
series of Additional Preferred Stock hereafter created by the Board of
Directors, the terms of which expressly provide that it ranks on a parity
with the 11 1/8% Series L Redeemable Exchangeable
<PAGE>
8
Preferred Stock as to dividends and distributions upon the liquidation,
dissolution or winding-up of the corporation (collectively referred to as
"Parity Securities"); and
(iii) junior to any Capital Stock, including any series of Additional
Preferred Stock hereafter created by the Board of Directors, the terms of
which expressly provide that it ranks senior to the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock as to dividends and distributions
upon the liquidation, dissolution or winding-up of the corporation ("Senior
Securities").
IV. DIVIDENDS.
(A) Beginning on the Original Issue Date, Holders shall be entitled
to receive, when, as and if declared by the Board of Directors, out of funds
legally available for the payment of dividends, dividends on each outstanding
share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, at a rate per
annum equal to 11 1/8% of the Liquidation Preference per share of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock, payable with respect to each
Dividend Period. All dividends shall be cumulative and shall be payable in
arrears for each Dividend Period on each Dividend Payment Date, commencing on
April 1, 1996. Dividends with respect to a share of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock shall only cumulate from the date of their
issuance, or, if later, the last Dividend Payment Date in respect of which
dividends on such share of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock were paid. Prior to the Dividend Payment Date occurring on April 1, 2001,
dividends may, at the option of the corporation, be paid either in cash or fully
paid and non-assessable shares of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock with an aggregate Liquidation Preference equal to the amount of
such dividend (or in any combination of cash and such shares). On or after the
Dividend Payment Date occurring on April 1, 2001, dividends shall be paid only
in cash.
(B) Each dividend paid on the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock shall be payable to Holders of record as their
names shall appear in the stock ledger of the corporation on the Dividend Record
Date for such dividend, except that dividends in arrears for any past Dividend
Payment Date may be declared and paid at any time without reference to such
regular Dividend Payment Date to Holders of record on a later dividend record
date determined by the Board of Directors.
(C) Dividends shall cease to accumulate in respect of shares of 11
1/8% Series L Redeemable Exchangeable Preferred Stock on the day prior to the
Exchange Date or on the day prior to their earlier redemption, unless the
corporation shall have failed to issue the appropriate aggregate principal
amount of Exchange Debentures in respect of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock on the Exchange Date or shall have failed to pay
the relevant redemption price on the date fixed for redemption.
<PAGE>
9
(D) All dividends paid with respect to shares of the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock shall be paid PRO RATA to the Holders
entitled thereto based upon the number of shares of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock held by each such Holder on the relevant Dividend
Record Date.
(E) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for payment by the corporation on the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock or any Parity Securities for any period
unless full cumulative dividends have been or contemporaneously are declared and
paid, or declared and (in the case of dividends payable in cash) a sum set apart
sufficient for such payment, on the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock and any Parity Securities for all Dividend Periods terminating
on or prior to the date of payment of such full dividends on the 11 1/8% Series
L Redeemable Exchangeable Preferred Stock or such Parity Securities. If any
dividends are not paid in full, as aforesaid, upon the shares of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock and any Parity Securities, all
dividends declared upon shares of the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock and any other Parity Securities shall be declared PRO RATA so
that the amount of dividends declared per share on the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock and such Parity Securities shall in all
cases bear to each other the same ratio that accumulated and unpaid dividends
per share on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and
such Parity Securities bear to each other. Except as contemplated herein, no
interest or additional dividends, or sum of money in lieu of interest or
additional dividends, shall be payable in respect of any dividend payment or
payments on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or any
Parity Securities which may be in arrears.
(F) So long as any shares of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock are outstanding, except with respect to (i) any
conversion of Class B Common Stock into Class A Common Stock, (ii) prior to
April 1, 2001, the occurrence of the Rainbow Spin-off, (iii) repurchases of
Common Stock, or warrants, rights, calls or options exercisable for or
convertible into Common Stock, issued under the corporation's stock incentive
programs, and (iv) dividends or distributions payable in kind in additional
shares of, or warrants, rights, calls or options exercisable for or convertible
into additional shares of, Junior Securities, the corporation shall not declare,
pay or set apart for payment any dividend on any Junior Securities (except
dividends on Junior Securities payable in additional shares of Junior
Securities), or make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Junior Securities, and
shall not permit any corporation or other entity directly or indirectly
controlled by the corporation to purchase or redeem any of the Junior Securities
or any warrants, rights, calls or options exercisable for or convertible into
any of the Junior Securities, unless prior to or concurrently with such
declaration, payment, setting apart for payment, purchase, redemption or
distribution, as the
<PAGE>
10
case may be, all accumulated and unpaid dividends on shares of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock not paid on the dates provided
for in Section IV(A) hereof (and, to the extent previously due but not yet paid,
any and all redemption payments on the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock) shall have been or are concurrently being paid.
(G) Dividends payable on shares of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock for any period less than a year shall be computed
on the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in the period for which payable. If any Dividend Payment Date
occurs on a day that is not a Business Day, any accumulated and unpaid dividends
otherwise payable on such Dividend Payment Date shall be paid on the next
succeeding Business Day.
V. PAYMENT ON LIQUIDATION.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the corporation, Holders will be entitled to receive out of the
assets of the corporation available for distribution to the holders of its
Capital Stock, whether such assets are capital, surplus or earnings, an amount
in cash equal to the Liquidation Preference, before any payment shall be made or
any assets distributed to the holders of any of the Junior Securities. Except
as set forth in the preceding sentence, Holders shall not be entitled to any
distribution in the event of voluntary or involuntary liquidation, dissolution
or winding-up of the corporation. If upon any voluntary or involuntary
liquidation, dissolution or winding-up of the affairs of the corporation, the
assets of the corporation are not sufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock and all Parity Securities, then the
holders of all such shares shall share equally and ratably in any distribution
of assets in proportion to the full liquidation preferences, determined as of
the date of such voluntary or involuntary liquidation, dissolution or winding-
up, to which they are entitled.
(B) For the purposes of this Section V only, neither the sale, lease,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
corporation nor the consolidation or merger of the corporation with or into one
or more corporations shall be deemed to be a liquidation, dissolution or
winding-up of the corporation.
<PAGE>
11
VI. REDEMPTION.
(A) OPTIONAL REDEMPTION. (i) The corporation may, at its option,
redeem (subject to contractual and other restrictions with respect thereto and
the legal availability of funds therefor), at any time on or after April 1,
2003, from any source of funds legally available therefor, in whole or in part,
in the manner provided in Section VI(C) hereof, any or all of the shares of the
11 1/8% Series L Redeemable Exchangeable Preferred Stock, at the redemption
prices (expressed as a percentage of the Liquidation Preference thereof) set
forth below plus an amount in cash equal to all accumulated and unpaid dividends
per share for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the day prior to the Redemption Date (the "Optional
Redemption Price"), if redeemed during the 12-month period beginning April 1, of
the years indicated:
Year Percentage
---- ----------
2003 105.563%
2004 103.708%
2005 101.854%
2006 and thereafter 100.000%
(ii) In addition, on or prior to April 1, 1999, the corporation may
redeem, in the manner provided in Section VI(C) hereof, shares of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock having an aggregate Liquidation
Preference of up to 50% of the aggregate Liquidation Preference of all 11 1/8%
Series L Redeemable Exchangeable Preferred Stock then outstanding, at a
redemption price equal to 100.00% of the Liquidation Preference thereof, plus an
amount in cash equal to all accumulated and unpaid dividends per share for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the day prior to the Redemption Date) plus a premium of $1,000 per share (the
"Contingent Redemption Price"), out of the proceeds of the sale of Junior
Securities to a Strategic Equity Investor or a public offering of Class A Common
Stock; PROVIDED that following such redemption, at least 32,500 shares of 11
1/8% Series L Redeemable Exchangeable Preferred Stock shall remain outstanding
thereafter.
(iii) In addition, the corporation may, at its option, prior to
April 1, 2003, redeem the 11 1/8% Series L Redeemable Exchangeable Preferred
Stock, in whole but not in part, at any time within 180 days after a Change of
Control at a redemption price (the "Change of Control Redemption Price") per
share equal to the sum of (i) the Original Liquidation Preference plus (ii)
accumulated and unpaid dividends for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the day prior to the Redemption Date
plus (iii) the Make-Whole Premium.
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12
(iv) In the event of a redemption pursuant to this Section VI(A) of
only a portion of the then outstanding shares of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock, the corporation shall effect such redemption PRO
RATA according to the number of shares held by each Holder of such 11 1/8%
Series L Redeemable Exchangeable Preferred Stock or by lot, as determined by the
corporation, except that the corporation may redeem such shares held by any
Holders of fewer than 100 shares (or shares held by Holders who would hold less
than 100 shares as a result of such redemption), as determined by the
corporation in its sole discretion.
(B) MANDATORY REDEMPTION. On the Mandatory Redemption Date, the
corporation shall redeem from any source of funds legally available therefor, in
the manner provided in Section VI(C) below, all of the shares of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock then outstanding at a
redemption price equal to the Liquidation Preference thereof, plus an amount of
cash equal to all accumulated and unpaid dividends per share for the period from
the Dividend Payment Date immediately prior to the Redemption Date to the day
prior to the Redemption Date (the "Mandatory Redemption Price").
(C) PROCEDURE FOR REDEMPTION. (i) Not more than sixty (60) and not
less than thirty (30) days prior to the date fixed for any redemption of the 11
1/8% Series L Redeemable Exchangeable Preferred Stock, written notice (the
"Redemption Notice") shall be given by first-class mail, postage prepaid, to
each Holder of record of shares to be redeemed on the record date fixed for such
redemption of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock at
such Holder's address as the same appears on the stock ledger of the
corporation, PROVIDED, HOWEVER, that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the redemption
of any shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be
redeemed except as to the Holder or Holders to whom the corporation has failed
to give such notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(a) whether the redemption is pursuant to Section VI(A)(i),
VI(A)(ii), VI(A)(iii) or VI(B) hereof;
(b) the Optional Redemption Price, Contingent Redemption Price,
Change of Control Redemption Price or Mandatory Redemption Price, as the
case may be;
(c) whether all or less than all the outstanding shares of the 11
1/8% Series L Redeemable Exchangeable Preferred Stock are to be redeemed
and the total number of shares of such 11 1/8% Series L Redeemable
Exchangeable Preferred Stock being redeemed;
(d) the number of shares of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock held by the Holder that the corporation intends to redeem;
<PAGE>
13
(e) the date fixed for redemption (the "Redemption Date");
(f) that the Holder is to surrender to the corporation, at the place
or places, which shall be designated in such Redemption Notice, its
certificates representing the shares of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock to be redeemed;
(g) that dividends on the shares of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock to be redeemed shall cease to accumulate on
the day prior to such Redemption Date unless the corporation defaults in
the payment of the Optional Redemption Price, Contingent Redemption Price,
Change of Control Redemption Price or Mandatory Redemption Price, as the
case may be; and
(h) the name of any bank or trust company performing the duties
referred to in Section VI(C)(v) below.
(ii) On or before the Redemption Date, each Holder of 11 1/8% Series
L Redeemable Exchangeable Preferred Stock to be redeemed shall surrender the
certificate or certificates representing such shares of 11 1/8% Series L
Redeemable Exchangeable Preferred Stock to the corporation, in the manner and at
the place designated in the Redemption Notice, and on the Redemption Date the
full Optional Redemption Price, Contingent Redemption Price, Change of Control
Redemption Price or Mandatory Redemption Price, as the case may be, for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be returned to authorized but unissued shares. In the event
that less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
(iii) Unless the corporation defaults in the payment in full of the
applicable redemption price, dividends on the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock called for redemption shall cease to accumulate on
the day prior to the Redemption Date, and the Holders of such shares shall cease
to have any further rights with respect thereto on the Redemption Date, other
than the right to receive the Optional Redemption Price, Contingent Redemption
Price, Change of Control Redemption Price or Mandatory Redemption Price, as the
case may be, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on or
before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the corporation, separate and apart from
its other funds, in trust for the PRO RATA benefit of the Holders of the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock called for redemption so as to
be and continue to be available therefor, then, notwithstanding that any
certificate for shares so called for redemption shall not have been surrendered
for
<PAGE>
14
cancellation, all shares so called for redemption shall no longer be deemed
outstanding, and all rights with respect to such shares shall forthwith on such
Redemption Date cease and terminate, except only the right of the Holders
thereof to receive the amount payable on redemption thereof, without interest.
(v) If a Redemption Notice shall have been duly given or if the
corporation shall have given to the bank or trust company hereinafter referred
to irrevocable authorization promptly to give such notice, and if on or before
the Redemption Date specified therein the funds necessary for such redemption
shall have been deposited by the corporation with such bank or trust company in
trust for the PRO RATA benefit of the Holders of the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock called for redemption, then, notwithstanding that
any certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit, all
shares so called, or to be so called pursuant to such irrevocable authorization,
for redemption shall no longer be deemed to be outstanding and all rights with
respect of such shares shall forthwith cease and terminate, except only the
right of the Holders thereof to receive from such bank or trust company at any
time after the time of such deposit the funds so deposited, without interest.
The aforesaid bank or trust company shall be organized and in good standing
under the laws of the United States of America or of the State of New York,
shall be doing business in the Borough of Manhattan, The City of New York, shall
have capital, surplus and undivided profits aggregating at least $100,000,000
according to its last published statement of condition, and shall be identified
in the Redemption Notice. Any interest accrued on such funds shall be paid to
the corporation from time to time. Any funds so set aside or deposited, as the
case may be, and unclaimed at the end of three years from such Redemption Date
shall, to the extent permitted by law, be released or repaid to the corporation,
after which repayment the Holders of the shares so called for redemption shall
look only to the corporation for payment thereof.
VII. VOTING RIGHTS.
(A) Holders, except as otherwise required under Delaware law and as
set forth in paragraphs (B) and (C) below, shall not be entitled or permitted to
vote on any matter required or permitted to be voted upon by the stockholders of
the corporation.
(B) Without the approval of holders of at least a majority of the
shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a single class, given in person or by proxy, either in writing or
by resolution adopted at an annual or special meeting called for the purpose,
the corporation will not (i) create, authorize or issue any Senior Securities or
any warrants, rights, calls or options exercisable or exchangeable for or
convertible into, or any obligations evidencing the right to purchase or
acquire, any Senior
<PAGE>
15
Securities, including in connection with a merger, consolidation or other
reorganization or (ii) reclassify any Junior Securities, Parity Securities or
other outstanding Capital Stock of the corporation into any Senior Securities or
any warrants, rights, calls or options exercisable or exchangeable for or
convertible into, or any obligations evidencing the right to purchase or
acquire, any Senior Securities.
(C) Without the approval of holders of at least a majority of the
shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a single class, given in person or by proxy, either in writing or
by resolution adopted at an annual or special meeting called for the purpose,
the corporation will not amend, modify or repeal the Certificate of Designations
so as to adversely affect the specified designations, rights, preferences,
privileges or voting rights of the 11 1/8% L Redeemable Exchangeable Preferred
Stock or Series M Preferred Stock. The authorization or consummation of a
transaction that results in the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock being converted or exchanged for or becoming shares of a
resulting entity (as such term is defined in Section X) shall not constitute an
amendment, modification or repeal of this Certificate of Designations for
purposes of this Section VII.
(D) Prior to the exchange of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock for Exchange Debentures, the corporation shall not amend or
modify the indenture dated February 15, 1996, between the corporation and the
Trustee for the Exchange Debentures (the "Exchange Indenture"), a copy of which
is on file at the principal executive offices of the corporation, without the
affirmative vote or consent of holders of at least a majority of the shares of
11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred
Stock then outstanding, voting or consenting, as the case may be, separately as
a single class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting called for the purpose; PROVIDED that
the corporation and the Trustee shall be permitted, without any vote or consent
of the Holders, to effect any amendments to the Exchange Indenture that could
have been effected under the Exchange Indenture without the consent of holders
of Exchange Debentures if any Exchange Debentures were then outstanding.
(E) The holders of at least a majority of the shares of 11 1/8%
Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock
then outstanding, voting or consenting, as the case may be, separately as a
single class, whether voting in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting called for the purpose, may
waive compliance with any provision of this Certificate of Designations.
(F) Notwithstanding anything herein to the contrary, (i) the
creation, authorization or issuance of any shares of any Parity Securities or
Junior Securities or (ii) the
<PAGE>
16
increase or decrease in the amount of authorized Capital Stock of any class,
including any preferred stock, shall not require the consent of the holders of
11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred
Stock and shall not be deemed to affect adversely the rights, preferences,
privileges or voting rights of Holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock or Series M Preferred Stock.
(G) (i) In the event that (a) dividends on the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock or Series M Preferred Stock are in
arrears and unpaid for six Quarterly Dividend Periods (whether or not
consecutive) (a "Dividend Default") or (b) the corporation shall fail to
discharge its obligation to redeem the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock or Series M Preferred Stock on the Mandatory Redemption Date (a
"Redemption Default"), then the number of directors constituting the Board of
Directors shall be adjusted to permit the holders of a majority of the shares of
11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred
Stock then outstanding, voting or consenting, as the case may be, separately as
a single class, to elect one member of the Board of Directors of the
corporation. Each such event described in clause (a) or (b) is a "Voting Rights
Triggering Event". Holders of a majority of the issued and outstanding shares
of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a single class, shall thereupon have the exclusive right to elect
one member of the Board of Directors at any annual or special meeting of
stockholders or at a special meeting of the holders of 11 1/8% Series L
Redeemable Exchangeable Preferred Stock and Series M Preferred Stock called as
hereinafter provided.
(ii) The right of the holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock and Series M Preferred Stock to vote pursuant to
Section VII(G)(i) to elect one member of the Board of Directors as aforesaid
shall continue until such time as (a) in the event such right arises due to a
Dividend Default, all accumulated dividends that are in arrears on the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock
are paid in full and (ii) in the event such right arises due to a Redemption
Default, the corporation remedies any such failure, at which time the special
right of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock
and Series M Preferred Stock to vote for the election of a director and the term
of office of the director elected by the holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock and Series M Preferred Stock shall terminate, and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after voting power to elect a director shall have
become vested and be continuing in the holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock and Series M Preferred Stock pursuant to Section
VII(G)(i) hereof, or if a vacancy shall exist in the office of a director
elected by the holders of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock and Series M Preferred Stock, a proper officer of the corporation may, and
upon the written request of the holders of record of at least twenty percent
(20%) of the shares of 11 1/8% Series L Redeemable Exchangeable
<PAGE>
17
Preferred Stock and Series M Preferred Stock then outstanding addressed to the
Secretary of the corporation shall, call a special meeting of the holders of 11
1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred
Stock, for the purpose of electing the one director which such holders are
entitled to elect as herein provided. If such meeting shall not be called by a
proper officer of the corporation within 20 days after personal service of such
written request upon the Secretary of the corporation, or within 20 days after
mailing the same within the United States by certified mail, addressed to the
Secretary of the corporation at its principal executive offices, then the
holders of record of at least twenty percent (20%) of the outstanding shares of
11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred
Stock may designate in writing one of their number to call such meeting at the
expense of the corporation, and such meeting may be called by the Person so
designated upon the notice required for annual meetings of stockholders of the
corporation and shall be held at the place for holding annual meetings of
stockholders. Notwithstanding the provisions of this Section VII(G)(ii), no
such special meeting shall be called if any such request is received less than
60 days before the date fixed for the next ensuing annual or special meeting of
stockholders of the corporation. Any holder of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock or Series M Preferred Stock so designated shall
have access to the list of holders of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock and Series M Preferred Stock entitled to attend the meeting
pursuant to the provisions hereof.
(iii) At any meeting held for the purpose of electing directors at
which the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock
and Series M Preferred Stock then outstanding shall have the right, voting or
consenting, as the case may be, separately as a single class, to elect a
director as aforesaid, the presence in person or by proxy of the holders of at
least a majority of the outstanding 11 1/8% Series L Redeemable Exchangeable
Preferred Stock and Series M Preferred Stock shall be required to constitute a
quorum.
(H) (i) Any vacancy occurring in the office of a director elected by
the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and
Series M Preferred Stock may be filled by the departing director unless and
until such vacancy shall be filled by the holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock and Series M Preferred Stock.
(ii) In any case in which the holders of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock and Series M Preferred Stock shall be entitled to
vote pursuant to this Section VII or pursuant to Delaware law, each holder of
shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M
Preferred Stock, as the case may be, shall be entitled to one vote for each
share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M
Preferred Stock held.
<PAGE>
18
VIII. EXCHANGE.
(A) The corporation may, at its option, on any Dividend Payment Date
on or after April 1, 1996, exchange the shares of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures issued pursuant to the Exchange Indenture (such date, the "Exchange
Date"). Notwithstanding the foregoing, the corporation may not exercise such
exchange option unless all accumulated and unpaid dividends in respect of shares
of 11 1/8% Series L Redeemable Exchangeable Preferred Stock surrendered to the
corporation upon exchange shall have been paid either in cash or, in respect of
accumulated and unpaid dividends relating to any Dividend Payment Date prior to
April 1, 2001, at the option of the corporation, in cash or a principal amount
of Exchange Debentures equal to such amount in lieu of a payment in cash;
PROVIDED, THAT, the corporation may elect to set aside Exchange Debentures (in
respect of accumulated and unpaid dividends relating to any Dividend Payment
Date prior to April 1, 2001) or funds to provide for the payment in full of such
dividends. At least thirty (30) and not more than sixty (60) days prior to the
date fixed for exchange, the corporation shall send a written notice (the
"Exchange Notice") of exchange by mail to each Holder, which notice shall state:
(a) that the corporation has elected to exchange the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock into Exchange Debentures pursuant to this
Certificate of Designations; (b) the Exchange Date; (c) that the Holder is to
surrender to the corporation, at the place or places and in the manner
designated in the Exchange Notice, its certificate or certificates representing
the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock; (d) that
dividends on the shares of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock to be exchanged shall cease to accumulate at the close of business on the
day prior to the Exchange Date, whether or not certificates for shares of 11
1/8% Series L Redeemable Exchangeable Preferred Stock are surrendered for
exchange on the Exchange Date, unless the corporation shall default in the
delivery of Exchange Debentures; and (e) that interest on the Exchange
Debentures shall accrue from the Exchange Date whether or not certificates for
shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock are
surrendered for exchange on the Exchange Date. On the Exchange Date, if the
conditions set forth in clauses (i) through (iv) below are satisfied and if the
exchange is then permitted under the Exchange Indenture, the corporation shall
issue Exchange Debentures in exchange for the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock as provided in the next paragraph, PROVIDED that on
the Exchange Date: (i) there shall be legally available funds sufficient for
the exchange to occur (including, without limitation, legally available funds
sufficient therefor under Sections 160 and 170 (or any successor provisions), to
the extent applicable, of the General Corporation Law of the State of Delaware);
(ii) either (a) a registration statement relating to the Exchange Debentures
shall have been declared effective under the Securities Act prior to such
exchange and shall continue to be in effect on the Exchange Date or (b)(1) the
corporation shall have obtained a written opinion of counsel acceptable to the
corporation that an exemption from the registration requirements of the
Securities Act is available for such exchange and (2) such exemption is relied
upon by the
<PAGE>
19
corporation for such exchange; (iii) the Exchange Indenture and the Trustee
shall have been qualified under the Trust Indenture Act or the corporation shall
have obtained a written opinion of counsel that such qualification is not
required; and (iv) immediately after giving effect to such exchange, no Default
or Event of Default (each as defined in the Exchange Indenture) would exist
under the Exchange Indenture. In the event that any of the conditions set forth
in clauses (i) through (iv) of the preceding sentence are not satisfied on the
Exchange Date, then no shares of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock shall be exchanged, and in order to effect an exchange as
provided for in this Section VIII, the corporation shall be required to fix
another date for the exchange and issue a new Exchange Notice.
(B) Upon any exchange pursuant to Section VIII(A), Holders shall be
entitled to receive a principal amount of Exchange Debentures equal to the
Liquidation Preference of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock, plus an amount in cash equal to all accumulated and unpaid dividends
thereon for the period from the immediately preceding Dividend Payment Date to
the day prior to the Exchange Date; PROVIDED that the corporation shall pay cash
in lieu of issuing an Exchange Debenture in a principal amount of less than
$1,000 and PROVIDED FURTHER that the Exchange Debentures will be issuable only
in denominations of $1,000 and integral multiples thereof. If any amount is
owed by the corporation in respect of accumulated and unpaid dividends relating
to any Dividend Payment Date prior to April 1, 2001, such amount may, at the
option of the corporation, be paid in a principal amount of Exchange Debentures
equal to such amount in lieu of a payment in cash.
(C) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of 11 1/8% Series L
Redeemable Exchangeable Preferred Stock, in the manner and at the place
designated in the Exchange Notice. The corporation shall cause the Exchange
Debentures to be executed on the Exchange Date and, upon surrender in accordance
with the Exchange Notice of the certificates for any shares of 11 1/8% Series L
Redeemable Exchangeable Preferred Stock so exchanged (properly endorsed or
assigned for transfer, if the Exchange Notice shall so state), such shares shall
be exchanged by the corporation into Exchange Debentures as aforesaid. The
corporation shall pay interest on the Exchange Debentures at the rate and on the
dates specified therein from the Exchange Date.
(D) If the Exchange Notice has been mailed as aforesaid, and if
before the Exchange Date all Exchange Debentures necessary for such exchange
shall have been duly executed by the corporation and delivered to the Trustee
with irrevocable instructions to authenticate the Exchange Debentures necessary
for such exchange, then the rights of the Holders as stockholders of the
corporation shall cease (except the right to receive Exchange Debentures and
accumulated and unpaid dividends (in cash or, in respect of accumulated and
unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001,
at the option
<PAGE>
20
of the corporation, in cash or a principal amount of Exchange Debentures equal
to such amount in lieu of a payment in cash) to the Exchange Date), and the
Person or Persons entitled to receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as the registered Holder or Holders
of such Exchange Debentures as of the date of exchange. Upon the exchange of
the 11 1/8% Series L Redeemable Exchangeable Preferred Stock for Exchange
Debentures, the rights of Holders as stockholders of the corporation shall cease
(except the right to receive the Exchange Debentures and accumulated and unpaid
dividends (in cash or, in respect of accumulated and unpaid dividends relating
to any Dividend Payment Date prior to April 1, 2001, at the option of the
corporation, in cash or a principal amount of Exchange Debentures equal to such
amount in lieu of a payment in cash) to the Exchange Date), and the Person or
Persons entitled to receive the Exchange Debentures issuable upon exchange shall
be treated for all purposes as registered holder or holders of such Exchange
Debentures as of the date of exchange.
IX. MERGER, CONSOLIDATION AND SALE OF ASSETS.
Without the affirmative vote or consent of the holders of a majority
of the issued and outstanding shares of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock and Series M Preferred Stock, voting or consenting, as the case
may be, separately as a single class, the corporation may not consolidate or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, any Person unless: (a)
the entity formed by such consolidation or merger (if other than the
corporation) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "resulting entity") shall be a
corporation organized or existing under the laws of the United States or any
state thereof or the District of Columbia; (b) any outstanding shares of the 11
1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred
Stock shall remain unchanged and or be converted into or exchanged for and shall
become shares of such resulting entity, having in respect of such resulting
entity the same (or more favorable) powers, preferences and relative
participating, optional or other special rights, and the same (or more
favorable) qualifications, limitations or restrictions thereon, that the 11 1/8%
Series L Redeemable Exchangeable Preferred Stock or the Series M Preferred
Stock, as the case may be, had immediately prior to such transaction; and (c)
immediately after giving effect to such transaction, no Voting Rights Triggering
Event shall have occurred and be continuing. Notwithstanding the foregoing, the
corporation may consolidate or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
any Person if the corporation makes adequate provision (i) prior to April 1,
2003, to redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and
Series M Preferred Stock after a Change of Control or (ii) on or after April 1,
2003, to redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and
Series M Preferred Stock at the applicable redemption price set forth herein.
<PAGE>
21
X. COVENANT TO REPORT.
Notwithstanding that the corporation may not be subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the
corporation will file with the SEC and provide the Transfer Agent and the
holders of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock with all
information, documents and reports specified in Section 13 and Section 15(d) of
the Exchange Act.
XI. MUTILATED OR MISSING 11 1/8% SERIES L REDEEMABLE EXCHANGEABLE PREFERRED
STOCK CERTIFICATES.
If any of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock
certificates shall be mutilated, lost, stolen or destroyed, the corporation
shall issue, in exchange and in substitution for and upon cancellation of the
mutilated 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificate,
or in lieu of and substitution for the 11 1/8% Series L Redeemable Exchangeable
Preferred Stock certificate lost, stolen or destroyed, a new 11 1/8% Series L
Redeemable Exchangeable Preferred Stock certificate of like tenor and
representing an equivalent amount of shares of 11 1/8% Series L Redeemable
Exchangeable Preferred Stock, but only upon receipt of evidence of such loss,
theft or destruction of such 11 1/8% Series L Redeemable Exchangeable Preferred
Stock certificate and indemnity, if requested, satisfactory to the corporation
and the Transfer Agent (if other than the corporation).
XII. REISSUANCE; CONVERSION; PREEMPTIVE RIGHTS
(i) Shares of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock that have been issued and reacquired in any manner, including shares
purchased or redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of authorized
and unissued shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of Additional Preferred Stock
other than the 11 1/8% Series L Redeemable Exchangeable Preferred Stock.
(ii) The Holders of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the corporation.
(iii) No shares of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock shall have any rights of preemption whatsoever as to any securities of the
corporation, or any
<PAGE>
22
warrants, rights or options issued or granted with respect thereto, regardless
of how such securities or such warrants, rights or options may be designated,
issued or granted.
XIII. BUSINESS DAY.
If any payment or redemption shall be required by the terms hereof to
be made on a day that is not a Business Day, such payment, redemption or
exchange shall be made on the immediately succeeding Business Day and no further
dividends shall accumulate after the day payment was required.
XIV. HEADINGS OF SUBDIVISIONS.
The headings of various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
XV. SEVERABILITY OF PROVISIONS.
If any right, preference or limitation of the 11 1/8% Series L
Redeemable Exchangeable Preferred Stock set forth in these resolutions and the
Certificate of Designations filed pursuant hereto (as such Certificate of
Designations may be amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule or law or public policy, all other
rights, preferences and limitations set forth in such Certificate of
Designations, as amended, which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
XVI. NOTICE TO THE CORPORATION.
All notices and other communications required or permitted to be given
to the corporation hereunder shall be made by first-class mail, postage prepaid,
to the corporation at its principal executive offices (currently located on the
date of the adoption of these resolutions at the following address: Cablevision
Systems Corporation, One Media Crossways, Woodbury, New York 11797, Attention:
General Counsel). Minor imperfections in any such notice shall not affect the
validity thereof.
<PAGE>
23
XVII. LIMITATIONS.
Except as may otherwise be required by law, the shares of 11 1/8%
Series L Redeemable Exchangeable Preferred Stock shall not have any powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth in this resolution (as such resolution may be
amended from time to time) or otherwise in the Certificate of Incorporation of
the corporation.
<PAGE>
IN WITNESS WHEREOF, this Certificate has been signed on this 14th day
of February, 1996.
CABLEVISION SYSTEMS CORPORATION
By:
----------------------------------
Name:
Title:
Attested by:
- ---------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CABLEVISION SYSTEMS CORPORATION
Depositary Shares Each Representing
a One One-Hundredth Interest in a Share of
11 1/8% Series L Redeemable
Exchangeable Preferred Stock
-----------------------------
Registration Rights Agreement
-----------------------------
Dated: February 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated February 15, 1996 between
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), and
BEAR, STEARNS & CO. INC., MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED and MORGAN STANLEY & CO. INCORPORATED as the initial
purchasers (the "Initial Purchasers") of the Securities referred to below
pursuant to the Purchase Agreement dated February 8, 1996 between the Initial
Purchasers and the Company, in connection with the issuance of up to 11,500,000
Depositary Shares (as defined in the Purchase Agreement) representing the
Company's 11 1/8% Series L Redeemable Exchangeable Preferred Stock (such
Depositary Shares hereafter referred to as the "Securities").
In consideration of the foregoing, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following defined terms shall have the
following meanings:
"BEST EFFORTS" with respect to the Company shall mean the Company's
best efforts except that such term shall mean reasonable best efforts in
the event and to the extent that the Company could satisfy the standard for
the issuance of a Suspension Notice pursuant to the third paragraph of
Section 5 hereof.
"BUSINESS DAY" shall mean any day except (i) a Saturday, Sunday or
other day in The City of New York on which banks are required or authorized
to close or (ii) any other day on which the SEC is closed.
"CLOSING TIME" shall mean the Closing Time as defined in the Purchase
Agreement.
"COMPANY" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"DEPOSITARY" shall mean The First National Bank of Boston.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXCHANGE DEBENTURES" shall mean the 11 1/8% Senior Subordinated
Debentures due 2008 of the Company into which the Securities are
exchangeable at the option of the Company on or after April 1, 1996.
<PAGE>
2
"EXCHANGE INDENTURE" shall mean the indenture relating to the Exchange
Debentures dated as of February 15, 1996 between the Company and The Bank
of New York, trustee.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement of the Company pursuant to the provisions of Section
2(a) hereof on Form S-4 (or, if applicable,on another appropriate form),
and all amendments and supplements to such registration statement, in each
case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"EXCHANGE SECURITIES" shall mean the 11 1/8% Series M Redeemable
Exchangeable Preferred Stock of the Company and the depositary shares that
will represent such Series M Redeemable Exchangeable Preferred Stock issued
as Registered Securities containing terms identical to the Securities
(except that dividends thereon will accumulate from February 15, 1996 or
from the most recent dividend payment date to which were dividends were
paid on the Securities surrendered in exchange therefor and except that
such Exchange Securities shall bear no legend and shall be free from
restrictions on transfer), to be offered to Holders of Securities pursuant
to the Exchange Offer.
"HOLDER" shall mean, individually, each of the Initial Purchasers, for
so long as they own any Registrable Securities, and any of the Initial
Purchasers' successors, assigns and direct and indirect transferees who
become registered owners of Registrable Securities.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with
<PAGE>
3
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
PURCHASE AGREEMENT" shall mean the Purchase Agreement dated February
8, 1996 between the Company and the Initial Purchasers, providing for the
initial purchase and sale of the Securities.
"REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED, HOWEVER,
that any such Securities shall cease to be Registrable Securities upon the
earlier to occur of (i) the Exchange Offer has been consummated, (ii) a
Registration Statement with respect to such Securities shall have been
declared effective under the Securities Act and such Securities shall have
been disposed of pursuant to such Registration Statement, PROVIDED, THAT
Securities not disposed of pursuant to an effective Shelf Registration
Statement shall cease to be Registrable Securities three years from the
date such Shelf Registration Statement is declared effective by the SEC, or
such longer period as the Company's obligation to keep such Shelf
Registration Statement effective is extended in accordance with Section 5
hereof, (iii) such Registrable Securities have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act, or (iv) such Registrable Securities
shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky
laws, (iii) all expenses of any Persons acting on behalf of the Company in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto and other documents reasonably relating to the
performance of and compliance with this Agreement by the Company, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the
Company and, in connection with a Shelf Registration Statement, the fees
and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and shall be reasonably acceptable to the
Company), and (vi) any fees and expenses of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters (in connection with a Shelf Registration) required
by or necessary to such performance and compliance, but excluding
underwriting discounts and commissions, fees and expenses and transfer
taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement.
<PAGE>
4
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES" shall have the meaning set forth in the preamble.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities on an appropriate form under
Rule 4l5 under the Securities Act, or any similar rule that may be adopted
by the SEC and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"TRUSTEE" shall mean the trustee with respect to the Exchange
Debentures under the Exchange Indenture.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Securities are sold to one or more
Underwriters (as hereinafter defined) for reoffering to the public.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) EXCHANGE OFFER REGISTRATION. The Company shall, for the benefit
of the Holders of the Securities, file an Exchange Offer Registration Statement
with respect to Exchange Securities within 60 days after the Closing Time and
use its best efforts to cause such Exchange Offer Registration Statement to be
declared effective under the Securities Act within 180 days after the Closing
Time. Upon such Exchange Offer Registration Statement becoming effective under
the Securities Act, the Company shall offer the Exchange Securities in return
for surrender of the Securities. The Exchange Offer shall remain open for not
less than 30 days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to Holders of the Securities. For the
Securities surrendered to the Company under the Exchange Offer, the Holder will
receive Exchange Securities having an aggregate liquidation preference equal to
that of the surrendered Securities. Dividends on the Exchange Securities shall
accumulate from February 15 , 1996 or from the most recent dividend payment date
to which dividends were paid on the Securities surrendered in exchange therefor
(or on the Exchange Securities, as the case may be). The Company shall commence
the Exchange Offer by mailing the related Exchange Offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
<PAGE>
5
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange;
(ii) the date of acceptance for exchange (which shall be a Business
Day no earlier than 30 days nor later than 40 days (unless otherwise
required by applicable law) from the date such notice is mailed) (the
"Exchange Date");
(iii) that any Registrable Security not tendered will remain
outstanding and shall accumulate dividends at the initial rate borne by the
Securities and, other than Registrable Securities referred to in Section
2(b)(iii) below, will not retain any rights under this Registration Rights
Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with letters of transmittal, to the
institution and at the address (located in the Borough of Manhattan, City
of New York) specified in the notice prior to the close of business on the
Business Day immediately preceding the Exchange Date; and
(v) that Holders will be entitled to withdraw the election, not
later than the close of business on the Business Day immediately preceding
the Exchange Date, by sending to the institution and at the address
(located in the Borough of Manhattan, City of New York) specified in the
notice, a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the number of shares of Registrable Securities
delivered for exchange, and a statement that such Holder is withdrawing its
election to have such Registrable Securities exchanged.
On the Exchange Date, the Company shall:
(i) accept for exchange Registrable Securities tendered and not
validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Depositary for
cancellation all Registrable Securities so accepted for exchange by the
Company, and issue and mail to each Holder or such Holder's nominee, for
the Registrable Securities so surrendered, new Exchange Securities having
an aggregate liquidation preference equal to that of the Registrable
Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above, and in accordance with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws in connection with
the Exchange Offer. Consummation of the Exchange Offer shall not be subject to
any conditions, other than that the Exchange Offer does not, and consummation of
the Exchange Offer will not, violate applicable law or any applicable
interpretation of the staff of the SEC. The Company shall inform the Initial
<PAGE>
6
Purchasers of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Securities in the Exchange
Offer.
(b) SHELF REGISTRATION. In the event that (i) the Company determines
that the Exchange Offer Registration provided in Section 2(a) above is not
available or may not be consummated because it would violate applicable law or
the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer
is not for any other reason consummated within 240 days after the Closing Time,
or (iii) following the consummation of the Exchange Offer a Registration
Statement must be filed and a Prospectus must be delivered by the Initial
Purchasers in connection with any offering or sale of Registrable Securities
because such Registrable Securities represent an unsold allotment of the
Registrable Securities purchased by the Initial Purchasers from the Company,
unless the Company has previously done so, the Company will (a) file as soon as
practicable after such determination or date, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, (b) use its best efforts to have such Shelf Registration
Statement declared effective by the SEC and (c) keep the Shelf Registration
Statement continuously effective until the third anniversary of the Closing Time
or such shorter period which will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. In the event the Company is required to
file a Shelf Registration Statement solely as a result of the matters referred
to in clause (iii) of the preceding sentence, the Company shall file and have
declared effective by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf
Registration Statement (which may be a combined Registration Statement with the
Exchange Offer Registration Statement) with respect to offers and sales of
Registrable Securities held by the Initial Purchasers after completion of the
Exchange Offer. The Company further agrees, if necessary, to supplement or
amend the Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other rules and
regulations thereunder for shelf registration, and the Company agrees to furnish
to the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) EXPENSES. The Company shall pay all Registration Expenses in
connection with any registration pursuant to Section 2(a) or 2(b) hereof.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; PROVIDED, HOWEVER, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
<PAGE>
7
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
3. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) The Staff of the SEC has taken the position that any broker-
dealer that receives Exchange Securities for its own account in the Exchange
Offer in exchange for Securities that were acquired by such broker-dealer as a
result of market-making or other trading activities (a "Participating Broker-
Dealer") may be deemed to be an "underwriter" within the meaning of the
Securities Act and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers and other persons, if any, subject to similar prospectus delivery
requirements to satisfy their prospectus delivery obligation under the
Securities Act in connection with resales of Exchange Securities for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Initial Purchasers or by one or more
Participating Broker-Dealers in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 3(a) above; PROVIDED that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 5(i), for a period exceeding 90 days
after the last Exchange Date (as such period may be extended pursuant to
the penultimate paragraph of Section 5 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 3; and
(ii) the application of the Shelf Registration procedures set forth in
Section 5 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the
Securities Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Initial
Purchasers or with the reasonable request in writing to the
<PAGE>
8
Company by one or more broker-dealers who certify to the Initial Purchasers
and the Company in writing that they anticipate that they will be
Participating Broker-Dealers; and PROVIDED FURTHER that, in connection with
such application of the Shelf Registration procedures set forth in Section
5 to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be one of the Initial Purchasers unless they collectively elect
not to act as such representative, (y) to pay the fees and expenses of only
one counsel representing the Participating Broker-Dealers, which shall be
counsel to the Initial Purchasers unless such counsel elects not to so act
and (z) to cause to be delivered only one, if any, "cold comfort" letter
with respect to the Prospectus in the form existing on the last Exchange
Date and with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (i) above; PROVIDED, that
the provisions of clauses (y) and (z) of this Section 3(b)(ii) shall apply
only if one or more Participating Broker-Dealers holding at least 100,000
shares of Registrable Securities shall request that the provisions of this
Agreement as they relate to a Shelf Registration also apply to an Exchange
Offer Registration Statement for the disposition of Exchange Securities by
Participating Broker-Dealers.
4. LIQUIDATED DAMAGES.
In the event that, for any reason, either (i) the Exchange Offer
Registration Statement is not filed with the SEC on or prior to the 60th
calendar day following the Closing Time or (ii) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective on or
prior to the 240th calendar day following the Closing Time, the dividend rate
borne by the Securities shall be increased by one-quarter of one percent per
annum for the first 30 days following such 60-day period in the case of (i)
above, or the first 90 days following such 240-day period in the case of (ii)
above. Such dividend rate will increase by an additional one-quarter of one
percent per annum at the beginning of each subsequent 30-day period in the case
of (i) above, or 90-day period in the case of (ii) above, up to a maximum
aggregate increase of one percent per annum. Upon (x) the filing of the
Exchange Offer Registration Statement or (y) the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, the dividend rate borne by the Securities will be reduced to the original
interest rate.
5. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to the
Registration Statement pursuant to Sections 2(a) and 2(b) hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be selected
by the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution as the Company is so advised of
by the selling Holders thereof and (z)
<PAGE>
9
shall comply as to form in all material respects with the requirements of
the applicable form and include (including through incorporation by
reference) all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to such Registration Statement as may be necessary to keep such
Registration Statement in compliance with the Securities Act; and cause the
Prospectus to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities and to each Underwriter of Registrable Securities,
if any, without charge, as many copies of the Prospectus, including each
preliminary prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Securities;
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions as any Holder of
Registrable Securities covered by such Shelf Registration Statement and or
any Underwriter shall reasonably request in writing by the time the
applicable Shelf Registration Statement is declared effective by the SEC,
and do any and all other acts and things which may be reasonably necessary
or advisable to enable such Holder or Underwriter to consummate the
disposition in each such designated jurisdiction, PROVIDED, HOWEVER, that
the Company shall not be required to (i) qualify generally to do business
as a foreign corporation or as a broker-dealer in any jurisdiction where it
would not otherwise be required to qualify but for this Section 5(d), (ii)
consent to general service of process in any such jurisdiction or (iii)
subject itself to taxation in any such jurisdiction;
(e) in the case of a Shelf Registration, promptly notify each Holder
and, if requested by such Holder, confirm such advice in writing (i) when
such Shelf Registration Statement has become effective and when any post-
effective amendments and supplements thereto become effective, (ii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of such Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iii) if, between the
effective date of such Shelf Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, and (iv) of the happening of any event
during the period such Shelf Registration Statement is effective which
makes any statement made in such Shelf Registration Statement or the
<PAGE>
10
related Prospectus untrue in any material respect or which requires the
making of any changes in such Shelf Registration Statement or Prospectus in
order to make the statements therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement promptly and
shall provide notice to each Holder of the withdrawal of any such order as
promptly as practicable;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of such
Shelf Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the selling
Holders may reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 5(e)(iv) hereof, use its best efforts to
prepare a supplement or post-effective amendment to such Shelf Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(j) in the case of a Shelf Registration Statement, enter into and
deliver all such customary agreements, documents and take such other
actions (including causing the delivery of opinions of counsel and
"comfort" letters of independent certified public accountants) as are
reasonably required to expedite or facilitate the disposition of
Registrable Securities;
(k) in the case of a Shelf Registration, upon reasonable notice make
available for inspection by a representative of the Holders of the
Registrable Securities, any Underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney or
accountant designated by the Selling Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by
any such representative, Underwriter, attorney or accountant in connection
with a Shelf Registration Statement; PROVIDED, HOWEVER, that such
<PAGE>
11
representatives, attorneys or accountants shall be acceptable to the
Company in its judgment reasonably exercised and shall agree to enter into
a written confidentiality agreement mutually acceptable to the Company and
the Underwriters regarding any records, information or documents that are
designated by the Company as confidential unless such records, information
or documents are available to the public or disclosure of such records,
information or documents is required by court or administrative order after
the exhaustion of appeals therefrom and to use such information obtained
pursuant to this provision only in connection with the transaction for
which such information was obtained, and not for any other purpose;
(1) in the case of a Shelf Registration, provide copies of any
Prospectus, any amendment to any applicable Shelf Registration Statement or
amendment or supplement to any Prospectus or any document which is to be
incorporated by reference into such Shelf Registration Statement or any
Prospectus after initial filing of such Shelf Registration Statement, a
reasonable time prior to the filing of any such Prospectus, amendment,
supplement or document, to the Initial Purchasers on behalf of the Holders
and Underwriters, if any, and except with respect to a Shelf Registration
filed pursuant to Section 2(b)(iii) not file any such document in a form to
which the Initial Purchasers on behalf of the Holders or Underwriters, if
any, shall reasonably object; and make the representatives of the Company
as shall be reasonably requested by the Holders or the Initial Purchasers
on behalf of such Holders available for discussion of such document;
PROVIDED that the requirements of this paragraph shall not apply to the
Company's annual report on Form 10-K, its Quarterly Reports on Form 10-Q,
its current reports on Form 8-K or any other documents filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (the "Exchange Act
Documents"); and further PROVIDED that the Company shall promptly notify
Holders of the filing of any Exchange Act Documents except for such
Exchange Act Documents specifically related to the offering of other
securities and not to the Registrable Securities;
(m) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of any
Registration Statement; and
(n) cause the Exchange Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Debentures, cooperate with the Trustee and the
Holders to effect such changes to the Exchange Indenture as may be required
for the Exchange Indenture to be so qualified in accordance with the terms
of the TIA and execute, and use its best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable the
Exchange Indenture to be so qualified in a timely manner.
<PAGE>
12
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in a Shelf Registration) require each
Holder to furnish to the Company information regarding the Holder and the
proposed distribution by such Holder of any Registrable Securities as the
company may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any (i) notice from the Company of the happening of any
event of the kind described in Section 5(e)(ii) or (iv) hereof, (ii) notice from
the Company that it is in possession of material information that has not been
disclosed to the public and the Company reasonably deems it to be advisable not
to disclose such information in a registration statement or (iii) notice from
the Company that it is in the process of a registered offering of securities and
the Company reasonably deems it to be advisable to temporarily discontinue
disposition of Registrable Securities pursuant to the Shelf Registration
Statement (in each case, such notice being hereinafter referred to as a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to any Shelf Registration Statement and shall
not be entitled to the benefits provided under Section 6 hereof with respect to
any sales made by it in contravention of this paragraph, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(i) or a notice in accordance with Section 5(f) hereof that any order
suspending the effectiveness of the Shelf Registration Statement has been
withdrawn, or, in the case of (ii) or (iii) above, until further notice from the
Company that disposition of Registrable Securities may resume, provided that
(except with respect to a Shelf Registration filed pursuant to Section
2(b)(iii)) such further notice will be given within 90 days of the Suspension
Notice in the case of (ii) above and within 120 days of the Suspension Notice in
the case of (iii) above, and provided further that in the case of (ii) and (iii)
above that any Suspension Notice must be based upon a good faith determination
of the Board of Directors of the Company or the Executive Committee thereof that
such Notice is necessary; and, if so directed by the Company, such Holder will
deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice to suspend
the disposition of Registrable Securities pursuant to any Shelf Registration
Statement, the Company shall extend the period during which such Shelf
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions or received notice that any order suspending dispositions of
the Securities has been withdrawn.
Each Holder will furnish to the Company such information regarding
such Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing, but only to the extent that
such information is required in order to comply with the Securities Act or any
relevant state securities or Blue Sky law or obligation. Each Holder of
Registrable Securities as to which any registration is being
<PAGE>
13
effected agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such Holder to the
Company or of the happening of any event, in either case as a result of which
any Prospectus relating to such registration contains an untrue statement of a
material fact regarding such Holder or the distribution of such Registrable
Securities or omits to state any material fact regarding such Holder or the
distribution of such Registrable Securities required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and to furnish to the Company
promptly any additional information required to correct and update any
previously furnished information or required such that such prospectus shall not
contain, with respect to such holder or the distribution of such Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
6. INDEMNIFICATION; CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Holder and
each Person, if any, who controls any Holder within the meaning of Section 15 of
the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatever.as incurred (including,
subject to the provisions of subsection (c), fees and disbursements of
counsel chosen by any Holder), reasonably incurred in investigating,
preparing or defending against any litigation, or investigation or
proceeding by any governmental agency or body,
<PAGE>
14
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subparagraph (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, claim,
damage, liability or expense to the extent it arises out of an untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any Holder
expressly for use in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto).
The foregoing indemnity with respect to any untrue statement contained
in or any omission from a preliminary prospectus shall not inure to the benefit
of any Holder (or any person controlling such Holder) from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities that are the subject thereof if the Company shall sustain the
burden of proving that such person was not sent or given a copy of the
Prospectus (or the Prospectus as amended or supplemented) (in each case
exclusive of the documents from which information is incorporated by reference)
at or prior to the written confirmation of the sale of such Securities to such
person and the untrue statement contained in or the omission from such
preliminary prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented).
(b) Each Holder severally agrees to indemnify and hold harmless the
Company, its directors, officers and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in Section 6(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in the
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
under this indemnity agreement. An indemnifying party may participate at its
own expense in the defense of such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction, arising out of the same
general allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 6 is
for any reason held to be
<PAGE>
15
unenforceable by the indemnified parties although applicable in accordance with
its terms, the Company and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and one or more of the Holders;
PROVIDED, HOWEVER, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. As between the Company and the Holders, such parties shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement in such proportion as shall
be appropriate to reflect (i) the relative benefits received by the Company on
the one hand and the Holders on the other hand, from the offering of the
Exchange Securities or Registrable Securities included in such offering, and
(ii) the relative fault of the Company on the one hand and the Holders on the
other, with respect to the statements or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect thereof, as well as
any other relevant equitable considerations. The Company and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 6 were to be determined by PRO RATA
allocation or by any other method of allocation which does not take into account
the relevant equitable considerations. For purposes of this Section 6, each
Person, if any, who controls a Holder within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such Holder, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
7. SELECTION OF UNDERWRITERS. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
(the "Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Securities included in such offering;
PROVIDED THAT such Underwriters must be reasonably acceptable to the Company and
of a reputation comparable to that of the Initial Purchasers.
8. ISSUANCE OF EXCHANGE DEBENTURES. In the event that Exchange
Debentures are issued prior to the issuance of the Exchange Securities, the
provisions herein shall apply equally in respect of the registration of any
Exchange Debentures PROVIDED THAT changes in the dividend rate as provided for
in Section 4 herein shall result in corresponding changes in the interest rate
applicable to the Exchange Debentures.
9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way
<PAGE>
16
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority of the issued and outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or departure;
PROVIDED, HOWEVER, no amendment, modification or supplement, waiver or consent
with respect to the provisions of Section 6 hereof shall be effective as against
any Holder of Registrable Securities unless consented to in writing by such
Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 9(c); (ii) if to the Company, initially at One Media Crossways,
Woodbury, New York 11797, Attention: General Counsel, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to any courier guaranteeing overnight
delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Depositary, at 150
Royall Street, Mail Stop 45-02-62, Canton, MA 02021, Attention: Margaret Dunn.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
<PAGE>
17
(e) ENFORCEMENT BY INITIAL PURCHASERS. The Initial Purchasers shall
have the right to directly enforce the agreements made hereunder between the
Company, on the one hand, and the Holders, on the other hand, to the extent they
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder, provided, however, that such right of direct
enforcement shall terminate upon consummation of an Exchange Offer.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(i) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CABLEVISION SYSTEMS CORPORATION
By:
-----------------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
MORGAN STANLEY & CO. INCORPORATED
c/o Bear, Stearns & Co. Inc.
By: Bear, Stearns & Co. Inc.
By
----------------------------
Name:
Title:
<PAGE>
AMENDMENT NO. 2 AND WAIVER
Dated as of September 28, 1995
to
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 14, 1994
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the
"Company"), the Restricted Subsidiaries (as defined in the Credit Agreement
referred to below), the banks parties to such Credit Agreement (the "Banks"),
BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA,
THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS, N.A., as Co-
Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as Agent (the
"Agent"), agree as follows:
ARTICLE I
AMENDMENTS
Section 1.1. CREDIT AGREEMENT. Reference is made to the Fourth
Amended and Restated Credit Agreement dated as of October 14, 1994, as amended
by Amendment No. 1 thereto, dated as of March 6, 1995, among the Company, the
Restricted Subsidiaries, the Banks, the Co-Agents and the Agent (the "Credit
Agreement"). Terms used in this Amendment No. 2 and Waiver (this "Amendment and
Waiver") that are not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement. The Credit Agreement as amended by this
Amendment and Waiver (the "Amended Credit Agreement") is and shall continue to
be in full force and effect and is hereby in all respects ratified and
confirmed.
Section 1.2. CERTAIN AMENDMENTS. Upon and after the Amendment and
Waiver Effective Date (as defined in Section 1.4 hereof):
(a) Section 1.01 of the Credit Agreement shall be amended by:
(i) restating the definition of "Free Cash Flow Coverage Ratio"
therein to read as follows:
<PAGE>
"FREE CASH FLOW COVERAGE RATIO" shall mean, as of the last day of
any four consecutive Quarter period (the "Test Period"), the ratio of
(a) the Operating Cash Flow for such Test Period
PLUS CNJ Availability as of the first day of such Test Period
PLUS (x) the lesser of
(i) (A) the Total Available Revolving Credit Commitment as of
the first day of such Test Period (less the aggregate principal amount
of the Revolving Credit Loans and Letter of Credit Liabilities then
outstanding on such day) PLUS (B) Net Cash Proceeds from New Preferred
Stock, New Common Stock and New Subordinated Debt issued during such
Test Period, in each case to the extent such Net Cash Proceeds do not
constitute Refunding Proceeds, MINUS (C) the amount of any reduction
in the Total Commitment pursuant to Section 2.04(c)(1)(A) or (C)
during such Test Period MINUS (D) the amount of any increase in the
limit on unspecified Investments during such Test Period as specified
in a notice to the Agent provided for in clauses (A) and (B) of the
first proviso contained in Section 9.16(ix), and
(ii) for each Test Period beginning on or before December 31,
1995, $150,000,000, (B) for each Test Period beginning thereafter and
on or before December 31, 1996, $140,000,000, (C) for each Test Period
beginning thereafter and on or before December 31, 1997, $130,000,000,
and (D) for each Test Period beginning on or after January 1, 1998,
120,000,000,
MINUS (y) the aggregate amount of capital expenditures made and taxes
paid in cash during such Test Period, to
(b) Total Debt Expense for such Test Period.
(ii) inserting therein a new definition of "New Common Stock" as
follows:
"NEW COMMON STOCK" shall mean any common stock of any class of
the Company issued after September 1, 1995.
(iii) inserting the words "(other than with common stock or other
New Preferred Stock of the Company)" after the words "in whole or in part" in
clause (i) of the definition of "New Preferred Stock" therein.
(iv) restating the definition of "Refunding Proceeds" therein to
read as follows:
-2-
<PAGE>
"REFUNDING PROCEEDS" shall mean, as specified in a notice from
the Company to the Agent, with respect to any New Subordinated Debt, any
New Preferred Stock or any New Common Stock of the Company, (i) an amount
equal to up to 100% of the Net Cash Proceeds thereof, but only to the
extent that the Company purchases, acquires, redeems, retires, pays or
prepays Subordinated Debt, any obligations of the Company under any
Guarantee permitted under Section 9.12(x) hereof or preferred stock of the
Company (other than, in the case of Net Cash Proceeds of New Subordinated
Debt, New Preferred Stock as to which notice had been given pursuant to
Section 9.16(ix)(A) hereof) with such Net Cash Proceeds immediately upon
receipt thereof or (ii) the proceeds of Revolving Credit Loans reborrowed
by the Company in an aggregate amount not to exceed other Revolving Credit
Loans that were prepaid with the Net Cash Proceeds of such New Subordinated
Debt, New Preferred Stock or New Common Stock (less the amount of any such
Net Cash Proceeds constituting Refunding Proceeds by reason of clause (i)
above), but, in each case, only to the extent that the Company purchases,
acquires, redeems, retires, pays or prepays Subordinated Debt, any
obligations of the Company under any Guarantee permitted under Section
9.12(x) hereof or preferred stock of the Company (other than, in the case
of any Revolving Credit Loans that were repaid with Net Cash Proceeds of
New Subordinated Debt, New Preferred Stock as to which notice had been
given pursuant to Section 9.16(ix)(A) hereof) with such reborrowed amounts
at any time within the period ending (A) if such reborrowed amounts were
prepaid with Net Cash Proceeds of New Subordinated Debt, 75 days after the
date of the incurrence, issuance or sale of such New Subordinated Debt and
(B) if such reborrowed amounts were prepaid with Net Cash Proceeds of New
Preferred Stock or New Common Stock of the Company, one year after the
incurrence, issuance or sale of such New Preferred Stock or New Common
Stock.
(v) inserting the words "(other than to the extent any such
dividends and distributions are paid in New Common Stock or New Preferred
Stock)" after the words "during such period" in clause (i) of the definition of
"Total Fixed Charges" therein.
(b) Section 9.16(ix) of the Credit Agreement shall be amended by (i)
deleting the words "six months" in clause (A) thereof and inserting in lieu
thereof the words "one year", (ii) inserting the words "not constituting
Refunding Proceeds" after the word "issuance" the first time such word appears
in the thirteenth line thereof, and (iii) deleting the words "(B) upon the
issuance of common stock by 66.60% of the Net Cash Proceeds of such issuance;"
in the thirteenth and fourteenth lines thereof and inserting in lieu thereof the
following:
(B) upon notice from the Company to the Agent given within one year after
the date of issuance of any New Common Stock
-3-
<PAGE>
(which notice may be given only once in respect of each such issuance), by
the amount specified in the such notice (which amount shall not be in
excess of 66.60% of the Net Cash Proceeds of such issuance not constituting
Refunding Proceeds);
(c) Section 9.17 of the Credit Agreement shall be amended by (i)
deleting the word "permitted" in clause (i)(A) thereof and inserting in lieu
thereof the words "not prohibited", (ii) inserting the words "or any preferred
stock issued to holders of Series E Redeemable Exchangeable Convertible
Preferred Stock in exchange therefor, provided that the interest on such
preferred stock will not exceed the interest currently due on the Series E
Redeemable Exchangeable Convertible Preferred Stock" after the words "Series E
Redeemable Exchangeable Convertible Preferred Stock" in clause (i)(B) thereof,
(iii) deleting the word "and" at the end of clause (iii) thereof and inserting a
comma in lieu thereof and (iv) inserting the words "and (v) make any Restricted
Payment to the extent payable in New Common Stock or New Preferred Stock of the
Company" before the period at the end thereof.
Section 1.3. WAIVER. Upon and after the Amendment and Waiver
Effective Date as defined in Section 1.4, the Banks shall waive compliance with:
(a) the limitation set forth in the second parenthetical in
clause (A) of the first proviso contained in Section 9.16(ix) of the Credit
Agreement solely to the extent necessary to permit the Company to increase
the amount of Investments permitted by Section 9.16(ix) by 100% of the Net
Cash Proceeds received from the issuance by the Company of its New
Preferred Stock to General Electric Capital Corporation in an aggregate
amount not exceeding $500,000,000 (the "Preferred Issuance") upon notice to
the Agent, which notice is hereby deemed to have been given; and
(b) the commitment reduction provision of Section 2.04(c)(i)(C)
solely with respect to the Preferred Issuance.
Section 1.4. EFFECTIVE DATE. This Amendment and Waiver shall be
effective on the first date (the "Amendment and Waiver Effective Date") when the
following conditions shall have been satisfied:
(a) This Amendment and Waiver shall have been duly executed and
delivered by each of the Company, the Restricted Subsidiaries that are parties
to the Credit Agreement, the Agents and the Majority Banks.
(b) The Company and the Restricted Subsidiaries shall have provided
the Agent (with copies to be provided for each Bank) with:
-4-
<PAGE>
(i) certified copies of the name and signature of each of the
persons authorized to sign this Amendment and Waiver on behalf of the
Company and such of the Restricted Subsidiaries as are parties hereto;
(ii) an opinion of Robert Lemle, Esq., General Counsel to the Company
and the Restricted Subsidiaries, covering such matters as any Bank or
special New York counsel to the Agent may reasonably request; and
(iii) an opinion of Sullivan & Cromwell, special New York Counsel to
the Company and the Restricted Subsidiaries, covering such matters as any
Bank or special New York counsel to the Agent may reasonably request.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and
the Restricted Subsidiaries represents and warrants as follows:
(a) POWER; BINDING AGREEMENTS. Each of the Company and the
Restricted Subsidiaries has full power, authority and legal right to make and
perform such of this Amendment and Waiver and the Amended Credit Agreement to
which it is a party. This Amendment and Waiver and the Amended Credit Agreement
constitute the legal, valid and binding obligations of each of the Company and
the Restricted Subsidiaries as are parties thereto, enforceable in accordance
with their terms (except for limitations on enforceability under bankruptcy,
reorganization, insolvency and other similar laws affecting creditors' rights
generally and limitations on the availability of the remedy of specific
performance imposed by the application of general equitable principles).
(b) AUTHORITY; NO CONFLICT. The making and performance of this
Amendment and Waiver and the Amended Credit Agreement by each of the Company and
the Restricted Subsidiaries which is a party thereto have been duly authorized
by all necessary action and do not and will not (i) violate any provision of any
laws, orders, rules or regulations presently in effect (other than violations
that, singly or in the aggregate, have not had and are not likely to have a
Materially Adverse Effect), or any provision of any of the Company's or the
Restricted Subsidiaries' respective partnership agreements, charters or by-laws
presently in effect; (ii) result in the breach of, or constitute a default or
require any consent under, any existing indenture or other agreement or
instrument to which the Company or any of the Restricted Subsidiaries is a party
or by which their respective properties may be bound or affected (other than any
breach, default or required consent that, singly or in the aggregate, have not
had and are not likely to have a
-5-
<PAGE>
Materially Adverse Effect); or (iii) result in, or require, the creation or
imposition of any Lien (other than those contemplated by the Security
Documents) upon or with respect to any of the properties or assets now owned
or hereafter acquired by the Company or any of the Restricted Subsidiaries.
(c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of,
or filing or registration with, any federal, state or local commission or other
regulatory authority is required in connection with the execution, delivery and
performance by the Company and the Restricted Subsidiaries of this Amendment and
Waiver and the Amended Credit Agreement.
Section 2.2. SURVIVAL. Each of the foregoing representations
and warranties shall be made at and as of the Amendment and Waiver Effective
Date and shall constitute a representation and warranty of the Company and the
Restricted Subsidiaries made under the Amended Credit Agreement and it shall be
an Event of Default if any such representation and warranty shall prove to have
been incorrect or misleading in any material respect when made. Each of the
representations and warranties made under the Amended Credit Agreement (and
including those representations and warranties made herein) shall survive and
not be waived by the execution and delivery of this Amendment and Waiver.
ARTICLE III
MISCELLANEOUS
Section 3.1. GOVERNING LAW. This Amendment and Waiver shall be
construed in accordance with and governed by the laws of the State of New York.
Section 3.2. COUNTERPARTS. This Amendment and Waiver may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such separate counterparts shall together constitute but one and the
same instrument.
Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse
the Agent for all reasonable fees and expenses, including attorneys' fees,
incurred in connection with the negotiation, preparation, execution and delivery
of this Amendment and Waiver.
[THE NEXT PAGE IS A SIGNATURE PAGE]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed by their duly authorized officers in counterparts all
as of the day and year first above written.
CABLEVISION SYSTEMS CORPORATION, for itself
and as a General Partner of Cablevision
Finance Limited Partnership
By
--------------------------------
Title:
CABLEVISION AREA 9 CORPORATION
CABLEVISION FAIRFIELD CORPORATION
CABLEVISION FINANCE CORPORATION
CABLEVISION LIGHTPATH, INC.
CABLEVISION OF CLEVELAND GP, INC., for itself
and as a General Partner of Cablevision of
Cleveland Limited Partnership
CABLEVISION OF CLEVELAND LP, INC.
CABLEVISION OF CONNECTICUT CORPORATION
CABLEVISION OF MICHIGAN, INC.
CABLEVISION SYSTEMS DUTCHESS CORPORATION
CABLEVISION SYSTEMS EAST HAMPTON CORPORATION
CABLEVISION SYSTEMS GREAT NECK CORPORATION
CABLEVISION SYSTEMS HUNTINGTON CORPORATION
CABLEVISION SYSTEMS ISLIP CORPORATION
CABLEVISION SYSTEMS LONG ISLAND CORPORATION
CABLEVISION SYSTEMS SUFFOLK CORPORATION
CABLEVISION SYSTEMS WESTCHESTER CORPORATION
COMMUNICATIONS DEVELOPMENT CORPORATION
CSC ACQUISITION CORPORATION
CSC ACQUISITION - MA, INC.
CSC ACQUISITION - NY, INC.
By
--------------------------------
Title:
of each of the above-
named twenty corporations
CABLEVISION FINANCE LIMITED PARTNERSHIP
By Cablevision Systems Corporation,
as General Partner
CABLEVISION OF CLEVELAND LIMITED
PARTNERSHIP
By Cablevision of Cleveland GP, Inc.,
as General Partner
-7-
<PAGE>
THE TORONTO-DOMINION BANK,
Grand Cayman Islands
Branch, B.W.I.
By
--------------------------------
Title:
BANK OF MONTREAL,
Chicago Branch,
as Bank and Co-Agent
By
--------------------------------
Title:
THE BANK OF NEW YORK,
as Bank and Co-Agent
By
--------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Bank and Co-Agent
By
--------------------------------
Title:
THE CANADIAN IMPERIAL BANK
OF COMMERCE,
as Bank and Co-Agent
By
--------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.,
as Bank and Co-Agent
By
--------------------------------
Title:
-8-
<PAGE>
CREDIT LYONNAIS,
Cayman Islands Branch
By
--------------------------------
Title:
MELLON BANK, N.A.
By
--------------------------------
Title:
ROYAL BANK OF CANADA
By
--------------------------------
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By
--------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
--------------------------------
Title:
CHEMICAL BANK
By
--------------------------------
Title:
BANQUE PARIBAS
By
--------------------------------
Title:
-9-
<PAGE>
CITIBANK, N.A.
By
--------------------------------
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By
--------------------------------
Title:
SHAWMUT BANK CONNECTICUT, N.A.
By
--------------------------------
Title:
BARCLAYS BANK PLC
By
--------------------------------
Title:
THE DAIWA BANK, LIMITED
By
--------------------------------
Title:
CORESTATES BANK, N.A.
By
--------------------------------
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By
--------------------------------
Title:
-10-
<PAGE>
THE FUJI BANK, LIMITED,
New York Branch
By
--------------------------------
Title:
LTCB Trust Company
By
--------------------------------
Title:
NATWEST BANK, N.A.
(formerly NATIONAL WESTMINSTER BANK USA)
By
--------------------------------
Title:
PNC BANK, National Association
By
--------------------------------
Title:
SOCIETE GENERALE
By
--------------------------------
Title:
UNION BANK
By
--------------------------------
Title:
TORONTO DOMINION (TEXAS), INC.,
as Agent
By
--------------------------------
Title:
-11-
<PAGE>
AMENDMENT NO. 3 AND WAIVER
Dated as of November 7, 1995
to
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 14, 1994
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the
"Company"), the Restricted Subsidiaries (as defined in the Credit Agreement
referred to below), the banks that are parties to such Credit Agreement (the
"Banks"), BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF
NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS,
N.A., as Co-Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as
Agent (the "Agent"), agree as follows:
ARTICLE I
AMENDMENTS AND WAIVER
Section 1.1. CREDIT AGREEMENT. Reference is made to (i) the Fourth
Amended and Restated Credit Agreement dated as of October 14, 1994, as amended
by Amendment No. 1 thereto, dated as of March 6, 1995, and as further amended by
Amendment No. 2 and Waiver thereto, dated as of September 28, 1995, among the
Company, the Restricted Subsidiaries, the Banks, the Co-Agents and the Agent (as
so amended, the "Credit Agreement") and (ii) the CSC/CNYC Adjustment Agreement
dated October 14, 1994 (the "Adjustment Agreement"), between the Company and the
Agent. Terms used in this Amendment No. 3 and Waiver (this "Amendment") that
are not otherwise defined herein shall have the meanings given to such terms in
the Credit Agreement. The Credit Agreement as amended by this Amendment (the
"Amended Credit Agreement") is and shall continue to be in full force and effect
and is hereby in all respects ratified and confirmed.
Section 1.2. AMENDMENTS. Upon and after the Effective Date (as
defined in Section 1.6 hereof) (except as provided in Section 1.6(b)):
(a) Section 1.01 of the Credit Agreement shall be amended by:
(i) restating the definition of "FREE CASH FLOW
<PAGE>
COVERAGE RATIO" therein to read as follows:
"FREE CASH FLOW COVERAGE RATIO" shall mean, as of the last day of
any four consecutive Quarter period (the "Test Period"), the ratio of
(a) the Operating Cash Flow for such Test Period
PLUS (x) CNJ Availability as of the first day of such Test Period
PLUS (y) the lesser of
(i) (A) the Total Available Revolving Credit Commitment as of
the first day of such Test Period (less the aggregate principal amount
of the Revolving Credit Loans and Letter of Credit Liabilities then
outstanding on such day) PLUS (B) Net Cash Proceeds from New Preferred
Stock, New Common Stock and New Subordinated Debt issued during such
Test Period, in each case to the extent such Net Cash Proceeds do not
constitute Refunding Proceeds, MINUS (C) the amount of any reduction
in the Total Commitment pursuant to Section 2.04(c)(1)(A) or (C)
during such Test Period MINUS (D) the amount of any increase in the
limit on unspecified Investments during such Test Period as specified
in a notice to the Agent provided for in clauses (A) and (B) of the
first proviso contained in Section 9.16(ix), and
(ii) $150,000,000
MINUS (z) the aggregate amount of capital expenditures made and taxes
paid in cash during such Test Period, to
(b) Total Debt Expense for such Test Period.
(ii) inserting therein the following definition in the proper
alphabetical order:
"UNRESTRICTED NEW SUBORDINATED DEBT" shall mean any New
Subordinated Debt incurred, issued or sold by the Company after November 1,
1995, PROVIDED that such New Subordinated Debt (i) shall be unsecured, (ii)
shall have a commercially reasonable interest rate (which rate shall be
deemed commercially reasonable if such New Subordinated Debt is sold by a
member of the National Association of Securities Dealers, Inc. in an
underwritten offering), (iii) shall have terms no more restrictive or
burdensome than the most restrictive and burdensome applicable terms of any
other New Subordinated Debt (which condition shall be deemed satisfied if
such terms are no more restrictive than the terms contained in the
Company's Indenture dated as of
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<PAGE>
April 1, 1993 between the Company and The Bank of New York, as Trustee, as
in effect on November 1, 1995, relating to the Company's 9 7/8% Senior
Subordinated Debentures due 2023), and (iv) shall be neither (A)
redeemable, payable or required to be purchased or otherwise retired or
extinguished in whole or in part at a fixed or determinable date (whether
by operation of a sinking fund or otherwise) at the option of any Person
other than the Company or upon the occurrence of a condition not solely
within the control of the Company (such as a redemption required to be made
out of future earnings) nor (B) convertible into any other Indebtedness or
capital stock of the Company that may be so retired, extinguished or
converted, in the case of clause (A) or (B) above, at any time before the
date that is two years after the Commitment Termination Date as in effect
at the time of the incurrence, issuance or sale of such New Subordinated
Debt.
(b) Section 2.04(a)(i) of the Credit Agreement shall be amended by
deleting the columns set forth therein under the headings "(x)" and "(y)" and
entitled "QUARTERLY DATE FALLING ON OR NEAREST TO" and "TERM REDUCTION AMOUNT"
respectively and inserting in lieu thereof the following:
Quarterly Date Term
Falling on or Nearest to Reduction Amount
------------------------ ----------------
June 30, 1997 $12,000,000
September 30, 1997 $12,000,000
December 31, 1997 $12,000,000
March 31, 1998 $15,000,000
June 30, 1998 $15,000,000
September 30, 1998 $15,000,000
December 31, 1998 $15,000,000
March 31, 1999 $20,000,000
June 30, 1999 $20,000,000
September 30, 1999 $20,000,000
December 31, 1999 $20,000,000
March 31, 2000 $20,000,000
June 30, 2000 $20,000,000
September 30, 2000 $20,000,000
December 31, 2000 $20,000,000
March 31, 2001 $20,000,000
June 30, 2001 $20,000,000
September 30, 2001 $20,000,000
December 31, 2001 $20,000,000
March 31, 2002 $10,000,000
June 30, 2002 $10,000,000
September 30, 2002 $10,000,000
December 31, 2002 $10,000,000
March 31, 2003 $12,000,000
June 30, 2003 $12,000,000
-3-
<PAGE>
(c) Section 2.04(a)(ii) of the Credit Agreement shall be amended by
deleting the columns set forth therein under the headings "(x)" and "(y)" and
entitled "QUARTERLY DATE FALLING ON OR NEAREST TO" and "REVOLVING CREDIT
REDUCTION AMOUNT" respectively and inserting in lieu thereof the following:
Quarterly Date Revolving Credit
Falling on or Nearest to Reduction Amount
------------------------ ----------------
December 31, 1996 $10,500,000
March 31, 1997 $6,500,000
June 30, 1997 $17,000,000
September 30, 1997 $17,000,000
December 31, 1997 $17,000,000
March 31, 1998 $26,125,000
June 30, 1998 $26,125,000
September 30, 1998 $26,125,000
December 31, 1998 $26,125,000
March 31, 1999 $36,875,000
June 30, 1999 $36,875,000
September 30, 1999 $36,875,000
December 31, 1999 $36,875,000
March 31, 2000 $43,500,000
June 30, 2000 $43,500,000
September 30, 2000 $43,500,000
December 31, 2000 $43,500,000
March 31, 2001 $51,250,000
June 30, 2001 $51,250,000
September 30, 2001 $51,250,000
December 31, 2001 $51,250,000
March 31, 2002 $50,250,000
June 30, 2002 $50,250,000
September 30, 2002 $50,250,000
December 31, 2002 $50,250,000
March 31, 2003 $62,500,000
June 30, 2003 $62,500,000
(d) Section 2.04(c)(i)(A) shall be amended by (i) inserting the words
"(other than Unrestricted New Subordinated Debt)" after the words "New
Subordinated Debt" the first time such words are used therein, and (ii) deleting
the second proviso therein in its entirety.
(e) Section 3.01(a) shall be amended by (i) deleting the word "Loans"
the second time such word appears in the third line thereof and inserting in
lieu thereof the words "Base Rate Loans on any Business Day if prior notice is
given to the Agent before 11:00 a.m. New York time on such day (and if such
notice is received by the Agent after 11:00 a.m. New York time, on the next
succeeding Business Day), and Eurodollar Loans", and (ii) deleting the
parenthetical beginning in the fourth line thereof and inserting in lieu thereof
the parenthetical "(and the Agent shall promptly notify the Banks in each case
of such notice)".
-4-
<PAGE>
(f) Section 3.01(b)(iii) shall be amended by (i) deleting the words
"to the extent that the aggregate principal amount of such New Subordinated
Debt, together with all other New Subordinated Debt incurred, issued or sold on
or after the Effective Date, does not exceed $200,000,000 or" in the proviso in
the first sentence thereof, and (ii) inserting the words "(other than
Unrestricted New Subordinated Debt)" after the words "New Subordinated Debt" the
first time such words are used in the second sentence thereof.
Section 1.3. ARSENAL MSUB 2 INC. (V CABLE LONG ISLAND). The parties
hereto agree that the Company may designate each of Arsenal MSub 2 Inc.
("Arsenal") and its Subsidiaries a "Restricted Subsidiary" for all purposes
under the Amended Credit Agreement by giving a notice captioned "Designation of
Arsenal as Restricted Subsidiary" to the Agent, PROVIDED that, concurrently
with the giving of such notice, the Company shall (i) comply with the
requirements of clauses (i), (ii) and (iii) of Section 9.08(a) of the Amended
Credit Agreement as such clauses would be applied to Arsenal and its
Subsidiaries as if each were a "New Subsidiary", and (ii) certify to the Agent
that, as of the date of such notice, (A) outstanding Consolidated Indebtedness
of Arsenal and its Subsidiaries before giving effect to such new designation
does not exceed $250,000,000 and (B) no Default has occurred and is continuing
under the Amended Credit Agreement both before and after giving effect to such
new designation. Upon the giving of such notice and compliance with such
requirements, all references to "Restricted Subsidiaries" and "Unrestricted
Subsidiaries" in the Amended Credit Agreement and Schedules 1.01(v) and 1.01(vi)
thereto shall be deemed amended to reflect such new designation.
Section 1.4. WAIVER. Upon and after the Effective Date, the Agent and
the Banks shall waive compliance with the requirement set forth in clause
(A)(i)(y) of the Adjustment Agreement, PROVIDED, THAT, notwithstanding such
waiver, upon the prepayment of any CNYC Loan, the Company shall comply with the
requirements of clause (A)(iii) of the Adjustment Agreement as if the Company
had failed to comply with such clause (A)(i)(y).
Section 1.5. NOTICE. In accordance with the requirements of the
definition of "New Subordinated Debt" in Section 1.01 of the Credit Agreement,
notice is hereby deemed given by the Company to the Agent of the proposed
issuance by the Company on or about November 7, 1995 of its 9 1/4% Senior
Subordinated Notes in an aggregate principal amount of $300,000,000 and with a
final maturity of November 1, 2005.
Section 1.6. EFFECTIVE DATE. (a) This Amendment shall become
effective (except as provided in clause (b) below) as of the date first written
above (the "Effective Date") on the first date when the following conditions
shall have been satisfied:
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<PAGE>
(i) This Amendment shall have been duly executed and delivered by
each of the Company, the Restricted Subsidiaries that are parties to the Credit
Agreement, the Agent and the Majority Banks.
(ii) The Company and the Restricted Subsidiaries shall have provided
the Agent (with copies to be provided for each Bank) with:
(A) certified copies of the name and signature of each of the
persons authorized to sign this Amendment on behalf of the Company and such
of the Restricted Subsidiaries as are parties hereto;
(B) an officer's certificate of the Company stating that no
Default has occurred and is continuing under the Credit Agreement both
before and after giving effect hereto and the amendments to be effected
hereby;
(C) an opinion of Robert Lemle, Esq., General Counsel to the
Company and the Restricted Subsidiaries, covering such matters as any Bank
or special New York counsel to the Agent may reasonably request; and
(D) an opinion of Sullivan & Cromwell, special New York Counsel
to the Company and the Restricted Subsidiaries, covering such matters as
any Bank or special New York counsel to the Agent may reasonably request.
(b) Notwithstanding the foregoing, the amendments described in
Sections 1.2(b) and (c) hereof shall become effective as of the date first
written above on the first date when (i) this Amendment shall have been duly
executed and delivered by the Company, each of the Restricted Subsidiaries that
are parties to the Credit Agreement, the Agent and each Bank and (ii) the
requirements of clause (a)(ii) above shall have been satisfied.
(c) On the date of the effectiveness of the amendments described in
Sections 1.2(b) and (c) hereof, (i) the Revolving Credit Commitment of each Bank
shall be increased, and the Term Commitment of each Bank shall be decreased, by
an amount equal to (A) $350,000,000 multiplied by (B) the fraction obtained by
dividing such Bank's Term Commitment by the Total Term Commitment (both measured
as of the date immediately preceding the Effective Date); and (ii) a portion of
the outstanding Term Loans specified in writing by the Company equal to
$350,000,000 shall be deemed Revolving Credit Loans for all purposes of the
Amended Credit Agreement, and the Banks may mark their respective Notes
accordingly. After giving effect to the adjustments described in the preceding
sentence, (x) the Total Term Commitment and the aggregate amount of Term Loans
outstanding shall both be $400,000,000 and (y) the Total Revolving Credit
Commitment shall be $1,025,000,000. Promptly after the Effective Date, the
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<PAGE>
Company shall issue new Revolving Credit Notes to the Banks reflecting the
foregoing adjustments in exchange for the Revolving Credit Notes outstanding on
the date hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and
the Restricted Subsidiaries that are parties to the Credit Agreement represents
and warrants as follows:
(a) POWER; BINDING AGREEMENTS. Each of the Company and such
Restricted Subsidiaries has full power, authority and legal right to make and
perform this Amendment and the Amended Credit Agreement. This Amendment and the
Amended Credit Agreement constitute the legal, valid and binding obligations of
each of the Company and such Restricted Subsidiaries, enforceable in accordance
with their terms (except for limitations on enforceability under bankruptcy,
reorganization, insolvency and other similar laws affecting creditors' rights
generally and limitations on the availability of the remedy of specific
performance imposed by the application of general equitable principles).
(b) AUTHORITY; NO CONFLICT. The making and performance of this
Amendment and the Amended Credit Agreement by each of the Company and such
Restricted Subsidiaries have been duly authorized by all necessary action and do
not and will not (i) violate any provision of any laws, orders, rules or
regulations presently in effect (other than violations that, singly or in the
aggregate, have not had and are not likely to have a Materially Adverse Effect),
or any provision of any of the Company's or the Restricted Subsidiaries'
respective partnership agreements, charters or by-laws presently in effect; (ii)
result in the breach of, or constitute a default or require any consent under,
any existing indenture or other agreement or instrument to which the Company or
any of the Restricted Subsidiaries is a party or by which their respective
properties may be bound or affected (other than any breach, default or required
consent that, singly or in the aggregate, have not had and are not likely to
have a Materially Adverse Effect); or (iii) result in, or require, the creation
or imposition of any Lien (other than those contemplated by the Security
Documents) upon or with respect to any of the properties or assets now owned or
hereafter acquired by the Company or any of the Restricted Subsidiaries.
(c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of,
or filing or registration with, any federal, state or local commission or other
regulatory authority is required in connection with the execution, delivery and
performance by the Company and such Restricted Subsidiaries of this Amendment
and the Amended Credit Agreement.
-7-
<PAGE>
Section 2.2. SURVIVAL. Each of the foregoing representations and
warranties shall be made at and as of the Effective Date and shall constitute a
representation and warranty of the Company and the Restricted Subsidiaries made
under the Amended Credit Agreement and it shall be an Event of Default if any
such representation and warranty shall prove to have been incorrect or
misleading in any material respect when made. Each of the representations and
warranties made under the Amended Credit Agreement (and including those
representations and warranties made herein) shall survive and not be waived by
the execution and delivery of this Amendment.
ARTICLE III
MISCELLANEOUS
Section 3.1. GOVERNING LAW. This Amendment shall be construed in
accordance with and governed by the laws of the State of New York.
Section 3.2. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse
the Agent for all reasonable fees and expenses, including attorneys' fees,
incurred in connection with the negotiation, preparation, execution and delivery
of this Amendment.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers in counterparts all as of the
day and year first above written.
CABLEVISION SYSTEMS CORPORATION, for itself
and as a General Partner of Cablevision
Finance Limited Partnership
By
---------------------------------
Title:
CABLEVISION AREA 9 CORPORATION
CABLEVISION FAIRFIELD CORPORATION
CABLEVISION FINANCE CORPORATION
CABLEVISION LIGHTPATH, INC.
CABLEVISION OF CLEVELAND GP, INC., for itself
and as a General Partner of Cablevision of
Cleveland Limited Partnership
CABLEVISION OF CLEVELAND LP, INC.
CABLEVISION OF CONNECTICUT CORPORATION
CABLEVISION OF MICHIGAN, INC.
CABLEVISION SYSTEMS DUTCHESS CORPORATION
CABLEVISION SYSTEMS EAST HAMPTON CORPORATION
CABLEVISION SYSTEMS GREAT NECK CORPORATION
CABLEVISION SYSTEMS HUNTINGTON CORPORATION
CABLEVISION SYSTEMS ISLIP CORPORATION
CABLEVISION SYSTEMS LONG ISLAND CORPORATION
CABLEVISION SYSTEMS SUFFOLK CORPORATION
CABLEVISION SYSTEMS WESTCHESTER CORPORATION
COMMUNICATIONS DEVELOPMENT CORPORATION
CSC ACQUISITION CORPORATION
CSC ACQUISITION - MA, INC.
CSC ACQUISITION - NY, INC.
By
---------------------------------
Title:
of each of the above-
named twenty corporations
CABLEVISION FINANCE LIMITED PARTNERSHIP
By Cablevision Systems Corporation,
as General Partner
CABLEVISION OF CLEVELAND LIMITED
PARTNERSHIP
By Cablevision of Cleveland GP, Inc.,
as General Partner
<PAGE>
THE TORONTO-DOMINION BANK,
Grand Cayman Islands
Branch, B.W.I.
By
---------------------------------
Title:
BANK OF MONTREAL,
Chicago Branch,
as Bank and Co-Agent
By
---------------------------------
Title:
THE BANK OF NEW YORK,
as Bank and Co-Agent
By
---------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Bank and Co-Agent
By
---------------------------------
Title:
THE CANADIAN IMPERIAL BANK
OF COMMERCE,
as Bank and Co-Agent
By
---------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.,
as Bank and Co-Agent
By
---------------------------------
Title:
<PAGE>
CREDIT LYONNAIS,
Cayman Islands Branch
By
---------------------------------
Title:
MELLON BANK, N.A.
By
---------------------------------
Title:
ROYAL BANK OF CANADA
By
---------------------------------
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By
---------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
---------------------------------
Title:
CHEMICAL BANK
By
---------------------------------
Title:
BANQUE PARIBAS
By
---------------------------------
Title:
<PAGE>
CITIBANK, N.A.
By
---------------------------------
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By
---------------------------------
Title:
SHAWMUT BANK CONNECTICUT, N.A.
By
---------------------------------
Title:
BARCLAYS BANK PLC
By
---------------------------------
Title:
THE DAIWA BANK, LIMITED
By
---------------------------------
Title:
CORESTATES BANK, N.A.
By
---------------------------------
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By
---------------------------------
Title:
<PAGE>
THE FUJI BANK, LIMITED,
New York Branch
By
---------------------------------
Title:
LTCB Trust Company
By
---------------------------------
Title:
NATWEST BANK, N.A.
(formerly NATIONAL WESTMINSTER BANK USA)
By
---------------------------------
Title:
PNC BANK, National Association
By
---------------------------------
Title:
SOCIETE GENERALE
By
---------------------------------
Title:
UNION BANK
By
---------------------------------
Title:
TORONTO DOMINION (TEXAS), INC.,
as Agent
By
---------------------------------
Title:
<PAGE>
AMENDMENT NO. 4, WAIVER AND CONSENT
Dated as of March 4, 1996
to
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 14, 1994
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the
"Company"), the Restricted Subsidiaries (as defined in the Credit Agreement
referred to below), the banks that are parties to such Credit Agreement (the
"Banks"), BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF
NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS,
N.A., as Co-Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as
Agent (the "Agent"), agree as follows:
ARTICLE I
AMENDMENTS AND WAIVER
Section 1.1. CREDIT AGREEMENT. Reference is made to the Fourth
Amended and Restated Credit Agreement dated as of October 14, 1994, as amended
by Amendment No. 1 thereto, dated as of March 6, 1995, as further amended by
Amendment No. 2 and Waiver ("Amendment No. 2") thereto, dated as of September
28, 1995, and as further amended by Amendment No. 3 and Waiver thereto, dated as
of November 7, 1995, among the Company, the Restricted Subsidiaries, the Banks,
the Co-Agents and the Agent (as so amended, the "Credit Agreement"). Terms used
in this Amendment No. 4, Waiver and Consent (this "Amendment") that are not
otherwise defined herein shall have the meanings given to such terms in the
Credit Agreement. The Credit Agreement as amended by this Amendment (the
"Amended Credit Agreement") is and shall continue to be in full force and effect
and is hereby in all respects ratified and confirmed.
Section 1.2. AMENDMENTS. Upon and after the Effective Date (as
defined in Section 1.5 hereof):
(a) Section 2.04(a) of the Credit Agreement shall be deleted in its
entirety and restated as follows:
"(a) SCHEDULED REDUCTIONS. (i) SCHEDULED REDUCTIONS TO TOTAL
TERM COMMITMENT. Subject to the
<PAGE>
adjustments described in Section 2.04(d)(i) hereof, the Total Term
Commitment shall be automatically reduced on each Quarterly Date falling on
or nearest to the date specified in column (x) below (each such Quarterly
Date, a "Scheduled Term Reduction Date") by the Dollar amount specified in
column (y) below opposite such date (the "Term Reduction Amount"):
(x) (y)
Quarterly Date Term
Falling on or Nearest to Reduction Amount
------------------------ ----------------
June 30, 1997 $7,500,000
September 30, 1997 $7,500,000
December 31, 1997 $7,500,000
March 31, 1998 $9,375,000
June 30, 1998 $9,375,000
September 30, 1998 $9,375,000
December 31, 1998 $9,375,000
March 31, 1999 $12,500,000
June 30, 1999 $12,500,000
September 30, 1999 $12,500,000
December 31, 1999 $12,500,000
March 31, 2000 $12,500,000
June 30, 2000 $12,500,000
September 30, 2000 $12,500,000
December 31, 2000 $12,500,000
March 31, 2001 $12,500,000
June 30, 2001 $12,500,000
September 30, 2001 $12,500,000
December 31, 2001 $12,500,000
March 31, 2002 $6,250,000
June 30, 2002 $6,250,000
September 30, 2002 $6,250,000
December 31, 2002 $6,250,000
March 31, 2003 $7,500,000
June 30, 2003 $7,500,000
The Total Term Commitment shall be reduced to zero on the Commitment
Termination Date
(ii) SCHEDULED REDUCTIONS TO TOTAL REVOLVING CREDIT COMMITMENT.
Subject to the adjustments described in Section 2.04(d)(ii) hereof, the
Total Revolving Credit Commitment shall be automatically reduced on each
Quarterly Date falling on or nearest to the date specified in column (x)
below (each such Quarterly Date, a "Scheduled Revolving Credit Reduction
Date") by the Dollar amount specified in
-2-
<PAGE>
column (y) below opposite such date (the "Revolving Credit Reduction
Amount"):
(x) (y)
Quarterly Date Revolving Credit
Falling on or Nearest to Reduction Amount
------------------------ ----------------
December 31, 1996 $10,500,000
March 31, 1997 $6,500,000
June 30, 1997 $21,500,000
September 30, 1997 $21,500,000
December 31, 1997 $21,500,000
March 31, 1998 $31,750,000
June 30, 1998 $31,750,000
September 30, 1998 $31,750,000
December 31, 1998 $31,750,000
March 31, 1999 $44,375,000
June 30, 1999 $44,375,000
September 30, 1999 $44,375,000
December 31, 1999 $44,375,000
March 31, 2000 $51,000,000
June 30, 2000 $51,000,000
September 30, 2000 $51,000,000
December 31, 2000 $51,000,000
March 31, 2001 $58,750,000
June 30, 2001 $58,750,000
September 30, 2001 $58,750,000
December 31, 2001 $58,750,000
March 31, 2002 $54,000,000
June 30, 2002 $54,000,000
September 30, 2002 $54,000,000
December 31, 2002 $54,000,000
March 31, 2003 $67,000,000
June 30, 2003 $67,000,000
The Total Revolving Credit Commitment shall be reduced to zero on the
Commitment Termination Date."
(b) Exhibit A(2) to the Credit Agreement shall be deleted in its
entirety and replaced with Exhibit A(2) hereto.
Section 1.3. WAIVER. Upon and after the Effective Date (as defined
in Section 1.5 hereof):
(a) the Banks shall waive compliance with the limitation set forth in
the second parenthetical in clause (A) of the first proviso contained in Section
9.16(ix) of the Credit Agreement solely to the extent necessary to permit the
Company to increase the amount of Investments permitted by Section 9.16(ix) by
an amount equal to up to $570,000,000 of the Net Cash Proceeds received from the
issuance by the Company on or about February 15, 1996 of its Depositary Shares
representing shares of its 11 1/8% Series L Redeemable Exchangeable Preferred
Stock (the
-3-
<PAGE>
"Preferred Issuance") upon notice to the Agent, which notice is hereby deemed to
have been given;
(b) the Banks shall waive compliance with the commitment reduction
provision of Section 2.04(c)(i)(C) solely with respect to the Preferred
Issuance; and
(c) the waiver set forth in Section 1.3 of Amendment No. 2 to the
Credit Agreement shall terminate and be of no effect.
Section 1.4. DISPOSITION OF CLEVELAND ENTITIES. The Banks hereby
agree that the disposition by the Company of the Cleveland Entities (as defined
below) to one or more Unrestricted Subsidiaries shall, to the extent such
disposition complies with the requirements of Section 9.15(a)(v), constitute an
Investment permitted under Section 9.16(vi) (and, accordingly, shall not
constitute an unspecified Investment under Section 9.16(ix)). The Banks further
agree to take all such action, and make all such filings, as reasonably
requested by the Company to release the Cleveland Entities from their respective
obligations as Restricted Subsidiaries, Guarantors and Securing Parties under
the Credit Agreement and the Security Agreement promptly after the disposition
referred to in the previous sentence is completed. The Company agrees that, on
the date of the disposition of the Cleveland Entities, it shall prepay Revolving
Credit Loans in an amount not less than $70,000,000. For purposes of this
Section 1.4, "Cleveland Entities" shall mean Cablevision of Cleveland, L.P.,
Cablevision of Cleveland, G.P., Inc. and Cablevision of Cleveland, L.P., Inc.
Section 1.5. EFFECTIVE DATE. (a) This Amendment shall become
effective as of the date first written above (the "Effective Date") on the first
date when the following conditions shall have been satisfied:
(i) This Amendment shall have been duly executed and delivered by the
Company, each of the Restricted Subsidiaries that are parties to the Credit
Agreement, the Agent and each Bank.
(ii) The Company and the Restricted Subsidiaries shall have provided
the Agent (with copies to be provided for each Bank) with:
(A) certified copies of the name and signature of each of the
persons authorized to sign this Amendment on behalf of the Company and such
of the Restricted Subsidiaries as are parties hereto;
(B) an officer's certificate of the Company stating that no
Default has occurred and is continuing under the Credit Agreement both
before and after giving effect hereto and the amendments to be effected
hereby;
-4-
<PAGE>
(C) an opinion of Robert Lemle, Esq., General Counsel to the
Company and the Restricted Subsidiaries, covering such matters as any Bank
or special New York counsel to the Agent may reasonably request; and
(D) an opinion of Sullivan & Cromwell, special New York Counsel
to the Company and the Restricted Subsidiaries, covering such matters as
any Bank or special New York counsel to the Agent may reasonably request.
(iii) The Company shall have prepaid Term Loans with a portion of the
proceeds of the Preferred Issuance in an aggregate amount equal to at least
$150,000,000.
(b) On the Effective Date (i) the Revolving Credit Commitment of each
Bank shall be increased by an amount equal to (A) $150,000,000 multiplied by (B)
the fraction obtained by dividing such Bank's Revolving Credit Commitment by the
Total Revolving Credit Commitment. After giving effect to this Amendment, (x)
the Total Term Commitment shall be $250,000,000 and (y) the Total Revolving
Credit Commitment shall be $1,175,000,000. Promptly after the Effective Date,
the Company shall issue to each Bank that so requests a new Revolving Credit
Note in the form attached hereto as Exhibit A(2) in exchange for the Revolving
Credit Note outstanding to such Bank on the date hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and
the Restricted Subsidiaries that are parties to the Credit Agreement represents
and warrants as follows:
(a) POWER; BINDING AGREEMENTS. Each of the Company and such
Restricted Subsidiaries has full power, authority and legal right to make and
perform this Amendment and the Amended Credit Agreement. This Amendment and the
Amended Credit Agreement constitute the legal, valid and binding obligations of
each of the Company and such Restricted Subsidiaries, enforceable in accordance
with their terms (except for limitations on enforceability under bankruptcy,
reorganization, insolvency and other similar laws affecting creditors' rights
generally and limitations on the availability of the remedy of specific
performance imposed by the application of general equitable principles).
(b) AUTHORITY; NO CONFLICT. The making and performance of this
Amendment and the Amended Credit Agreement by each of the Company and such
Restricted Subsidiaries have been duly authorized by all necessary action and do
not and will not (i) violate any provision of any laws, orders, rules or
-5-
<PAGE>
regulations presently in effect (other than violations that, singly or in the
aggregate, have not had and are not likely to have a Materially Adverse Effect),
or any provision of any of the Company's or the Restricted Subsidiaries'
respective partnership agreements, charters or by-laws presently in effect; (ii)
result in the breach of, or constitute a default or require any consent under,
any existing indenture or other agreement or instrument to which the Company or
any of the Restricted Subsidiaries is a party or by which their respective
properties may be bound or affected (other than any breach, default or required
consent that, singly or in the aggregate, have not had and are not likely to
have a Materially Adverse Effect); or (iii) result in, or require, the creation
or imposition of any Lien (other than those contemplated by the Security
Documents) upon or with respect to any of the properties or assets now owned or
hereafter acquired by the Company or any of the Restricted Subsidiaries.
(c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of,
or filing or registration with, any federal, state or local commission or other
regulatory authority is required in connection with the execution, delivery and
performance by the Company and such Restricted Subsidiaries of this Amendment
and the Amended Credit Agreement.
Section 2.2. SURVIVAL. Each of the foregoing representations and
warranties shall be made at and as of the Effective Date and shall constitute a
representation and warranty of the Company and the Restricted Subsidiaries made
under the Amended Credit Agreement and it shall be an Event of Default if any
such representation and warranty shall prove to have been incorrect or
misleading in any material respect when made. Each of the representations and
warranties made under the Amended Credit Agreement (and including those
representations and warranties made herein) shall survive and not be waived by
the execution and delivery of this Amendment.
ARTICLE III
MISCELLANEOUS
Section 3.1. GOVERNING LAW. This Amendment shall be construed in
accordance with and governed by the laws of the State of New York.
Section 3.2. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse
the Agent for all reasonable fees and expenses, including attorneys' fees,
incurred in connection with the
-6-
<PAGE>
negotiation, preparation, execution and delivery of this Amendment.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers in counterparts all as of the
day and year first above written.
CABLEVISION SYSTEMS CORPORATION, for itself
and as a General Partner of Cablevision
Finance Limited Partnership
By
--------------------------------
Title:
CABLEVISION AREA 9 CORPORATION
CABLEVISION FAIRFIELD CORPORATION
CABLEVISION FINANCE CORPORATION
CABLEVISION LIGHTPATH, INC.
CABLEVISION OF CLEVELAND GP, INC., for itself
and as a General Partner of Cablevision of
Cleveland Limited Partnership
CABLEVISION OF CLEVELAND LP, INC.
CABLEVISION OF CONNECTICUT CORPORATION
CABLEVISION OF MICHIGAN, INC.
CABLEVISION SYSTEMS DUTCHESS CORPORATION
CABLEVISION SYSTEMS EAST HAMPTON CORPORATION
CABLEVISION SYSTEMS GREAT NECK CORPORATION
CABLEVISION SYSTEMS HUNTINGTON CORPORATION
CABLEVISION SYSTEMS ISLIP CORPORATION
CABLEVISION SYSTEMS LONG ISLAND CORPORATION
CABLEVISION SYSTEMS SUFFOLK CORPORATION
CABLEVISION SYSTEMS WESTCHESTER CORPORATION
COMMUNICATIONS DEVELOPMENT CORPORATION
CSC ACQUISITION CORPORATION
CSC ACQUISITION - MA, INC.
CSC ACQUISITION - NY, INC.
CABLEVISION OF BOSTON, INC.
By
--------------------------------
Title:
of each of the above-
named twenty-one corporations
CABLEVISION FINANCE LIMITED PARTNERSHIP
By Cablevision Systems Corporation,
as General Partner
CABLEVISION OF CLEVELAND LIMITED
PARTNERSHIP
By Cablevision of Cleveland GP, Inc.,
as General Partner
<PAGE>
THE TORONTO-DOMINION BANK,
Grand Cayman Islands
Branch, B.W.I.
By
--------------------------------
Title:
BANK OF MONTREAL,
Chicago Branch,
as Bank and Co-Agent
By
--------------------------------
Title:
THE BANK OF NEW YORK,
as Bank and Co-Agent
By
--------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Bank and Co-Agent
By
--------------------------------
Title:
THE CANADIAN IMPERIAL BANK
OF COMMERCE,
as Bank and Co-Agent
By
--------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.,
as Bank and Co-Agent
By
--------------------------------
Title:
<PAGE>
CREDIT LYONNAIS,
Cayman Island Branch
By
--------------------------------
Title:
MELLON BANK, N.A.
By
--------------------------------
Title:
ROYAL BANK OF CANADA
By
--------------------------------
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By
--------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
--------------------------------
Title:
CHEMICAL BANK
By
--------------------------------
Title:
BANQUE PARIBAS
By
--------------------------------
Title:
<PAGE>
CITIBANK, N.A.
By
--------------------------------
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By
--------------------------------
Title:
FLEET NATIONAL BANK (formerly SHAWMUT BANK
CONNECTICUT, N.A.)
By
--------------------------------
Title:
BARCLAYS BANK PLC
By
--------------------------------
Title:
THE SUMITOMO BANK, LIMITED
By
--------------------------------
Title:
CORESTATES BANK, N.A.
By
--------------------------------
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By
--------------------------------
Title:
<PAGE>
THE FUJI BANK, LIMITED,
New York Branch
By
--------------------------------
Title:
LTCB TRUST COMPANY
By
--------------------------------
Title:
NATWEST BANK, N.A.
(formerly NATIONAL WESTMINSTER BANK USA)
By
--------------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By
--------------------------------
Title:
SOCIETE GENERALE
By
--------------------------------
Title:
UNION BANK
By
--------------------------------
Title:
TORONTO DOMINION (TEXAS), INC.,
as Agent
By
--------------------------------
Title:
<PAGE>
EXHIBIT A(2)
[Form of Revolving Credit Note]
REVOLVING CREDIT NOTE
___, 199__
New York, New York
FOR VALUE RECEIVED, CABLEVISION SYSTEMS CORPORATION, a Delaware
corporation (the "COMPANY"), hereby promises to pay to the order of
(the "BANK") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below), at the principal office of Toronto Dominion
(Texas), Inc. at 909 Fannin Street, Suite 1700, Houston, Texas 77010, the
aggregate principal amount of the Revolving Credit Loans evidenced hereby, in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of each Revolving Credit Loan
made by the Bank to the Company under the Credit Agreement, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The Bank is hereby authorized by the Company to endorse on the
schedule attached to this Revolving Credit Note (or any continuation thereof)
the amount and type of, and the duration of each Interest Period for, each
Revolving Credit Loan made by the Bank to the Company under the Credit
Agreement, the date such Loan is made, and the amount of each payment on account
of principal of such Loan received by the Bank, provided that any failure by the
Bank to make any such endorsement shall not affect the obligations of the
Company hereunder or under the Credit Agreement in respect of such Loans.
This Revolving Credit Note is one of the Notes referred to in the
Fourth Amended and Restated Credit Agreement dated as of October 14, 1994 among
the Company, the Restricted Subsidiaries named therein, the Co-Agents and the
Banks (including the Bank) named therein and Toronto Dominion (Texas), Inc. as
Agent, as the same may be amended from time to time (the "CREDIT AGREEMENT"),
and evidences Revolving Credit Loans made by the Bank thereunder. Capitalized
terms used in this Revolving Credit Note have the respective meanings assigned
to them in the Credit Agreement.
<PAGE>
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon shall become, or may be declared to be, forthwith due
and payable in the manner, upon the conditions and with the effect provided in
the Credit Agreement.
The Company may at its option prepay, and may be required to prepay,
all or part of the principal of this Revolving Credit Note before maturity upon
the terms provided in the Credit Agreement.
This Revolving Credit Note is also entitled to the benefits of, and is
secured by, the Security Agreement.
The obligations of the Company evidenced hereby constitute "Senior
Indebtedness" as such term is defined in all documents to which the Company or
any Restricted Subsidiary is a party.
CABLEVISION SYSTEMS CORPORATION
By:
----------------------------
Title:
<PAGE>
[Form of Schedule to Revolving Credit Note]
This Revolving Credit Note evidences Revolving Credit Loans made under the
within-described Credit Agreement to the Company, in the principal amounts, of
the types and having the Interest Periods set forth below, which Loans were made
on the dates set forth below, subject to the payments in respect of principal
set forth below:
Principal
Amount Type Principal Balance
Date of of Amount Out- Interest
Made Loan Loan Paid standing Period
- ---- --------- ---- ---------- -------- --------
<PAGE>
AMENDED AND RESTATED SENIOR LOAN AGREEMENT
Dated as of March 15, 1996
between
U.S. CABLE TELEVISION GROUP, L.P.
a Delaware limited partnership
as Borrower
and
THE LENDERS NAMED HEREIN
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent and Lender
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 31
2.1. Revolving Credit Advances. . . . . . . . . . . . . . . . . . . . 31
2.2. Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.3. Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . 34
2.4. Optional Prepayment; Prepayment Premium. . . . . . . . . . . . . 35
2.5. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 35
2.6. Single Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.7. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.8. Limitations on Types of Advances . . . . . . . . . . . . . . . . 39
2.9. Receipt of Payments. . . . . . . . . . . . . . . . . . . . . . . 39
2.10. Application of Payments. . . . . . . . . . . . . . . . . . . . . 39
2.11. Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . 40
2.12. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.13. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.14. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.15. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.16. Capital Adequacy; Increased Costs;
Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.17. Income Tax Reporting . . . . . . . . . . . . . . . . . . . . . . 47
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.1. Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . 49
3.2. Conditions to Each Revolving
Credit Advance . . . . . . . . . . . . . . . . . . . . . . . . . 51
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 52
4.1. Corporate or Partnership Existence;
Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 52
4.2. Executive Offices. . . . . . . . . . . . . . . . . . . . . . . . 52
4.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.4. Corporate or Partnership Power;
Authorization; Enforceable Obligations . . . . . . . . . . . . . 53
4.5. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 54
4.7. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . 55
4.8. Ownership of Property; Liens . . . . . . . . . . . . . . . . . . 55
4.9. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.10. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.11. Other Ventures . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.12. Investment Company Act . . . . . . . . . . . . . . . . . . . . . 57
4.13. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . 57
i
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SECTION PAGE
------- ----
4.14. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.15. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.16. No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.17. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.18. Redemption Agreement; Prepayment
Transactions;
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.19. Outstanding Stock; Options; Warrants; Etc. . . . . . . . . . . . 62
4.20. Employment and Labor Agreements. . . . . . . . . . . . . . . . . 62
4.21. Patents, Trademarks, Copyrights and
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.22. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 63
4.23. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.24. Media Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.25. Environmental Protection . . . . . . . . . . . . . . . . . . . . 64
4.26. Receipt of Agreements. . . . . . . . . . . . . . . . . . . . . . 64
5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . . . 65
5.1. Reports and Notices. . . . . . . . . . . . . . . . . . . . . . . 65
5.2. Communication with Accountants . . . . . . . . . . . . . . . . . 69
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.1. Maintenance of Existence and Conduct
of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.2. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . 70
6.3. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.4. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 71
6.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.7. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 72
6.8. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.9. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.10. Media Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.11. Leases; New Real Estate. . . . . . . . . . . . . . . . . . . . . 74
6.12. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 75
6.13. SEC Filings; Certain Other Notices . . . . . . . . . . . . . . . 77
6.14. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . 77
6.15. Post-Effective Date Items. . . . . . . . . . . . . . . . . . . . .73
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.1. Mergers, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.2. Investments; Loans and Advances. . . . . . . . . . . . . . . . . 78
7.3. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.4. Employee Loans . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.5. Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . 80
7.6. Maintenance of Business. . . . . . . . . . . . . . . . . . . . . 80
7.7. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 80
ii
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SECTION PAGE
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7.8. Guarantied Indebtedness. . . . . . . . . . . . . . . . . . . . . 81
7.9. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.10. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . 82
7.11. Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . 82
7.12. Cancellation of Indebtedness . . . . . . . . . . . . . . . . . . 83
7.13. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 83
7.14. Hedging Transactions . . . . . . . . . . . . . . . . . . . . . . 83
7.15. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 84
7.16. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.17. Modification of Certain Agreements . . . . . . . . . . . . . . . 84
8. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.2. Survival of Obligations Upon Termination
of Financing Arrangement . . . . . . . . . . . . . . . . . . . . 85
8.3. Termination Prior to Effective Date. . . . . . . . . . . . . . . 86
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . 86
9.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 86
9.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.3. Waivers by Borrower. . . . . . . . . . . . . . . . . . . . . . . 91
9.4. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . 91
9.5. Cure of Capital Expenditure Default. . . . . . . . . . . . . . . 92
10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . 92
10.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . 93
10.3. GE Capital and Affiliates. . . . . . . . . . . . . . . . . . . . 94
10.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . 94
10.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 94
10.6. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . 95
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.1. Complete Agreement; Modification of
Agreement; Sale of Interest. . . . . . . . . . . . . . . . . . . 95
11.2. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 98
11.3. No Waiver by Agent or Any Lender . . . . . . . . . . . . . . . . 99
11.4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.5. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 99
11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.7. Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.8. Conflict of Terms. . . . . . . . . . . . . . . . . . . . . . . . 100
11.9. Authorized Signature . . . . . . . . . . . . . . . . . . . . . . 100
11.10. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.11. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.12. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
11.13. Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . 103
iii
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SECTION PAGE
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11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.15. Liability of General Partners. . . . . . . . . . . . . . . . . . 103
iv
<PAGE>
INDEX OF EXHIBITS, SCHEDULES AND ANNEXES
Exhibit A - Form of Notice of Revolving Credit Advance or
Conversion
Exhibit A-1 - Form of Notice of Term Loan Conversion
Exhibit B - Form of Borrowing Date Certificate
Exhibit C-1 - Form of Legal Opinion of Sullivan & Cromwell
Exhibit C-2 - Form of Legal Opinion of Robert S. Lemle
Schedule 1 - Capitalization Policies of Cablevision and
Affiliates
Schedule 4.2 - Executive Offices
Schedule 4.3 - Subsidiaries
Schedule 4.5 - Insurance
Schedule 4.8(a) - Owned Property
Schedule 4.8(b) - Leased Property
Schedule 4.11 - Other Ventures
Schedule 4.14 - Tax Matters
Schedule 4.15 - ERISA Matters
Schedule 4.16 - Litigation
Schedule 4.19 - Partners of Borrower
Schedule 4.20 - Employment Matters
Schedule 4.21 - Patents, Trademarks, Copyrights and Licenses
Schedule 4.24(a) - Media Licenses of Borrower and its
Subsidiaries
Schedule 4.24(b) - Notices of Media License Material Default or
Breach of Covenant
Schedule 7.2 - Certain Existing Loans
Schedule 7.7 - Transactions with Affiliates
Schedule 7.9 - Certain Liens
Schedule 11.9 - Authorized Signatures
Annex 1 - Allocation Policy for Cablevision Stock
Incentive Programs
v
<PAGE>
AMENDED AND RESTATED SENIOR LOAN AGREEMENT, dated as of March 15, 1996,
between U.S. CABLE TELEVISION GROUP, L.P., a Delaware limited partnership having
an office at One Media Crossways, Woodbury, New York 11797 ("Borrower"), the
lenders listed on the signature pages hereof ("Lenders"), and GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation having an office at 201 High Ridge
Road, Stamford, Connecticut 06927-5100 ("GE Capital"), as agent for Lenders
hereunder (GE Capital, in such capacity, being "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower, Lenders and Agent are parties to the Senior Loan
Agreement, dated as of December 31, 1992 (the "Existing USC Senior Loan
Agreement");
WHEREAS, as of the date hereof Borrower and certain of its affiliates
are consummating the Prepayment Transactions, as defined in the Partnership
Agreement, and in connection therewith the parties hereto desire to amend and
restate the Existing USC Senior Loan Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree that, effective as of
the Effective Date, the Existing Loan Agreement is hereby amended and restated
in its entirety as follows:
1. DEFINITIONS
In addition to the defined terms appearing elsewhere in this
Agreement, capitalized terms used in this Agreement shall have the following
respective meanings when used herein:
"Active Subsidiaries" shall mean, collectively, the Subsidiaries of
Borrower set forth as such on Schedule 4.3 hereof.
"Advance" shall mean an Index Rate Advance or a LIBOR Advance (each of
which shall be a "Type" of Advance).
"Adverse Environmental Condition" shall mean any of the matters
referred to in clause (i) or (iii) of the definition of Environmental Claim or
any Environmental Claim
<PAGE>
based on any of the matters referred to in clause (ii) of the definition of
Environmental Claim.
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially or as
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of such Person and (ii) each Person
that controls, is controlled by or is under common control with such Person.
For the purpose of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; PROVIDED, HOWEVER, that with respect to
each of Borrower and any of its Subsidiaries or Affiliates, the term "Affiliate"
shall not include GE Capital.
"Agent" shall have the meaning assigned to it in the first paragraph
of this Agreement and shall include GE Capital and any successor Agent appointed
pursuant to Section 10.6 hereof.
"Aggregate Loan" shall have the meaning assigned to it in Section
2.17(a) hereof.
"Agreement" shall mean this Amended and Restated Senior Loan
Agreement, including all amendments, modifications and supplements hereto and
any appendices, exhibits or schedules to any of the foregoing, and shall refer
to this Agreement as the same may be in effect at the time any reference hereto
becomes operative.
"Ancillary Agreement" shall mean any agreement, undertaking,
instrument, document or other writing executed by Borrower or any of its
Subsidiaries or any of their direct or indirect stockholders or partners, as a
condition to advances or funding under this Agreement or otherwise in connection
herewith, including, without limitation, the Partnership Agreement, the Loan
Documents and all amendments or supplements thereto.
"Annualized Consolidated Operating Cash Flow" shall mean, for any
Fiscal Quarter, the product of (i) Operating Cash Flow of Borrower and its
Subsidiaries for such Fiscal Quarter multiplied by (ii) 4.
2
<PAGE>
"Annualized Consolidated System Cash Flow" shall mean, for any Fiscal
Quarter, the product of (i) System Cash of Borrower and its Subsidiaries for
such Fiscal Quarter multiplied by (ii) 4.
"Applicable Margin" shall mean an interest margin determined quarterly
and based upon the ratio of Total Debt to Annualized Consolidated Operating Cash
Flow for the immediately preceding Fiscal Quarter as follows:
TOTAL DEBT TO ANNUALIZED INDEX LIBOR
CONSOLIDATED OPERATING RATE RATE
CASH FLOW RATIO PLUS PLUS
------------------------ ----- ------
greater than or equal .750% 1.750%
to 5.50:1.00
less than 5.50:1.00 .500% 1.500%
For purposes of determining the Applicable Margin to be used in
calculating the interest which is payable in respect of any Fiscal Quarter or
Interest Period, as the case may be, Annualized Consolidated Operating Cash Flow
shall be determined based upon the last quarterly financial statements required
to have been delivered to Lenders pursuant to Section 5.1(b) hereof; PROVIDED,
HOWEVER, that if Borrower shall fail to deliver such financial statements on a
timely basis, the Applicable Margin shall be the highest rate set forth above
for the period until such financial statements have been delivered (whereupon
the Applicable Margin shall be the applicable rate provided above for periods
commencing after the date of such delivery until the following period's
financial statements are due).
"Borrower" shall have the meaning assigned to it in the first
paragraph of this Agreement.
"Borrowing Date Certificate" shall mean a certificate in the form
attached hereto as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a Sunday nor
a day on which banks are required or permitted to be closed in the State of New
York.
"Cablevision" shall mean Cablevision Systems Corporation, a Delaware
corporation.
"Capital Expenditures" shall mean all amounts accrued (or, without
double counting, paid) in respect of
3
<PAGE>
any fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized in accordance with GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required either to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise to be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower or any of its Subsidiaries, any such lease under which Borrower or such
Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would be required to appear on a balance sheet of such lessee in
respect of such Capital Lease or otherwise be disclosed as such an obligation in
a note to such balance sheet.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) Borrower's or any of its Subsidiaries' employees, payroll, income or gross
receipts, (iv) Borrower's or any of its Subsidiaries' ownership or use of any of
its assets, or (v) any other aspect of Borrower's or any of its Subsidiaries'
business.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Collateral" shall mean, collectively, all Collateral and all other
collateral referred to in the Security Agreements and all Pledged Collateral, as
well as all other property and interests in property and proceeds thereof now
owned or hereafter acquired by any Loan Party in or upon which a Lien is granted
under any of the Collateral Documents.
"Collateral Documents" shall mean, collectively, the Guaranties, the
Security Agreements, the Pledge Agreements, the Nonrecourse Guaranty and Pledge
Agreements and
4
<PAGE>
any other document executed and delivered by a Loan Party granting a Lien on any
of its property to secure payment of the Obligations.
"Commitment Termination Date" shall mean the earlier of (i) the
Maturity Date and (ii) the date on which payment in full of the Revolving Credit
Loan may otherwise be required pursuant to the proviso in Section 8.1 hereof.
"Consolidated Available Cash Flow" shall mean, for any Person for any
period, Consolidated Operating Cash Flow of such Person for such period PLUS
(x) the sum of (i) the excess, if any, of such Person's Working Capital at the
beginning of such period over such Person's Working Capital at the end of such
period and (ii) for Borrower, any Curing Capital Contribution made to Borrower
during such period or within 90 days thereafter (without double counting any
Curing Capital Contribution taken into account in determining Consolidated
Available Cash Flow for any previous period) MINUS (y) (without double counting)
the sum of (a) such Person's Capital Expenditures for such period to the extent
such Capital Expenditures are permitted hereunder (including by Section 9.5
hereof), (b) cash interest paid by such Person during such period, (c) principal
payments made by such Person on its Indebtedness during such period to the
extent permitted hereunder (other than prepayments of the Revolving Credit Loan
that do not permanently reduce the amount of the Maximum Revolving Credit Loan),
(d) the excess, if any, of such Person's Working Capital at the end of such
period over such Person's Working Capital at the beginning of such period and
(e) amounts accrued by such Person in respect of taxes (other than deferred
taxes) for such period. Any calculations relating to the Consolidated Available
Cash Flow of Borrower shall include such calculations with respect to Borrower's
consolidated Subsidiaries (including, without limitation, Missouri Partnership).
"Consolidated Operating Cash Flow" shall mean, for any Person for any
period, the consolidated operating income (before extraordinary items, interest,
taxes, depreciation, amortization, non-cash charges, other non-cash items,
compensation in respect of Borrower's and its Subsidiaries' allocable portion of
Cablevision's employee stock incentive programs (not to exceed in the aggregate
for any calendar year 5% of Consolidated Operating Cash Flow for the preceding
calendar year) which employee stock incentive expense shall be allocated among
Cablevision' Subsidiaries
5
<PAGE>
based on the existing Cablevision allocation methodology reflected in Annex 1
hereto, with respect to Borrower, amounts constituting Allocation Items (as
defined in the USC Management Agreement) that are payable pursuant to the terms
of the USC Management Agreement which have been accrued but have not been paid
and the payment of which has been subordinated to all Obligations in a manner
satisfactory to Agent) of such Person and its consolidated Subsidiaries (with
respect to Borrower, including, without limitation, Missouri Partnership)
determined in accordance with GAAP and (to the extent consistent with GAAP) in a
manner consistent with the past practices of Borrower; PROVIDED, HOWEVER, that
the amounts set forth above shall be determined on the basis of the
capitalization policies of Cablevision and its Affiliates as in effect on the
Effective Date and set forth on Schedule 1 hereto.
"Contaminant" shall mean any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste, including
any such substance regulated under any Environmental Law.
"Curing Capital Contribution" shall have the meaning assigned to it in
Section 9.5 hereof.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Disposition" shall mean any sale, transfer, assignment or other
disposition (whether voluntary or involuntary) of all or a portion of any member
of the USC Group (including, without limitation, by means of transfer of equity
interests or assets or by merger or consolidation).
"DOL" shall mean the United States Department of Labor or any
successor to any of its relevant functions.
"ECC" shall mean ECC Holding Corporation, a Delaware corporation and a
wholly-owned subsidiary of USC.
"Effective Date" shall mean the date hereof, subject to the
satisfaction (or the waiver thereof) or the conditions set forth in Section 3.1.
6
<PAGE>
"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order or direction (conditional or
otherwise) by any Governmental Authority or any other Person for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions, resulting
from or based upon (i) the existence, or the continuation of the existence, of a
Release (including, without limitation, any sudden or non-sudden, accidental or
non-accidental Release) of, or exposure to, any substance, chemical, material,
pollutant, Contaminant, odor or audible noise or other release or emission in,
into or onto the environment (including, without limitation, the air, ground,
water or any surface) at, in, by, from or related to the Facilities, (ii) the
environmental aspects of the transportation, storage, treatment or disposal of
materials in connection with the operation of the Facilities or (iii) the
violation, or alleged violation, of any Environmental Law, ordinance, order,
Permit or license of or from any Governmental Authority, relating to
environmental matters connected with the Facilities.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., the
Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., the Clean Water Act, 33 U.S.C.
Section 1251, ET SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601,
ET SEQ., the Occupational Safety and Health Act, 29 U.S.C. Section 651, ET SEQ.,
and all other federal, state, and local laws, ordinances, regulations, rules,
orders, Permits, and the like, which are aimed at the protection of human health
or the environment, each as in effect from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, all trades
or businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the IRC.
7
<PAGE>
"ERISA Event" shall mean, with respect to Borrower or any of its ERISA
Affiliates, (a) a Reportable Event (other than a Reportable Event not subject to
the provision for 30-day notice to the PBGC under regulations issued under
Section 4043 of ERISA), (b) the withdrawal of Borrower or any of its ERISA
Affiliates from a Plan subject to Section 4063 of ERISA during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(c) the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under Section 4041 of ERISA, (d) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA,
(e) the complete or partial withdrawal of Borrower or any of its ERISA
Affiliates from any Multiemployer Plan, (f) the failure to make required
contributions to a Plan under Section 412 of the IRC or (g) any other event or
condition which might reasonably be expected to constitute grounds under
Section 4042(a)(1), (2) or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Essex" shall mean Essex Communications Corporation, a Delaware
corporation and an indirect wholly-owned subsidiary of Borrower.
"Event of Default" shall have the meaning assigned to it in
Section 9.1 hereof.
"Existing USC Loans" shall mean, collectively, (i) the revolving
credit loans and the senior term loans made by GE Capital to Borrower pursuant
to the Existing USC Senior Loan Agreement and (ii) all accrued and unpaid
interest on the loans referred to in clause (i).
"Existing USC Senior Loan Agreement" shall have the meaning provided
in the recitals hereto.
"Facilities" shall mean real property owned or leased or used by
Borrower or any of its Subsidiaries.
"FCC" shall mean the Federal Communications Commission (or any
successor).
"FCC Consent" shall mean an order or orders issued by the FCC to
Borrower approving the management of Borrower by Cablevision pursuant to the USC
Management Agreement.
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"Federal Funds Rate" shall mean, for any date, a fluctuating interest
rate per annum equal for such day to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by it.
"Federal Reserve Board" shall have the meaning assigned to it in
Section 4.13 hereof.
"Financials" shall mean the financial statements referred to in
Section 4.6(a) hereof.
"Fiscal Quarter" shall mean the calendar quarter ending on each March
31, June 30, September 30 and December 31 of each year. Subsequent changes of
the fiscal quarters of Borrower shall not change the term "Fiscal Quarter"
unless the Required Lenders shall consent in writing to such changes.
"Fiscal Year" shall mean the calendar year. Subsequent changes of the
fiscal year of Borrower shall not change the term "Fiscal Year" unless the
Required Lenders shall consent in writing to such changes.
"Funding Arrangements" shall have the meaning assigned to it in
Section 2.14(b) hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"GE Capital" shall have the meaning assigned to it in the first
paragraph of this Agreement.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"G.P. and L.P. Nonrecourse Guaranty and Pledge Agreement" shall mean
the agreement, dated as of December
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31, 1992, among GE Capital (as agent for Lenders) and the pledgors listed on the
signature pages thereof, including all amendments, modifications and supplements
thereto and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to such G.P. and L.P. Nonrecourse Guaranty and Pledge Agreement as
the same may be in effect at the time any reference thereto becomes operative.
"Guarantied Indebtedness" shall mean, as to any Person, any obligation
of such Person guarantying any indebtedness, lease, dividend or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including, without limitation, any obligation or arrangement of such
Person (i) to purchase or repurchase any such primary obligation, (ii) to
advance or supply funds (a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guaranties" shall mean the USC/Subsidiary (Senior) Guaranty.
"Guarantor" shall mean each Subsidiary of Borrower which is executing
and delivering to Agent any of the Guaranties.
"Homes Passed" shall mean the sum of: (i) all dwelling units passed
by energized cable of the cable systems of Borrower or any of its Subsidiaries
which are occupied or, if not occupied, are in a condition permitting
occupation, and which are capable of being furnished with a signal level not
less than six decibels, including each dwelling unit in a multiple dwelling unit
that has basis for a first set connection (whether or not Borrower or any of its
Subsidiaries enters into an arrangement with a multiple dwelling unit for
provision of service to such unit on a discounted basis) or that is an
individual dwelling unit to which a first set connection could be offered and
supplied, but in any case excluding any multiple dwelling unit and the
individual dwelling units therein to which Borrower or any of its Subsidiaries
does not have and cannot obtain access
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for the provision of such first set connection to such individual dwelling
units; (ii) each commercial subscriber which is actually connected to the cable
systems of Borrower or any of its Subsidiaries and is receiving service; and
(iii) each non-connected hotel or motel (counted as one "home" each) passed by
energized cable of the cable systems of Borrower or any of its Subsidiaries;
PROVIDED, HOWEVER, that "Homes Passed" shall not in any event include any
non-connected commercial establishments other than the hotels and motels
referred to in clause (iii) above.
"IMP and EHR Nonrecourse Guaranty and Pledge Agreement" shall mean the
agreement, dated as of December 31, 1992, among GE Capital (as agent for
Lenders), IMP Cable Management, Inc. and Golden Holdings, Inc., including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such IMP and EHR
Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the
time any reference thereto becomes operative.
"Indebtedness" of any Person shall mean (a)(i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (iv) all Capital Lease Obligations of such Person, (v) all Guarantied
Indebtedness of such Person, (vi) all Indebtedness of such Person referred to in
clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, and (vii) all
Unfunded Pension Liabilities and all Withdrawal Liabilities of such Person and
(b) with respect to Borrower or any of its
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Subsidiaries, (i) all Indebtedness of such Person referred to in clause (a)
above and (ii) the Obligations.
"Index Rate" shall mean, on any date, the greater of (i) the highest
of the daily prime, base, commercial loan or equivalent rate of interest
published or publicly announced for such date by Bankers Trust Company, Chemical
Bank, N.A., Citibank, N.A., Morgan Guaranty Trust Company of New York or The
Chase Manhattan Bank, N.A. (whether or not such rate is actually charged by any
such bank) as in effect for such date and (ii) the Federal Funds Rate for such
date plus 1/2 of 1%.
"Index Rate Advance" shall mean a portion of a Loan which bears
interest at a rate based on the Index Rate.
"Interest Expense" shall mean, for any period, gross interest expense
of Borrower and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, LESS the following for Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP:
(a) the sum of (i) interest capitalized during construction for such period,
(ii) interest income for such period, and (iii) gains for such period on
interest rate contracts (to the extent not included in interest income above and
to the extent not deducted in the calculation of gross interest expense), PLUS
the following for Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP: (b) the sum of (i) losses for such period on
interest rate contracts (to the extent not included in gross interest expense),
and (ii) the expensing of upfront costs or fees for such period associated with
interest rate contracts (to the extent not included in gross interest expense).
"Interest Period" shall mean, for any LIBOR Advance, the period
commencing and ending on such dates as are selected by Borrower pursuant to the
provisions set forth below. The duration of each Interest Period shall be one,
two or three, six or, to the extent available and if agreed to by all Lenders,
nine or twelve months as Borrower may, upon notice received by Agent not later
than 10:00 A.M. (New York City time) on the second Business Day prior to the
first day of such Interest Period, select; PROVIDED, HOWEVER, that:
(i) Borrower may not select any Interest Period which ends
after the Maturity Date; and
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(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day.
"Investments" shall mean any advances, loans, accounts receivable
(other than (x) accounts receivable arising in the ordinary course of business
of Borrower or any Subsidiary of Borrower and (y) accounts receivable owing to
Borrower from any Subsidiary of Borrower for management services (other than
such accounts receivable that constitute direct charges or out-of-pocket
expenses relating to such services) provided by Borrower to such Subsidiary) or
other extensions of credit (excluding, however, accrued and unpaid interest in
respect of any advance, loan or other extension of credit) or capital
contributions to (by means of transfers of property to others, or payments for
property or services for the account or use of others, or otherwise), or the
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership,
joint venture or joint adventure) of, or any bank accounts with, or guarantee
any Indebtedness or other obligations of, any Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service or any entity succeeding
to any or all of its functions.
"Leases" shall mean all of those leasehold estates in real property
now owned or hereafter acquired by Borrower or any of its Subsidiaries, as
lessee.
"Lender" or "Lenders" shall have the meaning assigned to it in the
first paragraph of this Agreement and shall include GE Capital and any future
holder of all or any portion of the Notes.
"LIBOR Advance" shall mean a portion of a Loan which bears interest at
a rate based on the LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period, the rate obtained by
dividing (i) the average of the four rates reported from time to time by
Telerate News Service on page 3875 thereof (or such other number of rates as
such
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service may from time to time report) at which foreign branches of major U.S.
banks offer U.S. dollar deposits to other banks for such Interest Period in the
London interbank market at approximately 11:00 A.M., London time, on the second
full Eurodollar Business Day (as hereinafter defined) next preceding such
Interest Period by (ii) a percentage equal to 100% minus the weighted average of
the maximum rates of all reserve requirements (including, without limitation,
any marginal emergency, supplemental, or special or other reserves) scheduled to
be applicable during such Interest Period to any member bank of the Federal
Reserve System in respect of eurocurrency or eurodollar funding or liabilities.
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Agent and Borrower. The
term "Eurodollar Business Day" shall mean a Business Day on which banks
generally are open in the city of London for interbank or foreign exchange
transactions.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement (other than an unrestricted bank
account in the name of and maintained by Borrower or any of its Subsidiaries),
lien, Charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any lease or title retention
agreement, any arrangement having substantially the same economic effect as any
of the foregoing (including any financing lease), and the filing of, or
agreement to give, any financing statement perfecting a security interest under
the Code or comparable law of any jurisdiction).
"Loan" shall mean the Revolving Credit Loan and any Term Loan.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Collateral Documents, the Pompadur Letter Agreement, the Missouri Assumption
Agreement and the USC Non-Competition Agreement.
"Loan Party" shall mean Borrower and each of its Subsidiaries and
Cablevision.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, operations or financial condition of Borrower and its
Subsidiaries taken
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as a whole, (ii) Borrower's and its Subsidiaries' collective ability to pay the
Obligations in accordance with the terms thereof, (iii) the Collateral or
(iv) Lenders' Liens on the Collateral taken as a whole or the priority of such
Liens taken as a whole.
"Maturity Date" shall mean the earlier of (i) the closing under the
Redemption Agreement and (ii) July 15, 1998.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 2.7(g) hereof.
"Maximum Revolving Credit Loan" shall mean, at any time, an amount
equal to $30,000,000; PROVIDED that the Maximum Revolving Credit Loan shall
increase by $5,000,000 commencing on January 1, 1997; and, PROVIDED FURTHER that
such aggregate amount may be reduced from time to time pursuant to Section 2.3
hereof.
"Media Approval" shall mean any FCC Consent and any other approval
necessary with respect to the investment by V Cable and V Sub in the Borrower
and the management of Borrower by Cablevision pursuant to the USC Management
Agreement.
"Media License" shall mean any franchise, license, permit,
certificate, ordinance, right by contract or other authorization from any
Governmental Authority which is necessary for the cable television operations of
any Person.
"Missouri Assumption Agreement" shall mean the Missouri Assumption
Agreement, dated as of December 31, 1992, among Borrower, Missouri Partnership
and GE Capital, including all amendments, modifications and supplements thereto
and any appendices, exhibits or schedules to any of the foregoing, and shall
refer to such Missouri Assumption Agreement as the same may be in effect at the
time any reference thereto becomes operative.
"Missouri Partnership" shall mean Missouri Cable Partners, L.P., a
Delaware limited partnership.
"Missouri Partnership Agreement" shall mean the Limited Partnership
Agreement, dated as of June 30, 1992, including all amendments, modifications
and supplements thereto and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to such Missouri Partnership
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Agreement as the same may be in effect at the time any reference thereto becomes
operative (but only giving effect to such amendments, modifications or
supplements consented to by GE Capital).
"Mortgage Supplements" shall mean the supplements, dated as of
December 31, 1992, to the Mortgages.
"Mortgages" shall mean the mortgages or deeds of trust made in
connection with the Existing USC Loans in favor of GE Capital, in its individual
capacity or as agent, by Borrower or any of its Subsidiaries, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such Mortgages as the
same may be in effect at the time any reference thereto becomes operative.
"Multiemployer Plan" shall mean, with respect to any Person, a
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, to which such
Person or any of its ERISA Affiliates is making, or is obligated to make,
contributions or has made, or has been obligated to make, contributions within
the preceding five years.
"Net Cash Proceeds" of a Disposition shall mean cash payments actually
received by Borrower from any sale or other disposition or series of related
sales or other dispositions net of the amount of any and all (i) reasonable
expenses incurred as a direct result of and directly attributable to such sale
or disposition, (ii) reasonable fees, including attorneys' fees, accountant's
fees, brokerage, consultant and other customary fees, commissions and other
costs, actually incurred therewith, and (iii) all foreign, federal, state and
local taxes payable or reasonably estimated to be payable as a direct
consequence of such sale or disposition.
"Newco" shall mean VC Holding, Inc., a Delaware corporation.
"Nonrecourse Guaranty and Pledge Agreements" shall mean, collectively,
the USC Nonrecourse Guaranty and Pledge Agreement, the Pompadur Et Al.
Nonrecourse Guaranty and Pledge Agreement, the G.P. and L.P. Nonrecourse
Guaranty and Pledge Agreement and the IMP and EHR Nonrecourse Guaranty and
Pledge Agreement.
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"Notes" shall mean, collectively, the Revolving Credit Note and the
Term Notes.
"Notice of Revolving Credit Advance or Conversion" shall have the
meaning assigned to it in Section 2.1(b) hereof.
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations for monetary amounts (whether or not such amounts are liquidated or
determinable) owing by Borrower or any of its Subsidiaries or any other Loan
Party to Agent or any Lender, and all covenants and duties regarding the payment
of such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, in each case arising under
any of the Loan Documents. "Obligations" include, without limitation, all
interest, Charges, expenses, attorneys' fees and any other sum chargeable to
Borrower or any of its Subsidiaries or any other Loan Party under any of the
Loan Documents.
"Operating Cash Flow" shall mean, for any period, the following for
Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP: (i) aggregate operating revenues MINUS
(ii) aggregate operating expenses (including technical, programming, sales,
selling, general administrative expenses and salaries and other compensation
paid to any general partner, director, officer or employee of Borrower or any
Subsidiary of Borrower and any management fees paid to Cablevision, but
excluding interest, depreciation and amortization and, to the extent otherwise
included in operating expenses, any losses resulting from a writeoff or
writedown of Investments by Borrower or any Subsidiary of Borrower in
Affiliates); PROVIDED, HOWEVER, that for purposes of determining Operating Cash
Flow, there shall be excluded (x) all management fees paid to Borrower or any
Subsidiary of Borrower during such period, (y) the amortization of deferred
installation income and (z) compensation in respect of Borrower's and its
Subsidiaries' allocable portion of Cablevision's employee stock incentive
programs (not to exceed in the aggregate for any calendar year 5% of
Consolidated Operating Cash Flow for the preceding calendar year) which employee
stock incentive expense shall be allocated among Cablevision's Subsidiaries
based on the existing Cablevision allocation methodology reflected in Annex 1
hereto.
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"Other Taxes" shall have the meaning assigned to it in Section 2.13(b)
hereof.
"Participants" shall have the meaning assigned to it in
Section 11.1(b)(ii) hereof.
"Partnership Agreement" shall mean the Second Amended and Restated
Limited Partnership Agreement of Borrower, dated as of the date hereof,
including all amendments, modifications and supplements thereto and any
appendices, exhibits or schedules to any of the foregoing, and shall refer to
such Partnership Agreement as the same may be in effect at the time any
reference thereto becomes operative (but only after giving effect to such
amendments, modifications or supplements consented to by GE Capital).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Permit" shall mean any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under any
applicable Environmental Law.
"Permitted Encumbrances" shall mean the following encumbrances:
(i) Liens for taxes or assessments or other governmental charges or levies
either not yet due and payable or to the extent that nonpayment thereof is
permitted by the terms of this Agreement; (ii) pledges or deposits securing
obligations under workers' compensation, unemployment insurance, social security
or public liability laws or similar legislation; (iii) pledges or deposits
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which Borrower or any of its Subsidiaries is a party as
lessee made in the ordinary course of business; (iv) deposits securing public or
statutory obligations of Borrower or any of its Subsidiaries; (v) workers',
mechanics', suppliers', carriers', warehousemen's or other similar Liens arising
in the ordinary course of business and securing indebtedness aggregating not in
excess of $500,000 at any time outstanding and not yet due and payable;
(vi) deposits securing or in lieu of surety, appeal or customs bonds in
proceedings to which Borrower or any of its Subsidiaries is a party; (vii) any
attachment or judgment Lien, unless the judgment it secures shall not, within 60
days after the entry thereof, have been discharged or execution thereof stayed
pending appeal or shall not have
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been discharged within 60 days after the expiration of any such stay;
(viii) Capital Leases permitted under Section 7.3(a)(iv) hereof; and (ix) zoning
restrictions, easements, licenses or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value or
marketability of such real property, leases or leasehold estates.
"Permitted USC Sale" shall mean a Disposition permitted pursuant to
Section 7.11(a)(i) or 7.11(a)(ii) hereof.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
company, institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to any Person or any of its ERISA
Affiliates, at any time, an employee pension benefit plan, as defined in
Section 3(2) of ERISA (including a Multiemployer Plan), that is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
IRC and is maintained by such Person or any of its ERISA Affiliates.
"Pledge Agreements" shall mean the USC Group Pledge Agreement.
"Pledged Collateral" shall mean, collectively, the Pledged Collateral
referred to in the Pledge Agreements and the Nonrecourse Guaranty and Pledge
Agreements.
"Pompadur Et Al. Nonrecourse Guaranty and Pledge Agreement" shall mean
the agreement, dated as of December 31, 1992, among GE Capital (as agent for
Lenders) and the pledgors listed on the signature pages thereof, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such Pompadur Et Al.
Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the
time any reference thereto becomes operative.
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"Pompadur Letter Agreement" shall mean that certain letter agreement,
dated as of June 30, 1992, between I. Martin Pompadur and GE Capital, including
all amendments, modifications and supplements thereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to such Pompadur
Letter Agreement as the same may be in effect at the time any reference thereto
becomes operative.
"Preferred USC Interest" shall mean the collective reference to the
19% limited partnership interest in Borrower and the 1% general partnership
interest in Borrower held by V Cable, Inc. and V Cable G.P., Inc.
"Premium Services" shall mean such cable television programming
services as Borrower and/or its Subsidiaries from time to time determine in the
course of its business constitute "Premium Services" or the like.
"Premium Units" shall mean the total number of Premium Services
subscribed to by each Subscriber.
"Prepayment Transactions" shall have the meaning assigned in the
recitals to the Partnership Agreement.
"Real Estate" shall mean all of those plots, pieces or parcels of land
now owned or hereafter acquired by Borrower or any of its Subsidiaries (the
"Land"), including, without limitation, those listed on Schedule 4.8(a) hereto,
together with the right, title and interest of Borrower or any of its
Subsidiaries, if any, in and to the streets, the land lying in the bed of any
streets, roads or avenues, opened or proposed, in front of, adjoining or
abutting the Land to the center line thereof, the air space and development
rights pertaining to the Land and right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including, without
limitation, all alley, vault, drainage, mineral, water, oil and gas rights,
together with all of the buildings and other improvements now or hereafter
erected on the Land, and all fixtures and articles of personal property
appertaining thereto and all additions thereto and substitutions and
replacements thereof.
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"Redemption Agreement" shall mean the Partnership Interests Redemption
Agreement, dated as of the date hereof, among Borrower, the limited partners and
general partners of Borrower and the other parties listed on the signature pages
thereto.
"Release" shall have the meaning assigned to it in Section 101(20) of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(22).
"Reportable Event" shall have the meaning assigned to it in
Section 4043 of ERISA.
"Required Lenders" shall mean, on any date on which any Loan is
outstanding, the holders of Notes evidencing at least a majority of the
aggregate unpaid principal amount of the Loans; PROVIDED, HOWEVER, that any
amendment to, modification of or supplement to this Agreement or waiver of a
Default or an Event of Default hereunder that would have the effect of
reinstating the obligations to make Revolving Credit Advances from and after the
date such obligations have been terminated or changing the terms of, amount of
or obligation to make Revolving Credit Advances shall require the affirmative
consent thereto of holders of Notes evidencing at least a majority of the
aggregate unpaid principal amount of the Revolving Credit Loan then outstanding
or, in the event that at such date there is no Revolving Credit Loan then
outstanding, then the holders of Notes evidencing at least a majority of the
unused portion of the Maximum Revolving Credit Loan.
"Reserves" shall mean such reserves for doubtful accounts, returns,
allowances and the like as may be established by Borrower or any of its
Subsidiaries or as may otherwise be required in accordance with GAAP.
"Restricted Payment" shall mean (i) the declaration of any dividend,
the making of any distribution or the incurrence of any liability to make any
other payment or distribution of cash or other property or assets in respect of
Stock of Borrower, (ii) any payment on account of the purchase, redemption or
other retirement of Stock of Borrower, any direct or indirect partner of
Borrower or any other Affiliate of Borrower (other than a Subsidiary of
Borrower) or any other payment or distribution made in respect thereof, either
directly or indirectly, or (iii) any payment on account of federal, state or
local taxes (inclusive of interest and penalties), in respect of any
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consolidated, combined or unitary tax return filed by any partner of Borrower
which includes Borrower or any of its Subsidiaries, or any other payment by
Borrower of any federal, state or local taxes (inclusive of interest and
penalties) of its partners.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 2.1(a) hereof, and may consist of an Index Rate Advance or a LIBOR
Advance.
"Revolving Credit Loan" shall mean the aggregate amount of Revolving
Credit Advances outstanding at any time.
"Revolving Credit Note" shall have the meaning assigned to it in
Section 2.1(c) hereof.
"Sale" shall have the meaning assigned to it in Section 11.1(b)
hereof.
"Security Agreements" shall mean, collectively, the Mortgages and the
USC Group Security Agreement.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity, whether
voting or nonvoting, including, without limitation, common stock, preferred
stock and any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subscribers", on any date, shall mean the sum of (a) the total number
of households (exclusive of "second outlets", as such term is commonly
understood in the cable television industry), subscribing on such date to any
cable television system of Borrower or any of its Subsidiaries and paying any
currently available rate for monthly service fees and charges imposed by such
system, for any level of programming services offered by such system; PROVIDED
that such term shall not include any household whose account is more than 60
days past due. For purposes of this definition, an account shall be deemed due
on the last day of each monthly billing period for which service has been
provided to a household.
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"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person is a general partner or shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50% (including with respect to Borrower, without
limitation, Missouri Partnership and any of its Subsidiaries); PROVIDED that
none of Newco or any of its Subsidiaries shall be considered a Subsidiary of
Borrower.
"System Cash Flow" of Borrower shall mean, for any period, the
consolidated operating income (before extraordinary items, interest, taxes,
depreciation, amortization, non-cash charges and other non-cash items and, with
respect to Borrower, amounts constituting Allocation Items (as defined in the
USC Management Agreement) that are payable (whether or not paid) pursuant to the
terms of the USC Management Agreement, and expenses and costs directly related
to the consummation of the transactions contemplated by the Loan Documents) of
Borrower and its consolidated Subsidiaries (including, without limitation,
Missouri Partnership) determined in accordance with GAAP and (to the extent
consistent with GAAP) in a manner consistent with the past practices of
Borrower; PROVIDED, HOWEVER, that such amounts shall be determined on the basis
of the capitalization policies of Cablevision and its Affiliates as in effect on
the Closing Date and set forth on Schedule 1 hereto; and PROVIDED FURTHER,
HOWEVER, that to the extent that Cablevision or its Affiliates provides to any
of Borrower, ECC, Essex or any of their respective Subsidiaries, goods or
services for consideration which is below the fairly allocable cost thereof, for
purposes of the calculations herein, such goods and services shall be deemed to
be provided at the fairly allocable cost.
"Systems" shall mean the cable television systems owned and operated
by Borrower and its Subsidiaries, wherever located.
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"Taxes" shall have the meaning assigned to it in Section 2.13(a)
hereof.
"Termination and Modification Documents" shall mean the collective
reference to the Termination and Amendatory Agreement, dated as of the date
hereof, among Agent, V Cable and certain affiliates of V Cable, the Termination
and Amendatory Agreement, dated as of the date hereof, among Agent, VC Holding
and certain affiliates of VC Holding, Amendment No. 1 the CSC Nonrecourse
Guaranty and Pledge Agreement, dated as of the date hereof, between Agent and
Cablevision, to the CSC Nonrecourse Guaranty and Pledge Agreement and the
Termination and Release Agreement, dated as of the date hereof, between Agent
and USC.
"Termination Date" shall mean the date on which all Loans and other
Obligations hereunder have been completely discharged and Borrower shall have no
further right to borrow any monies hereunder.
"Term Loans" shall have the meaning assigned to it in Section 2.2(a)
hereof.
"Term Notes" shall have the meaning assigned to it in Section 2.2(a)
hereof.
"Total Debt" shall mean all Indebtedness of Borrower and its
consolidated Subsidiaries.
"Treasury Regulation" shall mean the Income Tax Regulations
promulgated under the IRC as such regulations may be amended from time to time
(including temporary and proposed regulations).
"Type" of Advance shall have the meaning assigned to it in the
definition of Advance.
"Unfunded Pension Liability" shall mean, with respect to any Person at
any time, the aggregate amount, if any, of the sum of (i) the amount by which
the present value of all accrued benefits under each Plan of such Person, any of
its Subsidiaries or any of its ERISA Affiliates exceeds the fair market value of
all assets of such Plan allocable to such benefits in accordance with Title IV
of ERISA, all determined as of the most recent valuation date for each such Plan
using the actuarial assumptions in effect under such Plan, and (ii) for a period
of five years following a transaction reasonably likely to be covered by
Section 4069
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of ERISA, the liabilities (whether or not accrued) that could be avoided by such
Person, any of its Subsidiaries or any of its ERISA Affiliates as a result of
such transaction.
"U.S. Cable Partners" shall mean U.S. Cable Partners, a Delaware
general partnership.
"USC Group" shall mean Borrower, USC, ECC and Essex and their
respective corporate, partnership and other direct or indirect wholly-owned
Subsidiaries, including, without limitation, Missouri Partnership (so long as
Borrower owns its limited partnership interest therein).
"USC Group Pledge Agreement" shall mean the agreement, dated as of
December 31, 1992, among GE Capital (as agent for Lenders), Borrower and the
Subsidiaries of Borrower listed on the signature pages thereof, including all
amendments, modifications, and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such USC Group Pledge
Agreement as the same may be in effect at the time any reference thereto becomes
operative.
"USC Group Security Agreement" shall mean the agreement, dated as
December 31, 1992, among GE Capital (as agent for Lenders) and Borrower and the
Subsidiaries of Borrower listed on the signature pages thereof, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such USC Group Security
Agreement as the same may be in effect at the time any reference thereto becomes
operative.
"USC Management Agreement" shall mean the agreement, dated as of
December 31, 1992, among Cablevision, Borrower and the Subsidiaries of Borrower
listed on the signature pages thereof, providing, INTER ALIA, for the management
of Borrower and its cable television systems, including all amendments,
modifications and supplements thereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to such USC Management Agreement as the
same may be in effect at the time any reference thereto becomes operative (but
only giving effect to such amendments, modifications or supplements consented to
by GE Capital).
"USC Non-Competition Agreement" shall mean the agreement, dated as of
December 31, 1992, among Cablevision,
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Borrower and GE Capital (as agent for Lenders) and in its individual capacity as
lender, providing, INTER ALIA, for Cablevision's agreement not to compete with
the operations of Borrower and its Subsidiaries, including all amendments,
modifications and supplements thereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to such USC Non-Competition Agreement
as the same may be in effect at the time any reference thereto becomes operative
(but only giving effect to such amendments, modifications or supplements
consented to by GE Capital).
"USC Nonrecourse Guaranty and Pledge Agreement" shall mean the
agreement, dated as of December 31, 1992, between GE Capital (as agent for
Lenders) and Borrower, including all amendments, modifications and supplements
thereto and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to such USC Nonrecourse Guaranty and Pledge Agreement as the same
may be in effect at the time any reference thereto becomes operative.
"USC/Subsidiary (Senior) Guaranty" shall mean the agreement, dated as
of December 31, 1992, made in favor of Agent by the Subsidiaries of Borrower
listed on the signature pages thereof, including all amendments, modifications
and supplements thereto and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to such USC/Subsidiary (Senior) Guaranty as the same
may be in effect at the time any reference thereto becomes operative.
"V Cable" shall mean V Cable, Inc., a Delaware corporation.
"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1)
of ERISA, which is maintained or contributed to by Borrower or any of its
Subsidiaries on behalf of former employees after such employees' termination of
employment (other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant).
"Withdrawal Liability" shall mean, (a) with respect to Borrower, at
any time, the aggregate amount of the liabilities of any Loan Party, any of its
Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA,
and any increase in contributions required to be made pursuant to Section 4243
of ERISA, with respect to all Multiemployer Plans of any such Person and (b)
with respect
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to any other Person, at any time, the aggregate amount of the liabilities of
such Person, any of its Subsidiaries or any of its ERISA Affiliates pursuant to
Section 4201 of ERISA, and any increase in contributions required to be made
pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans of
any such Person.
"Working Capital" shall mean, for any Person (including, with respect
to Borrower, without limitation, Missouri Partnership) on any date, the excess
of current assets of such Person on such date (excluding cash, cash equivalents
and marketable securities) over current liabilities of such Person on such date
(including, for Borrower, the outstanding balance of the Revolving Credit Loan,
but excluding current maturities of other long-term Indebtedness) determined on
a consolidated basis in accordance with GAAP and (to the extent consistent with
GAAP) in a manner consistent with the past practices of Borrower; PROVIDED,
HOWEVER, that, with respect to Borrower, such amount shall be determined on the
basis of the capitalization policies of Cablevision and its Affiliates as in
effect on the Effective Date and set forth on Schedule 1 hereto.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed to
limit the foregoing.
All other undefined terms contained in this Agreement shall, unless
the context indicates otherwise, have the meanings provided for by the Code as
in effect in the State of New York to the extent the same are used or defined
therein.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement.
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Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
2.1. REVOLVING CREDIT ADVANCES. (a) Upon and subject to the terms
and conditions hereof, GE Capital agrees to make available, from time to time
until the Commitment Termination Date, for Borrower's use and upon the request
of Borrower therefor, advances (each, a "Revolving Credit Advance") in an
aggregate amount outstanding which shall not at any time exceed the Maximum
Revolving Credit Loan. Subject to the foregoing and to the provisions of
Section 2.3 hereof and until all amounts outstanding in respect of the Revolving
Credit Loan shall become due and payable on the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow under this Section
2.1(a). Revolving Credit Advances outstanding on the date hereof under the
Existing USC Senior Loan Agreement after giving effect to the Prepayment
Transactions shall constitute "Revolving Credit Advances" for purposes of this
Agreement.
(b) Each Revolving Credit Advance shall be made on notice, given no
later than 1:00 P.M. (New York City time) on the Business Day of the proposed
Revolving Credit Advance, by Borrower to GE Capital. Each such notice (a
"Notice of Revolving Credit Advance or Conversion") shall be in writing or by
telephone to GE Capital's Account Executive, (203) 316-7661, telecopy, telex or
cable, if by telephone confirmed immediately in writing, in substantially the
form of Exhibit A hereto, specifying therein (consistent with this Agreement),
INTER ALIA, the requested (i) date and aggregate amount of such Advance,
(ii) Type or Types of Advance comprising such Revolving Credit Advance and the
amount of each such Type and (iii) Interest Period for each such Advance which
is a LIBOR Advance. Each Revolving Credit Advance shall be deemed to be an
Index Rate Advance unless otherwise specified by Borrower in the Notice of
Revolving Credit Advance or Conversion delivered to GE Capital in relation to
such Advance in accordance with the procedures and time set forth in this
Section 2.1(b). GE Capital shall, before 5:00 P.M. (New York City time) on the
date of the proposed Revolving Credit Advance (or, if the Notice of Revolving
Credit Advance or Conversion is
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given by 10:30 A.M. (New York City time) on such date, by 2:00 P.M. (New York
City time) on the date of the proposed Revolving Credit Advance), upon
fulfillment of the applicable conditions set forth in Section 3 hereof, wire the
amount of such Revolving Credit Advance to a bank designated by Borrower and
reasonably acceptable to GE Capital.
(c) The Revolving Credit Loan of GE Capital shall be evidenced by the
promissory note executed and delivered by Borrower to GE Capital at the time of
the initial Revolving Credit Advance (the "Revolving Credit Note"). The
Revolving Credit Note shall be payable to the order of GE Capital and shall
represent the obligation of Borrower to pay the amount of the Maximum Revolving
Credit Loan or, if less, the aggregate unpaid principal amount of all Revolving
Credit Advances made by GE Capital to Borrower with interest thereon as
prescribed in Section 2.7 hereof. The date and amount of each Revolving Credit
Advance and the Type of each such Advance (and, if a LIBOR Advance, the Interest
Period therefor) and each payment of principal with respect thereto shall be
recorded on the books and records of GE Capital, which books and records shall
(absent manifest error) constitute PRIMA FACIE evidence of the accuracy of the
information therein recorded. The entire unpaid balance of the Revolving Credit
Loan shall be due and payable on the Commitment Termination Date.
(d) Not later than 10:00 A.M. on the second Business Day prior to the
end of any Interest Period for each Revolving Credit Advance consisting of a
LIBOR Advance, Borrower shall deliver to GE Capital a Notice of Revolving Credit
Advance or Conversion electing to convert such LIBOR Advance into an Index Rate
Advance or into a LIBOR Advance (or part into an Index Rate Advance and part
into a LIBOR Advance), in each case effective at the end of the Interest Period
for such Advance. Each such Notice of Revolving Credit Advance or Conversion
shall be in writing or by telephone to GE Capital's Account Executive, (203)
316-7661, telex, telecopy or cable, if by telephone confirmed immediately in
writing, specifying therein (consistent with this Agreement), INTER ALIA, (i)
the aggregate amount and Type of Advance which is to be converted and the last
day of the current Interest Period for such Advance, (ii) the Type or Types of
Advance into which such Advance is to be converted and the amount of each such
Type and (iii) the Interest Period for each Advance which is to be a LIBOR
Advance. If Borrower shall fail to provide a Notice of Revolving Credit
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Advance or Conversion on or prior to 10:00 A.M. on the second Business Day prior
to the end of the Interest Period in respect of any LIBOR Advance, such Advance
shall automatically convert into an Index Rate Advance on the day following the
last day of such Interest Period.
(e) Borrower shall be entitled to convert all or any part of any
Index Rate Advance into a LIBOR Advance by delivery to GE Capital, not later
than 10:00 A.M. on the second Business Day prior to the date such conversion is
to occur, of a Notice of Revolving Credit Advance or Conversion in the manner,
and containing the relevant information indicated in, Section 2.1(d) hereof;
PROVIDED, HOWEVER, that no such conversion shall occur or be effective on any
date which is not a Business Day.
2.2. TERM LOANS. (a) The Series A Term Loans and the Series B Term
Loans outstanding under the Existing USC Senior Loan Agreement shall constitute
and be referred to as the "Term Loans" for purposes of this Agreement. The
promissory notes evidencing the Term Loans shall be referred to herein as the
"Term Notes".
(b) The principal amount of the Term Loans shall be payable in full,
together with accrued and unpaid interest thereon, on the Maturity Date.
(c) Not later than 10:00 A.M. on the second Business Day prior to the
end of any Interest Period for each portion of a Term Loan consisting of a LIBOR
Advance, Borrower shall deliver to Agent a notice in substantially the form of
Exhibit A-1 hereto (a "Notice of Term Advance or Conversion") electing to
convert such LIBOR Advance into an Index Rate Advance or into a LIBOR Advance
(or part into an Index Rate Advance and part into a LIBOR Advance), in each case
effective at the end of the Interest Period for such Advance. Each such Notice
of Term Advance or Conversion shall be in writing or by telephone to Agent's
Account Executive, 203-316-7661, telex, telecopy or cable, if by telephone
confirmed immediately in writing, specifying therein (consistent with this
Agreement), INTER ALIA, (i) the aggregate amount and Type of Advance which is to
be converted and the last day of the current Interest Period for such Advance,
(ii) the Type or Types of Advance into which such Advance is to be converted and
the amount of each such Type and (iii) the Interest Period for each Advance
which is to be a LIBOR Advance. If Borrower shall fail to provide a Notice of
Term Advance or Conversion on or prior
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to 10:00 A.M. on the second Business Day prior to the end of the Interest Period
in respect of any LIBOR Advance, such Advance shall automatically convert into
an Index Rate Advance on the day following the last day of such Interest Period.
(d) Borrower shall be entitled to convert any portion of a Term Loan
consisting of an Index Rate Advance into a LIBOR Advance by delivery to Agent,
not later than 10:00 A.M. on the second Business Day prior to the date such
conversion is to occur, of a Notice of Term Advance or Conversion in the manner,
and containing the relevant information indicated in, Section 2.2(c) hereof;
provided, however, that no such conversion shall occur or be effective on any
date which is not a Business Day.
2.3. MANDATORY PREPAYMENT. (a) Immediately upon receipt by Borrower
of any Net Cash Proceeds pursuant to (and to the extent provided in) Section
7.11(a)(ii) hereof, Borrower shall use the proceeds of any such assets sales to
repay FIRST, such outstanding Loans (other than the Revolving Credit Loan) as
Agent shall determine in its sole discretion and, SECOND, to the then
outstanding principal amount of the Revolving Credit Loan.
Notwithstanding the foregoing, Borrower shall not make a prepayment,
with the proceeds of asset sales under Section 7.11(a)(ii), otherwise required
pursuant to this Section 2.3(a) to the extent that such prepayment is waived by
Agent (at the direction or with the consent of the Required Lenders) in writing.
Any prepayment with the proceeds of such asset sales pursuant to this
Section 2.3(a) shall be accompanied by all accrued and unpaid interest on the
principal amount so prepaid; provided that except in connection with a
prepayment in full of the Loans, such accrued and unpaid interest in respect of
the Series B Term Loan shall be paid in kind in the same manner as provided in
Section 2.7(c). Any prepayments of any Loans pursuant to this Section 2.3(a)
shall be applied FIRST, to those portions of such Loans that constitute Index
Rate Advances, and NEXT, to those portions of such Loans that constitute LIBOR
Advances. Notwithstanding the foregoing, if any prepayment of a LIBOR Advance
in the manner and at the times provided above would result in any such
prepayment occurring prior to the last day of the Interest Period for such
Advance, such prepayment shall instead be made on the last day of the Interest
Period therefor (unless GE Capital otherwise directs). Borrower shall use
reasonable good
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faith efforts to select Interest Periods in respect of its LIBOR Advances in
order to avoid circumstances whereby (or to minimize, to the extent possible,
the extent to which) any mandatory prepayments pursuant to this Section 2.3(a)
would in the absence of the previous sentence result in a LIBOR Advance being
prepaid prior to the last day of the Interest Period with respect thereto. Any
prepayments of Revolving Credit Advances pursuant to this Section 2.3(a) shall
not be available to be reborrowed, and the Maximum Revolving Credit Loan shall
be permanently reduced by an amount equal to the maximum amount of proceeds of
asset sales available to be applied to reduce Revolving Credit Advances pursuant
to clause (a) above (even if all or a portion of such amounts available pursuant
to clause (a) above shall not have been applied in prepayment of Revolving
Credit Advances due to the outstanding amount of Revolving Credit Advances being
less than the amount of such asset sales proceeds available pursuant to clause
(a) above).
(b) In the event that in the reasonable determination of Agent, (i)
Borrower fails to use its best efforts to perform its obligations under the
Redemption Agreement and to cause all conditions precedent thereunder of parties
other than Borrower to be satisfied, or (ii) the closing thereunder does not
occur due to a breach by Borrower under such Redemption Agreement, the
Obligations shall be due and payable on July 1, 1997.
(c) No prepayment fee shall be payable in respect of any mandatory
prepayment under this Section 2.3.
2.4. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM. (a) Borrower shall
have the right at any time (but subject to the provisions set forth below), on 5
Business Days' prior written notice to Agent, to voluntarily prepay, in whole or
in part, the then outstanding balance, including accrued and unpaid interest, of
the Loans, without premium or penalty except as set forth in Section 2.4(b)
below; PROVIDED, HOWEVER, that such prepayment shall be applied in the manner
set forth in Section 2.10 hereof as determined by Agent or Lenders in their
discretion.
(b) Notwithstanding the foregoing, Borrower shall have no right to
prepay any LIBOR Advance or Term Loan prior to the end of the respective
Interest Period therefor except to the extent required under Section 2.3 above;
PROVIDED, HOWEVER, that Borrower may prepay any such LIBOR Advance or any Term
Loan in connection with a prepayment in full of
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such Loans if such prepayment is accompanied by payment of all amounts (if any)
required to be paid by Borrower in respect thereof pursuant to Section 2.14(b)
hereof.
2.5. USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Credit Loan for working capital purposes.
2.6. SINGLE LOAN. The Revolving Credit Loan, the Term Loans and all
of the other Obligations of Borrower arising under this Agreement and the other
Loan Documents shall constitute one general obligation of Borrower secured,
until the Termination Date, by all of the Collateral.
2.7. INTEREST. (a) Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Advance from the date of such Advance
until the principal amount thereof shall be paid in full, as follows: at all
times from the Effective Date, at a rate based on either the Index Rate or the
LIBOR Rate as follows: (A) with respect to each Index Rate Advance, at a rate
per annum equal to the Index Rate plus the Applicable Margin, payable quarterly
in arrears on the last day of each Fiscal Quarter commencing on or after the
Effective Date and on the date such Advance is repaid in full; and (B) with
respect to each LIBOR Advance, at a rate per annum equal at all times during the
Interest Period therefor to the LIBOR Rate for such Interest Period plus the
Applicable Margin, payable in arrears on the last day of such Interest Period
or, if such Interest Period exceeds three months, on the last day of each three
month period and on the date such Advance is repaid in full.
(b) Borrower shall pay interest on the unpaid principal amount of
each Term Loan from the Effective Date until the principal amount thereof shall
be paid in full, as follows: at all times from the Effective Date, at a rate
based on either the Index Rate or the LIBOR Rate as follows: (A) with respect
to each Term Loan bearing interest at the Index Rate, at a rate per annum equal
to the Index Rate plus the Applicable Margin, payable quarterly in arrears on
the last day of each Fiscal Quarter commencing on or after the Effective Date
and on the date such Term Loan is repaid in full; and (B) with respect to each
Term Loan bearing interest at the LIBOR Rate, at a rate per annum equal at all
times during the Interest Period therefor to the LIBOR Rate for such Interest
Period plus the Applicable Margin, payable in arrears on the last day of such
Interest Period or, if such Interest Period exceeds three months, on the last
day
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of each three month period and on the date such Term Loan is repaid in full.
(c) All computations of the LIBOR Rate shall be made by Agent on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last) occurring in the period for which such interest is
payable. All computations of the Index Rate or any Fixed Rate shall be made by
Agent on the basis of a year of 365 or 366 days, as the case may be, for the
actual number of days occurring in the period for which such interest is payable
or accrues. Each determination of the Index Rate for Index Rate Advances shall
be on a daily basis for (and for the period through and including) the next
succeeding Business Day. Each determination by Agent of an interest rate
hereunder shall be, in the absence of manifest error, conclusive and binding for
all purposes.
(d) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall accrue at the then applicable rate during such extension and shall
be payable on such next succeeding Business Day.
(e) So long as any default in the payment of principal or interest
hereunder shall have occurred and be continuing, the interest rate applicable to
each Loan shall be increased by 2% per annum above the rate otherwise
applicable.
(f) Notwithstanding anything to the contrary set forth in this
Section 2.7, if at any time until payment in full of all of the Obligations, any
stated rate of interest hereunder exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest hereunder shall to the extent permitted by law be equal to the
Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time thereafter, any
stated rate of interest hereunder is less than the Maximum Lawful Rate, to the
extent permitted by law interest shall continue to be paid or accrued hereunder
at the Maximum Lawful Rate until such time as the total interest received by any
Lender hereunder is equal to the total interest which such Lender would have
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received had each such interest rate been (but for the operation of this
paragraph) the interest rate since the Effective Date. Thereafter, the interest
rate hereunder shall be the rate otherwise set forth in this Agreement for each
Loan or portion thereof, unless and until any such interest rate again exceeds
the Maximum Lawful Rate, in which event this paragraph shall again apply. In no
event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount which such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. In the event interest is calculated at the Maximum Lawful Rate
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.7(f), shall make
a final determination that any Lender has received interest hereunder or under
any of the Loan Documents in excess of the Maximum Lawful Rate, such Lender
shall, to the extent permitted by applicable law, promptly apply such excess
first to any interest due and not yet paid under the Loans, then to any due and
payable principal of the Loans, then to the remaining principal amount of the
Loans, then to other unpaid Obligations and thereafter refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
2.8. LIMITATIONS ON TYPES OF ADVANCES. Notwithstanding any other
provision of this Agreement, there shall not at any time be in effect (and
Borrower shall not be entitled to select) more than three Interest Periods with
respect to all outstanding LIBOR Advances.
2.9. RECEIPT OF PAYMENTS. Borrower shall make each payment under
this Agreement not later than 2:00 P.M. (New York City time) on the day when due
in lawful money of the United States of America in immediately available funds
to Agent's depository bank in the United States as designated by Agent from time
to time for deposit in Agent's depositary account or, if Agent so notifies
Borrower, directly to each Lender, ratably based on the respective principal
amounts of the Notes held by each Lender that relate to the Loan in respect of
which such payment is made or applied. Agent will, upon any such deposit to its
depositary account, promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest (other than interest or
principal payments on
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the Revolving Credit Loan, which will be paid directly to GE Capital) ratably to
Lenders as provided above, and like funds relating to the payment of any other
amount payable to any Lender to such Lender, in each case to be applied in
accordance with the terms of this Agreement. For purposes only of computing
interest hereunder, all payments shall be applied by GE Capital to the Revolving
Credit Loan and by each Lender to its Term Loans on the day payment has been
credited by Agent's depository bank to Agent's depositary account in immediately
available funds or, if Agent has notified Borrower to make any such payments
directly to any Lender, such payments shall be applied by each Lender to its
Term Loans on the day payment has been received by such Lender in immediately
available funds. For purposes of determining the amount of funds available for
borrowing by Borrower pursuant to Section 2.1(a) hereof, such payments shall be
applied by GE Capital against the outstanding amount of the Revolving Credit
Loan at the time they are credited to its account.
2.10. APPLICATION OF PAYMENTS. Except as otherwise expressly
provided herein, Borrower irrevocably waives the right to direct the application
of any and all payments at any time or times hereafter received by Agent or any
Lender from or on behalf of Borrower pursuant to the terms of this Agreement,
and Borrower irrevocably agrees that, except as otherwise expressly provided
herein, Agent and Lenders shall have the continuing exclusive right to apply any
and all such payments against the then due and payable Obligations and in
repayment of the Revolving Credit Loan and the Term Loans as they each may deem
advisable. In the absence of a specific determination by Agent and the Required
Lenders with respect thereto, the same shall be applied in the following order:
(i) then due and payable fees and expenses; (ii) then due and payable interest
payments on the Loans; and (iii) then due and payable principal payments on the
Loans. Notwithstanding the foregoing, prior to the occurrence of a Default or
Event of Default, Agent agrees to apply payments received in accordance with
instructions received from Borrower (if any) in connection with such payments,
to the extent such instructions are consistent with the provisions of this
Agreement. GE Capital is authorized to, and at its option may, make advances on
behalf of Borrower for payment of all fees, expenses, Charges, costs, principal
or interest incurred by Borrower hereunder. Such advances shall be made when
and as Borrower fails to promptly pay such fees, expenses, Charges, costs,
principal or interest and at GE Capital's option
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shall be deemed to be additional Revolving Credit Advances constituting part of
the Revolving Credit Loan hereunder and comprised of Index Rate Advances or
LIBOR Advances (as selected by GE Capital).
2.11. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of any Loan made by it in excess of its ratable
share of payments on account of such Loan obtained by all Lenders, such Lender
shall forthwith purchase from each other Lender such participations in such Loan
made by each other Lender as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each other Lender; PROVIDED, HOWEVER,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
each Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 2.11 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
2.12. ACCOUNTING. Agent will provide a monthly accounting of
transactions under the Revolving Credit Loan and the Term Loans, if applicable,
to Borrower. Each and every such accounting shall (absent manifest error) be
deemed final, binding and conclusive upon Borrower in all respects as to all
matters reflected therein unless Borrower, within 90 days after the date any
such accounting is rendered, shall notify Agent in writing of any objection
which Borrower may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower. Agent's
determination, based upon the facts available, of any item objected to by
Borrower in such notice shall (absent manifest error) be final, binding and
conclusive on Borrower, unless Borrower shall, within 30 days following Agent's
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notifying Borrower of such determination, either (i) commence a judicial
proceeding to resolve such objection or (ii) submit such dispute to KPMG Peat
Marwick, independent public accountants, for resolution of the items in dispute
(which resolution shall be final, conclusive and binding on both parties). The
fees of such independent public accountant shall be borne by Lenders if such
resolution shall indicate that the items in dispute were not accounted for
accurately by Agent, and shall otherwise be borne by Borrower.
2.13. TAXES. (a) Any and all payments by Borrower hereunder or
under the Notes shall be made, in accordance with Section 2.9 hereof, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income of any Lender
or Agent, as the case may be (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under any Note to any Lender or
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.13) such Lender or Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law.
(b) In addition to the foregoing, Borrower agrees to pay any present
or future stamp or documentary taxes or any other sales, excise or property
taxes, charges or similar levies that arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) Borrower shall indemnify each Lender and Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.13) paid by such Lender or Agent and any liability (including
penalties, interest and expenses) arising
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therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Such indemnification shall be made within 30
days from the date such Lender or Agent makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Agent and each Lender, at their addresses referred to in
Section 11.11 hereof, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.
2.14. INDEMNITY. (a) Borrower shall indemnify and hold Agent and
each Lender harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and disbursements, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by Agent or such Lender as a result of its having entered into any of
the Loan Documents or extended credit hereunder; PROVIDED, HOWEVER, that
Borrower shall not be liable for such indemnification to any such indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense (x) results from such indemnified Person's gross
negligence or willful misconduct, (y) relates to a dispute between Agent or any
Lender and any of the Loan Parties or (z) results from a breach by Agent or such
Lender of its obligations under the last sentence of Section 11.1(b) hereof.
(b) Borrower understands that in connection with Lenders' arranging
to provide the LIBOR Advances from time to time at the option of Borrower on the
terms provided herein, Lenders have entered or may enter into funding
arrangements with third parties ("Funding Arrangements") on terms and conditions
which could result in substantial losses to such Lenders if any LIBOR Advances
do not remain outstanding at the interest rates provided herein for the entire
Interest Period with respect to which such LIBOR Advance has been fixed.
Consequently, in order to induce Lenders to provide the LIBOR Advances on the
terms provided herein and in consideration for the entering into by Lenders
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of Funding Arrangements from time to time in contemplation thereof, if any LIBOR
Advance is repaid in whole or in part prior to the last day of the Interest
Period therefor (whether any such repayment is made pursuant to any provision of
this Agreement or any other Loan Document or is the result of acceleration, by
operation of law or otherwise), Borrower shall indemnify and hold harmless each
Lender from and against and in respect of any and all losses, costs and expenses
resulting from, or arising out of or imposed upon or incurred by such Lender by
reason of the liquidation or reemployment of funds acquired or committed to be
acquired by such Lender to fund such LIBOR Advance, pursuant to the Funding
Arrangements. The amount of any losses, costs or expenses resulting in an
obligation of Borrower to make a payment pursuant to the foregoing sentence
shall not include any losses attributable to any Lender's lost profit, but shall
represent the excess, if any, of (i) such Lender's cost of borrowing the
relevant LIBOR Advance pursuant to the Funding Arrangements over (ii) the return
such Lender would receive on its reinvestment of such funds; PROVIDED, HOWEVER,
that if any Lender terminates any Funding Arrangements in respect of any LIBOR
Advance, the amount of such losses, costs and expenses shall include the cost to
such Lender of such termination. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to the next preceding sentence, and such
calculation shall be binding on the parties hereto unless Borrower shall object
thereto in writing within ten Business Days of receipt thereof. Notwithstanding
the foregoing, the provisions of this Section 2.14(b) shall not apply in respect
of any such prepayment of any Term Loan or LIBOR Advance required to be made
solely as a result of the provisions of Section 2.3 (other than with the
proceeds of asset sales) or Section 2.16(c) hereof.
(c) Borrower hereby waives and relinquishes any set-off or similar
rights which it may have against Agent or any Lender with respect to any
Obligation under this Agreement; PROVIDED that, with respect to any Default or
Event of Default asserted by Agent or any Lender, this sentence shall not be
deemed to impair Borrower's right to assert any claim against Agent or any
Lender that, if adjudicated to be correct by a court of competent jurisdiction,
would excuse or cure such Default or Event of Default.
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2.15. ACCESS. (a) Without limiting any other rights that Agent or
any Lender may otherwise have, Agent and any of its officers, employees and/or
agents shall have the right, exercisable as frequently as Agent determines to be
appropriate, during normal business hours (or at such other times as may
reasonably be requested by Agent), to inspect the properties and facilities of
Borrower and its Subsidiaries and to inspect, audit and make extracts from all
of Borrower's and its Subsidiaries' records, files and books of account at the
place(s) where the same shall be located all to the extent, but only to the
extent, that such inquiry is related to its position as Agent. Borrower shall
deliver any document or instrument reasonably necessary for Agent, as it may
request, to obtain records from any service bureau maintaining records for
Borrower or its Subsidiaries. Borrower shall instruct its and its Subsidiaries'
banking and other financial institutions to make available to Agent such
information and records as Agent may reasonably request.
(b) Agent and each Lender agree to exercise their reasonable efforts
to keep any information delivered or made available by Borrower pursuant hereto
confidential from anyone other than Persons employed or retained by Agent or
such Lender who are expected to become engaged in evaluating, approving,
structuring, administering or transferring the Loans; PROVIDED, that nothing
herein shall prevent Agent or any Lender from disclosing such information (i) to
any other Lender, (ii) upon the order of any court or administrative agency or
as otherwise may be required by law, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over Agent or such Lender, as
the case may be, (iv) which has been publicly disclosed or is otherwise
available to Agent or such Lender on a nonconfidential basis, (v) in connection
with any litigation to which Agent, any Lender, Cablevision, Borrower or any
other Loan Party or any of its Subsidiaries may be a party, (vi) to the extent
reasonably required in connection with the exercise or enforcement of any rights
or remedies under the Loan Documents, (vii) to Agent's or such Lender's legal
counsel and independent auditors and (viii) to any actual or proposed
participant or to any other Person in connection with any actual or proposed
sale, transfer or other disposition of all or any part of the Loans, if such
other Person, prior to such disclosure, agrees for the benefit of Borrower to
comply with the provisions of this subsection (b).
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2.16. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any
Lender shall determine that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by such Lender (or its lending office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder or credit
extended by it hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance by an amount deemed by such
Lender to be material, then from time to time as specified by such Lender by
written notice to Borrower, Borrower shall pay such additional amount or amounts
as will compensate such Lender for such reduction (such notice to indicate
Lender's method of determining the amount of such reduction and that such method
is consistent with such Lender's treatment of customers similar to Borrower
having similar provisions generally in their agreements with such Lender, which
method and amount will be conclusive and binding absent manifest error).
(b) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Loan or portion thereof bearing interest based on the LIBOR Rate, then Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to in clause (i) or (ii) above which
would result in any such increased cost to such Lender, such Lender shall, to
the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize
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costs and expenses incurred by it and payable to it by Borrower pursuant to this
Section 2.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any Loan bearing interest based on
the LIBOR Rate, then, unless such Lender is able to agree to make or to continue
to fund or to maintain such Loan which bears interest based on the LIBOR Rate at
another branch or office of such Lender without, in such Lender's opinion,
adversely affecting it or its Loans or the income obtained therefrom, on notice
thereof and demand therefor by such Lender to Borrower through Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain Loans or any portion thereof bearing interest based on the LIBOR Rate
shall terminate and (ii) Borrower shall forthwith prepay in full all outstanding
Loans or any portions thereof then bearing interest based on the LIBOR Rate,
together with interest accrued thereon (but without any penalty for such
prepayment), of such Lender UNLESS Borrower, within five Business Days after the
delivery of such notice and demand, converts each such Loan into a Loan bearing
interest based on the Index Rate.
(d) Agent, upon becoming aware thereof, shall promptly notify
Borrower of the occurrence of any event described in this Section 2.16.
Borrower shall have the right within five Business Days of receipt of such
notice to convert any outstanding LIBOR Advance to an Index Rate Advance.
2.17. INCOME TAX REPORTING. (a) Subject to Section 2.17(b),
Borrower, Lenders and Agent hereby acknowledge and agree that, for U.S. federal
income tax reporting purposes:
(i) the Term Loans will be aggregated (as contemplated by
proposed Treasury Regulation Section 1.1275-2(c)) (as aggregated, the
"Aggregate Loan") and treated as a single debt instrument with a
single issue price, maturity date, yield to maturity and stated
redemption price at maturity for purposes of Sections 1271
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through 1275 of the IRC and the proposed Treasury Regulations
thereunder;
(ii) the Aggregate Loan is a debt instrument to which Section
1274 of the IRC applies;
(iii) the "issue date" (as defined in Section 1275(a)(2) of the
IRC and the proposed Treasury Regulations thereunder) of the Aggregate
Loan is the Effective Date;
(iv) the maturity date of the Aggregate Loan is the Maturity
Date;
(v) the Aggregate Loan constitutes a "variable rate debt
instrument" as defined in proposed Treasury Regulation Section 1.1275-
5; and
(vi) the Aggregate Loan is not part of an "investment unit" and
the provisions governing the determination of the issue price of an
investment unit as set forth in proposed Treasury Regulation Section
1.1273-2(d) do not apply.
(b) Notwithstanding Section 2.17(a), if the Internal Revenue
Service promulgates new final, temporary or proposed regulations under any of
Sections 1271 through 1275 of the IRC, or if any of Sections 1271 through 1275
of the IRC are amended, and such regulations or amendments are applicable to any
of the loans made pursuant to this Agreement, or if there is another change in
the tax law (or interpretations thereof) applicable to the reporting of the
loans made pursuant to this Agreement, Borrower and Agent will negotiate in good
faith to determine the effect of any of the foregoing on the reporting of the
loans made pursuant to this Agreement and to agree upon a consistent treatment
for federal income tax reporting purposes of the loans made pursuant to this
Agreement.
(c) Within 20 days after the end of any year, Agent shall furnish
Borrower with its computation of the amount of interest income and deductions
attributable to the Loans for U.S. federal income tax purposes. If Borrower
does not agree with such computation, Borrower shall notify Agent, and promptly
thereafter Borrower and Agent will negotiate in good faith to attempt to resolve
any disagreement with respect to Agent's computation. It is Borrower's,
Lenders' and Agent's intention to use their
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reasonable efforts to reach an agreement with respect to such computation. If
such agreement is reached, each of Borrower and the Lenders will consistently
report the amount of any interest income and deductions reflected in such agreed
upon computation.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS TO EFFECTIVENESS. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Agent or any Lender hereunder, this Agreement shall not be effective unless and
until the Effective Date shall have occurred under the Partnership Agreement and
Borrower shall have delivered to Agent, in form and substance satisfactory to
Agent and (unless otherwise indicated) each dated the Effective Date:
(a) Evidence, in form and substance reasonably satisfactory to Agent,
that all aspects of the Prepayment Transactions have closed or are
simultaneously closing on terms satisfactory to Agent, in compliance with all
relevant laws and regulations.
(b) A Notice of Revolving Credit Advance or Conversion, if a
Revolving Credit Advance is to be made on the Effective Date, duly executed by
Borrower.
(c) Favorable opinions of Sullivan & Cromwell, counsel to
Cablevision, V Cable, Newco and their respective Subsidiaries, in substantially
the form attached hereto as Exhibit C-1 and of Robert S. Lemle, counsel to
Cablevision, in substantially the form attached hereto as Exhibit C-2, it being
understood that to the extent that any such opinion shall rely upon any other
opinion of counsel or any of such opinions are to instead be rendered by other
counsel, each such other counsel shall be acceptable to Agent and each such
other opinion shall be in form and substance reasonably satisfactory to Agent
and shall provide that Agent and each Lender may rely thereon.
(d) Resolutions of (i) the board of directors of each Loan Party
which is a corporation, certified by the Secretary or Assistant Secretary of
such Loan Party and (ii) the general partners or management committee of each
Loan Party which is a partnership, certified by a general partner of each such
partnership, in each case as of the Effective Date, to be duly adopted and in
full force and effect on such date, authorizing (A) the consummation of
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each of the transactions contemplated by the Loan Documents to which each such
Loan Party is a party, (B) specific officers to execute and deliver this
Agreement (in the case of Borrower) and each other Loan Document to which such
Loan Party is a party and (C) the execution, delivery and performance by each
such Loan Party of each other Ancillary Agreement to be delivered on or prior to
the Effective Date to which such Loan Party is a party.
(e) [Intentionally Omitted]
(f) A copy of the organizational documents and all amendments thereto
of each Loan Party and copies of such Loan Party's by-laws and partnership
agreements, certified by the Secretary or Assistant Secretary (or general
partner, if applicable) of such Loan Party as true and correct as of the
Effective Date.
(g) A certificate of the Senior Vice President and Treasurer of a
general partner of Borrower stating that all of the representations and
warranties (other than the representations contained in Section 4.16 hereof) of
each Loan Party contained herein or in any of the Loan Documents are correct on
and as of the Effective Date as though made on and as of such date (except to
the extent any such representation or warranty expressly relates to an earlier
date and except for changes therein permitted or contemplated by this Agreement)
and that no event has occurred and is continuing, or would result from a
Revolving Credit Advance, if made on the Effective Date, or the Prepayment
Transactions, which constitutes or would constitute a Default or an Event of
Default.
(h) Payment of all reasonable fees and expenses of (i) Agent's
outside counsel Weil, Gotshal & Manges (upon submission no later than 11:00 A.M.
(New York City time) on the Effective Date of a statement thereof in reasonable
detail) and (ii) all special local counsel (including, without limitation, Kaye,
Scholer, Fierman, Hays & Handler and Akin, Gump, Strauss, Hauer & Feld, L.L.P.)
retained in connection with any of the Loan Documents and the transactions
contemplated thereby.
(i) Certificates of the Secretary or an Assistant Secretary of each
Loan Party which is a corporation and of a general partner of each Loan Party
which is a partnership as to the incumbency and signatures of the officers or
representatives of such entity executing this Agreement, any of
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the Loan Documents or other Ancillary Agreements or any other certificate or
document to be delivered by such Person pursuant hereto or thereto, together
with evidence of the incumbency and authority of such Secretary or Assistant
Secretary or general partner.
(j) A copy (or other evidence reasonably satisfactory to Agent) of
each consent, license and approval required to have been obtained in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement, the other Loan Documents and Ancillary Agreements, the consummation
of the Prepayment Transactions, such consents, licenses and approvals to be
satisfactory, in form and substance, to Agent.
(k) Such additional information and materials as Agent may reasonably
request, including, without limitation, copies of any debt agreements, security
agreements and other material contracts.
3.2. CONDITIONS TO EACH REVOLVING CREDIT ADVANCE. (a) It shall be a
condition to the funding of each subsequent Revolving Credit Advance that the
following statements shall be true on the date of each such funding:
(i) All of the representations and warranties of the Loan
Parties contained herein or in any of the Loan Documents shall be correct
on and as of each such date as though made on and as of such date, except
(A) to the extent that any such representation or warranty expressly
relates to an earlier date and (B) for changes therein permitted or
contemplated by this Agreement.
(ii) No event shall have occurred and be continuing, or would
result from any such funding or incurrence, which constitutes or would
constitute a Default or an Event of Default.
(b) The acceptance by Borrower of the proceeds of any Revolving
Credit Advance shall be deemed to constitute, as of the date of such acceptance,
(i) a representation and warranty by Borrower that the conditions in
Section 3.2(a) hereof have been satisfied and (ii) a confirmation by Borrower of
the granting and continuance of Agent's Liens pursuant to the Collateral
Documents.
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4. REPRESENTATIONS AND WARRANTIES
To induce GE Capital and Lenders to make the Revolving Credit Loan, as
herein provided for, Borrower makes the following representations and warranties
to GE Capital and Lenders, each and all of which (subject, in the case of
Section 4.8 hereof, to Section 6.15 hereof) shall be true and correct as of the
date of execution and delivery of this Agreement after giving effect to the
Prepayment Transactions, and each and all of which shall survive the execution
and delivery of this Agreement:
4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW. (a)
Borrower and each of its Active Subsidiaries (i) is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
state of incorporation or organization; (ii) is duly qualified to do business
and is in good standing under the laws of each jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification
(except for jurisdictions in which such failure to so qualify or to be in good
standing would not have a Material Adverse Effect).
(b) Borrower and each of its Subsidiaries (i) has the requisite
corporate or partnership power and authority to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease, and to conduct its business as now and proposed to be conducted;
(ii) has, or will by the Effective Date have, all material licenses, permits,
consents or approvals from or by, and has made all material filings with, and
has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct
(except where any failure to obtain such licenses, permits, consents or
approvals, or to make such filings, would not have a Material Adverse Effect);
(iii) is in compliance with its certificate of incorporation and by-laws or
certificate or articles of partnership or partnership agreement (as the case may
be); and (iv) is in compliance with all applicable provisions of law where the
failure to comply would have a Material Adverse Effect.
4.2. EXECUTIVE OFFICES. The current location of Borrower's and each
of its Subsidiaries' executive offices and principal place of business is set
forth on Schedule 4.2 hereto.
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4.3. SUBSIDIARIES. There currently exist no Subsidiaries of Borrower
other than as set forth on Schedule 4.3 hereto, which sets forth such
Subsidiaries, together with their respective jurisdictions of organization, and
the authorized and outstanding Stock of each such Subsidiary by class and the
number and percentage of each such class legally owned by Borrower or a
Subsidiary of Borrower or any other Person, or to be owned by the Effective
Date. There are no outstanding options, warrants, rights to purchase or similar
rights covering Stock of any such Subsidiary. The Subsidiaries of Borrower,
other than the Active Subsidiaries, have no significant liabilities or
obligations and conduct no business.
4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Borrower and its
Subsidiaries of the Loan Documents and all other existing Ancillary Agreements
and all instruments and documents to be delivered by Borrower and its
Subsidiaries, to the extent they are parties thereto, hereunder and thereunder,
and the creation of all Liens provided for herein and therein: (i) are within
Borrower's and its Subsidiaries' corporate or partnership power; (ii) have been,
or by the Effective Date will be, duly authorized by all necessary or proper
corporate or partnership action; (iii) are not in contravention of any provision
of Borrower's or its Subsidiaries' respective certificates or articles of
incorporation or by-laws or certificates or articles of partnership or
partnership agreements, as the case may be; (iv) will not violate any law or
regulation, or any order or decree of any court or Governmental Authority (other
than violations which will not, individually or in the aggregate, have a
Material Adverse Effect and which are not known to Borrower); (v) will not
conflict with or result in the breach or termination of, or constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any
of their property is bound; (vi) will not result in the creation or imposition
of any Lien upon any of the property of Borrower or any of its Subsidiaries
other than those in favor of Agent, pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except for the Media Approvals, all of which will have been duly
obtained, made or complied with prior to the Effective Date, except as provided
in the Collateral
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Documents and except for violations which will not have a Material Adverse
Effect and which are not known to Borrower. Upon the delivery, on or prior to
the Effective Date, of each of the Loan Documents, each such Loan Document will
have been duly executed and delivered for the benefit of or on behalf of
Borrower or its Subsidiaries, as the case may be, and each will then constitute
a legal, valid and binding obligation of Borrower or its Subsidiaries, to the
extent they are parties thereto, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and laws affecting creditors' rights generally and, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding of law or in equity).
4.5. INSURANCE. Schedule 4.5 hereto lists all insurance of any
nature maintained by Borrower and each Subsidiary of Borrower, as well as a
summary of the terms of such insurance.
4.6. FINANCIAL STATEMENTS. (a) The audited and unaudited balance
sheets and statements of income, retained earnings and statements of cash flow
of Borrower and its consolidated Subsidiaries most recently furnished to GE
Capital, as agent, and each lender under the Existing USC Loan Agreements prior
to the date of this Agreement, have been, except as noted therein, prepared in
conformity with GAAP consistently applied throughout the periods involved, and
present fairly the consolidated financial position of Borrower and such
Subsidiaries in each case as at the dates thereof, and the results of operations
and statements of cash flow for the periods then ended (as to the unaudited
interim financial statements, subject to normal year-end audit adjustments).
(b) Borrower and its Subsidiaries, as of December 31, 1995, had no
obligations, contingent liabilities or liabilities for Charges, long-term leases
or unusual forward or long-term commitments which are not reflected in the
consolidated balance sheet of Borrower and its Subsidiaries referred to in
Section 4.6(a) hereof and which would have a Material Adverse Effect.
(c) No dividends or other distributions have been declared, paid or
made upon any Stock of Borrower or any of its Subsidiaries nor has any Stock of
Borrower or any of its Subsidiaries been redeemed, retired, purchased or
otherwise acquired for value by Borrower or any of its Subsidiaries
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since December 31, 1995, otherwise than as permitted by this Agreement or as
reflected in the consolidated balance sheet of Borrower and its consolidated
Subsidiaries referred to in Section 4.6(a) hereof.
4.7. [INTENTIONALLY OMITTED]
4.8. OWNERSHIP OF PROPERTY; LIENS. (a) (i) Except as disclosed in
Schedules 4.8(a) and 4.8(b) hereto, each of Borrower and each of its
Subsidiaries owns good and marketable fee simple title to all of the Real Estate
described on Schedule 4.8(a) hereto and good, valid and marketable leasehold
interests in the Leases described in Schedule 4.8(b) hereto, and good and
marketable title to, or valid leasehold interests in, all of its other
properties and assets, except where any failure to hold any such title or
interest would not have a Material Adverse Effect; (ii) none of the properties
or assets of Borrower or any of its Subsidiaries, including, without limitation,
the Real Estate and Leases, are subject to any Liens, except (x) Permitted
Encumbrances and (y) Liens pursuant to the Collateral Documents; and
(iii) Borrower and each of its Subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and duly effected all recordings,
filings and other actions necessary to establish, protect and perfect Borrower's
and its Subsidiaries' right, title and interest in and to all such property
except where the failure to have received such documents or effected such
actions will not, in the aggregate, have a Material Adverse Effect.
(b) All real property owned or leased by Borrower or any of its
Subsidiaries is set forth on Schedules 4.8(a) and 4.8(b) hereto, respectively.
Neither Borrower nor any of its Subsidiaries owns any other Real Estate or is
lessee or lessor under any leases other than as set forth therein. Schedules
4.8(a) and 4.8(b) hereto are true and correct in all material respects. Part
One of Schedule 4.8(b) hereto sets forth all Leases of real property held by
Borrower or any of its Subsidiaries as lessee and Part Two of Schedule 4.8(b)
hereto sets forth all leases of real property held by Borrower or any of its
Subsidiaries as lessor together with information regarding the commencement
date, termination date, renewal options (if any) and annual base rents for the
years [1995 and 1996]. Each of such leases is valid and enforceable in
accordance with its terms and is in full force and effect, subject to applicable
bankruptcy, insolvency,
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reorganization, moratorium and other laws affecting creditors' rights generally
and to general equitable principles. Borrower has delivered to Agent true and
complete copies of each of such leases set forth on Part One and Part Two of
Schedule 4.8(b) hereto and all documents affecting the rights or obligations of
Borrower or any of its Subsidiaries which is a party thereto, including, without
limitation, any non-disturbance and recognition agreement, subordination
agreement, attornment agreement and any agreement regarding the term or rental
of any of the Leases. Neither Borrower nor any of its Subsidiaries nor any
other party to any such lease is in default of its obligations thereunder or has
delivered or received any notice of default under any such lease, nor has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease, except for any default which
would not have a Material Adverse Effect.
(c) No real property, or any part thereof, owned or leased by
Borrower or any of its Subsidiaries has been materially damaged by fire or other
casualty which has not been completely restored or is subject to any pending,
or, to the knowledge of Borrower or any of its Subsidiaries, threatened or
contemplated condemnation proceeding or any sale or other disposition thereof,
in lieu of condemnation.
4.9. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in
default, nor, to Borrower's knowledge, is any third party in default, under or
with respect to any Media License, contract, agreement, lease or other
instrument to which it is a party, except for any default which (either
individually or collectively with other defaults arising out of the same event
or events) would not have a Material Adverse Effect, and no Default or Event of
Default has occurred and is continuing.
4.10. LABOR MATTERS. There are no strikes or other labor disputes
against Borrower or any of its Subsidiaries pending or, to Borrower's knowledge,
threatened, which would have a Material Adverse Effect. Hours worked by and
payment made to employees of Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters which would have a Material Adverse Effect. All payments due
from Borrower or any of its Subsidiaries on account of employee health and
welfare insurance which would have a Material Adverse Effect if not paid have
been paid or ac
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crued as a liability on the books of Borrower or such Subsidiary.
4.11. OTHER VENTURES. Except as set forth in Schedule 4.11, neither
Borrower nor any of its Subsidiaries is engaged in any joint venture or
partnership with any other Person.
4.12. INVESTMENT COMPANY ACT. Neither Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. None of
the making of the Revolving Credit Advances by GE Capital, the application of
the proceeds and repayment thereof by Borrower or the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
violate any provision of such Act or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
4.13. MARGIN REGULATIONS. Borrower does not own any "margin
security," as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and the
proceeds of the Loans will be used only for the purposes contemplated hereby.
None of the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulation G, T, U or X
of the Federal Reserve Board. Borrower will not take or permit any agent acting
on its behalf to take any action which might cause this Agreement or any
document or instrument delivered pursuant hereto to violate any regulation of
the Federal Reserve Board.
4.14. TAXES. All federal, state, local and foreign tax returns,
reports and statements required to be filed by Borrower or any of its
Subsidiaries have been filed with the appropriate Governmental Authorities and
all Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid or, as disclosed on
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Schedule 4.14 hereto, is being contested in good faith by appropriate procedures
(and the provisions of Section 6.2(b) hereof are being met with respect
thereto). Each of Borrower and each of its Subsidiaries has paid when due and
payable all requisite Charges (except where the failure to do so would not have
a Material Adverse Effect). Proper and accurate amounts have been withheld by
Borrower and each of its Subsidiaries from their respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities (except where the failure to do so would not have a
Material Adverse Effect). Schedule 4.14 hereto sets forth, for each of Borrower
and each of its Subsidiaries, those taxable years for which its tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority. Except as described in Schedule 4.14 hereto, neither Borrower nor
any of its Subsidiaries has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
Neither Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC
Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any dispositions
of subsection (f) assets (as such term is defined in IRC Section 341(f)(4)).
None of the property owned by Borrower or any of its Subsidiaries is property
which such Person is required to treat as being owned by any other Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended, as in effect immediately prior to the enactment of the Tax
Reform Act of 1986 or is "tax-exempt use property" within the meaning of IRC
Section 168(h). Except as set forth on Schedule 4.14 hereto, neither Borrower
nor any of its Subsidiaries has agreed or has been requested to make any
adjustment under IRC Section 481(a) by reason of a change in accounting method
or otherwise initiated by Borrower or any of its Subsidiaries and neither
Borrower nor any of its Subsidiaries has any knowledge that the IRS has proposed
any such adjustment or change in accounting method. Except as set forth on
Schedule 4.14 hereto, neither Borrower nor any of its Subsidiaries has any
obligation under any written tax sharing agreement.
4.15. ERISA. Schedule 4.15 hereto lists all Plans maintained or
contributed to by Borrower or any of its ERISA Affiliates, and separately
identifies any Multiem-
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ployer Plans of Borrower or any of its ERISA Affiliates and any Welfare Plans.
Each such Plan has been determined by the IRS to be tax qualified under IRC
Section 401(a), and the trusts created thereunder have been determined to be
exempt from tax under the provisions of IRC Section 501, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status
or the imposition of any IRC or ERISA liability or penalty in excess of
$1,000,000. Each such Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under ERISA, the IRC or any other applicable law or regulation with the
relevant Governmental Authority the failure of which to file could reasonably be
expected to result in a liability of Borrower or such ERISA Affiliate in excess
of $1,000,000 and all such reports which are true and correct in all material
respects as of the date given. None of Borrower, any of its Subsidiaries or any
of its ERISA Affiliates, with respect to any of their Plans, has failed to make
any contribution or pay any amount due as required under Section 412 of the IRC
or Section 302 of ERISA or the terms of any such Plan. Neither Borrower nor any
of its ERISA Affiliates has engaged in a "prohibited transaction," as such term
is defined in IRC Section 4975 and Title I of ERISA, in connection with any of
their Plans which would subject, or has a reasonable likelihood of subjecting,
Borrower or such ERISA Affiliate (after giving effect to any exemption) to the
tax on prohibited transactions imposed by IRC Section 4975 or any other
liability, PROVIDED that the "amount involved" under said section is in excess
of $1,000,000. No Plan of Borrower or any of its ERISA Affiliates which is not
a Multiemployer Plan has been terminated, nor has any accumulated funding
deficiency (as defined in IRC Section 412(a)) been incurred (without regard to
any waiver granted under IRC Section 412), nor has any funding waiver from the
IRS been received or requested. There has not been any Reportable Event or any
event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Plan of Borrower or any of its ERISA Affiliates (other than a
Multiemployer Plan), if any of the foregoing could reasonably result in
liability of Borrower or any of its ERISA Affiliates in excess of $1,000,000.
The value of the assets of each Plan of Borrower or any of its ERISA Affiliates
(other than a Multiemployer Plan) equalled or exceeded the present value of the
accrued benefits of each such Plan as of the end of the preceding Plan year
using Plan actuarial assumptions as in effect for such Plan year. There are no
claims (other than claims for benefits in the
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normal course), actions or lawsuits asserted or instituted against, and neither
Borrower nor any of its ERISA Affiliates has knowledge of any threatened
litigation or claims against (i) the assets of any of their Plans (other than a
Multiemployer Plan) or against any fiduciary of such Plan with respect to the
operation of such Plan or (ii) Borrower, any of its Subsidiaries or any of
Borrower's ERISA Affiliates with respect to any of their Plans which, if
adversely determined, could have a material effect on the business, operations,
properties, assets or conditions (financial or otherwise) of Borrower or any of
its ERISA Affiliates, taken as a whole. Any bond required to be obtained by
Borrower or any of its ERISA Affiliates under ERISA with respect to any Plan has
been obtained and is in full force and effect. Neither Borrower nor any of its
ERISA Affiliates has incurred (a) any Withdrawal Liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 of ERISA as a result of a complete
or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from
a Multiemployer Plan, which would exceed $1,000,000 in the aggregate or (b) any
liability under ERISA Section 4062 to the PBGC, to a trust established under
ERISA Section 4041 or 4042 or to a trustee appointed under ERISA Section 4042.
Neither Borrower nor any of its ERISA Affiliates nor any organization to which
Borrower or such ERISA Affiliate is a successor or parent corporation within the
meaning of ERISA Section 4069(b) has engaged in a transaction within the meaning
of ERISA Section 4069. Except as set forth on Schedule 4.15 hereto, neither
Borrower nor any of its Subsidiaries maintains or has established any Welfare
Plan. Borrower and each of its ERISA Affiliates has complied in all material
respects with the notice and continuation coverage requirements of Section 4980B
of the IRC and the regulations thereunder. Except as set forth on Schedule 4.15
hereto, no liability under any Plan of Borrower or any of its ERISA Affiliates
has been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by Standard & Poor's
Corporation and the equivalent by each other nationally recognized statistical
rating organization.
4.16. NO LITIGATION. Except as set forth on Schedule 4.16 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower or any of its Subsidiaries, at law, in equity or
otherwise, before any court, board, commission, agency or
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instrumentality of any federal, state or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, which, if
determined adversely, is reasonably likely to have a Material Adverse Effect,
nor, to the knowledge of Borrower, does a state of facts exist which is
reasonably likely to give rise to any such proceeding. Except as expressly set
forth on Schedule 4.16 hereto, none of the matters set forth therein questions
the validity of any of the Loan Documents, any of the other documents to be
entered into in connection with the Restructuring or any action taken or to be
taken pursuant thereto, or would either individually or in the aggregate have a
Material Adverse Effect.
4.17. BROKERS. No broker or finder acting on behalf of Borrower
brought about the obtaining, making or closing of the Loans made pursuant to
this Agreement or the Restructuring and Borrower has no obligation to any Person
in respect of any finder's or brokerage fees in connection with the Loans
contemplated by this Agreement or the Restructuring.
4.18. REDEMPTION AGREEMENT; PREPAYMENT TRANSACTIONS; CONSENTS. (a)
A true and complete copy of the Redemption Agreement (including all exhibits,
schedules and amendments thereto) has been delivered to Agent, and a true and
complete copy of each document delivered at the closing of the transactions
contemplated by the Prepayment Transactions will be delivered to Agent on the
Effective Date. None of Borrower or any of its Subsidiaries is in default under
the Redemption Agreement or under any instrument or document to be delivered in
connection therewith.
(b) All necessary consents of the FCC and other Governmental
Authorities required in connection with the USC Management Agreement, the
Partnership Agreement, the Redemption Agreement and all the Prepayment
Transactions have been obtained or will be obtained prior to the Effective Date,
except (with respect to any consents required under any Media Licenses) where
neither the failure to obtain any such consent nor the termination of any such
Media License could reasonably be expected to have a Material Adverse Effect.
4.19. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC. The Stock of
Borrower owned by the partners of Borrower listed on Schedule 4.19 hereto at the
Effective Date will
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constitute all of the issued and outstanding Stock of Borrower immediately
following the Effective Date. Borrower will on the Effective Date have no
outstanding rights, options, warrants or agreements pursuant to which it may be
required to issue or sell any Stock other than the Redemption Agreement.
4.20. EMPLOYMENT AND LABOR AGREEMENTS. Except for the Partnership
Agreement and the USC Management Agreement and as set forth on Schedule 4.20
hereto, there are no employment, consulting or management agreements covering
management of Borrower or any of its Subsidiaries and there are no collective
bargaining agreements or other labor agreements covering any employees of
Borrower or any of its Subsidiaries. A true and complete copy of each such
agreement has been furnished to Agent.
4.21. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as set
forth on Schedule 4.21 hereto, there are no licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications or
trade names necessary for Borrower or any of its Subsidiaries to continue to
conduct its business as now conducted by them or proposed to be conducted by
them. Borrower and each of its Subsidiaries conducts its respective businesses
without infringement or claim of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual property
right of others, except where such infringement or claim of infringement would
not have a Material Adverse Effect. To the best of Borrower's knowledge, there
is no infringement or claim of infringement by others of any material license,
patent, copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of Borrower or any of its Subsidiaries.
4.22. FULL DISCLOSURE. No information contained in this Agreement,
the other Loan Documents, the Financials, or any written statement furnished by
or on behalf of Borrower or any of its Subsidiaries pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which made and taking
into account the transactions contemplated hereby and by the Prepayment
Transactions.
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4.23. LIENS. Except as otherwise provided in the Collateral
Documents, the Liens granted to Lenders pursuant to the Collateral Documents
will on the Effective Date be fully perfected first priority Liens in and to the
Collateral described therein, except as such priority may be affected by any
Permitted Encumbrances.
4.24. MEDIA LICENSES. Set forth on Schedule 4.24(a) hereto is a
complete and correct list of all of the Media Licenses held by Borrower or any
of its Subsidiaries relating to any of the Systems (which list sets forth the
number of Subscribers attributable to such Media License as of December 31,
1995). All approvals, applications, filings, registrations, consents or other
actions required of any local, state or federal authority to enable Borrower or
any of its Subsidiaries (as the case may be) to exploit any such Media License
have been obtained or made. Except as set forth on Schedule 4.24(b) hereto,
neither Borrower nor any of its Subsidiaries has received any notice from the
granting body or any other Governmental Authority with respect to any material
breach of any covenant under, or any material default with respect to, any Media
License held by Borrower or any of its Subsidiaries. True and complete copies
of all Media Licenses listed on Schedule 4.24(a) hereto have previously been, or
will upon receipt be, delivered to Agent. No material default has occurred and
is continuing under any Media License held by Borrower or any of its
Subsidiaries which default could reasonably be expected to have a Material
Adverse Effect. All consents and approvals of and filings and registrations
with, and all other actions in respect of, all Governmental Authorities required
to maintain any Media License held by Borrower or any of its Subsidiaries in
full force and effect prior to the scheduled date of expiration thereof have
been or, prior to the time when required, will have been, obtained, given, filed
or taken and are or will be in full force and effect, except where the loss of
any such Media License, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
4.25. ENVIRONMENTAL PROTECTION. To Borrower's knowledge, all
property owned or leased by Borrower or any of its Subsidiaries is free of
Contaminants or any other substance which could result in the incurrence of
material liabilities, or constituent thereof, currently defined, identified or
listed as hazardous or toxic pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., or
any other
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Environmental Law, or any other substance which has in the past or could at any
time in the future cause or constitute a health, safety or environmental hazard
to any Person or property, including, without limitation, asbestos in any
building, petroleum products, PCBs, pesticides and radioactive materials. To
Borrower's knowledge, none of Borrower or any of its Subsidiaries has caused or
suffered to occur any Release of any Contaminant into the environment or any
other condition that could result in the incurrence of material liabilities or
any material violations of any Environmental Law. To Borrower's knowledge,
based on reasonable investigation, none of Borrower or any of its Subsidiaries
has caused or suffered to occur any condition on any of Borrower's Facilities
that could give rise to the imposition of any Lien under any Environmental Law.
To Borrower's knowledge, based on reasonable investigation, none of Borrower or
any of its Subsidiaries is engaged in any manufacturing or any other operations,
other than the use of petroleum products for vehicles, that require the use,
handling, transportation, storage or disposal of any Contaminant, where such
operations require permits or are otherwise regulated pursuant to any
Environmental Law.
4.26. RECEIPT OF AGREEMENTS. Borrower acknowledges receipt of, and
has reviewed, each Ancillary Agreement delivered on or prior to the Effective
Date.
5. FINANCIAL STATEMENTS AND INFORMATION
5.1. REPORTS AND NOTICES. Borrower covenants and agrees that from
and after the Effective Date and until the Termination Date, it shall deliver to
Agent and, with respect to Sections 5.1(a) through (h), to each Lender:
(a) Within 30 days after the end of each month, (i) a copy of the
unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the
end of such month and (ii) a copy of the unaudited consolidated and
consolidating statements of income of Borrower and its Subsidiaries for such
month and for the year to date, all prepared in accordance with GAAP (subject to
normal year-end adjustments and, in the case of the balance sheet, to the lack
of requisite footnotes), setting forth in comparative form in each case the
projected consolidated figures for such period (all such financial statements to
include appropriate supporting details (prepared separately for each of
Missouri, Kentucky, Florida, North Carolina and any other state, if any)
delineating the financial positions and
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performance of each System and the amount and nature of any Capital Expenditures
during such month).
(b) Within 45 days after the end of each Fiscal Quarter, (i) a copy
of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as
of the close of such quarter and the related consolidated and consolidating
statements of income and cash flows for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) a copy of the unaudited
consolidated and consolidating statements of income and cash flow of Borrower
and its Subsidiaries for such Fiscal Quarter, all prepared in accordance with
GAAP (subject to normal year-end adjustments), such financial statements to
include appropriate supporting details delineating the financial position and
condition of each System and to be accompanied by (A) a statement in reasonable
detail showing the calculations used in determining compliance with the covenant
set forth in Section 7.10 hereof, (B) a statement in reasonable detail showing
the amount and nature of any Capital Expenditures (prepared separately for each
of Missouri, Kentucky, Florida, North Carolina and any other state, if any)
during such Fiscal Quarter and (C) the certification of the chief executive
officer or chief financial officer of Borrower that all such financial
statements are complete and correct and present fairly in accordance with GAAP
(subject to normal year-end adjustments) the consolidated financial position,
the consolidated and consolidating results of operations and the cash flows of
Borrower and its Subsidiaries as at the end of such quarter and for the period
then ended, and that there was no Default or Event of Default in existence as of
such time.
(c) Within 90 days after the end of each Fiscal Year (or, if Borrower
shall then be subject to the periodic reporting requirements of Section 13 or
Section 15(d) of the Securities and Exchange Act of 1934, as amended, and its
Fiscal Year shall then end on December 31 of each year, on such later date as
Borrower files its Annual Report on Form 10-K, but in no event later than 105
days after the end of each Fiscal Year), a copy of the annual audited
consolidated and unaudited consolidating financial statements of Borrower and
its Subsidiaries, consisting of consolidated and consolidating balance sheets
and consolidated and consolidating statements of income and partners' capital
and cash flows, setting forth in comparative form in each case the consolidated
and consolidating figures for the previous Fiscal Year, which financial
statements shall be prepared in accor-
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dance with GAAP, certified (only with respect to the consolidated financial
statements) without qualification by the independent certified public
accountants regularly retained by Borrower, by any other "Big 6" firm of
independent certified public accountants or by any other firm of independent
certified public accountants of recognized national standing selected by
Borrower and acceptable to Agent, and accompanied by (i) a schedule in
reasonable detail showing the calculations used in determining (x) compliance
with the covenant set forth in Section 7.10 hereof and (y) the amount of
Consolidated Available Cash Flow for such Fiscal Year, (ii) a report from such
accountants to the effect that in connection with their audit examination,
nothing has come to their attention to cause them to believe that a Default or
Event of Default has occurred, (iii) a certification of the chief executive
officer or chief financial officer of Borrower that, to the best of his
knowledge, there was no Default or Event of Default in existence as at the end
of such Fiscal Year, (iv) a statement in reasonable detail showing the amount
and nature of any Capital Expenditures (prepared respectively for each of
Missouri, Kentucky, Florida, North Carolina and any other state, if any) during
such Fiscal Year, and (v) in the case of Fiscal Year 1995, a certificate of
Borrower certifying the ratio of Total Debt to Annualized Consolidated System
Cash Flow as of the Effective Date together with a certificate of KPMG Peat
Marwick certifying Annualized Consolidated System Cash Flow as of the Effective
Date.
(d) As soon as practicable, but in any event within five Business
Days after an executive officer of Borrower becomes aware of the existence of
any Default or Event of Default, or any development or other information which
has had, or which such officer reasonably believes will have, a Material Adverse
Effect, telephonic or telegraphic notice specifying the nature of such Default
or Event of Default or development or information, including the anticipated
effect thereof, which notice shall be promptly (and in any event within ten
days) confirmed in writing (specifying that such notice is a "Notice of Default
or Event of Default" or a "Notice of Material Adverse Effect", as the case may
be).
(e) (i) Within 30 days after the beginning of each Fiscal Year:
(A) projected consolidated cash flow statements of Borrower and
its Subsidiaries (prepared
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separately for each of Missouri, Kentucky, Florida, North Carolina and
any other state, if any), including summary details of cash
disbursements, including for Capital Expenditures, for such Fiscal
Year, on a monthly basis; and
(B) projected consolidated income statements of Borrower and its
Subsidiaries (prepared separately for each of Missouri, Kentucky,
Florida, North Carolina and any other state, if any) for such Fiscal
Year, on a monthly basis;
(ii) Within 60 days after the beginning of each Fiscal Year,
projected consolidated balance sheets of Borrower and its Subsidiaries for
such Fiscal Year, on a quarterly basis;
(iii) Within 90 days after the beginning of each Fiscal Year:
(A) projected consolidated balance sheets of Borrower and its
Subsidiaries for each subsequent Fiscal Year through and including the
Fiscal Year in which the Maturity Date occurs, on an annual basis;
(B) projected consolidated cash flow statements of Borrower and
its Subsidiaries (prepared separately for each of Missouri, Kentucky,
Florida, North Carolina and any other state, if any), including
summary details of cash disbursements, including for Capital
Expenditures, for each subsequent Fiscal Year through and including
the Fiscal Year in which the Maturity Date occurs, on an annual basis;
and
(C) projected consolidated income statements of Borrower and its
Subsidiaries (prepared separately for each of Missouri, Kentucky,
Florida, North Carolina and any other state, if any), for each
subsequent Fiscal Year through and including the Fiscal Year in which
the Maturity Date occurs, on an annual basis;
together (in the case of clauses (i), (ii) and (iii) above) with appropriate
supporting details as may be reasonably requested by any Lender (including,
without limitation, a breakout (prepared separately for each of Missouri,
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Kentucky, Florida, North Carolina and any other state, if any) of projected
Subscribers, Premium Units, Homes Passed and rates in effect for Subscribers).
(f) If requested in writing by Agent or any Lender, copies of all
federal, state, local and foreign tax returns and reports in respect of income,
franchise or other taxes on or measured by income (excluding sales, use or like
taxes) filed by Borrower or any of its Subsidiaries.
(g) Within 30 days following the end of each calendar month, a
Subscriber statistic report for such month in such detail as may be reasonably
requested by Agent, certified by Borrower, including but not limited to (i) the
number of Subscribers and Premium Units for each cable television system
(prepared separately for each of Missouri, Kentucky, Florida, North Carolina and
any other state, if any) owned or operated by Borrower or any of its
Subsidiaries separately identifying the number of Subscribers (A) whose accounts
payable to Borrower or any of its Subsidiaries are more than 90 days past due
from the date of billing or (B) as to which a request has been made that service
be discontinued, (ii) Homes Passed during such period, (iii) average recurring
revenue per Subscriber during such period and (iv) a comparison of such actual
number of Subscribers and Premium Units with the number and composition of
Subscribers and Premium Units assumed by Borrower for purposes of the
projections relating to such period furnished by Borrower to Agent and each
Lender pursuant to Section 5.1(e) hereof.
(h) Within 15 days after being requested to do so by Agent within one
year after the Effective Date, supplements or amendments, if any, to the
Schedules hereto and representations and warranties herein with respect to any
matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth in such Schedule or as an
exception to such representation or warranty or which is necessary to correct
any information in such Schedule or representation or warranty which has been
rendered inaccurate thereby; PROVIDED, HOWEVER, that Borrower shall be required
to prepare and deliver such supplements and amendments only once.
(i) Within 60 days after the Effective Date, an unaudited balance
sheet of Borrower and its Subsidiaries as
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of the Effective Date (and after giving effect to the Prepayment Transactions),
prepared in accordance with GAAP.
(j) Such information as Agent may reasonably request concerning the
amount and method of allocation of Allocation Items (as defined in the USC
Management Agreement) charged to Borrower or any of its Subsidiaries pursuant to
the USC Management Agreement.
(k) Such other information respecting Borrower's or any of its
Subsidiaries' business, financial condition or prospects as Agent or any Lender
may, from time to time, reasonably request in writing.
5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Agent to
communicate directly with its independent certified public accountants and
authorizes those accountants to disclose to Agent any and all financial
statements and other supporting financial documents and schedules, including
copies of any management letter with respect to the business, financial
condition and other affairs of Borrower or any of its Subsidiaries. On or
before the Effective Date, Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section 5.2.
Agent agrees to provide Borrower with reasonable notice prior to requesting any
such information from Borrower's accountants (and an officer of Borrower shall
be entitled to attend any meeting between, and to participate in any
communication between, Agent and such accountants), except that no such notice
shall be required upon the occurrence and during the continuance of any Event of
Default.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Required Lenders shall
otherwise consent in writing, from and after the date hereof and until the
Termination Date:
6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower
shall, and shall cause each of its Subsidiaries to, (a) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights, licenses, privileges and franchises; (b) continue to
conduct its business substantially as conducted on the date hereof (other than
changes therein otherwise permitted hereunder); and (c) at all times maintain,
preserve and protect all of its trademarks and
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trade names and preserve the remainder of its property in use or useful in the
conduct of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with cable
television industry practices, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; SUBJECT, in
the case of clauses (b) and (c) above, to such changes which are consistent with
the operation by Borrower and its Subsidiaries of cable television systems and
which would not have a Material Adverse Effect.
6.2. PAYMENT OF OBLIGATIONS. (a) Borrower shall, and shall cause
each of its Subsidiaries to, (i) pay and discharge or cause to be paid and
discharged, all the Obligations, as and when due and payable and (ii) pay and
discharge, or cause to be paid and discharged promptly, all (A) Charges imposed
upon it, its income and profits or any of its property (real, personal or mixed)
and (B) lawful claims for labor, materials, supplies and services or otherwise
before any thereof shall become in default (except, in the case of clauses (A)
and (B) above, for Charges and other claims not exceeding $600,000 in the
aggregate at any one time outstanding.
(b) Borrower and its Subsidiaries may in good faith contest, by
proper legal actions or proceedings, the validity or amount of any Charges or
claims referred to in Section 6.2(a)(i) or (ii) hereof, PROVIDED that at the
time of commencement of any such action or proceeding, and during the pendency
thereof (i) no Default or Event of Default shall have occurred as a result
thereof; (ii) adequate Reserves with respect thereto are maintained on the books
of Borrower or such Subsidiary, in accordance with GAAP; (iii) such contest
operates to suspend collection of the contested Charges or claims; (iv) none of
the Collateral would be subject to forfeiture or loss or any Lien by reason of
the institution or prosecution of such contest; (v) no Lien shall exist for such
Charges or claims during such action or proceeding; (vi) Borrower or such
Subsidiary shall promptly pay or discharge such contested Charges and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to
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Borrower or such Subsidiary; and (vii) nonpayment or nondischarge thereof would
not have a Material Adverse Effect.
(c) Notwithstanding anything to the contrary contained in
Section 6.2(b) hereof, Borrower and each of its Subsidiaries shall have the
right to pay the Charges or claims described in Section 6.2(a)(ii) hereof and in
good faith contest, by proper legal actions or proceedings, the validity or
amount of such Charges or claims.
6.3. AGENT'S FEES. Borrower shall pay to Agent, on demand, any and
all reasonable fees, costs or expenses that Agent shall pay to a bank or other
similar institution arising out of or in connection with the forwarding to
Borrower or any other Person on behalf of Borrower by Agent of proceeds of the
Loans.
6.4. BOOKS AND RECORDS. Borrower shall, and shall cause each of its
Subsidiaries to, keep adequate records and books of account with respect to its
business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financials referred to in Section 4.6(b) hereof.
6.5. LITIGATION. Borrower shall notify Agent in writing, promptly
upon learning thereof, of any litigation commenced against Borrower and/or any
of its Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding in each case that, either individually or in the
aggregate, might, in the reasonable judgment of Borrower, have a Material
Adverse Effect.
6.6. INSURANCE. Borrower shall, and shall cause each of its
Subsidiaries to, maintain insurance covering, without limitation, fire, theft,
burglary, public liability, property damage, product liability, workers'
compensation and insurance on all property and assets, all in amounts and scope
customary for the cable television industry and under policies issued by
insurers reasonably satisfactory to Agent and with a lender's loss payable
clause in favor of Agent for the benefit of Lenders. Borrower shall, and shall
cause each of its Subsidiaries to, pay all insurance premiums payable by them
when due.
6.7. COMPLIANCE WITH LAW. Borrower shall, and shall cause each of
its Subsidiaries to, comply with all federal, state and local laws and
regulations applicable to
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it, including, without limitation, those regarding the collection, payment and
deposit of employees' income, unemployment and social security taxes and those
relating to environmental matters, except in each case where the failure to
comply is not reasonably likely to have a Material Adverse Effect.
6.8. AGREEMENTS. Borrower shall, and shall cause each of its
Subsidiaries to, perform, within all required time periods (after giving effect
to any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement with any of its Affiliates to which it is a party,
including, without limitation, any leases to which Borrower or such Subsidiary
is a party, where the failure to so perform and enforce would have a Material
Adverse Effect. Borrower shall not, and shall cause each of its Subsidiaries
not to, terminate or modify in any manner adverse to any such party any
provision of any such agreement which termination or modification could have a
Material Adverse Effect.
6.9. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer
Plan, (i) for each Plan hereafter adopted or maintained by Borrower or any of
its ERISA Affiliates, Borrower shall or shall cause such ERISA Affiliate to seek
and receive determination letters from the IRS to the effect that such Plan is
qualified within the meaning of IRC Section 401(a); (ii) from and after the
adoption of any Plan by Borrower or any of its ERISA Affiliates, Borrower shall
cause such Plan to be qualified within the meaning of IRC Section 401(a) and to
be administered in all material respects in accordance with the requirements of
ERISA and IRC Section 401(a); and (iii) Borrower shall not take any action which
would cause such Plan not to be qualified within the meaning of IRC
Section 401(a) or not to be administered in all material respects in accordance
with the requirements of ERISA and IRC Section 401(a).
(b) Borrower shall, and shall cause each of its ERISA Affiliates to,
deliver to Agent: (i)(A) as soon as possible, and in any event within 30 days,
after Borrower or any such ERISA Affiliate knows or has reason to know that any
ERISA Event described in clause (a) of the definition of ERISA Event or any
event requiring disclosure under Section 4063(a) of ERISA with respect to any
Plan of Borrower or any of its ERISA Affiliates has occurred and (B) within 10
days after Borrower or any of its ERISA Affiliates knows or has reason to know
that any other ERISA Event with respect to
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any Plan of Borrower or any of its ERISA Affiliates has occurred or a request
for a minimum funding waiver under IRC Section 412 with respect to any Plan of
Borrower or any of its ERISA Affiliates has been made, a statement of the chief
financial officer of Borrower or such ERISA Affiliate setting forth details as
to such Reportable Event or other event and the action which Borrower or such
ERISA Affiliate proposes to take with respect thereto, together with a copy of
the notice of such Reportable Event or other event, if required by the
applicable regulations under ERISA, given to the PBGC; (ii) promptly (and in any
event within 30 days) after the filing thereof by Borrower or such ERISA
Affiliate with the DOL, IRS or the PBGC, copies of each annual and other report
with respect to each Plan of Borrower and its ERISA Affiliates; (iii) promptly
(and in any event within 30 days) after receipt thereof, a copy of any adverse
notice, determination letter, ruling or opinion Borrower or such ERISA Affiliate
may receive from the PBGC, DOL or IRS with respect to any Plan of Borrower or
any of its ERISA Affiliates; (iv) promptly, and in any event within ten Business
Days after receipt thereof, a copy of any correspondence Borrower or such ERISA
Affiliate receives from the plan sponsor (as defined in ERISA
Section 4001(a)(10)) of any Multiemployer Plan concerning potential withdrawal
liability pursuant to ERISA Section 4219 or Section 4202, and a statement from
the chief financial officer of Borrower or such ERISA Affiliate setting forth
details as to the events giving rise to such potential withdrawal liability and
the action which Borrower or such ERISA Affiliate proposes to take with respect
thereto; (v) notification within 30 days of any material increase in the
benefits of any existing Plan of Borrower or any of its ERISA Affiliates which
is not a Multiemployer Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which Borrower or such ERISA
Affiliate was not previously contributing; (vi) promptly, and in any event
within ten Business Days, after receipt thereof by Borrower or such ERISA
Affiliate from the PBGC, copies of each notice received by Borrower or such
ERISA Affiliate of the PBGC's intention to terminate any of their Plans or to
have a trustee appointed to administer any of their Plans; (vii) notification
within ten days of a request for a minimum funding waiver under IRC Section 412
with respect to any Plan and a copy of such request; (viii) notification within
two Business Days after Borrower or any of its ERISA Affiliates knows or has
reason to know that Borrower or such ERISA Affiliate has or intends to file a
notice of intent to terminate any Plan under a distress termination within the
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meaning of Section 4041(c) of ERISA and a copy of such notice; and (ix) promptly
after the commencement thereof, notice of all actions, suits and proceedings
before any court or Governmental Authority, domestic or foreign, affecting
Borrower, any of its ERISA Affiliates or any Plan of Borrower or any of its
ERISA Affiliates except those which, if adversely determined, would not have a
reasonable likelihood of having a Material Adverse Effect.
6.10. MEDIA LICENSES. Borrower shall, and shall cause each of its
Subsidiaries to, keep in full force and effect all of their Media Licenses,
except those the loss of which individually or in the aggregate would not have a
Material Adverse Effect. Borrower shall furnish to Agent copies of all notices
which Borrower or any of its Subsidiaries shall have received from the FCC or
other Governmental Authorities concerning any Media License, other than
communications of a daily or routine nature, promptly after such receipt.
6.11. LEASES; NEW REAL ESTATE. (a) Borrower shall, and shall cause
each of its Subsidiaries to, provide Agent with copies of all material leases of
real property or similar agreements with respect to real property (and all
amendments thereto) entered into by Borrower or any such Subsidiary after the
date hereof, whether as lessor or lessee. Borrower shall, and shall cause each
of its Subsidiaries to, comply in all material respects with all of its and
their obligations under all leases now existing or hereafter entered into or
assumed by it or them with respect to real property, including, without
limitation, all leases listed on Schedule 4.8(b) hereto, except where any
failures to comply would not, individually or in the aggregate, have a Material
Adverse Effect. Borrower shall, and shall cause each of its Subsidiaries to,
(i) provide Agent with a copy of each notice of default received by Borrower or
such Subsidiary under any such lease as soon as practicable after receipt of any
such notice and deliver to Agent a copy of each notice of default sent by
Borrower or such Subsidiary under any such lease simultaneously with its
delivery of such notice under such lease; (ii) notify Agent at least 14 days
prior to the date Borrower or such Subsidiary takes possession of material newly
leased premises or becomes liable under any material lease, whichever is
earlier; and (iii) obtain and deliver to Agent a non-disturbance agreement, in
form and substance satisfactory to Agent, prior to entering into any material
new Lease.
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(b) If Borrower or any of its Subsidiaries shall acquire any Real
Estate or enter into a Lease which Agent designates as material to Borrower or
any of its Subsidiaries at any time prior to the Termination Date, Borrower or
such Subsidiary shall, at the request of Agent or any Lender, promptly execute
and deliver to Agent a first priority mortgage (or deed of trust, as
appropriate) in favor of Agent for the benefit of Lenders covering such Real
Estate or Lease, in form and substance reasonably satisfactory to Agent. In
such case, Borrower or such Subsidiary shall deliver to Agent with respect to
each mortgaged property an A.L.T.A. form B (or other form reasonably acceptable
to Agent) mortgagee policy of title insurance in an amount and issued by a title
insurance company satisfactory to Agent insuring that the relevant mortgage
relating thereto creates and constitutes a valid first Lien against such
mortgaged property in favor of Agent, subject only to exceptions and
reservations which do not impair the use of the premises and which are
reasonably acceptable to counsel to Agent, with such endorsements and
affirmative insurance (including, without limitation, survey coverage,
perimeter, metes and bounds) as Agent may reasonably request.
6.12. ENVIRONMENTAL MATTERS. (a) Borrower shall, and shall cause
each of its Subsidiaries to, (i) comply in all material respects with the
Environmental Laws applicable to it, (ii) notify Agent promptly after becoming
aware thereof of any Release, Adverse Environmental Condition or Environmental
Claim in connection with Borrower's or any of its Subsidiaries' Facilities, and
(iii) promptly forward to Agent a copy of any order, notice, permit, application
or any other communication or report received by Borrower or any of its
Subsidiaries in connection with any such matters as they may affect such
premises, if material.
(b) Borrower shall fully and promptly indemnify and hold harmless
Agent and each Lender, their respective Subsidiaries and Affiliates and each of
their respective officers, directors, employees and agents, from and against any
loss, liability, damage, deficiency, fine, penalty or expense, including,
without limitation, attorneys' fees, suffered or incurred by Agent or any
Lender, whether as mortgagee in possession, or as successor in interest to
Borrower or any of its Subsidiaries as lessee of any premises by virtue of
foreclosure or acceptance in lieu of foreclosure (i) under or on account of any
Environmental Law, including the assertion of any Lien thereunder; (ii) with
respect to any Release or Contaminant affecting such premises, whether
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or not the same originates or emanates from such premises or any contiguous Real
Estate, including any loss of value of such premises as a result of a Release or
Contaminant; and (iii) with respect to any other matter affecting such premises
within the jurisdiction of any federal, state or municipal agency or official
administering any Environmental Law, except if caused by Agent's or any Lender's
gross negligence or willful misconduct.
(c) In the event of any Release or Contaminant affecting any premises
occupied by Borrower or any of its Subsidiaries, whether or not the same
originates or emanates from such premises or any contiguous Real Estate, and if
Borrower or such Subsidiary shall fail to comply with any of the requirements of
any Environmental Law, or in the case of any leasehold premises, if required to
do so under the applicable Lease, Agent or any Lender may, but shall not be
obligated to, give such notices or cause such work to be performed or take any
and all actions deemed necessary or desirable to remedy such Release or remove
such Contaminant or cure such failure to comply. Any amounts paid by Agent or
any such Lender as a result thereof, together with interest thereon at the rate
set forth in Section 2.7 hereof then applicable to Index Rate Advances, shall be
immediately due and payable by Borrower and, until paid, shall be added to the
Obligations. Nothing in this Agreement shall be construed as limiting or
impeding Borrower's rights and obligations to take any and all necessary or
desirable actions to address any Release or Adverse Environmental Condition or
to comply with any Environmental Law.
6.13. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to
Agent and each Lender (i) promptly after the filing thereof with the Securities
and Exchange Commission, a copy of each report, notice or other filing, if any,
by Borrower with the Securities and Exchange Commission, (ii) copies of all
notices which Borrower or any of its Subsidiaries shall have received from the
FCC or any other Governmental Authority concerning any Media License which
notices are (A) material to the business of Borrower and its Subsidiaries taken
as a whole or (B) relate to the revocation or renewal of, or default under, any
Media License, in each case promptly after each such receipt or delivery, and
(iii) a copy of each written report or other communication received by Borrower
from or delivered by Borrower to the Securities and Exchange Commission in each
case promptly after each such receipt or delivery.
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6.14. FINANCIAL COVENANTS.
(a) TOTAL DEBT TO ANNUALIZED CONSOLIDATED SYSTEM CASH FLOW. Borrower
and its Subsidiaries shall, on a consolidated basis, maintain a ratio of Total
Debt to Annualized Consolidated System Cash Flow not in excess of 6.25:1.00;
PROVIDED, HOWEVER, that compliance with this financial covenant shall be
determined at the time of each request by Borrower for an Advance and such
determination shall be based on Total Debt as of such date, after giving effect
to such Advance, and Annualized Consolidated System Cash Flow for the most
recently completed Fiscal Quarter of Borrower or portion thereof occurring after
the Effective Date.
(b) OPERATING CASH FLOW TO INTEREST EXPENSE. Borrower and its
Subsidiaries, on a consolidated basis, shall maintain through the Maturity Date
(determined based on the most recently completed two consecutive Fiscal Quarters
of Borrower or portion thereof occurring after the Effective Date) a ratio of
Operating Cash Flow to Interest Expense of not less than 1.50:1.00.
6.15. POST-EFFECTIVE DATE ITEMS. On or prior to March 21, 1996 (or
April 14, 1996 with respect to clause (iii) below for any New York
corporations), Borrower shall deliver to Agent copies of (i) Schedules 4.8(a)
and 4.8(b) hereto, (ii) governmental certificates, dated the most recent
practicable date prior to such date, with telegram updates where available,
showing that Cablevision, Borrower, and each of the Guarantors is organized and
in good standing in the jurisdiction of its organization and is qualified as a
foreign corporation or partnership and, if applicable, in good standing in all
other jurisdictions in which it is qualified to transact business, and (iii) the
documents of each Loan Party referred to in Section 3.1(f) hereof (except any
partnership agreement) certified as of a recent date by the Secretary of State
of the jurisdiction of such Loan Party's organization, which Schedules,
governmental certificates and documents shall be in form and substance
satisfactory to Agent.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the Required Lenders'
prior written consent, from and after the date hereof and until the Termination
Date:
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7.1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower
shall, directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire any assets (other than in the ordinary course of
business) or capital stock of, or combine with, any Person, nor form or acquire
any Subsidiary, directly or indirectly, except for any merger or consolidation
of Active Subsidiaries of Borrower (other than Missouri Partnership or any of
its Subsidiaries) if Borrower shall have given Agent 30 Business Days' prior
written notice thereof (describing such proposed transaction in reasonable
detail) and Agent shall have consented thereto; PROVIDED that, in the case of
such exception above, Borrower shall have taken all actions necessary to
maintain the priority and perfection of Lenders' Liens on the Collateral under
the Loan Documents, which obligation shall include the execution and delivery by
all Persons reasonably deemed appropriate by Agent of a guaranty, security
agreement, pledge agreement and any other similar document deemed appropriate by
Agent, all containing terms substantially similar to the Collateral Documents
(as applicable).
7.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted
by Section 7.3 or 7.4 hereof or set forth on Schedule 7.2 hereof, Borrower shall
not, and shall not permit any of its Subsidiaries to, make any investment in, or
make or accrue any loans or advances of money to any Person, through the direct
or indirect holding of securities or otherwise; PROVIDED, HOWEVER, that Borrower
shall be permitted hereunder, and may permit hereunder its Active Subsidiaries
(other than Missouri Partnership or any of its Subsidiaries) to, (a) make one or
more cash investments in, or make or accrue one or more loans or advances of
money to, Borrower or any other Active Subsidiary of Borrower, provided that
such loans and advances to Missouri Partnership shall not exceed $1,000,000 at
any time outstanding; and (b) make the payments required pursuant to Section
6.11 of the Partnership Agreement; and PROVIDED FURTHER, HOWEVER, that Borrower
and its Active Subsidiaries may make and own investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and at the time of its acquisition having the
highest rating obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc., (iii) certificates of deposit, maturing no more than
one year from
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the date of creation thereof, issued by commercial banks incorporated under the
laws of the United States of America or any State thereof, each having combined
capital, surplus and undivided profits of not less than $200,000,000 and having
a rating of "A" or better by a nationally recognized statistical rating
organization, and (iv) time deposits, maturing no more than 90 days from the
date of creation thereof, with commercial banks or savings bank or savings and
loan associations, the deposits of which are insured by the Federal Deposit
Insurance Corporation, and in amounts not exceeding the maximum amounts of
insurance thereunder.
7.3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by
this Section 7.3 or this Agreement, Borrower shall not, and shall not permit any
of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, whether recourse or nonrecourse, whether superior or junior, and
whether secured or unsecured, PROVIDED THAT Borrower or any of its Active
Subsidiaries may create, incur or permit to exist (i) Indebtedness secured by
Liens permitted under Section 7.9 hereof, (ii) the Obligations, (iii) trade
credit incurred to acquire goods, supplies, services (including, without
limitation, obligations incurred to employees for compensation for services
rendered in the ordinary course of business), or merchandise on terms similar to
those granted to purchasers in similar lines of business as Borrower or such
Active Subsidiary as of the date hereof and incurred in the ordinary and normal
course of business, (iv) lease payment obligations under Leases which Borrower
or such Active Subsidiary is not prohibited from entering into under the Loan
Documents (PROVIDED that none of Borrower nor any of its Subsidiaries shall
become a party to or bound by Capital Leases which, in the aggregate for all
such companies, require payments in excess of $6,600,000 prior to the
Termination Date), (v) deferred taxes, (vi) unfunded pension fund and other
employee benefit plan obligations and liabilities but only to the extent they
are permitted to remain unfunded under applicable law, (vii) Indebtedness to any
Active Subsidiary or to Borrower; PROVIDED FURTHER, that such Indebtedness of
Missouri Partnership shall not exceed $1,000,000 at any time outstanding; (viii)
Indebtedness in connection with surety bonds provided in the ordinary course of
business securing obligations not exceeding $4,000,000 in the aggregate,
(ix) liabilities under Title IV of ERISA if such liabilities, individually or in
the aggregate, do not result in a violation of Section 7.16 hereof, (x) other
Indebtedness for borrowed money to Lenders, (xi) accrued
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liabilities of Borrower and its Active Subsidiaries under Media Licenses, and
PROVIDED FURTHER, that the Subsidiaries of Borrower may create, incur or permit
to exist Indebtedness of Subsidiaries of Borrower created under the
USC/Subsidiary (Senior) Guaranty and (xii) Indebtedness incurred pursuant to
Section 6.11 of the Partnership Agreement.
(b) Except as provided in Section 7.11 hereof, Borrower shall not,
and shall not permit any of its Subsidiaries to, sell or transfer, either with
or without recourse, any assets, of any nature whatsoever, in respect of which a
Lien is granted or to be granted pursuant to any Loan Document or engage in any
sale-leaseback or similar transaction involving any of such assets.
7.4. EMPLOYEE LOANS. Borrower shall not, and shall not permit any of
its Subsidiaries to, make or accrue any loans or other advances of money to any
employee of Borrower or such Subsidiary, except for loans by Borrower or any
Active Subsidiary to employees not in excess at any one time outstanding of
$300,000 in the aggregate for all such loans, PROVIDED that such loans are made
only in the ordinary course of Borrower's or such Active Subsidiary's business
consistent with past practices.
7.5. CAPITAL STRUCTURE. Borrower shall not, and shall not permit any
of its Subsidiaries to, issue or agree to issue any of its authorized but not
outstanding Stock (including treasury shares).
7.6. MAINTENANCE OF BUSINESS. Except as otherwise permitted
hereunder, Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than constructing, owning, acquiring, altering,
repairing, financing, operating, promoting and otherwise exploiting cable
television systems. In addition, none of Borrower or any of its Subsidiaries
shall acquire or operate any cable television system (other than the Systems) or
acquire or commence any alternate form of television program distribution,
including, without limitation, broadcast television, multipoint distribution
services, multichannel multipoint distribution services, satellite master
antenna systems and direct broadcast satellites.
7.7. TRANSACTIONS WITH AFFILIATES. (a) Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
or be a party to any
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transaction with any Affiliate of Borrower or such Subsidiary (other than an
Active Subsidiary of Borrower), or with Cablevision or any of its Subsidiaries,
on terms that are, taken as a whole, less favorable to Borrower or such
Subsidiary, as the case may be, than would be available in a comparable
transaction with a Person not an Affiliate of Borrower or such Subsidiary;
PROVIDED that the foregoing restriction shall not apply to (i) any transaction
permitted under Section 7.15 hereof; (ii) performance under any contract or
agreement in effect on the date hereof and set forth on Schedule 7.7 hereto;
(iii) performance under any contract or agreement which was entered into with a
Person which was not an Affiliate of Borrower or any of its Subsidiaries on the
date of such contract or agreement other than a contract or agreement entered
into with a Person in anticipation of such Person's becoming such an Affiliate
or a holder of 10% of a class of equity securities of such company;
(iv) continued performance under any contract or arrangement which was not less
favorable to Borrower or such Subsidiary than would have been available in a
comparable transaction with an unrelated party at the date of the contract or
commencement of the arrangement; (v) payments by Borrower under the USC
Management Agreement; (vi) transactions with any entity 10% or more of the Stock
of which is owned by any Person which also owns 10% or more of the Stock of
Borrower if (A) such other entity is not controlled by such Person and
(B) neither Borrower nor any of its Subsidiaries is aware of such Person's
investment in such other entity; (vii) transactions pursuant to or contemplated
by the Guaranties, the Redemption Agreement, the Partnership Agreement or
otherwise pursuant to the Prepayment Transactions; (viii) the transactions
contemplated pursuant to that certain Letter Agreement dated as of June 30, 1992
by and among Borrower, U.S. Cable Management Partners, Multivision Cable TV
Corp. and consented to by GE Capital; and (ix) the transactions contemplated
pursuant to that certain Letter Agreement dated as of June 30, 1992 by and among
Multivision Cable TV Corp., Borrower and Cablevision.
(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any agreement or transaction to pay to any Person any management
or similar fee based on or related to Borrower's or any such Subsidiary's
operating performance or income or any percentage thereof or pay any management
or similar fee to an Affiliate, except as provided in the USC Management
Agreement.
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7.8. GUARANTIED INDEBTEDNESS. Borrower shall not, and shall not
permit any of its Subsidiaries to, incur any Guarantied Indebtedness (excluding
the Guarantied Indebtedness pursuant to the Guaranties) except (i) by
endorsement of instruments or items of payment for deposit to the account of
Borrower or such Subsidiary, (ii) for Guarantied Indebtedness incurred for the
benefit of Borrower or such Subsidiary if the primary obligation is permitted by
this Agreement and (iii) for liabilities under surety bonds permitted under
Section 7.3(a)(viii) hereof.
7.9. LIENS. Except as set forth on Schedule 7.9 hereto, Borrower
shall not, and shall not permit any of its Subsidiaries to, create or permit any
Lien on any of its properties or assets except:
(a) presently existing or hereafter created Liens in favor of
Lenders; and
(b) Permitted Encumbrances.
7.10. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit
any of its Subsidiaries to, make Capital Expenditures that, in the aggregate,
exceed $18,500,000 in any Fiscal Year; PROVIDED, HOWEVER, that any excess of the
amount provided above for any one Fiscal Year over the actual aggregate Capital
Expenditures of Borrower and its Subsidiaries during such Fiscal Year may be
carried forward only to, and made available only for, the next succeeding Fiscal
Year. Agent and Lenders hereby waive any Default or Event of Default (as such
terms are defined in the Existing USC Senior Loan Agreement) resulting from
Borrower's failure to comply with Section 7.10 of the Existing USC Senior Loan
Agreement as a result of having made Capital Expenditures for Fiscal Year 1995
of up to $20,600,000 (but not in excess of such amount).
7.11. SALES OF ASSETS. (a) Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, transfer, convey or otherwise dispose of any
of its assets or properties; PROVIDED, HOWEVER, that the foregoing shall not
prohibit:
(i) a Disposition to any Person (which may include Cablevision);
PROVIDED that the Net Cash Proceeds thereof shall not be less than the sum of
(x) the aggregate outstanding amount of the Obligations and (y) $4,010,000;
PROVIDED FURTHER that such Net Cash Proceeds are immediately
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applied to repay in full the Obligations, and an additional $4,010,000 of such
Net Cash Proceeds are paid to such Person or Persons as GE Capital shall in its
sole discretion direct;
(ii) the sale of surplus or obsolete equipment and fixtures or
transfers resulting from any casualty or condemnation of assets or properties,
PROVIDED that if the proceeds of such sales or transfers exceed $150,000 in any
one instance or $1,800,000 in the aggregate, Borrower shall, within 90 days
thereafter, prepay the Loans, in an amount equal to the excess of (x) the entire
proceeds of any such single sale or transfer exceeding $150,000 (or the amount
of such aggregate proceeds in excess of $1,800,000 as the case may be), over
(y) the amount expended by Borrower to repair or replace such assets or
properties prior to, or within 90 days after, the occurrence of such sale or
transfer; PROVIDED FURTHER that any net sales proceeds to be applied to prepay
Loans shall be applied in accordance with the provisions of Section 2.3(a)
hereof;
(iii) any transfer of the Newco Stock to V Cable pursuant to the
Exchange Agreement Termination (as defined in the Redemption Agreement); and
(iv) a disposition of a System to any Person; PROVIDED, HOWEVER, that
(i) (a) a Required Approval (as defined in the Redemption Agreement) with
respect to such System is a condition to the consummation of the transaction
under the Redemption Agreement and (b) Borrower has not been able to obtain such
Required Approval and would not, in its reasonable judgment, be able to obtain
such Required Approval in a timely manner, (ii) the Net Cash Proceeds thereof
are applied to repay a portion of the Obligations and (iii) after giving effect
to any such disposition Borrower will be in compliance with Section 6.14 hereof
as if such disposition had occurred prior to the end of the last full Fiscal
Quarter ending immediately preceding the date of such disposition as evidenced
by a certificate of an officer of Borrower; and, PROVIDED, FURTHER, that
Borrower shall not be permitted to dispose of a System pursuant to this clause
(iv) if after giving effect to such disposition, the total number of Subscribers
(measured on the latest practicable date prior to such disposition) attributable
to Systems disposed of pursuant to this clause (iv), after giving effect to the
proposed disposition, would in the aggregate exceed 10% of the total number of
Subscribers (measured as of the latest practicable date) attributable to
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Systems owned by Borrower and its Subsidiaries as of such date.
(b) In the event of any prepayment of any Obligations pursuant to
Section 7.11(a)(i) hereof, Borrower's right to receive Revolving Credit Advances
hereunder shall simultaneously terminate.
7.12. CANCELLATION OF INDEBTEDNESS. Borrower shall not, and shall
not permit any of its Subsidiaries to, cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business or
for sound business reasons.
7.13. EVENTS OF DEFAULT. Borrower shall not, and shall not permit
any of its Subsidiaries to, take or omit to take any action, which act or
omission would constitute a material default or event of default pursuant to, or
noncompliance with, any contract, Lease, mortgage, deed of trust or instrument
to which it is a party or by which it or any of its property is bound, or any
document creating a Lien, unless such default, event of default or noncompliance
would not have a Material Adverse Effect.
7.14. HEDGING TRANSACTIONS. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any interest rate hedging, swaps or
similar transaction, except as contemplated by this Agreement; PROVIDED that
Borrower and its Active Subsidiaries may engage in interest rate caps.
7.15. RESTRICTED PAYMENTS. Borrower shall not, and shall not permit
any of its Subsidiaries to, make any Restricted Payment nor shall Borrower
permit any Subsidiary of Borrower to do so with respect to Borrower's Stock.
Nothing contained in this Section 7.15 shall restrict any payment required or
permitted to be made (a) to Cablevision pursuant to the terms of the USC
Management Agreement, or (b) to any Person pursuant to Section 6.11 of the
Partnership Agreement.
7.16. ERISA. Borrower shall not, directly or indirectly,
(a) terminate, or permit any of its ERISA Affiliates to directly or indirectly
terminate, any of their respective Plans subject to Title IV of ERISA so as to
result in any liability to Borrower or any of its ERISA Affiliates which would
have a Material Adverse Effect, (b) permit to exist any ERISA Event which would
have a
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Material Adverse Effect, (c) make or permit any of Borrower's ERISA Affiliates
to make a complete or partial withdrawal (within the meaning of Section 4201 of
ERISA) from any Multiemployer Plan so as to result in any material (in the
opinion of Agent) liability to Borrower or any of its ERISA Affiliates which
would have a Material Adverse Effect, (d) permit, or permit its Subsidiaries or
any of Borrower's ERISA Affiliates to (i) satisfy any liability under any Plan
of Borrower or any of its ERISA Affiliates by purchasing annuities from an
insurance company or (ii) invest the assets of any Plan with an insurance
company, unless, in each case, such insurance company is rated AA by Standard &
Poor's Corporation and the equivalent by each other nationally recognized
statistical rating organization at the time of the investment, (e) establish or
become obligated to, or permit any of Borrower's ERISA Affiliates to establish
or become obligated to establish, any Welfare Plan, or modify any Welfare Plan
which would result in the present value of future liabilities under any such
Plan to increase by more than $250,000, or (f) increase the benefits of any of
its Plans or the Plans of any of its ERISA Affiliates, or begin to maintain or
begin to contribute to any new Plan.
7.17. MODIFICATION OF CERTAIN AGREEMENTS. (a) Borrower shall not
amend, supplement or otherwise modify any of the provisions of its certificate
of limited partnership of its Partnership Agreement and shall not permit any of
its Subsidiaries to amend its organizational documents, including, without
limitation, its certificate of limited partnership, partnership agreements
without the prior written consent of Agent.
(b) Borrower shall not, and shall not permit (x) any of its
Subsidiaries to, amend, supplement, modify or terminate any of the USC Non-
Competition Agreement or Missouri Partnership Agreement to which it is party
without the prior written consent of Agent and the Required Lenders and (y) any
of its Subsidiaries to consent to any amendment, modification, cancellation or
extension of any of the USC Non-Competition Agreement, Missouri Partnership
Agreement or the Tax Sharing Agreement to which it is a party without the prior
written consent of Agent and the Required Lenders.
8. TERM
8.1. TERMINATION. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated
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hereby in respect of the Revolving Credit Loan shall be in effect until (and
only until) the Commitment Termination Date; PROVIDED, HOWEVER, that in the
event of a prepayment of any part of or the entire Revolving Credit Loan prior
to the Commitment Termination Date with funds borrowed from any Person other
than Lenders, then, without limiting any other remedies of Lenders or Agent
hereunder, Agent shall be entitled in its discretion to require Borrower to
simultaneously therewith pay to Lenders, in immediately available funds, all
Obligations in full, in accordance with the terms of the agreements creating and
instruments evidencing such Obligations.
8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
powers, obligations, duties, rights or liabilities of Borrower or the rights of
Agent or any Lender relating to any transaction or event occurring prior to such
termination. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations contained in the Loan Documents shall survive such termination
or cancellation and shall continue in full force and effect until such time as
all of the Obligations have been paid in full in accordance with the terms of
the agreements creating such Obligations, at which time the same shall
terminate.
8.3. TERMINATION PRIOR TO EFFECTIVE DATE. In the event that the
Effective Date shall not have occurred on or prior to April 15, 1996, upon
notice by Agent to Borrower, all obligations of Agent and each Lender hereunder
shall forthwith be terminated. Notwithstanding any such termination, Borrower
shall continue to be obligated to indemnify Agent and each Lender pursuant to
the provisions of Section 2.14(a) hereof.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower shall fail to make any payment of principal of, interest
on or any other amount owing in
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respect of, the Revolving Credit Loan, either Term Loan or any of the other
Obligations when due and payable or declared due and payable, except that
(i) with respect to expenses payable under this Agreement, or other Obligations
owing under any Loan Document other than this Agreement, such failure shall have
remained unremedied for a period of ten days after Borrower has received notice
of such failure from Agent and (ii) with respect to interest payable under this
Agreement, Borrower shall be entitled to not more than one ten-day grace period
during any period of 365 consecutive days.
(b) Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 6.15 hereof or Article 7 hereof and, with respect to
any such breach of Section 7.10 hereof, such failure or neglect shall not be
cured within the period and in the manner provided in Section 9.5 hereof.
(c) Borrower or any other Loan Party shall fail or neglect to
perform, keep or observe any other provision of this Agreement or of any of the
other Loan Documents and the same shall remain unremedied for a period of 30
days after Borrower or such other Loan Party shall become aware thereof.
(d) A default shall occur under any other agreement, document or
instrument to which any Loan Party is a party or by which any such Loan Party or
any such Loan Party's property is bound and such default (i) involves the
failure to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) in respect of any Indebtedness of any Loan Party in an aggregate
amount exceeding $600,000 or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in an
aggregate amount exceeding $600,000 to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan Document, in
any written statement pursuant hereto or thereto, or in any report, financial
statement or certificate made or delivered to Agent or any Lender by any Loan
Party pursuant hereto or thereto, shall be untrue or incorrect in any material
respect as of the date when made or deemed made (including those made or deemed
made pursuant to Section 3.3 hereof).
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(f) Any of the assets of any Loan Party shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Loan Party and shall remain unstayed or undismissed for 30
consecutive days; or any Person other than any Loan Party shall apply for the
appointment of a receiver, trustee or custodian for any of the assets of any
Loan Party and such application shall remain unstayed or undismissed for 30
consecutive days; or any Loan Party shall have concealed, removed or permitted
to be concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be fraudulent
under any bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any Loan
Party in a court having competent jurisdiction seeking a decree or order in
respect of such Loan Party (i) under title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of such Loan
Party or of any substantial part of its properties or (iii) ordering the
winding-up or liquidation of the affairs of such Loan Party and such case or
proceeding shall remain undismissed or unstayed for 60 consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding.
(h) Any Loan Party shall (i) file a petition seeking relief under
title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
such Loan Party or of any substantial part of its properties, (iii) fail
generally to pay its debts as such debts become due or (iv) take any corporate
action in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $600,000 in the
aggregate shall be ren-
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dered against Borrower or any of its Subsidiaries and the same shall not be
(i) fully covered by insurance in accordance with Section 6.6 hereof or
(ii) vacated, stayed, bonded, paid or discharged for a period of 15 days.
(j) With respect to any Plan of Borrower or any of its ERISA
Affiliates: (i) Borrower or any other party-in-interest or disqualified person
shall engage in any transactions which in the aggregate would reasonably be
expected to result in a direct or indirect liability of Borrower or any of its
ERISA Affiliates in excess of $600,000 under Section 409 or 502 of ERISA or IRC
Section 4975; (ii) Borrower or any of its ERISA Affiliates shall incur any
accumulated funding deficiency, as defined in IRC Section 412, in the aggregate
in excess of $600,000, or request a funding waiver from the IRS for
contributions in the aggregate in excess of $600,000; (iii) Borrower or any of
its ERISA Affiliates shall incur any withdrawal liability in the aggregate in
excess of $600,000 as a result of a complete or partial withdrawal within the
meaning of Section 4203 or 4205 of ERISA; (iv) Borrower or any of its ERISA
Affiliates shall notify the PBGC of an intent to terminate, or the PBGC shall
institute proceedings to terminate, a Plan; (v) a Reportable Event shall occur
with respect to a Plan, and within 15 days after the reporting of such
Reportable Event to any Lender, such Lender shall have notified Borrower in
writing that (A) it has made a determination that, on the basis of such
Reportable Event, there are reasonable grounds under Section 4042(a)(1), (2) or
(3) of ERISA for the termination of such Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer such
Plan and (B) as a result thereof a Default or an Event of Default shall occur
hereunder; (vi) a trustee shall be appointed by a court of competent
jurisdiction to administer any Plan or the assets thereof; (vii) the benefits of
any Plan shall be increased, or Borrower or any of its ERISA Affiliates shall
begin to maintain, or begin to contribute to, any Plan, without the prior
written consent of the Required Lenders; or (viii) any ERISA Event with respect
to a Plan shall have occurred, and 30 days thereafter (A) such ERISA Event (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's vested benefits shall exceed the then current value of assets
accumulated in such Plan; PROVIDED, HOWEVER, that the events listed in
subsections (iv)-(viii) shall constitute Events of Default only if, as of the
date thereof or any subsequent date, the maximum amount of liability Borrower or
any of its ERISA Affiliates could incur in the
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aggregate under Section 4062, 4063, 4064, 4219 or 4243 of ERISA or any other
provision of law with respect to all such Plans, computed by the actuary of the
Plan taking into account any applicable rules and regulations of the PBGC at
such time, and based on the actuarial assumptions used by the Plan, resulting
from or otherwise associated with such event, exceeds $600,000.
(k) Any material provision of any Collateral Document, after delivery
thereof pursuant to Section 3.1 hereof, shall for any reason cease to be valid
or enforceable in accordance with its terms, except as provided in the
Termination and Modification Documents, or any security interest created under
any Collateral Document shall cease to be a valid and perfected first priority
security interest or Lien (except as otherwise stated therein or permitted
thereunder and except as provided in the Termination and Modification Documents,
in any material portion of the Collateral purported to be covered thereby.
(l) V Cable and V Sub shall cease to own 100% of the Preferred USC
Interest or (ii) U.S. Cable Partners shall cease to own the Class II General
Partnership Interest (as defined in the Partnership Agreement).
(m) Cablevision, Borrower or any Subsidiary thereof shall (i) breach
any material obligation under the USC Management Agreement (including any
obligation under Article III or Article VI thereof) and such breach shall remain
uncured for a period of 30 days, or breach any representation or warranty
thereunder in any material respect or (ii) breach any obligation under the USC
Non-Competition Agreement.
(n) The USC Management Agreement shall be terminated.
(o) Borrower shall amend, modify or supplement, without the prior
written consent of Agent, the Partnership Agreement or the USC Management
Agreement.
(p) Borrower shall breach any provisions of the Redemption Agreement.
(q) GE Capital, based on the certificates of the Borrower and KPMG
Peat Marwick delivered pursuant to Section 5.1(c)(v) hereof, shall determine
that the ratio of Total Debt to Annua lized Consolidated System Cash Flow shall
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exceed 5.94:1:00 as of the Effective Date and Borrower shall not have cured such
noncompliance within 30 days after notice thereof from GE Capital.
9.2. REMEDIES. (a) If any Event of Default shall have occurred and
be continuing, (i) GE Capital may terminate this facility with respect to
further Revolving Credit Advances, whereupon no further Revolving Credit
Advances shall be made hereunder, and/or (ii) Agent shall at the request, or may
with the consent, of the Required Lenders declare all Obligations to be
forthwith due and payable, whereupon all such Obligations shall become and be
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower; PROVIDED, HOWEVER, that
upon the occurrence of an Event of Default specified in Section 9.1(g) or
(h) hereof, such Obligations shall become due and payable without declaration,
notice or demand by Agent or any Lender.
(b) Agent shall take such action with respect to any Default or Event
of Default as shall be directed by the Required Lenders; PROVIDED, HOWEVER,
that, unless and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of Agent and Lenders taken as a whole, including any action
(or failure to act) pursuant to the Loan Documents.
9.3. WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement and to the extent permitted by applicable law, Borrower waives
(i) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent or any Lender on which Borrower
may in any way be liable and hereby ratifies and confirms whatever Agent or any
Lender may do in this regard, (ii) all rights to notice and a hearing prior to
Agent's or any Lender's taking possession or control of, or to Agent's or any
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Agent or any
Lender to exercise any of its remedies and (iii) the benefit of all valuation,
appraisal and exemption laws. Borrower acknowl-
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edges that it has been advised by counsel of its choice with respect to this
Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
9.4. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of Borrower against any and all of
the obligations of Borrower now or hereafter existing under this Agreement and
the Notes held by such Lender, whether or not such Lender shall have made any
demand under this Agreement or any such Note and although such obligations may
be unmatured. Each Lender agrees promptly to notify Borrower after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 9.4 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
9.5. CURE OF CAPITAL EXPENDITURE DEFAULT. Borrower shall be entitled
to cure any breach of the covenant set forth in Section 7.10 hereof if V Cable
(solely with new funds provided by Cablevision as a capital contribution to such
entity) shall make, during the Fiscal Year in respect of which such breach
occurred or within 90 days thereafter, a capital contribution to Borrower in
cash, equal to the excess of the amount of Capital Expenditures made by Borrower
and its Subsidiaries for the applicable Fiscal Year over the aggregate amount of
Capital Expenditures permitted to be made for such Fiscal Year pursuant to
Section 7.10 hereof. Borrower shall notify Agent of the making by V Cable of
any capital contribution constituting a cure of any breach of the covenant in
Section 7.10 pursuant to this Section 9.5 within five days after the making
thereof, which notice shall also specify (i) the date any such capital
contribution was made and (ii) the amount of any such capital contribution.
Such capital contribution applied to cure a breach of the provisions of Section
7.10 shall be referred to as a "Curing Capital Contribution."
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10. THE AGENT
10.1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders (including, without
limitation, (a) the application of payments in any manner other than as set
forth in Section 2.10 hereof and (b) if any prepayment of a LIBOR Advance in the
manner and at the times provided in this Agreement would result in any such
prepayment occurring prior to the last day of the Interest Period for such
Advance, directing Borrower to make (or not prohibiting Borrower from making)
such prepayment on a day other than the last day of the Interest Period
therefor), and such instructions shall be binding upon all Lenders; PROVIDED,
HOWEVER, that Agent shall not be required to take any action which exposes Agent
to personal liability or which is contrary to this Agreement or the other Loan
Documents or applicable law. Agent agrees to give each Lender prompt notice of
each notice given to it by Borrower pursuant to Article 2 or Section 6.5 hereof
(other than notices relating solely to the Revolving Credit Loan). Except for
the foregoing notices, and such other specific notices or reports received by
Agent from Borrower as any Lender may reasonably request, Agent shall have no
duty or responsibility to provide to any Lender any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of Borrower which may come into the
possession of Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or wilful
misconduct. Without limitation of the generality of the foregoing, Agent:
(i) may treat the payee of any
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Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof signed by such payee and in form satisfactory to Agent;
(ii) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statement, warranty or representation made in or in connection
with this Agreement or the other Loan Documents; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Loan Documents on the
part of any Loan Party or to inspect the property (including the books and
records) of any Loan Party; (v) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (vi) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
10.3. GE CAPITAL AND AFFILIATES. With respect to its commitment
hereunder to make Revolving Credit Advances and the Term Loans made by it,
GE Capital shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity. GE Capital
and its Affiliates may lend money to, and generally engage in any kind of
business with, any Loan Party, any Subsidiary or Affiliate of any Loan Party and
any Person who may do business with or own securities of any Loan Party or any
such Subsidiary or Affiliate, all as if GE Capital were not Agent and without
any duty to account therefor to any Lender.
10.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Section 4.6 hereof and such other
documents and information as it has deemed appropriate, made
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its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
10.5. INDEMNIFICATION. Each Lender agrees to indemnify Agent (to the
extent that Agent is not reimbursed by Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent under this Agreement; PROVIDED
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or wilful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Borrower.
10.6. SUCCESSOR AGENT. If GE Capital shall, consistent with
Section 11.1 hereof, hold 50% or less of the aggregate principal amount of the
Notes, Agent may resign by giving written notice thereof to each Lender and
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of Lenders, appoint a successor Agent, which shall
be a commercial bank organized under the laws of the United States of America or
of any state thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appoint-
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ment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
11. MISCELLANEOUS
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF
INTEREST. (a) The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered or amended except in accordance with Section 11.1(e) below.
(b) Borrower may not sell, assign or transfer any of the Loan
Documents or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
Borrower hereby consents to Agent's and any Lender's sale of participations,
assignment, transfer or other disposition (each, a "Sale"), at any time or
times, of any of the Loan Documents or of any portion thereof or interest
therein to any bank or other financial institution, including, without
limitation, Agent's and any Lender's rights, title, interests, remedies, powers
or duties thereunder, whether evidenced by a writing or not; PROVIDED, HOWEVER,
that, unless an Event of Default has occurred and is continuing, no Lender shall
(without the written consent of Borrower and Agent) (i) effect any Sale of any
Term Loans (A) if such Sale would result in any increased tax withholding
obligation (or, in the case of a Sale by any Lender other than GE Capital, if
such Sale would result in any additional payment being required to be made by
Borrower pursuant to Section 2.13 hereof) and (B) unless GE Capital or any of
its Affiliates would, after giving effect to such Sale, retain more than 50% of
the aggregate principal amount of the Notes or (ii) effect a Sale of
participations to one or more banks or other financial institutions
("Participants") in or to any of the Notes or any portion thereof or interest
therein, PROVIDED that any Lender may effect a Sale of such participations so
long as (w) such Lender does not sell (A) participations in an aggregate of 50%
or more of the aggregate principal amount of such Lender's Notes or
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(B) individual participations of less than $5,000,000, (x) such Lender shall
remain solely responsible for all of its obligations under this Agreement and
the Loan Documents, (y) Borrower, Agent and each other Lender shall continue to
be entitled to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (z) no Participant
shall be entitled to require such Lender to take or omit to take any action
hereunder; and PROVIDED FURTHER, HOWEVER, that in the event any Lender shall
determine to effect a Sale, other than to an Affiliate of such Lender, of any
portion of any Term Note, such Lender shall (except as otherwise agreed by
Borrower) use reasonable good faith efforts to sell such participations and
assignments to institutions reasonably acceptable to Borrower on terms
acceptable to such Lender in such Lender's sole discretion. Each Lender agrees
that the Sale of any participations or assignments in any Loan shall take place
in accordance with all applicable laws, rules and regulations.
(c) Without limiting the provisions of Section 11.1(b) hereof, unless
an Event of Default occurs and is continuing, no Lender shall, without the prior
written consent of Agent, effect any Sale other than (x) a Sale to one or more
Affiliates of such Lender or as required by law, (y) a Sale to GE Capital or
(z) a Sale of participations to one or more banks or other financial
institutions in accordance with the limitations set forth in Section 11.1(b)(ii)
hereof (PROVIDED that, in the case of clauses (x), (y) and (z) of this
Section 11.1(c), Agent shall have received prior written notice thereof). Any
consent of Agent contemplated hereunder may be given or withheld in its sole
discretion and without any consent or approval of Borrower being required.
(d) In the event Agent or any Lender effects a Sale or otherwise
transfers all or any part of any Note consistent with the terms of this
Agreement, Borrower shall, upon the request of Agent or such Lender, (i) issue
new Notes to effect such assignment or transfer and (ii) execute such amendments
to this Agreement as Agent may reasonably deem necessary or appropriate in order
that the transferee may become a party thereto.
(e) No amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure by Borrower
therefrom, nor release of any Collateral or Guaranty, shall in any event be
effec-
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tive unless the same shall be in writing and signed by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; PROVIDED, HOWEVER, that no amendment,
waiver or consent shall (i) subject any Lender to any additional obligations
(without the written consent of such Lender), or (ii) amend this Section 11.1(e)
without the written consent of each Lender affected thereby; and PROVIDED
FURTHER, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by Agent in addition to the Lenders required above to take such
action, affect the rights or duties of Agent under this Agreement, any Note or
any other Loan Document.
(f) If GE Capital shall effect a Sale of any participations in the
Term Loans to any Person, Borrower shall pay to GE Capital, from time to time,
all amounts that the holder of such participation would have been entitled to
receive pursuant to Section 2.14(b), 2.16(a) or 2.16(b) hereof if such holder
was a Lender under this Agreement and directly held that portion of the Notes
(or interest therein) underlying such participation (in which event GE Capital's
right to receive such amounts pursuant to such provisions shall be
correspondingly reduced).
11.2. FEES AND EXPENSES. Borrower shall pay all reasonable
out-of-pocket expenses of Agent in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its counsel
retained in connection with the Loan Documents and the transactions contemplated
thereby). If, at any time or times, regardless of the existence of an Event of
Default (except with respect to paragraphs (iii) and (iv) below, which shall be
subject to an Event of Default having occurred and continuing), Agent (or, in
the case of paragraphs (iii) and (iv) below, any Lender) shall employ counsel
for advice or other representation or shall incur reasonable legal or other
costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent with respect
to, any of the Loan Documents;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent or any Lender, Borrower, any Subsidiary of
Borrower or, subject to Section 2.14(a), any other Person) in any way
relating to the Collateral, any of the Loan
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Documents or any other agreement to be executed or delivered in connection
herewith;
(iii) any attempt to enforce any rights of Agent or any Lender
against Borrower, any Subsidiary of Borrower or any other Person that may
be obligated to any Lender by virtue of any of the Loan Documents; or
(iv) any attempt to verify, protect, collect, sell, liquidate or
otherwise dispose of the Collateral;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.2 shall be payable, on demand, by Borrower to Agent or such Lender
and shall be additional Obligations secured under this Agreement and the other
Loan Documents; PROVIDED, HOWEVER, that with respect to Lenders other than
GE Capital, Borrower shall be responsible for the attorneys' fees of only one
counsel for such other Lenders. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal services.
11.3. NO WAIVER BY AGENT OR ANY LENDER. Agent's or any Lender's
failure, at any time or times, to require strict performance by any Loan Party
of any provision of this Agreement or any of the other Loan Documents shall not
waive, affect or diminish any right of Agent or such Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by Agent
or Lenders of an Event of Default by any Loan Party under any Loan Document
shall not suspend, waive or affect any other Event of Default by any Loan Party
under any Loan Document, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of any Loan Party
contained in this Agreement or in any of the other Loan Documents and no Event
of Default and no default by any Loan Party under any of the Loan Documents
shall be
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deemed to have been suspended or waived by Agent or Lenders, unless such
suspension or waiver is by an instrument in writing signed by an officer of
Agent and Required Lenders and directed to such Loan Party specifying such
suspension or waiver.
11.4. REMEDIES. Agent's and each Lender's rights and remedies under
this Agreement shall be cumulative and non-exclusive of any other rights and
remedies which Agent and Lenders may have under any other agreement, including,
without limitation, the Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.
11.5. WAIVER OF JURY TRIAL. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights under
the Loan Documents.
11.6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.7. PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower, Agent and
Lenders and the permitted assigns, transferees and endorsees of Agent and
Lenders.
11.8. CONFLICT OF TERMS. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.9. AUTHORIZED SIGNATURE. Until Agent shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of V Sub listed on Schedule 11.9 hereto,
which officer signs such document on behalf of V Sub in its capacity as general
partner of Borrower, shall bind Borrower and be deemed to be the act of
Borrower.
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11.10. GOVERNING LAW. Except as otherwise expressly provided in any
of the Loan Documents, in all respects, including all matters of construction,
validity and performance, this Agreement and the Obligations arising hereunder
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws, and any
applicable laws of the United States of America. Agent, each Lender and
Borrower agree to submit to personal jurisdiction and to waive any objection as
to venue in the County of New York, State of New York. Service of process on
Borrower, Agent or any Lender in any action arising out of or relating to any of
the Loan Documents shall be effective if mailed to such party at the address
listed in Section 11.11 hereof. Nothing herein shall preclude Agent, any Lender
or Borrower from bringing suit or taking other legal action in any other
jurisdiction.
11.11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and shall be delivered either in person with receipt acknowledged, or
by telecopy, or by registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier, addressed as follows:
(a) If to Agent at:
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Region Operations Manager
Telecopy: (203) 316-7810
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With copies to:
General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, Georgia 30326
Attention: Thomas P. Waters
Telecopy: (404) 842-1533
and
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Commercial Finance
Legal Counsel
Telecopy: (203) 316-7889
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: William M. Gutowitz, Esq.
Norman D. Chirite, Esq.
Telecopy: (212) 310-8007
(b) If to Borrower at:
U.S. Cable Television Group, L.P.
One Media Crossways
Woodbury, New York 11797
Attention: General Counsel
Telecopy: (516) 496-1780
With copies to:
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Attention: Lawrence H. Budish, Esq.
Telecopy: (212) 969-2900
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and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John P. Mead, Esq.
Telecopy: (212) 558-3588
(c) If to any Lender, at its address indicated on the signature pages
hereof,
or, as to any party hereto, at such other address as may be substituted by
notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given or served on the date on which
personally delivered or transmitted by telecopy or three Business Days after the
same shall have been deposited in the United States mail or one Business Day
after the same shall have been deposited with an overnight courier. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the Persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
11.12. SURVIVAL. The representations and warranties of Borrower in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
11.13. SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.14. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
11.15. LIABILITY OF GENERAL PARTNERS. Neither V Sub nor U.S. Cable
Partners shall have any personal liability in respect of Borrower's Obligations
under this
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Agreement or any other Loan Document executed and delivered by Borrower solely
by reason of their status as general partners of Borrower; PROVIDED that the
foregoing shall in no way limit or impair any Obligations or other obligations
or liabilities of V Sub or U.S. Cable Partners under the Collateral Documents.
IN WITNESS WHEREOF, this Agreement has been duly executed in New York,
New York as of the date first written above.
U.S. CABLE TELEVISION GROUP, L.P.
By: V Cable G.P., Inc.,
its general partner
By:/s/ Barry J. O'Leary
------------------------------
Name: Barry J. O'Leary
Title: Senior Vice President, Finance
and Treasurer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By:
-------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By:
------------------------------
Name:
Title:
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AMENDED AND RESTATED LOAN AGREEMENT
Dated as of March 15, 1996
between
VC HOLDING, INC.
a Delaware corporation
as Borrower
and
THE LENDERS NAMED HEREIN
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent and Lender
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 26
2.1. REVOLVING CREDIT ADVANCES.. . . . . . . . . . . . . . . . . . 26
2.2. TERM LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 30
2.4. MANDATORY PREPAYMENT. . . . . . . . . . . . . . . . . . . . . 32
2.5. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM.. . . . . . . . . . . 33
2.6. USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . . 33
2.7. SINGLE LOAN.. . . . . . . . . . . . . . . . . . . . . . . . . 33
2.8. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.9. LIMITATIONS ON TYPES OF ADVANCES. . . . . . . . . . . . . . . 36
2.10. RECEIPT OF PAYMENTS.. . . . . . . . . . . . . . . . . . . . . 36
2.11. APPLICATION OF PAYMENTS.. . . . . . . . . . . . . . . . . . . 37
2.12. SHARING OF PAYMENTS, ETC. . . . . . . . . . . . . . . . . . . 37
2.13. ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.14. TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.15. INDEMNITY.. . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.16. ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.17. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. . . . . . . . 42
2.18. INCOME TAX REPORTING. . . . . . . . . . . . . . . . . . . . . 44
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.1. CONDITIONS TO EFFECTIVENESS.. . . . . . . . . . . . . . . . . 46
3.2. CONDITIONS TO EACH REVOLVING CREDIT ADVANCE AND EACH
INCURRENCE OF A LETTER OF CREDIT OBLIGATION. . . . . . . . . 48
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 49
4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW.. . . 49
4.2. EXECUTIVE OFFICES.. . . . . . . . . . . . . . . . . . . . . . 50
4.3. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . 50
4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 50
4.5. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 51
4.6. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . . 52
4.7. OWNERSHIP OF PROPERTY; LIENS. . . . . . . . . . . . . . . . . 52
4.8. NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.9. LABOR MATTERS.. . . . . . . . . . . . . . . . . . . . . . . . 54
i
<PAGE>
SECTION PAGE
- ------- ----
4.10. OTHER VENTURES. . . . . . . . . . . . . . . . . . . . . . . . 54
4.11. INVESTMENT COMPANY ACT. . . . . . . . . . . . . . . . . . . . 54
4.12. MARGIN REGULATIONS. . . . . . . . . . . . . . . . . . . . . . 54
4.13. TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.14. ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.15. NO LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 58
4.16. BROKERS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.17. PREPAYMENT TRANSACTIONS; CONSENTS. . . . . . . . . . . . . . 59
4.18. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC.. . . . . . . . . . 59
4.19. EMPLOYMENT AND LABOR AGREEMENTS.. . . . . . . . . . . . . . . 59
4.20. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. . . . . . . . . 59
4.21. FULL DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . 60
4.22. LIENS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.23. MEDIA LICENSES. . . . . . . . . . . . . . . . . . . . . . . . 60
4.24. ENVIRONMENTAL PROTECTION. . . . . . . . . . . . . . . . . . . 61
4.25. EXISTING LOAN AGREEMENT.. . . . . . . . . . . . . . . . . . . 62
4.26. INSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.27. RECEIPT OF AGREEMENTS . . . . . . . . . . . . . . . . . . . . 62
5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . 62
5.1. REPORTS AND NOTICES.. . . . . . . . . . . . . . . . . . . . . 62
5.2. COMMUNICATION WITH ACCOUNTANTS. . . . . . . . . . . . . . . . 67
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 67
6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. . . . . . . 67
6.2. PAYMENT OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . . 68
6.3. FINANCIAL COVENANTS.. . . . . . . . . . . . . . . . . . . . . 69
6.4. AGENT'S FEES. . . . . . . . . . . . . . . . . . . . . . . . . 70
6.5. BOOKS AND RECORDS.. . . . . . . . . . . . . . . . . . . . . . 70
6.6. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.8. COMPLIANCE WITH LAW.. . . . . . . . . . . . . . . . . . . . . 70
6.9. AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.10. EMPLOYEE PLANS. . . . . . . . . . . . . . . . . . . . . . . . 71
6.11. MEDIA LICENSES. . . . . . . . . . . . . . . . . . . . . . . . 73
6.12. LEASES; NEW REAL ESTATE.. . . . . . . . . . . . . . . . . . . 73
6.13. ENVIRONMENTAL MATTERS.. . . . . . . . . . . . . . . . . . . . 74
6.14. SEC FILINGS; CERTAIN OTHER NOTICES. . . . . . . . . . . . . . 75
6.15. POST-EFFECTIVE DATE ITEMS . . . . . . . . . . . . . . . . . . .76
7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.1. MERGERS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . 76
7.2. INVESTMENTS; LOANS AND ADVANCES.. . . . . . . . . . . . . . . 77
7.3. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . 78
7.4. EMPLOYEE LOANS. . . . . . . . . . . . . . . . . . . . . . . . 79
7.5. CAPITAL STRUCTURE.. . . . . . . . . . . . . . . . . . . . . . 79
7.6. MAINTENANCE OF BUSINESS.. . . . . . . . . . . . . . . . . . . 80
ii
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SECTION PAGE
- ------- ----
7.7. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . 80
7.8. GUARANTIED INDEBTEDNESS.. . . . . . . . . . . . . . . . . . . 81
7.9. LIENS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.10. CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . . . . . . 81
7.11. SALES OF ASSETS.. . . . . . . . . . . . . . . . . . . . . . . 82
7.12. CANCELLATION OF INDEBTEDNESS. . . . . . . . . . . . . . . . . 83
7.13. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . 83
7.14. HEDGING TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . 83
7.15. RESTRICTED PAYMENTS.. . . . . . . . . . . . . . . . . . . . . 84
7.16. ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.17. MODIFICATION OF CERTAIN AGREEMENTS. . . . . . . . . . . . . . 84
8. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.1. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . . . 85
8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 85
8.3. TERMINATION PRIOR TO EFFECTIVE DATE.. . . . . . . . . . . . . 86
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . 86
9.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 86
9.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.3. WAIVERS BY BORROWER.. . . . . . . . . . . . . . . . . . . . . 91
9.4. RIGHT OF SET-OFF. . . . . . . . . . . . . . . . . . . . . . . 91
9.5. CURE OF FINANCIAL COVENANT DEFAULT. . . . . . . . . . . . . . 92
10. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
10.1. AUTHORIZATION AND ACTION. . . . . . . . . . . . . . . . . . . 93
10.2. AGENT'S RELIANCE, ETC.. . . . . . . . . . . . . . . . . . . . 93
10.3. GE CAPITAL AND AFFILIATES.. . . . . . . . . . . . . . . . . . 94
10.4. LENDER CREDIT DECISION. . . . . . . . . . . . . . . . . . . . 95
10.5. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . 95
10.6. SUCCESSOR AGENT.. . . . . . . . . . . . . . . . . . . . . . . 95
11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.2. FEES AND EXPENSES.. . . . . . . . . . . . . . . . . . . . . . 98
11.3. NO WAIVER BY AGENT OR ANY LENDER. . . . . . . . . . . . . . . 100
11.4. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.5. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . 100
11.6. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 100
11.7. PARTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.8. CONFLICT OF TERMS.. . . . . . . . . . . . . . . . . . . . . . 101
11.9. AUTHORIZED SIGNATURE. . . . . . . . . . . . . . . . . . . . . 101
11.10. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . 101
11.11. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.12. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.13. SECTION TITLES. . . . . . . . . . . . . . . . . . . . . . . . 103
11.14. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 103
iii
<PAGE>
INDEX OF EXHIBITS, SCHEDULES AND ANNEXES
Exhibit A - Form of Notice of Revolving Credit Advance or Conversion
Exhibit A-1 - Form of Notice of Term Loan Conversion
Exhibit B - Form of Borrowing Date Certificate
Exhibit C-1 - Form of Legal Opinion of Sullivan & Cromwell
Exhibit C-2 - Form of Legal Opinion of Robert S. Lemle
Schedule 1 - Capitalization Policies of Borrower
Schedule 4.2 - Executive Offices
Schedule 4.3 - Subsidiaries
Schedule 4.7(a) - Owned Property
Schedule 4.7(b) - Leased Property
Schedule 4.10 - Other Ventures
Schedule 4.13 - Tax Matters
Schedule 4.14 - ERISA Matters
Schedule 4.15 - Litigation
Schedule 4.19 - Employment Matters
Schedule 4.20 - Patents, Trademarks, Copyrights and Licenses
Schedule 4.23(a) - Media Licenses of Borrower as held after
the Effective Date
Schedule 4.23(b) - Notices of Media License Material
Default or Breach of Covenant
Schedule 4.25 - Insurance
Schedule 7.7 - Transactions with Affiliates
Schedule 7.9 - Certain Liens
Schedule 11.9 - Authorized Signatures
Annex I - Cablevision Incentive Expense Allocation
Methodology
iv
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT, dated as of March 15, 1996,
between VC HOLDING, INC., a Delaware corporation having an office at One Media
Crossways, Woodbury, New York 11797 ("Borrower"), the lenders listed on the
signature pages hereof ("Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation having an office at 201 High Ridge Road, Stamford,
Connecticut 06927-5100 ("GE Capital"), as agent for Lenders hereunder (GE
Capital, in such capacity, being "Agent").
W I T N E S S E T H :
WHEREAS, Borrower, Lenders and Agent are parties to the Loan
Agreement, dated as of December 31, 1992 (as heretofore amended, the "Existing
Loan Agreement"); and
WHEREAS, as of the date hereof, Borrower and certain of its affiliates
are consummating the Prepayment Transactions (as defined in the USC Partnership
Agreement), and in connection therewith the parties hereto desire to amend and
restate the Existing Loan Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree that, effective as of
the Effective Date, the Existing Loan Agreement is hereby amended and restated
in its entirety as follows:
1. DEFINITIONS
In addition to the defined terms appearing elsewhere in this
Agreement, capitalized terms used in this Agreement shall have the following
respective meanings when used herein:
"Advance" shall mean an Index Rate Advance or a LIBOR Advance (each of
which shall be a "Type" of Advance).
"Adverse Environmental Condition" shall mean any of the matters
referred to in clause (i) or (iii) of the definition of Environmental Claim or
any Environmental Claim based on any of the matters referred to in clause (ii)
of the definition of Environmental Claim.
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns
<PAGE>
or controls, whether beneficially or as trustee, guardian or other fiduciary,
10% or more of the Stock having ordinary voting power in the election of
directors of such Person and (ii) each Person that controls, is controlled by or
is under common control with such Person. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise; PROVIDED,
HOWEVER, that with respect to each of Borrower and V Cable and any of its or
their Subsidiaries or Affiliates, the term "Affiliate" shall not include GE
Capital.
"Agent" shall have the meaning assigned to it in the first paragraph
of this Agreement and shall include GE Capital and any successor Agent appointed
pursuant to Section 10.6 hereof.
"Aggregate Loan" shall have the meaning assigned to it in Section
2.18(a) hereof.
"Agreement" shall mean this Amended and Restated Loan Agreement,
including all amendments, modifications and supplements hereto and any
appendices, exhibits or schedules to any of the foregoing, and shall refer to
this Agreement as the same may be in effect at the time any reference hereto
becomes operative.
"Ancillary Agreement" shall mean any agreement, undertaking,
instrument, document or other writing executed by Borrower or any of its
Subsidiaries, or any member of the V Cable Group, or any of their respective
direct or indirect stockholders or partners, as a condition to advances or
funding under this Agreement or otherwise in connection herewith, including,
without limitation, the Tax Sharing Agreement, the Loan Documents and all
amendments or supplements thereto.
"Annualized Consolidated Operating Cash Flow" shall mean, for any
Fiscal Quarter, the product of (i) Operating Cash Flow of Borrower and its
Subsidiaries for such Fiscal Quarter multiplied by (ii) 4.
"Applicable Margin" shall mean an interest margin determined quarterly
and based upon the ratio of Total Debt to Annualized Consolidated Operating Cash
Flow for the immediately preceding Fiscal Quarter as follows:
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<PAGE>
Total Debt to Annualized Index LIBOR
Consolidated Operating Rate Rate
Cash Flow Ratio plus plus
------------------------ ----- -----
greater than or .875% 1.875%
equal to 6.25:1.00
greater than or .750% 1.750%
equal to 5.50:1.00
and less than 6.25:1.00
less than 5.50:1.00 .500% 1.500%
For purposes of determining the Applicable Margin to be used in
calculating the interest which is payable in respect of any Fiscal Quarter or
Interest Period, as the case may be, Annualized Consolidated Operating Cash Flow
shall be determined based upon the last quarterly financial statements required
to have been delivered to Lenders pursuant to Section 5.1(b) hereof; PROVIDED,
HOWEVER, that if Borrower shall fail to deliver such financial statements on a
timely basis, the Applicable Margin shall be the highest rate set forth above
for the period until such financial statements have been delivered (whereupon
the Applicable Margin shall be the applicable rate provided above for periods
commencing after the date of such delivery until the following period's
financial statements are due).
"Borrower" shall have the meaning assigned to it in the first
paragraph of this Agreement.
"Borrowing Date Certificate" shall mean a certificate in the form
attached hereto as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a Sunday nor
a day on which banks are required or permitted to be closed in the State of New
York.
"Cablevision" shall mean Cablevision Systems Corporation, a Delaware
corporation.
"Capital Expenditures" shall mean all amounts accrued (or, without
double counting, paid) in respect of any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized in accordance with
GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or
3
<PAGE>
mixed) by such Person as lessee that, in accordance with GAAP, would be required
either to be classified and accounted for as a capital lease on a balance sheet
of such Person or otherwise to be disclosed as such in a note to such balance
sheet, other than, in the case of Borrower or any of its Subsidiaries, any such
lease under which Borrower or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would be required to appear on a balance sheet of such lessee in
respect of such Capital Lease or otherwise be disclosed as such an obligation in
a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in
Section 2.3(c)(i) hereof.
"Cash Equivalents" shall have the meaning assigned to it in Section
2.3(c)(i) hereof.
"Category 1 Capital Contribution" shall have the meaning assigned to
it in Section 9.5 hereof.
"Category 2 Capital Contribution" shall have the meaning assigned to
it in Section 9.5 hereof.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) Borrower's or any of its Subsidiaries' employees, payroll, income or gross
receipts, (iv) Borrower's or any of its Subsidiaries' ownership or use of any of
its assets, or (v) any other aspect of Borrower's or any of its Subsidiaries'
business.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Collateral" shall mean, collectively, all Collateral referred to in
the Security Agreements and all Pledged Collateral, as well as all other
property and interests in property and proceeds thereof now owned or
4
<PAGE>
hereafter acquired by any Loan Party in or upon which a Lien is granted under
any of the Collateral Documents.
"Collateral Documents" shall mean, collectively, the Guaranties, the
Security Agreements, the Pledge Agreements, the Nonrecourse Guaranty and Pledge
Agreement and any other document executed and delivered by a Loan Party granting
a Lien on any of its property to secure payment of the Obligations.
"Commitment Termination Date" shall mean the earlier of (i) the
Maturity Date and (ii) the date on which payment in full of the Revolving Credit
Loan may otherwise be required pursuant to the proviso in Section 8.1 hereof.
"Contaminant" shall mean any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste, including
any such substance regulated under any Environmental Law.
"CSC Nonrecourse Guaranty and Pledge Agreement" shall mean the
agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders
and lenders under the V Cable Loan Agreement) and Cablevision, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such CSC Nonrecourse
Guaranty and Pledge Agreement as the same may be in effect at the time any
reference thereto becomes operative.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Disposition Proceeds" shall have the meaning assigned to it in
Section 7.11(b) hereof.
"DOL" shall mean the United States Department of Labor or any
successor to any of its relevant functions.
"Effective Date" shall mean the date hereof, subject to the
satisfaction (or the waiver thereof) of the conditions set forth in Section 3.1
hereof.
"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or
5
<PAGE>
other order or direction (conditional or otherwise) by any Governmental
Authority or any other Person for personal injury (including sickness, disease
or death), tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, any sudden or non-sudden, accidental or non-accidental
Release) of, or exposure to, any substance, chemical, material, pollutant,
Contaminant, odor or audible noise or other release or emission in, into or onto
the environment (including, without limitation, the air, ground, water or any
surface) at, in, by, from or related to the Facilities, (ii) the environmental
aspects of the transportation, storage, treatment or disposal of materials in
connection with the operation of the Facilities or (iii) the violation, or
alleged violation, of any Environmental Law, ordinance, order, Permit or license
of or from any Governmental Authority relating to environmental matters
connected with the Facilities.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., the
Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., the Clean Water Act, 33 U.S.C.
Section 1251, ET SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601,
ET SEQ., the Occupational Safety and Health Act, 29 U.S.C. Section 651, ET SEQ.,
and all other federal, state, and local laws, ordinances, regulations, rules,
orders, Permits, and the like, which are aimed at the protection of human health
or the environment, each as in effect from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, all trades
or businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower or any of its ERISA
Affiliates, (a) a Reportable Event (other than a Reportable Event not subject to
the provision
6
<PAGE>
for 30-day notice to the PBGC under regulations issued under Section 4043 of
ERISA), (b) the withdrawal of Borrower or any of its ERISA Affiliates from a
Plan subject to Section 4063 of ERISA during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing
of a notice of intent to terminate a Plan or the treatment of a Plan amendment
as a termination under Section 4041 of ERISA, (d) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, (e) the complete or
partial withdrawal of Borrower or any of its ERISA Affiliates from any
Multiemployer Plan, (f) the failure to make required contributions to a Plan
under Section 412 of the IRC or (g) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042(a)(1), (2) or
(3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Event of Default" shall have the meaning assigned to it in Section
9.1 hereof.
"Excluded Subsidiaries" shall mean V Sub and V-C Mo. G.P., Inc., a
Delaware corporation and a wholly-owned Subsidiary of V Cable.
"Existing Loan Agreement" shall have the meaning assigned thereto in
the first recital to this Agreement.
"Existing Loans" shall mean the loans outstanding under the Existing
Loan Agreement.
"Facilities" shall mean real property owned or leased or used by
Borrower or any of its Subsidiaries.
"FCC" shall mean the Federal Communications Commission (or any
successor).
"FCC Consent" shall mean an order or orders issued by the FCC to
Borrower approving the transfer of control of the Systems in the manner
contemplated by the Newco Management Agreement.
"Federal Funds Rate" shall mean, for any date, a fluctuating interest
rate per annum equal for such day to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next
7
<PAGE>
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" shall have the meaning assigned to it in
Section 4.12 hereof.
"Financials" shall mean the financial statements referred to in
Section 4.5(a) hereof.
"Financial Covenants" shall have the meaning assigned to it in Section
9.1(b) hereof.
"Fiscal Quarter" shall mean the calendar quarter ending on each March
31, June 30, September 30 and December 31 of each year. Subsequent changes of
the fiscal quarters of Borrower or V Cable shall not change the term "Fiscal
Quarter" unless the Required Lenders shall consent in writing to such changes.
"Fiscal Year" shall mean the calendar year. Subsequent changes of the
fiscal year of Borrower or V Cable shall not change the term "Fiscal Year"
unless the Required Lenders shall consent in writing to such changes.
"Funding Arrangements" shall have the meaning assigned to it in
Section 2.15(b) hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"GE Capital" shall have the meaning assigned to it in the first
paragraph of this Agreement.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantied Indebtedness" shall mean, as to any Person, any obligation
of such Person guarantying any indebtedness, lease, dividend or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including, without limitation, any obligation or
8
<PAGE>
arrangement of such Person (i) to purchase or repurchase any such primary
obligation, (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guaranties" shall mean, collectively, the Newco Subsidiary Guaranty
and the V Cable Group Guaranty.
"Guarantor" shall mean each Subsidiary of Borrower and each member of
the V Cable Group, which is executing and delivering to Agent any of the
Guaranties.
"Homes Passed" shall mean the sum of: (i) all dwelling units passed
by energized cable of the cable systems of Borrower or any of its Subsidiaries
which are occupied or, if not occupied, are in a condition permitting
occupation, and which are capable of being furnished with a signal level not
less than six decibels, including each dwelling unit in a multiple dwelling unit
that has basis for a first set connection (whether or not Borrower or any of its
Subsidiaries enters into an arrangement with a multiple dwelling unit for
provision of service to such unit on a discounted basis) or that is an
individual dwelling unit to which a first set connection could be offered and
supplied, but in any case excluding any multiple dwelling unit and the
individual dwelling units therein to which Borrower or any of its Subsidiaries
does not have and cannot obtain access for the provision of such first set
connection to such individual dwelling units; (ii) each commercial subscriber
which is actually connected to the cable systems of Borrower or any of its
Subsidiaries and is receiving service; and (iii) each non-connected hotel or
motel (counted as one "home" each) passed by energized cable of the cable
systems of Borrower or any of its Subsidiaries; PROVIDED, HOWEVER, that "Homes
Passed" shall not in any event include any non-connected commercial
establishments other than the hotels and motels referred to in clause (iii)
above.
"Indebtedness" of any Person shall mean (a) (i) all indebtedness of
such Person for borrowed money or
9
<PAGE>
for the deferred purchase price of property or services (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured, but
not including obligations to trade creditors incurred in the ordinary course of
business), (ii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (iv) all Capital Lease Obligations of
such Person, (v) all Guarantied Indebtedness of such Person, (vi) all
Indebtedness of such Person referred to in clause (i), (ii), (iii), (iv) or (v)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (vii) all Unfunded Pension Liabilities and all
Withdrawal Liabilities of such Person and (b) with respect to V Cable, Borrower
or any of their respective Subsidiaries, (i) all Indebtedness of such Person
referred to in clause (a) above, (ii) the Obligations, and (iii) any indemnity
claim pursuant to the Supplemental Side Letter that shall have been established
and quantified pursuant to paragraph (1) of such letter.
"Index Rate" shall mean, on any date, the greater of (i) the highest
of the daily prime, base, commercial loan or equivalent rate of interest
published or publicly announced for such date by Bankers Trust Company, Chemical
Bank, N.A., Citibank, N.A., Morgan Guaranty Trust Company of New York or The
Chase Manhattan Bank, N.A. (whether or not such rate is actually charged by any
such bank) as in effect for such date and (ii) the Federal Funds Rate for such
date plus 1/2 of 1%.
"Index Rate Advance" shall mean a portion of a Loan which bears
interest at a rate based on the Index Rate.
"Interest Expense" shall mean, for any period, gross interest expense
of Borrower and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, LESS the following for Borrower and its
10
<PAGE>
Subsidiaries determined on a consolidated basis in accordance with GAAP:
(a) the sum of (i) interest capitalized during construction for such period,
(ii) interest income for such period, and (iii) gains for such period on
interest rate contracts (to the extent not included in interest income above and
to the extent not deducted in the calculation of gross interest expense), PLUS
the following for Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP: (b) the sum of (i) losses for such period on
interest rate contracts (to the extent not included in gross interest expense),
and (ii) the expensing of upfront costs or fees for such period associated with
interest rate contracts (to the extent not included in gross interest expense).
"Interest Period" shall mean for any LIBOR Advance, the period
commencing and ending on such dates as are selected by Borrower pursuant to the
provisions set forth below. The duration of each Interest Period shall be one,
two, three, six or, to the extent available and if agreed to by all Lenders,
nine or twelve months as Borrower may, upon notice received by Agent not later
than 10:00 A.M. (New York City time) on the second Business Day prior to the
first day of such Interest Period, select; PROVIDED, HOWEVER, that:
(i) Borrower may not select any Interest Period which ends
after the Maturity Date;
(ii) Borrower may not select any Interest Period in respect of
any LIBOR Advance such that any mandatory payment of the principal
amount of the Term Loans pursuant to Section 2.2(b) hereof would
result in such LIBOR Advance being required to be repaid, in whole or
in part, prior to the end of the Interest Period applicable thereto;
and
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day.
"Investments" shall mean any advances, loans, accounts receivable
(other than (x) accounts receivable arising in the ordinary course of business
of Borrower or any Subsidiary of Borrower and (y) accounts receivable owing to
Borrower from any Subsidiary of Borrower for management
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services (other than such accounts receivable that constitute direct charges or
out-of-pocket expenses relating to such services) provided by Borrower to such
Subsidiary) or other extensions of credit (excluding, however, accrued and
unpaid interest in respect of any advance, loan or other extension of credit) or
capital contributions to (by means of transfers of property to others, or
payments for property or services for the account or use of others, or
otherwise), or the purchase or ownership of any stocks, bonds, notes, debentures
or other securities (including, without limitation, any interests in any
partnership, joint venture or joint adventure) of, or any bank accounts with, or
guarantee any Indebtedness or other obligations of, any Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service or any entity succeeding
to any or all of its functions.
"Leases" shall mean all of those leasehold estates in real property
now owned or hereafter acquired by Borrower or any of its Subsidiaries, as
lessee.
"Lender" or "Lenders" shall have the meaning assigned to it in the
first paragraph of this Agreement and shall include GE Capital and any future
holder of all or any portion of the Notes.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by GE Capital at the request of Borrower, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance or
guaranty by GE Capital of letters of credit, bankers' acceptances or similar
obligations in respect of letters of credit. The amount of such Letter of
Credit Obligations shall equal the maximum amount which may be payable by GE
Capital thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters of credit
issued at the request and for the account of Borrower, and bankers' acceptances
issued by Borrower, for which GE Capital has incurred Letter of Credit
Obligations.
"LIBOR Advance" shall mean a portion of a Loan which bears interest at
a rate based on the LIBOR Rate.
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"LIBOR Rate" shall mean, for any Interest Period, the rate obtained by
dividing (i) the average of the four rates reported from time to time by
Telerate News Service on page 3875 thereof (or such other number of rates as
such service may from time to time report) at which foreign branches of major
U.S. banks offer U.S. dollar deposits to other banks for such Interest Period in
the London interbank market at approximately 11:00 A.M., London time, on the
second full Eurodollar Business Day (as hereinafter defined) next preceding such
Interest Period by (ii) a percentage equal to 100% minus the weighted average of
the maximum rates of all reserve requirements (including, without limitation,
any marginal emergency, supplemental, or special or other reserves) scheduled to
be applicable during such Interest Period to any member bank of the Federal
Reserve System in respect of eurocurrency or eurodollar funding or liabilities.
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Agent and Borrower. The
term "Eurodollar Business Day" shall mean a Business Day on which banks
generally are open in the city of London for interbank or foreign exchange
transactions.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement (other than an unrestricted bank
account in the name of and maintained by Borrower or any of its Subsidiaries),
lien, Charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any lease or title retention
agreement, any arrangement having substantially the same economic effect as any
of the foregoing (including any financing lease), and the filing of, or
agreement to give, any financing statement perfecting a security interest under
the Code or comparable law of any jurisdiction).
"Loan" shall mean the Revolving Credit Loan and any Term Loan.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Collateral Documents and the Non-Competition Agreement.
"Loan Party" shall mean Borrower and each of its Subsidiaries, each
member of the V Cable Group and Cablevision.
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"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, operations or financial condition of Borrower and its
Subsidiaries taken as a whole, (ii) Borrower's and its Subsidiaries' collective
ability to pay the Obligations in accordance with the terms thereof, (iii) the
Collateral or (iv) Lenders' Liens on the Collateral taken as a whole or the
priority of such Liens taken as a whole.
"Maturity Date" shall mean December 31, 2001.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
2.8(f) hereof.
"Maximum Revolving Credit Loan" shall mean, at any time, an amount
equal to $125,000,000, as reduced from time to time pursuant to Section 2.4
hereof.
"Media Approval" shall mean any FCC Consent and any other approval
necessary for the transfer by V Cable of control of any of its assets or any
portion of its business (including, without limitation, the Stock of V Cable's
Subsidiaries), or for the assignment of any of their Media Licenses, to Borrower
or any of its Subsidiaries.
"Media License" shall mean any franchise, license, permit,
certificate, ordinance, right by contract or other authorization from any
Governmental Authority which is necessary for the cable television operations of
any Person.
"Missouri Partnership" shall mean Missouri Cable Partners, L.P., a
Delaware limited partnership.
"Multiemployer Plan" shall mean, with respect to any Person, a
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, to which such
Person or any of its ERISA Affiliates is making, or is obligated to make,
contributions or has made, or has been obligated to make, contributions within
the preceding five years.
"Net Sales Proceeds" shall have the meaning assigned to it in Section
7.11(a)(i) hereof.
"Newco Group Pledge Agreement" shall mean the agreement, dated as of
December 31, 1992, among GE Capital (as agent for Lenders and lenders under the
V Cable Loan Agreement), V Cable, Borrower and the Subsidiaries of Borrower
listed on the signature pages thereof, including
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all amendments, modifications and supplements thereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to such Newco
Group Pledge Agreement as the same may be in effect at the time any reference
thereto becomes operative.
"Newco Group Security Agreement" shall mean the agreement, dated as of
December 31, 1992, among GE Capital (as agent for Lenders and lenders under the
V Cable Loan Agreement), Borrower and the Subsidiaries of Borrower listed on the
signature pages thereof, including all amendments, modifications and supplements
thereto and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to such Newco Group Security Agreement as the same may be in effect
at the time any reference thereto becomes operative.
"Newco Management Agreement" shall mean the agreement, dated as of
December 31, 1992, among Cablevision, Borrower and the Subsidiaries of Borrower
listed on the signature pages thereof, providing, INTER ALIA, for the management
of Borrower and its Subsidiaries and the Systems, including all amendments,
modifications and supplements thereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to such Newco Management Agreement as
the same may be in effect at the time any reference thereto becomes operative
(but only giving effect to such amendments, modifications or supplements
consented to by GE Capital).
"Newco Subsidiary Guaranty" shall mean the agreement, dated as of
December 31, 1992, made in favor of Agent by each Subsidiary of Borrower,
including all amendments, modifications and supplements thereto and any
appendices, exhibits or schedules to any of the foregoing, and shall refer to
such Newco Subsidiary Guaranty as the same may be in effect at the time any
reference thereto becomes operative.
"Non-Competition Agreement" shall mean an agreement, dated as of
December 31, 1992, among Cablevision, V Cable, Borrower, and GE Capital (as
Agent and as agent for lenders under the V Cable Loan Agreement and in its
individual capacity), providing, INTER ALIA, for Cablevision's agreement not to
compete with the operations of V Cable, Borrower and their respective
Subsidiaries, including all amendments, modifications and supplements thereto
and any appendices, exhibits or schedules to any of
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the foregoing, and shall refer to such Non-Competition Agreement as the same may
be in effect at the time any reference thereto becomes operative (but only
giving effect to such amendments, modifications or supplements consented to by
GE Capital).
"Nonrecourse Guaranty and Pledge Agreement" shall mean the CSC
Nonrecourse Guaranty and Pledge Agreement.
"Notes" shall mean, collectively, the Revolving Credit Note and the
Term Notes.
"Notice of Revolving Credit Advance or Conversion" shall have the
meaning assigned to it in Section 2.1(b) hereof.
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations for monetary amounts (whether or not such amounts are liquidated or
determinable) owing by Borrower or any of its Subsidiaries or any other Loan
Party to Agent or any Lender, and all covenants and duties regarding the payment
of such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, in each case arising under
any of the Loan Documents. "Obligations" include, without limitation, all
interest, Letter of Credit Obligations, Charges, expenses, attorneys' fees and
any other sum chargeable to Borrower or any of its Subsidiaries or any other
Loan Party under any of the Loan Documents.
"Operating Cash Flow" shall mean, for any period, the following for
Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP: (i) aggregate operating revenues MINUS (ii)
aggregate operating expenses (including technical, programming, sales, selling,
general administrative expenses and salaries and other compensation paid to any
general partner, director, officer or employee of Borrower or any Subsidiary of
Borrower and any management fees paid to Cablevision, but excluding interest,
depreciation and amortization and compensation in respect of Borrower's and its
Subsidiaries' allocable portion of Cablevision's employee stock incentive
programs (not to exceed in the aggregate for any calendar year 5% of the
Operating Cash Flow for the previous calendar year) which employee stock
incentive expense shall be allocated among Cablevision's Subsidiaries based on
the existing Cablevision allocation methodology reflected in Annex I hereto and,
to the extent
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<PAGE>
otherwise included in operating expenses, any losses resulting from a writeoff
or writedown of Investments by Borrower or any Subsidiary of Borrower in
Affiliates); PROVIDED, HOWEVER, that for purposes of determining Operating Cash
Flow, there shall be excluded (x) all management fees paid to Borrower or any
Subsidiary of Borrower during such period, and (y) the amortization of deferred
installation income.
"Other Taxes" shall have the meaning assigned to it in Section 2.14(b)
hereof.
"Participants" shall have the meaning assigned to it in Section
11.1(b)(ii) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Permit" shall mean any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under any
applicable Environmental Law.
"Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for taxes or assessments or other governmental charges or levies either
not yet due and payable or to the extent that nonpayment thereof is permitted by
the terms of this Agreement; (ii) pledges or deposits securing obligations under
workers' compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which Borrower or any of its Subsidiaries is a party as lessee made in the
ordinary course of business; (iv) deposits securing public or statutory
obligations of Borrower or any of its Subsidiaries; (v) workers', mechanics',
suppliers', carriers', warehousemen's or other similar Liens arising in the
ordinary course of business and securing indebtedness aggregating not in excess
of $500,000 at any time outstanding and not yet due and payable; (vi) deposits
securing or in lieu of surety, appeal or customs bonds in proceedings to which
Borrower or any of its Subsidiaries is a party; (vii) any attachment or judgment
Lien, unless the judgment it secures shall not, within 60 days after the entry
thereof, have been discharged or execution thereof stayed pending appeal or
shall not have been discharged within 60 days after the expiration of any
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such stay; (viii) Capital Leases permitted under Section 7.3(a)(iv) hereof; and
(ix) zoning restrictions, easements, licenses or other restrictions on the use
of real property or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value or
marketability of such real property, leases or leasehold estates.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
company, institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to any Person or any of its ERISA
Affiliates, at any time, an employee pension benefit plan, as defined in Section
3(2) of ERISA (including a Multiemployer Plan), that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the IRC
and is maintained by such Person or any of its ERISA Affiliates.
"Pledge Agreements" shall mean, collectively, the Newco Group Pledge
Agreement, the V Cable Group Pledge Agreement and the Preferred USC Interest
Pledge Agreement.
"Pledged Collateral" shall mean, collectively, the Pledged Collateral
referred to in the Pledge Agreements and the Nonrecourse Guaranty and Pledge
Agreement.
"Preferred USC Interest" shall mean the collective reference to the
19% limited partnership interest in USC and the 1% general partnership interest
in USC held by V Cable and V Sub.
"Preferred USC Interest Pledge Agreement" shall mean the agreement,
dated as of December 31, 1992, among GE Capital (as agent for Lenders and
lenders under the V Cable Loan Agreement), V Cable and V Sub, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such Preferred USC
Interest Pledge Agreement as the same may be in effect at the time any reference
thereto becomes operative.
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"Premium Services" shall mean such cable television programming
services as Borrower and/or its Subsidiaries from time to time determine in the
course of its business constitute "Premium Services" or the like.
"Premium Units" shall mean the total number of Premium Services
subscribed to by each Subscriber.
"Prepayment Transactions" shall have the meaning assigned to it in the
recitals to the USC Partnership Agreement.
"Real Estate" shall mean all of those plots, pieces or parcels of land
now owned or hereafter acquired by Borrower or any of its Subsidiaries (the
"Land"), including, without limitation, those listed on Schedule 4.7(a) hereto,
together with the right, title and interest of Borrower or any of its
Subsidiaries, if any, in and to the streets, the land lying in the bed of any
streets, roads or avenues, opened or proposed, in front of, adjoining or
abutting the Land to the center line thereof, the air space and development
rights pertaining to the Land and right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including, without
limitation, all alley, vault, drainage, mineral, water, oil and gas rights,
together with all of the buildings and other improvements now or hereafter
erected on the Land, and all fixtures and articles of personal property
appertaining thereto and all additions thereto and substitutions and
replacements thereof.
"Release" shall have the meaning assigned to it in Section 101(20) of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(22).
"Reportable Event" shall have the meaning assigned to it in Section
4043 of ERISA.
"Required Lenders" shall mean, on any date on which any Loan is
outstanding, the holders of Notes evidencing at least a majority of the
aggregate unpaid principal amount of the Loans; PROVIDED, HOWEVER, that any
amendment to, modification of or supplement to this Agreement or waiver of a
Default or an Event of Default hereunder that
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would have the effect of reinstating the obligations to make Revolving Credit
Advances from and after the date such obligations have been terminated or
changing the terms of, amount of or obligation to make Revolving Credit Advances
shall require the affirmative consent thereto of holders of Notes evidencing at
least a majority of the aggregate unpaid principal amount of the Revolving
Credit Loan then outstanding or, in the event that at such date there is no
Revolving Credit Loan then outstanding, then the holders of Notes evidencing at
least a majority of the unused portion of the Maximum Revolving Credit Loan.
"Reserves" shall mean such reserves for doubtful accounts, returns,
allowances and the like as may be established by Borrower or any of its
Subsidiaries or as may otherwise be required in accordance with GAAP.
"Restricted Payment" shall mean (i) the declaration of any dividend,
the making of any distribution or the incurrence of any liability to make any
other payment or distribution of cash or other property or assets in respect of
Stock of Borrower, (ii) any payment on account of the purchase, redemption or
other retirement of Stock of Borrower, any member of the V Cable Group,
Cablevision or any other Affiliate of Borrower (other than a Subsidiary of
Borrower) or any other payment or distribution made in respect thereof, either
directly or indirectly, or (iii) any payment on account of federal, state or
local taxes (inclusive of interest and penalties) in respect of any
consolidated, combined or unitary tax return filed by Cablevision or any of its
Subsidiaries (other than V Cable or any of its Subsidiaries).
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 2.1(a) hereof, and may consist of an Index Rate Advance or a LIBOR
Advance.
"Revolving Credit Loan" shall mean the aggregate amount of Revolving
Credit Advances outstanding at any time.
"Revolving Credit Note" shall have the meaning assigned to it in
Section 2.1(c) hereof.
"Sale" shall have the meaning assigned to it in Section 11.1(b)
hereof.
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"Security Agreements" shall mean, collectively, the Newco Group
Security Agreement and the V Cable Group Security Agreement.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity, whether
voting or nonvoting, including, without limitation, common stock, preferred
stock and any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subscribers", on any date, shall mean the sum of (a) the total number
of households (exclusive of "second outlets", as such term is commonly
understood in the cable television industry), subscribing on such date to any
cable television system of Borrower or any of its Subsidiaries and paying any
currently available rate for monthly service fees and charges imposed by such
system, for any level of programming services offered by such system; PROVIDED,
HOWEVER that such term shall not include any household whose account is more
than 60 days past due. For purposes of this definition, an account shall be
deemed due on the last day of each monthly billing period for which service has
been provided to a household.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person is a general partner or shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50%; PROVIDED, HOWEVER that none of USC or any of its
Subsidiaries (other than Borrower and its Subsidiaries) or the Missouri
Partnership shall be considered a Subsidiary of V Cable.
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"Supplemental Side Letter" shall mean that letter agreement, dated as
of December 31, 1992, among V Cable, Borrower and GE Capital, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such Supplemental Side
Letter as the same may be in effect at the time any reference thereto becomes
operative.
"Systems" shall mean the cable television systems owned and operated
by V Cable and its Subsidiaries, wherever located.
"Tax Sharing Agreement" shall mean an income tax allocation agreement
by and among V Cable and the Subsidiaries of V Cable listed on the signature
pages thereof and Cablevision, including all amendments, modifications and
supplements thereto and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to such Tax Sharing Agreement as the same may be in
effect at the time any reference thereto becomes operative (but only giving
effect to such amendments, modifications or supplements consented to by GE
Capital).
"Taxes" shall have the meaning assigned to it in Section 2.14(a)
hereof.
"Termination and Modification Documents" shall mean the collective
reference to the Termination and Amendatory Agreement, dated as of the date
hereof, among Agent, V Cable and certain affiliates of V Cable, the Termination
and Amendatory Agreement, dated as of the date hereof, among Agent, VC Holding
and certain affiliates of VC Holding, Amendment No. 1 the CSC Nonrecourse
Guaranty and Pledge Agreement, dated as of the date hereof, between Agent and
Cablevision, to the CSC Nonrecourse Guaranty and Pledge Agreement and the
Termination and Release Agreement, dated as of the date hereof, between Agent
and USC.
"Termination Date" shall mean the date on which all Loans and other
Obligations hereunder have been completely discharged and Borrower shall have no
further right to borrow any monies hereunder or require GE Capital to incur any
Letter of Credit Obligations.
"Term Loans" shall have the meaning assigned to it in Section 2.2(a)
hereof.
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"Term Notes" shall have the meaning assigned to such term in Section
2.2(a) hereof.
"Total Debt" shall mean all Indebtedness of Borrower and its
consolidated Subsidiaries.
"Treasury Regulation" shall mean the Income Tax Regulations
promulgated under the IRC as such regulations may be amended from time to time
(including temporary and proposed regulations).
"Type" of Advance shall have the meaning assigned to it in the
definition of Advance.
"Unfunded Pension Liability" shall mean, with respect to any Person at
any time, the aggregate amount, if any, of the sum of (i) the amount by which
the present value of all accrued benefits under each Plan of such Person, any of
its Subsidiaries or any of its ERISA Affiliates exceeds the fair market value of
all assets of such Plan allocable to such benefits in accordance with Title IV
of ERISA, all determined as of the most recent valuation date for each such Plan
using the actuarial assumptions in effect under such Plan, and (ii) for a period
of five years following a transaction reasonably likely to be covered by Section
4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by
such Person, any of its Subsidiaries or any of its ERISA Affiliates as a result
of such transaction.
"U.S. Cable Partners" shall mean U.S. Cable Partners, a Delaware
general partnership.
"USC" shall mean U.S. Cable Television Group, L.P., a Delaware limited
partnership.
"USC Partnership Agreement" shall mean the Second Amended and Restated
Limited Partnership Agreement of USC, dated as of the date hereof, including all
amendments, modifications and supplements thereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to such USC Partnership
Agreement as the same may be in effect at the time any reference thereto becomes
operative (but only giving effect to such amendments, modifications or
supplements consented to by GE Capital).
"V Cable" shall mean V Cable, Inc., a Delaware corporation.
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"V Cable Group" shall mean, collectively, V Cable and each of its
Subsidiaries (other than Borrower and its Subsidiaries) including, without
limitation, the Excluded Subsidiaries.
"V Cable Group Guaranty" shall mean the agreement, dated as of
December 31, 1992, made in favor of Agent by V Cable and the Subsidiaries of V
Cable listed on the signature pages thereof, including all amendments,
modifications and supplements thereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to such V Cable Group Guaranty as the
same may be in effect at the time any reference thereto becomes operative.
"V Cable Group Pledge Agreement" shall mean the agreement, dated as of
December 31, 1992, among GE Capital (as agent for Lenders and lenders under the
V Cable Loan Agreement), V Cable and the Subsidiaries of V Cable listed on the
signature pages thereof, including all amendments, modifications and supplements
thereto and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to such V Cable Group Pledge Agreement as the same may be in effect
at the time any reference thereto becomes operative.
"V Cable Group Security Agreement" shall mean the agreement, dated as
of December 31, 1992, among GE Capital (as agent for Lenders and lenders under
the V Cable Loan Agreement), V Cable and the Subsidiaries of V Cable listed on
the signature pages thereof, including all amendments, modifications and
supplements thereto and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to such V Cable Group Security Agreement as the same
may be in effect at the time any reference thereto becomes operative.
"V Cable Loan Agreement" shall mean the Loan Agreement, dated as of
December 31, 1992, among V Cable, the lenders thereunder and GE Capital, as
agent, including all amendments, modifications and supplements thereto and any
appendices, exhibits or schedules to any of the foregoing, and shall refer to
such V Cable Loan Agreement as the same may be in effect at the time any
reference thereto becomes operative.
"V Cable/Newco Collateral Documents" shall mean the CSC Nonrecourse
Guaranty and Pledge Agreement, the Newco Group Security Agreement, the Newco
Group Pledge Agreement,
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the V Cable Group Security Agreement and the V Cable Group Pledge Agreement.
"V Sub" shall mean V Cable G.P., Inc., a Delaware corporation and a
wholly-owned subsidiary of V Cable.
"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1)
of ERISA, which is maintained or contributed to by Borrower or any of its
Subsidiaries on behalf of former employees after such employees' termination of
employment (other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant).
"Withdrawal Liability" shall mean, (a) with respect to Borrower, at
any time, the aggregate amount of the liabilities of any Loan Party, any of its
Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA,
and any increase in contributions required to be made pursuant to Section 4243
of ERISA, with respect to all Multiemployer Plans of any such Person and (b)
with respect to any other Person, at any time, the aggregate amount of the
liabilities of such Person, any of its Subsidiaries or any of its ERISA
Affiliates pursuant to Section 4201 of ERISA, and any increase in contributions
required to be made pursuant to Section 4243 of ERISA, with respect to all
Multiemployer Plans of any such Person.
"Working Capital" shall mean, for any Person on any date, the excess
of current assets of such Person on such date (excluding cash, cash equivalents
and marketable securities) over current liabilities of such Person on such date
(including, for Borrower, the outstanding balance of the Revolving Credit Loan,
but excluding current maturities of other long-term Indebtedness) determined on
a consolidated basis in accordance with GAAP and (to the extent consistent with
GAAP) in a manner consistent with the past practices of V Cable; PROVIDED,
HOWEVER, that, with respect to V Cable and Borrower, such amount shall be
determined on the basis of the capitalization policies of V Cable and its
Subsidiaries as in effect on the Effective Date and set forth on Schedule 1
hereto.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance
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with GAAP consistently applied. That certain terms or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing.
All financial and other computations, covenants and reports hereunder
shall be determined assuming Borrower and its Subsidiaries are at all times
consolidated Subsidiaries of V Cable and its Subsidiaries, notwithstanding any
accounting, tax or other treatment or requirement to the contrary.
All other undefined terms contained in this Agreement shall, unless
the context indicates otherwise, have the meanings provided for by the Code as
in effect in the State of New York to the extent the same are used or defined
therein.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
2.1. REVOLVING CREDIT ADVANCES. Upon and subject to the terms
and conditions hereof, GE Capital agrees to make available, from time to time
until the Commitment Termination Date, for Borrower's use and upon the request
of Borrower therefor, advances (each, a "Revolving Credit Advance") in an
aggregate amount outstanding which, when combined with all outstanding Letter of
Credit Obligations, shall not at any time exceed the Maximum Revolving Credit
Loan. Subject to the foregoing and to the provisions of Section 2.4 hereof and
until all amounts outstanding in respect of the Revolving Credit Loan shall
become due and payable on the Commitment Termination Date, Borrower may from
time to time borrow, repay and reborrow under this Section 2.1(a). Revolving
Credit Advances outstanding on the date hereof under the Existing Loan Agreement
after
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giving effect to the Prepayment Transactions shall constitute "Revolving Credit
Advances" for purposes of this Agreement.
(b) Each Revolving Credit Advance shall be made on notice, given no
later than 1:00 P.M. (New York City time) on the Business Day of the proposed
Revolving Credit Advance, by Borrower to GE Capital. Each such notice (a
"Notice of Revolving Credit Advance or Conversion") shall be in writing or by
telephone to GE Capital's Account Executive 203-316-7661, telecopy, telex or
cable, if by telephone confirmed immediately in writing, in substantially the
form of Exhibit A hereto, specifying therein (consistent with this Agreement),
INTER ALIA, the requested (i) date and aggregate amount of such Advance, (ii)
Type or Types of Advance comprising such Revolving Credit Advance and the amount
of each such Type and (iii) Interest Period for each such Advance which is a
LIBOR Advance. Each Revolving Credit Advance shall be deemed to be an Index
Rate Advance unless otherwise specified by Borrower in the Notice of Revolving
Credit Advance or Conversion delivered to GE Capital in relation to such Advance
in accordance with the procedures and time set forth in this Section 2.1(b). GE
Capital shall, before 5:00 P.M. (New York City time) on the date of the proposed
Revolving Credit Advance (or, if the Notice of Revolving Credit Advance or
Conversion is given by 10:30 A.M. (New York City time) on such date, by 2:00
P.M. (New York City time) on the date of the proposed Revolving Credit Advance),
upon fulfillment of the applicable conditions set forth in Section 3 hereof,
wire the amount of such Revolving Credit Advance to a bank designated by
Borrower and reasonably acceptable to GE Capital.
(c) The Revolving Credit Loan of GE Capital shall be evidenced by the
promissory note executed and delivered by Borrower to GE Capital at the time of
the initial Revolving Credit Advance (the "Revolving Credit Note"). The
Revolving Credit Note shall be payable to the order of GE Capital and shall
represent the obligation of Borrower to pay the amount of the Maximum Revolving
Credit Loan or, if less, the aggregate unpaid principal amount of all Revolving
Credit Advances made by GE Capital to Borrower with interest thereon as
prescribed in Section 2.8 hereof. The date and amount of each Revolving Credit
Advance and the Type of each such Advance (and, if a LIBOR Advance, the Interest
Period therefor) and each payment of principal with respect thereto shall be
recorded on the books and records of GE Capital, which books and records shall
(absent manifest error)
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constitute PRIMA FACIE evidence of the accuracy of the information therein
recorded. The entire unpaid balance of the Revolving Credit Loan shall be due
and payable on the Commitment Termination Date.
(d) Not later than 10:00 A.M. on the second Business Day prior to the
end of any Interest Period for each Revolving Credit Advance consisting of a
LIBOR Advance, Borrower shall deliver to GE Capital a Notice of Revolving Credit
Advance or Conversion electing to convert such LIBOR Advance into an Index Rate
Advance or into a LIBOR Advance (or part into an Index Rate Advance and part
into a LIBOR Advance), in each case effective at the end of the Interest Period
for such Advance. Each such Notice of Revolving Credit Advance or Conversion
shall be in writing or by telephone to GE Capital's Account Executive, 203-316-
7661, telex, telecopy or cable, if by telephone confirmed immediately in
writing, specifying therein (consistent with this Agreement), INTER ALIA, (i)
the aggregate amount and Type of Advance which is to be converted and the last
day of the current Interest Period for such Advance, (ii) the Type or Types of
Advance into which such Advance is to be converted and the amount of each such
Type and (iii) the Interest Period for each Advance which is to be a LIBOR
Advance. If Borrower shall fail to provide a Notice of Revolving Credit Advance
or Conversion on or prior to 10:00 A.M. on the second Business Day prior to the
end of the Interest Period in respect of any LIBOR Advance, such Advance shall
automatically convert into an Index Rate Advance on the day following the last
day of such Interest Period.
(e) Borrower shall be entitled to convert all or any part of any
Index Rate Advance into a LIBOR Advance by delivery to GE Capital, not later
than 10:00 A.M. on the second Business Day prior to the date such conversion is
to occur, of a Notice of Revolving Credit Advance or Conversion in the manner,
and containing the relevant information indicated in, Section 2.1(d) hereof;
PROVIDED, HOWEVER, that no such conversion shall occur or be effective on any
date which is not a Business Day.
2.2. TERM LOANS. (a) The Series A Term Loan and the Series B Term
Loan outstanding on the date hereof under the Existing Loan Agreement after
giving effect to the Prepayment Transactions shall constitute the "Term Loans"
for purposes of this Agreement. The promissory notes evidencing the Term Loans
shall be referred to herein as the "Term Notes."
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(b) The principal amount of the Term Loans shall be payable in
installments, together with accrued and unpaid interest thereon, on March 31,
June 30, September 30 and December 31 of each year, commencing on March 31, 1999
and ending on December 31, 2001, as follows:
Quarterly Payment Dates Amount Per Payment
----------------------- ------------------
March 31 through December 31, 1999 $ 2,000,000
March 31 through December 31, 2000 $10,000,000
March 31 through December 31, 2001 $13,750,000
; PROVIDED, HOWEVER, that in any event the outstanding principal amount of the
Term Loans shall be payable, together with accrued and unpaid interest thereon,
no later than the Maturity Date.
(c) Not later than 10:00 A.M. on the second Business Day prior to the
end of any Interest Period for each portion of a Term Loan consisting of a LIBOR
Advance, Borrower shall deliver to Agent a notice in substantially the form of
Exhibit A-1 hereto (a "Notice of Term Loan Conversion") electing to convert such
LIBOR Advance into an Index Rate Advance or into a LIBOR Advance (or part into
an Index Rate Advance and part into a LIBOR Advance), in each case effective at
the end of the Interest Period for such Advance. Each such Notice of Term
Advance or Conversion shall be in writing or by telephone to Agent's Account
Executive, 203-316-7661, telex, telecopy or cable, if by telephone confirmed
immediately in writing, specifying therein (consistent with this Agreement),
inter alia, (i) the aggregate amount and Type of Advance which is to be
converted and the last day of the current Interest Period for such Advance, (ii)
the Type or Types of Advance into which such Advance is to be converted and the
amount of each such Type and (iii) the Interest Period for each Advance which is
to be a LIBOR Advance. If Borrower shall fail to provide a Notice of Term
Advance or Conversion on or prior to 10:00 A.M. on the second Business Day prior
to the end of the Interest Period in respect of any LIBOR Advance, such Advance
shall automatically convert into an Index Rate Advance on the day following the
last day of such Interest Period.
(d) Borrower shall be entitled to convert any portion of a Term Loan
consisting of an Index Rate Advance into a LIBOR Advance by delivery to Agent,
not later than 10:00 A.M. on the second Business Day prior to the date such
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conversion is to occur, of a Notice of Term Advance or Conversion in the manner,
and containing the relevant information indicated in, Section 2.2(c) hereof;
provided, however, that no such conversion shall occur or be effective on any
date which is not a Business Day.
2.3. LETTERS OF CREDIT. (a) GE Capital agrees, subject to the terms
and conditions hereinafter set forth, to incur, from time to time on not less
than five Business Days' prior written request of Borrower (but only on a
Business Day), Letter of Credit Obligations in respect of Letters of Credit
which either (i) support indebtedness of Borrower incurred in the ordinary
course of business and permitted under Section 7.3 hereof or (ii) secure
performance obligations of Borrower and its Subsidiaries entered into in the
ordinary course of business; PROVIDED, HOWEVER, that the amount of all Letter of
Credit Obligations incurred by GE Capital pursuant to this Section 2.3(a) at any
one time outstanding (whether or not then due and payable) shall not exceed the
lesser of (A) $5,000,000 and (B) the Maximum Revolving Credit Loan less the
aggregate principal amount of all outstanding Revolving Credit Advances; and
PROVIDED FURTHER, HOWEVER, that (A) no Letter of Credit shall have an expiry
date which is more than one year following the date of issuance thereof, (B) GE
Capital shall be under no obligation to incur Letter of Credit Obligations in
respect of any Letter of Credit having an expiry date which is later than the
Commitment Termination Date, (C) no Letter of Credit shall be in a stated amount
of less than $10,000 and (D) the terms of each Letter of Credit shall be
acceptable to GE Capital in all respects, in its sole discretion. It is
understood that the determination of the bank or other legally authorized Person
(including GE Capital) which shall issue or accept, as the case may be, any
letter of credit or bankers' acceptance contemplated by this Section 2.3(a)
shall be made by GE Capital, in its sole discretion.
(b) In the event that GE Capital shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then be deemed
to constitute a Revolving Credit Advance under Section 2.1(a) hereof.
(c) (i) In the event that any Letter of Credit Obligation, whether or
not then due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower will pay to GE Capital cash or cash equivalents of
the type referred to in the second proviso in Section 7.2 hereof ("Cash
Equivalents") in an amount equal
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to the maximum amount then available to be drawn under the related Letter of
Credit. Such cash or Cash Equivalents shall be held by GE Capital in a cash
collateral account (the "Cash Collateral Account"). The Cash Collateral Account
shall be in the name of GE Capital (as a cash collateral account), and shall be
under the sole dominion and control of GE Capital, subject to the terms of this
Section 2.3(c). Borrower hereby pledges to GE Capital, and grants to GE Capital
a security interest in, all such cash or Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of such Letter of Credit Obligations,
whether or not then due.
(ii) From time to time after funds are deposited in the Cash
Collateral Account, GE Capital may apply such cash or Cash Equivalents then held
in the Cash Collateral Account to the payment of any amounts, in such order as
GE Capital may elect, as shall be or shall become due and payable by Borrower to
GE Capital with respect to such Letter of Credit Obligations.
(iii) Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the cash or Cash Equivalents
held in the Cash Collateral Account, except that upon the termination of any
Letter of Credit Obligation in accordance with its terms and the payment of all
amounts payable by Borrower to GE Capital in respect thereof, any cash or Cash
Equivalents remaining in the Cash Collateral Account in excess of the then
remaining Letter of Credit Obligations shall be returned to Borrower.
(iv) GE Capital shall deposit the cash held in the Cash Collateral
Account in an interest-bearing account, and interest thereon shall be the
property of Borrower. Interest and earnings on the Cash Equivalents in the Cash
Collateral Account shall be the property of Borrower.
(d) In the event that GE Capital shall incur any Letter of Credit
Obligations pursuant hereto at the request or on behalf of Borrower, Borrower
agrees to pay to GE Capital, as compensation to GE Capital for such Letter of
Credit Obligation, commencing with the Fiscal Quarter in which such Letter of
Credit Obligation is incurred by GE Capital and quarterly thereafter for each
Fiscal Quarter during which such Letter of Credit Obligation shall remain
outstanding, a fee in an amount equal to the quotient of (i)
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an amount equal to (A) the sum of the daily outstanding amount of such Letter of
Credit Obligations on each day during such Fiscal Quarter multiplied by (B) a
rate equal to 2% divided by (ii) 360. Fees payable in respect of Letter of
Credit Obligations shall be paid to GE Capital, in arrears, on the last day of
each Fiscal Quarter.
2.4. MANDATORY PREPAYMENT. (a) Upon receipt by Borrower of Net
Sales Proceeds or other asset sale proceeds as contemplated pursuant to Section
7.11 hereof, Borrower shall prepay the Loans (other than the Revolving Credit
Loan) with such proceeds and, with respect to any Net Sales Proceeds or other
asset sale proceeds remaining after such prepayments, Borrower shall prepay the
Revolving Credit Loan. Such prepayments shall be applied in the following
manner: (i) FIRST, to the then outstanding principal amount of the remaining
Term Loans, in such orders and as among the portions of such Loans as GE Capital
shall determine, and (ii) SECOND to the then outstanding principal amount of the
Revolving Credit Loan. Notwithstanding the foregoing, Borrower shall not make a
prepayment otherwise required pursuant to this Section 2.4(a) with the proceeds
of asset sales to the extent that such prepayment is waived by Agent (at the
direction or with the consent of the Required Lenders) in writing. Any
prepayments of any Loan pursuant to this Section 2.4(a) shall be applied FIRST,
to those portions of such Loan that constitute Index Rate Advances, and NEXT, to
those portions of such Loan that constitute LIBOR Advances. Notwithstanding the
foregoing, if any prepayment of a LIBOR Advance in the manner and at the times
provided above would result in any such prepayment occurring prior to the last
day of the Interest Period for such Advance, such prepayment shall instead be
made on the last day of the Interest Period therefor (unless the Agent, at the
direction or with the consent of the Required Lenders, otherwise directs). Any
prepayment of any Loan from the proceeds of asset sales pursuant to this Section
2.4(a) shall be accompanied by all accrued and unpaid interest on the principal
amounts so prepaid. Any prepayments of Revolving Credit Advances pursuant to
this Section 2.4(a) shall not be available to be reborrowed, and the Maximum
Revolving Credit Loan shall be permanently reduced by an amount equal to the
maximum amount of the proceeds of asset sales available to be applied to reduce
Revolving Credit Advances pursuant to clause (ii) above (even if all or a
portion of such proceeds of asset sales available pursuant to clause (ii) above
shall not have been applied in prepayment of Revolving Credit Advances due to
the
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outstanding amount of Revolving Credit Advances being less than the amount of
such proceeds of asset sales available pursuant to clause (ii) above). Borrower
shall use reasonable good faith efforts to select Interest Periods in respect of
its LIBOR Advances in order to avoid circumstances whereby (or to minimize, to
the extent possible, the extent to which) any mandatory prepayments pursuant to
this Section 2.4(a) would result in a LIBOR Advance being prepaid prior to the
last day of the Interest Period with respect thereto.
(b) No prepayment fee shall be payable in respect of any mandatory
prepayment under this Section 2.4.
2.5. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM. (a) Borrower shall
have the right at any time (but subject to the provisions set forth below), on 5
Business Days' prior written notice to Agent, to voluntarily prepay, in whole or
in part, the then outstanding balance, including accrued and unpaid interest, of
the Loans, without premium or penalty except as set forth in Section 2.5(b) or
2.15(b) hereof; PROVIDED, HOWEVER, that such prepayment shall be applied in the
manner set forth in Section 2.4(a) hereof.
(b) Notwithstanding the foregoing, Borrower shall have no right to
prepay any LIBOR Advance prior to the end of the respective Interest Period
therefor, except pursuant to Section 2.4 or 2.17(c) hereof; PROVIDED, HOWEVER,
that Borrower may prepay any such LIBOR Advance in connection with a prepayment
in full of the Loans if such prepayment is accompanied by payment of all amounts
required to be paid by Borrower in respect thereof (if any) pursuant to Section
2.15(b) hereof.
2.6. USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Credit Loan for working capital purposes and Capital Expenditures
related to the Systems.
2.7. SINGLE LOAN. The Revolving Credit Loan and the Term Loans and
all of the other Obligations of Borrower arising under this Agreement and the
other Loan Documents shall constitute one general obligation of Borrower
secured, until the Termination Date, by all of the Collateral.
2.8. INTEREST. (a) Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Advance from the date of such Advance
until the principal amount thereof shall be paid in full, at all times from the
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Effective Date at a rate based on either the Index Rate or the LIBOR Rate as
follows: (x) with respect to each Term Loan bearing interest of the Index Rate,
at a rate per annum equal to the Index Rate plus the Applicable Margin, payable
quarterly in arrears on the last day of each Fiscal Quarter commencing on or
after the Effective Date and on the date such Term Loan is repaid in full; and
(y) with respect to each LIBOR Advance, at a rate per annum equal at all times
during the Interest Period therefor to the LIBOR Rate for such Interest Period
plus the Applicable Margin, payable in arrears on the last day of such Interest
Period or, if such Interest Period exceeds three months, on the last day of each
three month period and on the date such Term Loan is repaid in full.
(b) Borrower shall pay interest on the unpaid principal amount of
each Term Loan from the Effective Date until the principal amount thereof shall
be paid in full at all times at a rate based on either the Index Rate or the
LIBOR Rate as follows: (A) with respect to each Term Loan bearing interest at
the Index Rate, at a rate per annum equal to the Index Rate plus the Applicable
Margin, payable quarterly in arrears on the last day of each Fiscal Quarter
commencing on or after the Effective Date and on the date such Term Loan is
repaid in full; and (B) with respect to each Term Loan bearing interest at the
LIBOR Rate, at a rate per annum equal at all times during the Interest Period
therefor to the LIBOR Rate for such Interest Period plus the Applicable Margin,
payable in arrears on the last day of each Interest Period or, if such Interest
Period exceeds three months, on the last day of each three month period and on
the date such Term Loan is repaid in full.
(c) All computations of the LIBOR Rate shall be made by Agent on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last) occurring in the period for which such interest is
payable. All computations of the Index Rate shall be made by Agent on the basis
of a year of 365 or 366 days, as the case may be, for the actual number of days
occurring in the period for which such interest is payable or accrues. Each
determination of the Index Rate for Index Rate Advances shall be on a daily
basis for (and for the period through and including) the next succeeding
Business Day. Each determination by Agent of an interest rate hereunder shall
be, in the absence of manifest error, conclusive and binding for all purposes.
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(d) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall accrue at the then applicable rate during such extension and shall
be payable on such next succeeding Business Day.
(e) So long as any default in the payment of principal or interest
hereunder shall have occurred and be continuing, the interest rate applicable to
each Loan shall be increased by 2% per annum above the rate otherwise
applicable.
(f) Notwithstanding anything to the contrary set forth in this
Section 2.8, if at any time until payment in full of all of the Obligations, any
stated rate of interest hereunder exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest hereunder shall to the extent permitted by law be equal to the
Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time thereafter, any
stated rate of interest hereunder is less than the Maximum Lawful Rate, to the
extent permitted by law interest shall continue to be paid or accrued hereunder
at the Maximum Lawful Rate until such time as the total interest received by any
Lender hereunder is equal to the total interest which such Lender would have
received had each such interest rate been (but for the operation of this
paragraph) the interest rate since the Effective Date. Thereafter, the interest
rate hereunder shall be the rate otherwise set forth in this Agreement for each
Loan or portion thereof, unless and until any such interest rate again exceeds
the Maximum Lawful Rate, in which event this paragraph shall again apply. In no
event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount which such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. In the event interest is calculated at the Maximum Lawful Rate
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.8(f), shall make
a final determination that any Lender has
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received interest hereunder or under any of the Loan Documents in excess of the
Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable
law, promptly apply such excess first to any interest due and not yet paid under
the Loans, then to any due and payable principal of the Loans, then to the
remaining principal amount of the Loans, then to other unpaid Obligations and
thereafter refund any excess to Borrower or as a court of competent jurisdiction
may otherwise order.
(g) Notwithstanding anything herein to the contrary, the rate of
interest applicable to any Loan shall not be less than 2% per annum.
2.9. LIMITATIONS ON TYPES OF ADVANCES. Notwithstanding any other
provision of this Agreement, there shall not at any time be in effect (and
Borrower shall not be entitled to select) more than three Interest Periods with
respect to all outstanding LIBOR Advances.
2.10. RECEIPT OF PAYMENTS. Borrower shall make each payment under
this Agreement not later than 2:00 P.M. (New York City time) on the day when due
in lawful money of the United States of America in immediately available funds
to Agent's depository bank in the United States as designated by Agent from time
to time for deposit in Agent's depositary account or, if Agent so notifies
Borrower, directly to each Lender, ratably based on the respective principal
amounts of the Notes held by each Lender that relate to the Loan in respect of
which such payment is made or applied. Agent will, upon any such deposit to its
depositary account, promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest (other than interest or
principal payments on the Revolving Credit Loan, which will be paid directly to
GE Capital) ratably to Lenders as provided above, and like funds relating to the
payment of any other amount payable to any Lender to such Lender, in each case
to be applied in accordance with the terms of this Agreement. For purposes only
of computing interest hereunder, all payments shall be applied by GE Capital to
the Revolving Credit Loan and by each Lender to its Term Loans on the day
payment has been credited by Agent's depository bank to Agent's depositary
account in immediately available funds or, if Agent has notified Borrower to
make any such payments directly to any Lender, such payments shall be applied by
each Lender to its Term Loans on the day payment has been received by such
Lender in immediately available funds. For purposes of
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determining the amount of funds available for borrowing by Borrower pursuant to
Section 2.1(a) hereof, such payments shall be applied by GE Capital against the
outstanding amount of the Revolving Credit Loan at the time they are credited to
its account.
2.11. APPLICATION OF PAYMENTS. Except as otherwise expressly
provided herein, Borrower irrevocably waives the right to direct the application
of any and all payments at any time or times hereafter received by Agent or any
Lender from or on behalf of Borrower pursuant to the terms of this Agreement,
and Borrower irrevocably agrees that, except as otherwise expressly provided
herein, Agent and Lenders shall have the continuing exclusive right to apply any
and all such payments against the then due and payable Obligations and in
repayment of the Revolving Credit Loan and the Term Loans as they each may deem
advisable. In the absence of a specific determination by Agent and the Required
Lenders with respect thereto, the same shall be applied in the following order:
(i) then due and payable fees and expenses; (ii) then due and payable interest
payments on the Loans; and (iii) then due and payable principal payments on the
Loans. Notwithstanding the foregoing, prior to the occurrence of a Default or
Event of Default, Agent agrees to apply payments received in accordance with
instructions received from Borrower (if any) in connection with such payments,
to the extent such instructions are consistent with the provisions of this
Agreement. GE Capital is authorized to, and at its option may, make advances on
behalf of Borrower for payment of all fees, expenses, Charges, costs, principal
or interest incurred by Borrower hereunder. Such advances shall be made when
and as Borrower fails to promptly pay such fees, expenses, Charges, costs,
principal or interest and, at GE Capital's option shall be deemed to be
additional Revolving Credit Advances constituting part of the Revolving Credit
Loan hereunder and comprised of Index Rate Advances or LIBOR Advances (as
selected by GE Capital).
2.12. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of any Loan made by it in excess of its ratable
share of payments on account of such Loan obtained by all Lenders, such Lender
shall forthwith purchase from each other Lender such participations in such Loan
made by each other Lender as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each other
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Lender; PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Section 2.12 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation.
2.13. ACCOUNTING. Agent will provide a monthly accounting of
transactions under the Revolving Credit Loan and the Term Loans, if applicable,
to Borrower. Each and every such accounting shall (absent manifest error) be
deemed final, binding and conclusive upon Borrower in all respects as to all
matters reflected therein unless Borrower, within 90 days after the date any
such accounting is rendered, shall notify Agent in writing of any objection
which Borrower may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower. Agent's
determination, based upon the facts available, of any item objected to by
Borrower in such notice shall (absent manifest error) be final, binding and
conclusive on Borrower, unless Borrower shall, within 30 days following Agent's
notifying Borrower of such determination, either (i) commence a judicial
proceeding to resolve such objection or (ii) submit such dispute to KPMG Peat
Marwick, independent public accountants, for resolution of the items in dispute
(which resolution shall be final, conclusive and binding on both parties). The
fees of such independent public accountant shall be borne by Lenders if such
resolution shall indicate that the items in dispute were not accounted for
accurately by Agent, and shall otherwise be borne by Borrower.
2.14. TAXES. (a) Any and all payments by Borrower hereunder or
under the Notes shall be made, in accordance with Section 2.10 hereof, free and
clear of and
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without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of any Lender or Agent,
as the case may be (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under any Note to any Lender or Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14) such Lender or Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law.
(b) In addition to the foregoing, Borrower agrees to pay any present
or future stamp or documentary taxes or any other sales, excise or property
taxes, charges or similar levies that arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) Borrower shall indemnify each Lender and Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or Agent and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within 30 days from the date such Lender or
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Agent and each Lender, at their addresses referred to in
Section 11.11 hereof, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.14 shall
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survive the payment in full of principal and interest hereunder and under the
Notes.
2.15. INDEMNITY. (a) Borrower shall indemnify and hold Agent and
each Lender harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and disbursements, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by Agent or such Lender as a result of its having entered into any of
the Loan Documents or extended credit hereunder; PROVIDED, HOWEVER, that
Borrower shall not be liable for such indemnification to any such indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense (x) results from such indemnified Person's gross
negligence or willful misconduct, (y) relates to a dispute between Agent or any
Lender and any of the Loan Parties or (z) results from a breach by Agent or such
Lender of its obligations under the last sentence of Section 11.1(b) hereof.
(b) Borrower understands that in connection with Lenders' arranging
to provide the LIBOR Advances from time to time at the option of Borrower on the
terms provided herein, Lenders have entered or may enter into funding
arrangements with third parties ("Funding Arrangements") on terms and conditions
which could result in substantial losses to such Lenders if any LIBOR Advances
do not remain outstanding at the interest rates provided herein for the entire
Interest Period with respect to which such LIBOR Advance has been fixed.
Consequently, in order to induce Lenders to provide the LIBOR Advances on the
terms provided herein and in consideration for the entering into by Lenders of
Funding Arrangements from time to time in contemplation thereof, if any LIBOR
Advance is repaid in whole or in part prior to the last day of the Interest
Period therefor (whether any such repayment is made pursuant to any provision of
this Agreement or any other Loan Document or is the result of acceleration, by
operation of law or otherwise), Borrower shall indemnify and hold harmless each
Lender from and against and in respect of any and all losses, costs and expenses
resulting from, or arising out of or imposed upon or incurred by such Lender by
reason of the liquidation or reemployment of funds acquired or committed to be
acquired by such Lender to fund such LIBOR Advance, pursuant to the Funding
Arrangements. The amount of any losses, costs or expenses resulting in an
obligation of
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Borrower to make a payment pursuant to the foregoing sentence shall not include
any losses attributable to any Lender's lost profit, but shall represent the
excess, if any, of (i) such Lender's cost of borrowing the relevant LIBOR
Advance pursuant to the Funding Arrangements over (ii) the return such Lender
would receive on its reinvestment of such funds; PROVIDED, HOWEVER, that if any
Lender terminates any Funding Arrangements in respect of any LIBOR Advance, the
amount of such losses, costs and expenses shall include the cost to such Lender
of such termination. As promptly as practicable under the circumstances, each
Lender shall provide Borrower with its written calculation of all amounts
payable pursuant to the next preceding sentence, and such calculation shall be
binding on the parties hereto unless Borrower shall object thereto in writing
within ten Business Days of receipt thereof. Notwithstanding the foregoing, the
provisions of this Section 2.15(b) shall not apply in respect of any such
prepayment of any Loan or LIBOR Advance required to be made solely as a result
of the provisions of Section 2.4 (other than with the proceeds of asset sales)
or 2.17(c) hereof.
(c) Borrower hereby waives and relinquishes any set-off or similar
rights which it may have against Agent or any Lender with respect to any
Obligation under this Agreement; PROVIDED that, with respect to any Default or
Event of Default asserted by Agent or any Lender, this sentence shall not be
deemed to impair Borrower's right to assert any claim against Agent or any
Lender that, if adjudicated to be correct by a court of competent jurisdiction,
would excuse or cure such Default or Event of Default.
2.16. ACCESS. (a) Without limiting any other rights that Agent or
any Lender may otherwise have, Agent and any of its officers, employees and/or
agents shall have the right, exercisable as frequently as Agent determines to be
appropriate, during normal business hours (or at such other times as may
reasonably be requested by Agent), to inspect the properties and facilities of
Borrower and its Subsidiaries and to inspect, audit and make extracts from all
of Borrower's and its Subsidiaries' records, files and books of account at the
place(s) where the same shall be located all to the extent, but only to the
extent, that such inquiry is related to its position as Agent. Borrower shall
deliver any document or instrument reasonably necessary for Agent, as it may
request, to obtain records from any service bureau maintaining records for
Borrower or its Subsidiaries. Borrower shall instruct its and its Subsidiaries'
banking
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and other financial institutions to make available to Agent such information and
records as Agent may reasonably request.
(b) Agent and each Lender agree to exercise their reasonable efforts
to keep any information delivered or made available by Borrower pursuant hereto
confidential from anyone other than Persons employed or retained by Agent or
such Lender who are expected to become engaged in evaluating, approving,
structuring, administering or transferring the Loans; PROVIDED, that nothing
herein shall prevent Agent or any Lender from disclosing such information (i) to
any other Lender, (ii) upon the order of any court or administrative agency or
as otherwise may be required by law, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over Agent or such Lender, as
the case may be, (iv) which has been publicly disclosed or is otherwise
available to Agent or such Lender on a nonconfidential basis, (v) in connection
with any litigation to which Agent, any Lender, Cablevision, Borrower or any
other Loan Party or any of its Subsidiaries may be a party, (vi) to the extent
reasonably required in connection with the exercise or enforcement of any rights
or remedies under the Loan Documents, (vii) to Agent's or such Lender's legal
counsel and independent auditors and (viii) to any actual or proposed
participant or to any other Person in connection with any actual or proposed
sale, transfer or other disposition of all or any part of the Loans, if such
other Person, prior to such disclosure, agrees for the benefit of Borrower to
comply with the provisions of this subsection (b).
2.17. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any
Lender shall determine that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by such Lender (or its lending office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder or credit
extended by it hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance by an amount deemed by such
Lender to
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be material, then from time to time as specified by such Lender by written
notice to Borrower, Borrower shall pay such additional amount or amounts as will
compensate such Lender for such reduction (such notice to indicate Lender's
method of determining the amount of such reduction and that such method is
consistent with such Lender's treatment of customers similar to Borrower having
similar provisions generally in their agreements with such Lender, which method
and amount will be conclusive and binding absent manifest error).
(b) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Loan or portion thereof bearing interest based on the LIBOR Rate, then Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to in clause (i) or (ii) above which
would result in any such increased cost to such Lender, such Lender shall, to
the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 2.17(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any Loan bearing interest based on
the LIBOR Rate, then, unless such Lender is able to agree to make or to continue
to fund or to maintain such Loan which bears interest based on the LIBOR Rate at
another branch or office of such Lender without, in such Lender's opinion,
adversely affecting it or its Loans or the income obtained therefrom, on notice
thereof and demand therefor by such Lender to
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Borrower through Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain Loans or any portion thereof bearing
interest based on the LIBOR Rate shall terminate and (ii) Borrower shall
forthwith prepay in full all outstanding Loans or any portions thereof then
bearing interest based on the LIBOR Rate, together with interest accrued thereon
(but without any penalty for such prepayment), of such Lender UNLESS Borrower,
within five Business Days after the delivery of such notice and demand, converts
each such Loan into a Loan bearing interest based on the Index Rate.
(d) Agent, upon becoming aware thereof, shall promptly notify
Borrower of the occurrence of any event described in this Section 2.17.
Borrower shall have the right within five Business Days of receipt of such
notice to convert any outstanding LIBOR Advance to an Index Rate Advance.
2.18. INCOME TAX REPORTING. (a) Subject to Section 2.18(c),
Borrower, Lenders and Agent hereby acknowledge and agree that for U.S. federal
income tax reporting purposes:
(i) the Term Loans will be aggregated (as contemplated by
proposed Treasury Regulation Section 1.1275-2(c)) (as aggregated, the
"Aggregate Loan") and treated as a single debt instrument with a
single issue price, maturity date, yield to maturity and stated
redemption price at maturity for purposes of Sections 1271 through
1275 of the IRC and the proposed Treasury Regulations thereunder;
(ii) the Aggregate Loan is a debt instrument to which Section
1274 of the IRC applies;
(iii) the "issue date" (as defined in Section 1275(a)(2) of
the IRC and the proposed Treasury Regulations thereunder) of the
Aggregate Loan is the Effective Date;
(iv) the maturity date of the Aggregate Loan is the Maturity
Date;
(v) the Aggregate Loan constitutes a "variable rate debt
instrument" as defined in proposed Treasury Regulation Section 1.1275-
5; and
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(vi) the Aggregate Loan is not part of an "investment unit" and
the provisions governing the determination of the issue price of an
investment unit as set forth in proposed Treasury Regulation Section
1.1273-2(f) do not apply.
(b) Notwithstanding Section 2.19(a), if the Internal Revenue Service
promulgates new final, temporary or proposed regulations under any of Sections
1271 through 1275 of the IRC, or if any of Sections 1271 through 1275 of the IRC
are amended, and such regulations or amendments are applicable to any of the
loans made pursuant to this Agreement, or if there is another change in the tax
law (or interpretations thereof) applicable to the reporting of the loans made
pursuant to this Agreement, Borrower and Agent will negotiate in good faith to
determine the effect of any of the foregoing on the reporting of the loans made
pursuant to this Agreement and to agree upon a consistent treatment for federal
income tax reporting purposes of the loans made pursuant to this Agreement.
(c) Within 20 days after the end of any year, Agent shall furnish
Borrower with its computation of the amount of interest income and deductions
attributable to the Loans for U.S. federal income tax purposes. If Borrower
does not agree with such computation, Borrower shall notify Agent, and promptly
thereafter Borrower and Agent will negotiate in good faith to attempt to resolve
any disagreement with respect to Agent's computation. It is Borrower's,
Lenders' and Agent's intention to use their reasonable efforts to reach an
agreement with respect to such computation. If such agreement is reached, each
of Borrower and the Lenders will consistently report the amount of any interest
income and deductions reflected in such agreed upon computation.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS TO EFFECTIVENESS. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Agent or any Lender hereunder, this Agreement shall not be effective unless and
until the Effective Date shall have occurred under the USC Partnership Agreement
and Borrower shall have delivered to Agent, in form and substance satisfactory
to Agent and (unless otherwise indicated) each dated the Effective Date:
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(a) Evidence, in form and substance reasonably satisfactory to Agent,
that all aspects of the Prepayment Transactions have closed or are
simultaneously closing herewith on terms satisfactory to Agent, in compliance
with all relevant laws and regulations.
(b) A Notice of Revolving Credit Advance or Conversion, if a
Revolving Credit Advance is to be made on the Effective Date, each duly executed
by Borrower.
(c) Favorable opinions of Sullivan & Cromwell, counsel to the Loan
Parties, in substantially the form attached hereto as Exhibit C-1, and of Robert
S. Lemle, counsel to Cablevision, in substantially the form attached hereto as
Exhibit C-2, it being understood that to the extent that any such opinion shall
rely upon any other opinion of counsel or any of such opinions are to instead be
rendered by other counsel, each such other counsel shall be acceptable to Agent
and each such other opinion shall be in form and substance reasonably
satisfactory to Agent and shall provide that Agent and each Lender may rely
thereon.
(d) Resolutions of (i) the board of directors of each Loan Party
which is a corporation, certified by the Secretary or Assistant Secretary of
such Loan Party and (ii) the general partners or management committee of each
Loan Party which is a partnership, certified by a general partner of each such
partnership, in each case as of the Effective Date, to be duly adopted and in
full force and effect on such date, authorizing (A) the consummation of each of
the transactions contemplated by the Loan Documents to which each such Loan
Party is a party, (B) specific officers to execute and deliver this Agreement
(in the case of Borrower) and each other Loan Document to which such Loan Party
is a party and (C) the execution, delivery and performance by each such Loan
Party of each Ancillary Agreement to be delivered on or prior to the Effective
Date and to which such Loan Party is a party.
(e) [Intentionally Omitted]
(f) A copy of the organizational documents and all amendments thereto
of each Loan Party and copies of such Loan Party's by-laws and partnership
agreements, certified by the Secretary or Assistant Secretary (or general
partner, if applicable) of such Loan Party as true and correct as of the
Effective Date.
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(g) A certificate of the Senior Vice President and Treasurer of
Borrower (or other officer of Borrower acceptable to Agent) stating that all of
the representations and warranties of each Loan Party contained herein or in any
of the Loan Documents are correct on and as of the Effective Date as though made
on and as of such date (except to the extent any such representation or warranty
expressly relates to an earlier date and except for changes therein permitted or
contemplated by this Agreement) and that no event has occurred and is
continuing, or would result from a Revolving Credit Advance, if made on the
Effective Date, or the Prepayment Transactions, which constitutes or would
constitute a Default or an Event of Default.
(h) Payment of all reasonable fees and expenses of (i) Agent's
outside counsel Weil, Gotshal & Manges LLP (upon submission no later than 11:00
A.M. (New York City time) on the Effective Date of a statement thereof in
reasonable detail) and (ii) all special local counsel (including, without
limitation, Kaye, Scholer, Fierman, Hays & Handler and Akin, Gump, Strauss,
Hauer & Feld, L.L.P.) retained in connection with any of the Loan Documents and
the transactions contemplated thereby.
(i) Certificates of the Secretary or an Assistant Secretary of each
Loan Party (or other officer of Borrower acceptable to Agent) which is a
corporation and of a general partner of each Loan Party which is a partnership
as to the incumbency and signatures of the officers or representatives of such
entity executing this Agreement, the Term Notes, the Revolving Credit Note, any
of the Loan Documents or other Ancillary Agreements to be delivered on or prior
to the Effective Date or any other certificate or document to be delivered by
such Person pursuant hereto or thereto, together with evidence of the incumbency
and authority of such Secretary or Assistant Secretary.
(j) A copy (or other evidence reasonably satisfactory to Agent) of
each consent, license and approval required to have been obtained in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement, the other Loan Documents and Ancillary Agreements, the consummation
of the Prepayment Transactions, such consents, licenses and approvals to be
satisfactory, in form and substance, to Agent.
(k) Such additional information and materials as Agent may
reasonably request, including, without limitation,
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copies of any debt agreements, security agreements and other material contracts.
CONDITIONS TO EACH REVOLVING CREDIT ADVANCE AND EACH INCURRENCE
OF A LETTER OF CREDIT OBLIGATION. (a) It shall be a condition to the funding
of each subsequent Revolving Credit Advance and to the incurrence by GE Capital
of Letter of Credit Obligations, that the following statements shall be true on
the date of each such funding, advance or incurrence:
(i) All of the representations and warranties of the Loan
Parties contained herein or in any of the Loan Documents shall be
correct on and as of each such date as though made on and as of such
date, except (A) to the extent that any such representation or
warranty expressly relates to an earlier date and (B) for changes
therein permitted or contemplated by this Agreement.
(ii) No event shall have occurred and be continuing, or
would result from any such funding or incurrence, which constitutes or
would constitute a Default or an Event of Default.
(iii) The aggregate unpaid principal amount of the Revolving
Credit Loan plus the aggregate outstanding Letter of Credit
Obligations, after giving effect to such Revolving Credit Advance or
incurrence of Letter of Credit Obligations, shall not exceed the
Maximum Revolving Credit Loan.
(b) The acceptance by Borrower of the proceeds of any Revolving
Credit Advance, including the incurrence by GE Capital of any Letter of Credit
Obligations, shall be deemed to constitute, as of the date of such acceptance,
(i) a representation and warranty by Borrower that the conditions in Section
3.2(a) hereof have been satisfied and (ii) a confirmation by Borrower of the
granting and continuance of Agent's Liens pursuant to the Collateral Documents.
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4. REPRESENTATIONS AND WARRANTIES
To induce GE Capital and Lenders to make the Revolving Credit Loan and
to incur the Letter of Credit Obligations, each as herein provided for, Borrower
makes the following representations and warranties to GE Capital and Lenders,
each and all of which (subject, in the case of Section 4.7 hereof, to the
provisions of Section 6.15 hereof) shall be true and correct as of the date of
execution and delivery of this Agreement after giving effect to the Prepayment
Transactions, and each and all of which shall survive the execution and delivery
of this Agreement:
4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW.
Borrower and each of its Subsidiaries (i) is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its state of
incorporation or organization; (ii) is duly qualified to do business and is in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification (except
for jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate or
partnership power and authority to own, pledge, mortgage or otherwise encumber
and operate its properties, to lease the property it operates under lease, and
to conduct its business as now and proposed to be conducted; (iv) has, or will
by the Effective Date have, all material licenses, permits, consents or
approvals from or by, and has made all material filings with, and has given all
material notices to, all Governmental Authorities having jurisdiction, to the
extent required for such ownership, operation and conduct (except where any
failure to obtain such licenses, permits, consents or approvals, or to make such
filings, would not have a Material Adverse Effect); (v) is in compliance with
its certificate of incorporation and by-laws or certificate or articles of
partnership or partnership agreement (as the case may be); and (vi) is in
compliance with all applicable provisions of law where the failure to comply
would have a Material Adverse Effect.
4.2. EXECUTIVE OFFICES. The current location of Borrower's and each
of its Subsidiaries' executive offices and principal place of business is set
forth on Schedule 4.2 hereto.
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4.3. SUBSIDIARIES. There currently exist no Subsidiaries of Borrower
other than as set forth on Schedule 4.3 hereto, which sets forth such
Subsidiaries, together with their respective jurisdictions of organization, and
the authorized and outstanding Stock of each such Subsidiary by class and the
number and percentage of each such class legally owned by Borrower or a
Subsidiary of Borrower or any other Person, or to be owned by the Effective
Date. There are no outstanding options, warrants, rights to purchase or similar
rights covering Stock of any such Subsidiary.
4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Borrower and its
Subsidiaries of the Loan Documents, and all other existing Ancillary Agreements
and all instruments and documents to be delivered by Borrower and its
Subsidiaries, to the extent they are parties thereto, hereunder and thereunder,
and the creation of all Liens provided for herein and therein: (i) are within
Borrower's and its Subsidiaries' corporate or partnership power; (ii) have been,
or by the Effective Date will be, duly authorized by all necessary or proper
corporate or partnership action; (iii) are not in contravention of any provision
of Borrower's or its Subsidiaries' respective certificates or articles of
incorporation or by-laws or certificates or articles of partnership or
partnership agreements, as the case may be; (iv) will not violate any law or
regulation, or any order or decree of any court or Governmental Authority (other
than violations which will not, individually or in the aggregate, have a
Material Adverse Effect and which are not known to Borrower); (v) will not
conflict with or result in the breach or termination of, or constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any
of their property is bound; (vi) will not result in the creation or imposition
of any Lien upon any of the property of Borrower or any of its Subsidiaries
other than those in favor of Agent pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except for the Media Approvals, all of which will have been duly
obtained, made or complied with prior to the Effective Date, except as provided
in the Collateral Documents and except for violations which will not have a
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Material Adverse Effect and which are not known to Borrower. Upon the delivery,
on or prior to the Effective Date, of each of the Loan Documents, each such Loan
Document will have been duly executed and delivered for the benefit of or on
behalf of Borrower or its Subsidiaries, as the case may be, and each will then
constitute a legal, valid and binding obligation of Borrower or its
Subsidiaries, to the extent they are parties thereto, enforceable against them
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and laws affecting creditors' rights generally and,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding of law or in equity).
4.5. FINANCIAL STATEMENTS. (a) The audited and unaudited balance
sheets and statements of income, retained earnings and statements of cash flow
of V Cable and its consolidated Subsidiaries most recently furnished to GE
Capital, as agent and each lender under the Existing Loan Agreement prior to the
date of this Agreement, have been, except as noted therein, prepared in
conformity with GAAP consistently applied throughout the periods involved, and
present fairly the consolidated financial position of V Cable or such Subsidiary
(as the case may be) in each case as at the dates thereof, and the results of
operations and statements of cash flow for the periods then ended (as to the
unaudited interim financial statements, subject to normal year-end audit
adjustments).
(b) V Cable and its Subsidiaries, as of December 31, 1995, had no
obligations, contingent liabilities or liabilities for Charges, long-term leases
or unusual forward or long-term commitments which are not reflected in the
consolidated balance sheet of Borrower and its Subsidiaries referred to in
Section 4.5(a) hereof and which would have a Material Adverse Effect.
(c) No dividends or other distributions have been declared, paid or
made upon any Stock of V Cable or Borrower or any of its Subsidiaries nor has
any Stock of Borrower or any of its Subsidiaries been redeemed, retired,
purchased or otherwise acquired for value by Borrower or any of its Subsidiaries
since December 31, 1995, otherwise than as permitted by this Agreement or as
reflected in the consolidated balance sheet of Borrower and its consolidated
Subsidiaries referred to in Section 4.5(a) hereof.
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[INTENTIONALLY OMITTED]
4.7. OWNERSHIP OF PROPERTY; LIENS. (a)(i) Except as disclosed in
Schedules 4.7(a) and 4.7(b) hereto, each of Borrower and each of its
Subsidiaries owns good and marketable fee simple title to all of the Real Estate
described on Schedule 4.7(a) hereto and good, valid and marketable leasehold
interests in the Leases described in Schedule 4.7(b) hereto, and good and
marketable title to, or valid leasehold interests in, all of its other
properties and assets, except where any failure to hold any such title or
interest would not have a Material Adverse Effect; (ii) none of the properties
or assets of Borrower or any of its Subsidiaries, including, without limitation,
the Real Estate and Leases, are subject to any Liens, except (x) Permitted
Encumbrances and (y) Liens pursuant to the Collateral Documents; and
(iii) Borrower and each of its Subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and duly effected all recordings,
filings and other actions necessary to establish, protect and perfect Borrower's
and its Subsidiaries' right, title and interest in and to all such property
except where the failure to have received such documents or effected such
actions will not, in the aggregate, have a Material Adverse Effect.
(b) All real property owned or leased by Borrower or any of its
Subsidiaries is set forth on Schedules 4.7(a) and 4.7(b) hereto, respectively.
Neither Borrower nor any of its Subsidiaries owns any other Real Estate or is
lessee or lessor under any leases other than as set forth therein. Schedules
4.7(a) and 4.7(b) hereto are true and correct in all material respects. Part
One of Schedule 4.7(b) hereto sets forth all Leases of real property held by
Borrower or any of its Subsidiaries as lessee and Part Two of Schedule 4.7(b)
hereto sets forth all leases of real property held by Borrower or any of its
Subsidiaries as lessor together with information regarding the commencement
date, termination date, renewal options (if any) and annual base rents for the
years 1994 and 1995. Each of such leases is valid and enforceable in accordance
with its terms and is in full force and effect, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally and to general equitable principles. Borrower has
delivered to Agent true and com-
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plete copies of each of such leases set forth on Part One and Part Two of
Schedule 4.7(b) hereto and all documents affecting the rights or obligations of
Borrower or any of its Subsidiaries which is a party thereto, including, without
limitation, any non-disturbance and recognition agreement, subordination
agreement, attornment agreement and any agreement regarding the term or rental
of any of the Leases. Neither Borrower nor any of its Subsidiaries nor any
other party to any such lease is in default of its obligations thereunder or has
delivered or received any notice of default under any such lease, nor has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease, except for any default which
would not have a Material Adverse Effect.
(c) No real property, or any part thereof, owned or leased by
Borrower or any of its Subsidiaries has been materially damaged by fire or other
casualty which has not been completely restored or is subject to any pending,
or, to the knowledge of Borrower or any of its Subsidiaries, threatened or
contemplated condemnation proceeding or any sale or other disposition thereof,
in lieu of condemnation.
4.8. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in
default, nor, to Borrower's knowledge, is any third party in default, under or
with respect to any Media License, contract, agreement, lease or other
instrument to which it is a party, except for any default which (either
individually or collectively with other defaults arising out of the same event
or events) would not have a Material Adverse Effect, and no Default or Event of
Default has occurred and is continuing.
4.9. LABOR MATTERS. There are no strikes or other labor disputes
against V Cable, Borrower or any of their respective Subsidiaries pending or, to
Borrower's knowledge, threatened, which would have a Material Adverse Effect.
Hours worked by and payment made to employees of Borrower and its Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters which would have a Material Adverse
Effect. All payments due from Borrower or any of its Subsidiaries on account of
employee health and welfare insurance which would have a Material Adverse Effect
if not
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paid have been paid or accrued as a liability on the books of Borrower or such
Subsidiary.
4.10. OTHER VENTURES. Except as set forth in Schedule 4.10 neither
Borrower nor any of its Subsidiaries is engaged in any joint venture or
partnership with any other Person.
4.11. INVESTMENT COMPANY ACT. Neither Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. None of
the making of the Revolving Credit Advances by GE Capital, the application of
the proceeds and repayment thereof by Borrower or the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
violate any provision of such Act or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
4.12. MARGIN REGULATIONS. Borrower does not own any "margin
security," as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and the
proceeds of the Loans will be used only for the purposes contemplated hereby.
None of the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulation G, T, U or X
of the Federal Reserve Board. Borrower will not take or permit any agent acting
on its behalf to take any action which might cause this Agreement or any
document or instrument delivered pursuant hereto to violate any regulation of
the Federal Reserve Board.
4.13. TAXES. All federal, state, local and foreign tax returns,
reports and statements required to be filed by Borrower or any of its
Subsidiaries have been filed with the appropriate Governmental Authorities and
all Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for
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nonpayment thereof, or any such fine, penalty, interest, late charge or loss has
been paid or, as disclosed on Schedule 4.13 hereto, is being contested in good
faith by appropriate procedures (and the provisions of Section 6.2(b) hereof are
being met with respect thereto). Each of Borrower and each of its Subsidiaries
has paid when due and payable all requisite Charges (except where the failure to
do so would not have a Material Adverse Effect). Proper and accurate amounts
have been withheld by Borrower and each of its Subsidiaries from their
respective employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities (except where the failure to do
so would not have a Material Adverse Effect). Schedule 4.13 hereto sets forth,
for each of Borrower and each of its Subsidiaries, those taxable years for which
its tax returns are currently being audited by the IRS or any other applicable
Governmental Authority. Except as described in Schedule 4.13 hereto, neither
Borrower nor any of its Subsidiaries has executed or filed with the IRS or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. Neither Borrower nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by Borrower or any of its
Subsidiaries is property which such Person is required to treat as being owned
by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, as in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of IRC Section 168(h). Except as set forth on Schedule 4.13 hereto,
neither Borrower nor any of its Subsidiaries has agreed or has been requested to
make any adjustment under IRC Section 481(a) by reason of a change in accounting
method or otherwise initiated by Borrower or any of its Subsidiaries and neither
Borrower nor any of its Subsidiaries has any knowledge that the IRS has proposed
any such adjustment or change in accounting method. Except as set forth on
Schedule 4.13 hereto, neither Borrower nor any of its Subsidiaries has any
obligation under any written tax sharing agreement.
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4.14. ERISA. Schedule 4.14 hereto lists all Plans maintained or
contributed to by Borrower or any of its ERISA Affiliates, and separately
identifies any Multiemployer Plans of Borrower or any of its ERISA Affiliates
and any Welfare Plans. Each such Plan has been determined by the IRS to be tax
qualified under IRC Section 401(a), and the trusts created thereunder have been
determined to be exempt from tax under the provisions of IRC Section 501, and
nothing has occurred which would cause the loss of such qualification or tax-
exempt status or the imposition of any IRC or ERISA liability or penalty in
excess of $1,000,000. Each such Plan is in compliance in all material respects
with the applicable provisions of ERISA and the IRC, including the filing of
reports required under ERISA, the IRC or any other applicable law or regulation
with the relevant Governmental Authority the failure of which to file could
reasonably be expected to result in a liability of Borrower or such ERISA
Affiliate in excess of $1,000,000 and all such reports which are true and
correct in all material respects as of the date given. None of Borrower, any of
its Subsidiaries or any of its ERISA Affiliates, with respect to any of their
Plans, has failed to make any contribution or pay any amount due as required
under Section 412 of the IRC or Section 302 of ERISA or the terms of any such
Plan. Neither Borrower nor any of its ERISA Affiliates has engaged in a
"prohibited transaction," as such term is defined in IRC Section 4975 and Title
I of ERISA in connection with any of their Plans which would subject, or has a
reasonable likelihood of subjecting, Borrower or such ERISA Affiliate (after
giving effect to any exemption) to the tax on prohibited transactions imposed by
IRC Section 4975 or any other liability, provided that the "amount involved"
under said section is in excess of $1,000,000. No Plan of Borrower or any of
its ERISA Affiliates which is not a Multiemployer Plan has been terminated, nor
has any accumulated funding deficiency (as defined in IRC Section 412(a)) been
incurred (without regard to any waiver granted under IRC Section 412), nor has
any funding waiver from the IRS been received or requested. There has not been
any Reportable Event or any event requiring disclosure under Section
4041(c)(3)(C) or 4063(a) of ERISA with respect to any Plan of Borrower or any of
its ERISA Affiliates (other than a Multiemployer Plan), if any of the foregoing
could reasonably result in liability of Borrower or any of its ERISA Affiliates
in excess of $1,000,000. The value of the assets of each Plan of
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Borrower or any of its ERISA Affiliates (other than a Multiemployer Plan)
equalled or exceeded the present value of the accrued benefits of each such Plan
as of the end of the preceding Plan year using Plan actuarial assumptions as in
effect for such Plan year. There are no claims (other than claims for benefits
in the normal course), actions or lawsuits asserted or instituted against, and
neither Borrower nor any of its ERISA Affiliates has knowledge of any threatened
litigation or claims against (i) the assets of any of their Plans (other than a
Multiemployer Plan) or against any fiduciary of such Plan with respect to the
operation of such Plan or (ii) Borrower, any of its Subsidiaries or any of
Borrower's ERISA Affiliates with respect to any of their Plans which, if
adversely determined, could have a material effect on the business, operations,
properties, assets or conditions (financial or otherwise) of Borrower or any of
its ERISA Affiliates, taken as a whole. Any bond required to be obtained by
Borrower or any of its ERISA Affiliates under ERISA with respect to any Plan has
been obtained and is in full force and effect. Neither Borrower nor any of its
ERISA Affiliates has incurred (a) any Withdrawal Liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 of ERISA as a result of a complete
or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from
a Multiemployer Plan, which would exceed $1,000,000 in the aggregate or (b) any
liability under ERISA Section 4062 to the PBGC, to a trust established under
ERISA Section 4041 or 4042 or to a trustee appointed under ERISA Section 4042.
Neither Borrower nor any of its ERISA Affiliates nor any organization to which
Borrower or such ERISA Affiliate is a successor or parent corporation within the
meaning of ERISA Section 4069(b) has engaged in a transaction within the meaning
of ERISA Section 4069. Except as set forth on Schedule 4.14 hereto, neither
Borrower nor any of its Subsidiaries maintains or has established any Welfare
Plan. Borrower and each of its ERISA Affiliates has complied in all material
respects with the notice and continuation coverage requirements of Section 4980B
of the IRC and the regulations thereunder. Except as set forth on Schedule 4.14
hereto, no liability under any Plan of Borrower or any of its ERISA Affiliates
has been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by Standard
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& Poor's Corporation and the equivalent by each other nationally recognized
statistical rating organization.
4.15. NO LITIGATION. Except as set forth on Schedule 4.15 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower or any of its Subsidiaries, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, which, if determined adversely,
is reasonably likely to have a Material Adverse Effect, nor, to the knowledge of
Borrower, does a state of facts exist which is reasonably likely to give rise to
any such proceeding. Except as expressly set forth on Schedule 4.15 hereto,
none of the matters set forth therein questions the validity of any of the Loan
Documents, any of the other documents to be entered into in connection with the
Prepayment Transactions or any action taken or to be taken pursuant thereto, or
would either individually or in the aggregate have a Material Adverse Effect.
4.16. BROKERS. No broker or finder acting on behalf of Borrower
brought about the obtaining, making or closing of the Loans made pursuant to
this Agreement and Borrower has no obligation to any Person in respect of any
finder's or brokerage fees in connection with the Loans contemplated by this
Agreement.
4.17. PREPAYMENT TRANSACTIONS; CONSENTS. (a) A true and complete
copy of each document delivered at the closing of the transactions contemplated
by the Prepayment Transactions will be delivered to Agent on the Effective Date.
(b) All necessary consents of the FCC and other Governmental
Authorities required in connection with the Newco Management Agreement and all
the Prepayment Transactions have been obtained or will be obtained prior to the
Effective Date, except (with respect to any consents required under any Media
Licenses) where neither the failure to obtain any such consent nor the
termination of any such Media License could reasonably be expected to have a
Material Adverse Effect.
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4.18. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC. The Stock of
Borrower owned by V Cable at the Effective Date will constitute all of the
issued and outstanding Stock of Borrower immediately following the Effective
Date. Borrower will on the Effective Date have no outstanding rights, options,
warrants or agreements pursuant to which it may be required to issue or sell any
Stock other than the Redemption Agreement.
4.19. EMPLOYMENT AND LABOR AGREEMENTS. Except for the Newco
Management Agreement and as set forth on Schedule 4.19 hereto, there are no
employment, consulting or management agreements covering management of Borrower
or any of its Subsidiaries and there are no collective bargaining agreements or
other labor agreements covering any employees of Borrower or any of its
Subsidiaries. A true and complete copy of each such agreement has been
furnished to Agent.
4.20. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as set
forth on Schedule 4.20 hereto, there are no licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications or
trade names necessary for Borrower or any of its Subsidiaries to continue to
conduct its business as heretofore conducted by them or the members of the V
Cable Group (except the Excluded Subsidiaries), now conducted by them or the
members of the V Cable Group (except the Excluded Subsidiaries) or proposed to
be conducted by them. Borrower and each of its Subsidiaries conducts its
respective businesses without infringement or claim of infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others, except where such infringement or
claim of infringement would not have a Material Adverse Effect. To the best of
Borrower's knowledge, there is no infringement or claim of infringement by
others of any material license, patent, copyright, service mark, trademark,
trade name, trade secret or other intellectual property right of Borrower or any
of its Subsidiaries.
4.21. FULL DISCLOSURE. No information contained in this Agreement,
the other Loan Documents, the Financials or any written statement furnished by
or on behalf of Borrower or any of its Subsidiaries pursuant to the terms of
this Agreement (other than the Projections) contains any untrue statement of a
material fact or omits to state a
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material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which made and taking into
account the transactions contemplated hereby and the Prepayment Transactions.
4.22. LIENS. Except as otherwise provided in the Collateral
Documents, the Liens granted to Lenders pursuant to the Collateral Documents
will on the Effective Date be fully perfected first priority Liens in and to the
Collateral described therein, except as such priority may be affected by any
Permitted Encumbrances.
4.23. MEDIA LICENSES. Set forth on Schedule 4.23(a) is a complete
and correct list of all of the Media Licenses held by Borrower and its
Subsidiaries relating to Systems owned by Borrower or any of its Subsidiaries
immediately following the closing of the transactions contemplated to occur on
the Effective Date (which list sets forth the number of Subscribers attributable
to each such Media License as of December 31, 1995 and the name of the holder of
the Media License). All approvals, applications, filings, registrations,
consents or other actions required of any local, state or federal authority to
enable Borrower or any of its Subsidiaries to exploit the Media Licenses of
Borrower and its Subsidiaries have been obtained or made. Except as set forth
on Schedule 4.23(b) hereto, neither Borrower nor any of its Subsidiaries has
received any notice from the granting body or any other Governmental Authority
with respect to any material breach of any covenant under, or any material
default with respect to, any Media License held by Borrower or any of its
Subsidiaries. True and complete copies of all Media Licenses listed on Schedule
4.23(a) hereto have previously been, or will upon receipt be, delivered to
Agent. No material default has occurred and is continuing under any Media
License held by Borrower or any of its Subsidiaries, which default could
reasonably be expected to have a Material Adverse Effect. All consents and
approvals of and filings and registrations with, and all other actions in
respect of, all Governmental Authorities required to maintain any Media License
held by Borrower or any of its Subsidiaries in full force and effect prior to
the scheduled date of expiration thereof have been or, prior to the time when
required, will have been, obtained, given, filed or taken and are or will be in
full force and effect, except where the loss of any such Media License,
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individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
4.24. ENVIRONMENTAL PROTECTION. To Borrower's knowledge, all
property owned or leased by Borrower or any of its Subsidiaries is free of
Contaminants or any other substance which could result in the incurrence of
material liabilities, or constituent thereof, currently defined, identified or
listed as hazardous or toxic pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., or
any other Environmental Law, or any other substance which has in the past or
could at any time in the future cause or constitute a health, safety or
environmental hazard to any Person or property, including, without limitation,
asbestos in any building, petroleum products, PCBs, pesticides and radioactive
materials. To Borrower's knowledge, none of Borrower, V Cable or any of their
respective Subsidiaries has caused or suffered to occur any Release of any
Contaminant into the environment or any other condition that could result in the
incurrence of material liabilities or any material violations of any
Environmental Law. To Borrower's knowledge, based on reasonable investigation,
none of Borrower, V Cable or any of their respective Subsidiaries has caused or
suffered to occur any condition on any of Borrower's Facilities that could give
rise to the imposition of any Lien under any Environmental Law. To Borrower's
knowledge, based on reasonable investigation, none of Borrower, V Cable or any
of their respective Subsidiaries is engaged in any manufacturing or any other
operations, other than the use of petroleum products for vehicles, that require
the use, handling, transportation, storage or disposal of any Contaminant, where
such operations require permits or are otherwise regulated pursuant to any
Environmental Law.
4.25. EXISTING LOAN AGREEMENT. (a) As of the date hereof and
immediately prior to Prepayment Transactions, no event has occurred and is
continuing which constitutes or would constitute a Default or Event of Default
under the Existing Loan Agreement.
(b) As of the date hereof and immediately prior to the Prepayment
Transactions, all of the representations and warranties of each Loan Party (as
defined in the Existing Loan Agreement) contained in the Existing Loan
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Agreement and in the related loan documents are true and correct, except to the
extent that any such representation or warranty relates to an earlier date.
4.26. INSURANCE. Schedule 4.26 hereto lists all insurance of any
nature maintained by Borrower and each Subsidiary of Borrower, as well as a
summary of the terms of such insurance.
4.27. RECEIPT OF AGREEMENTS. Borrower acknowledges receipt of, and
has reviewed, each Ancillary Agreement (as defined in the V Cable Loan
Agreement) delivered on or prior to the Effective Date.
5. FINANCIAL STATEMENTS AND INFORMATION
5.1. REPORTS AND NOTICES. Borrower covenants and agrees that from
and after the Effective Date and until the Termination Date, it shall deliver to
Agent and, with respect to Sections 5.1(a) through (h), to each Lender:
(a) Within 30 days after the end of each month, (i) a copy of the
unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the
end of such month and (ii) a copy of the unaudited consolidated and
consolidating statements of income of Borrower and its Subsidiaries for such
month and for the year to date, all prepared in accordance with GAAP (subject to
normal year-end adjustments and, in the case of the balance sheet, to the lack
of requisite footnotes), setting forth in comparative form in each case the
projected consolidated figures for such period (all such financial statements to
include appropriate supporting details prepared separately for Ohio and Long
Island) delineating the financial positions and performance of each System and
the amount and nature of any Capital Expenditures during such month).
(b) Within 45 days after the end of each Fiscal Quarter, (i) a copy
of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as
of the close of such quarter and the related consolidated and consolidating
statements of income and cash flows for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) a copy of the unaudited
consolidated and consolidating statements of income and cash flow of Borrower
and its Subsidiaries for such Fiscal Quarter, all prepared in
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accordance with GAAP (subject to normal year-end adjustments), such financial
statements to include appropriate supporting details delineating the financial
position and condition of each System and to be accompanied by (A) a statement
in reasonable detail showing the calculations used in determining (x) compliance
with the Financial Covenants set forth in Sections 6.3 and 7.10 hereof and (y)
the amount of Operating Cash Flow for such Fiscal Quarter, (B) a statement in
reasonable detail showing the amount and nature of any Capital Expenditures
(prepared separately for Ohio and Long Island) during such Fiscal Quarter and
(C) the certification of the chief executive officer or chief financial officer
of Borrower that all such financial statements are complete and correct and
present fairly in accordance with GAAP (subject to normal year-end adjustments)
the consolidated financial position, the consolidated and consolidating results
of operations and the cash flows of Borrower and its Subsidiaries as at the end
of such quarter and for the period then ended, and that there was no Default or
Event of Default in existence as of such time.
(c) Within 90 days after the end of each Fiscal Year (or, if Borrower
shall then be subject to the periodic reporting requirements of Section 13 or
Section 15(d) of the Securities and Exchange Act of 1934, as amended, and its
Fiscal Year shall then end on December 31 of each year, on such later date as
Borrower files its Annual Report on Form 10-K, but in no event later than 105
days after the end of each Fiscal Year), a copy of the annual audited
consolidated and unaudited consolidating financial statements of Borrower and
its Subsidiaries, consisting of consolidated and consolidating balance sheets
and consolidated and consolidating statements of income and retained earnings
and cash flows, setting forth in comparative form in each case the consolidated
and consolidating figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified (only with
respect to the consolidated financial statements) without qualification by the
independent certified public accountants regularly retained by Borrower, by any
other "Big 6" firm of independent certified public accountants or by any other
firm of independent certified public accountants of recognized national standing
selected by Borrower and acceptable to Agent, and accompanied by (i) a schedule
in reasonable detail showing the calculations used in determining (x) compliance
with the Financial Covenants set forth in Sections 6.3 and 7.10
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hereof and (y) the amount of Operating Cash Flow for such Fiscal Year, (ii) a
report from such accountants to the effect that in connection with their audit
examination, nothing has come to their attention to cause them to believe that a
Default or Event of Default has occurred, (iii) a certification of the chief
executive officer or chief financial officer of Borrower that, to the best of
his knowledge, there was no Default or Event of Default in existence as at the
end of such Fiscal Year and (iv) a statement in reasonable detail showing the
amount and nature of any Capital Expenditures (prepared separately for Ohio and
Long Island) during such Fiscal Year.
(d) As soon as practicable, but in any event within five Business
Days after an executive officer of Borrower becomes aware of the existence of
any Default or Event of Default, or any development or other information which
has had, or which such officer reasonably believes will have, a Material Adverse
Effect, telephonic or telegraphic notice specifying the nature of such Default
or Event of Default or development or information, including the anticipated
effect thereof, which notice shall be promptly (and in any event within ten
days) confirmed in writing (specifying that such notice is a "Notice of Default
or Event of Default" or a "Notice of Material Adverse Effect", as the case may
be).
(e) (i) Within 30 days after the beginning of each Fiscal Year:
(A) projected consolidated cash flow statements of Borrower and
its Subsidiaries (prepared separately for Ohio and Long Island), including
summary details of cash disbursements, including for Capital Expenditures, for
such Fiscal Year, on a monthly basis; and
(B) projected consolidated income statements of Borrower and its
Subsidiaries (prepared separately for Ohio and Long Island) for such Fiscal
Year, on a monthly basis;
(ii) Within 60 days after the beginning of each Fiscal Year,
projected consolidated balance sheets of Borrower and its Subsidiaries for such
Fiscal Year, on a quarterly basis;
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(iii) Within 90 days after the beginning of each Fiscal Year:
(A) projected consolidated balance sheets of Borrower and
its Subsidiaries for each subsequent Fiscal Year through and including
Fiscal Year 2001, on an annual basis;
(B) projected consolidated cash flow statements of Borrower
and its Subsidiaries (prepared separately for Ohio and Long Island),
including summary details of cash disbursements, including for Capital
Expenditures, for each subsequent Fiscal Year through and including Fiscal
Year 2001, on an annual basis; and
(C) projected consolidated income statements of Borrower
and its Subsidiaries (prepared separately for Ohio and Long Island) for
each subsequent Fiscal Year through and including Fiscal Year 2001, on an
annual basis;
together (in the case of clauses (i), (ii) and (iii) above) with appropriate
supporting details as may be reasonably requested by any Lender (including,
without limitation, a breakout (prepared separately for Ohio and Long Island) of
projected Subscribers, Premium Units, Homes Passed and rates in effect for
Subscribers).
(f) If requested in writing by Agent or any Lender, copies of all
federal, state, local and foreign tax returns and reports in respect of income,
franchise or other taxes on or measured by income (excluding sales, use or like
taxes) filed by Borrower or any of its Subsidiaries.
(g) Within 30 days following the end of each calendar month, a
Subscriber statistic report for such month in such detail as may be reasonably
requested by Agent, certified by Borrower, including but not limited to (i) the
number of Subscribers and Premium Units for each cable television system
(prepared separately for Ohio and Long Island) owned or operated by Borrower or
any of its Subsidiaries separately identifying the number of Subscribers (A)
whose accounts payable to Borrower or any of its Subsidiaries are more than 90
days past due from the date of billing or (B) as to which a request has been
made that service be discontinued, (ii) Homes Passed during such
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period, (iii) average recurring revenue per Subscriber during such period and
(iv) a comparison of such actual number of Subscribers and Premium Units with
the number and composition of Subscribers and Premium Units assumed by Borrower
for purposes of the projections relating to such period furnished by Borrower to
Agent and each Lender pursuant to Section 5.1(e) hereof.
(h) Within 15 days after being requested to do so by Agent within one
year after the Effective Date, supplements or amendments, if any, to the
Schedules hereto and representations and warranties herein with respect to any
matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth in such Schedule or as an
exception to such representation or warranty or which is necessary to correct
any information in such Schedule or representation or warranty which has been
rendered inaccurate thereby; PROVIDED, HOWEVER, that Borrower shall be required
to prepare and deliver such supplements and amendments only once.
(i) Within 60 days after the Effective Date, an unaudited balance
sheet of Borrower and its Subsidiaries as of the Effective Date (and after
giving effect to the Prepayment Transactions), prepared in accordance with GAAP.
(j) Such information as Agent may reasonably request concerning the
amount and method of allocation of Allocation Items (as defined in the Newco
Management Agreement) charged to Borrower or any of its Subsidiaries pursuant to
the Newco Management Agreement.
(k) Such other information respecting Borrower's or any of its
Subsidiaries' business, financial condition or prospects as Agent or any Lender
may, from time to time, reasonably request in writing.
5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Agent to
communicate directly with its independent certified public accountants and
authorizes those accountants to disclose to Agent any and all financial
statements and other supporting financial documents and schedules, including
copies of any management letter with respect to the business, financial
condition and other affairs of Borrower or any of its Subsidiaries. On or be-
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fore the Effective Date, Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section 5.2.
Agent agrees to provide Borrower with reasonable notice prior to requesting any
such information from Borrower's accountants (and an officer of Borrower shall
be entitled to attend any meeting between, and to participate in any
communication between, Agent and such accountants), except that no such notice
shall be required upon the occurrence and during the continuance of any Event of
Default.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Required Lenders shall
otherwise consent in writing, from and after the date hereof and until the
Termination Date:
6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower
shall, and shall cause each of its Subsidiaries to, (a) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights, licenses, privileges and franchises; (b) conduct its
business substantially as conducted by V Cable and its Subsidiaries immediately
prior to the Prepayment Transactions (other than changes therein otherwise
permitted hereunder); and (c) at all times maintain, preserve and protect all of
its trademarks and trade names and preserve the remainder of its property in use
or useful in the conduct of its business and keep the same in good repair,
working order and condition (taking into consideration ordinary wear and tear)
and from time to time make, or cause to be made, all needful and proper repairs,
renewals and replacements, betterments and improvements thereto consistent with
cable television industry practices, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
SUBJECT, in the case of clauses (b) and (c) above, to such changes which are
consistent with the operation by Borrower and its Subsidiaries of cable
television systems and which would not have a Material Adverse Effect.
6.2. PAYMENT OF OBLIGATIONS. (a) Borrower shall, and shall cause
each of its Subsidiaries to, (i) pay and discharge or cause to be paid and
discharged, all the Obligations, as and when due and payable and (ii) pay and
discharge, or cause to be paid and discharged promptly, all
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(A) Charges imposed upon it, its income and profits or any of its property
(real, personal or mixed) and (B) lawful claims for labor, materials, supplies
and services or otherwise before any thereof shall become in default (except, in
the case of clauses (A) and (B) above, for Charges and other claims not
exceeding $1,000,000 in the aggregate at any one time outstanding.
(b) Borrower and its Subsidiaries may in good faith contest, by
proper legal actions or proceedings, the validity or amount of any Charges or
claims referred to in Section 6.2(a)(i) or (ii) hereof, provided that at the
time of commencement of any such action or proceeding, and during the pendency
thereof (i) no Default or Event of Default shall have occurred as a result
thereof; (ii) adequate Reserves with respect thereto are maintained on the books
of Borrower or such Subsidiary, in accordance with GAAP; (iii) such contest
operates to suspend collection of the contested Charges or claims; (iv) none of
the Collateral would be subject to forfeiture or loss or any Lien by reason of
the institution or prosecution of such contest; (v) no Lien shall exist for such
Charges or claims during such action or proceeding; (vi) Borrower or such
Subsidiary shall promptly pay or discharge such contested Charges and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to Borrower
or such Subsidiary; and (vii) nonpayment or nondischarge thereof would not have
a Material Adverse Effect.
(c) Notwithstanding anything to the contrary contained in Section
6.2(b) hereof, Borrower and each of its Subsidiaries shall have the right to pay
the Charges or claims described in Section 6.2(a)(ii) hereof and in good faith
contest, by proper legal actions or proceedings, the validity or amount of such
Charges or claims.
6.3. FINANCIAL COVENANTS.
(a) TOTAL DEBT TO ANNUALIZED CONSOLIDATED OPERATING CASH FLOW.
Borrower and its Subsidiaries shall, on a consolidated basis, maintain a ratio
of Total Debt to Annualized Consolidated Operating Cash Flow during each period
set forth below equal to or less than the ratio set forth below:
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7.25:1.00 from the date hereof to June 30, 1997;
6.75:1.00 from July 1, 1997 to June 30, 1998;
6.50:1.00 from July 1, 1998 to June 30, 1999;
6.25:1.00 from July 1, 1999 to June 30, 2000; and
5.75:1.00 from July 1, 2000 to December 31, 2001
; PROVIDED, HOWEVER, that compliance by Borrower with this Section 6.3(a) shall
be determined at the time of each request by Borrower for an extension of credit
under this Agreement and such determination shall be based on Total Debt as of
such date, after giving effect to such extension of credit, and Annualized
Consolidated Operating Cash Flow for Borrower and its Subsidiaries determined as
of the last day of the most recent month for which financial information is
available.
(b) OPERATING CASH FLOW TO INTEREST EXPENSE. From and after June 30,
1996, Borrower and its Subsidiaries, on a consolidated basis, shall maintain
through the Maturity Date (determined based on the most recently completed two
consecutive Fiscal Quarters of Borrower, PROVIDED that for any date prior to
September 30, 1996, such determination shall be based on the most recent Fiscal
Quarter multiplied by two (2)) a ratio of Operating Cash Flow to Interest
Expense of not less than 1.50:1.00.
6.4. AGENT'S FEES. Borrower shall pay to Agent, on demand, any and
all reasonable fees, costs or expenses that Agent shall pay to a bank or other
similar institution arising out of or in connection with the forwarding to
Borrower or any other Person on behalf of Borrower by Agent of proceeds of the
Loans.
6.5. BOOKS AND RECORDS. Borrower shall, and shall cause each of its
Subsidiaries to, keep adequate records and books of account with respect to its
business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financials referred to in Section 4.5(a) hereof.
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6.6. LITIGATION. Borrower shall notify Agent in writing, promptly
upon learning thereof, of any litigation commenced against Borrower and/or any
of its Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding in each case that, either individually or in the
aggregate, might, in the reasonable judgment of Borrower, have a Material
Adverse Effect.
6.7. INSURANCE. Borrower shall, and shall cause each of its
Subsidiaries to, maintain insurance covering, without limitation, fire, theft,
burglary, public liability, property damage, product liability, workers'
compensation and insurance on all property and assets, all in amounts and scope
customary for the cable television industry and under policies issued by
insurers reasonably satisfactory to Agent and with a lender's loss payable
clause in favor of Agent for the benefit of Lenders. Borrower shall, and shall
cause each of its Subsidiaries to, pay all insurance premiums payable by them
when due.
6.8. COMPLIANCE WITH LAW. Borrower shall, and shall cause each of
its Subsidiaries to, comply with all federal, state and local laws and
regulations applicable to it, including, without limitation, those regarding the
collection, payment and deposit of employees' income, unemployment and social
security taxes and those relating to environmental matters, except in each case
where the failure to comply is not reasonably likely to have a Material Adverse
Effect.
6.9. AGREEMENTS. Borrower shall, and shall cause each of its
Subsidiaries to, perform, within all required time periods (after giving effect
to any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement with any of its Affiliates to which it is a party,
including, without limitation, any leases to which Borrower or such Subsidiary
is a party, where the failure to so perform and enforce would have a Material
Adverse Effect. Borrower shall not, and shall cause each of its Subsidiaries
not to, terminate or modify in any manner adverse to any such party any
provision of any such agreement which termination or modification could have a
Material Adverse Effect.
6.10. EMPLOYEE PLANS. (a) With respect to other than a
Multiemployer Plan, (i) for each Plan hereafter
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adopted or maintained by Borrower or any of its ERISA Affiliates, Borrower shall
or shall cause such ERISA Affiliate to seek and receive determination letters
from the IRS to the effect that such Plan is qualified within the meaning of IRC
Section 401(a); (ii) from and after the adoption of any Plan by Borrower or any
of its ERISA Affiliates, Borrower shall cause such Plan to be qualified within
the meaning of IRC Section 401(a) and to be administered in all material
respects in accordance with the requirements of ERISA and IRC Section 401(a);
and (iii) Borrower shall not take any action which would cause such Plan not to
be qualified within the meaning of IRC Section 401(a) or not to be administered
in all material respects in accordance with the requirements of ERISA and IRC
Section 401(a).
(b) Borrower shall, and shall cause each of its ERISA Affiliates to,
deliver to Agent: (i)(A) as soon as possible, and in any event within 30 days,
after Borrower or any such ERISA Affiliate knows or has reason to know that any
ERISA Event described in clause (a) of the definition of ERISA Event or any
event requiring disclosure under Section 4063(a) of ERISA with respect to any
Plan of Borrower or any of its ERISA Affiliates has occurred and (B) within 10
days after Borrower or any of its ERISA Affiliates knows or has reason to know
that any other ERISA Event with respect to any Plan of Borrower or any of its
ERISA Affiliates has occurred or a request for a minimum funding waiver under
IRC Section 412 with respect to any Plan of Borrower or any of its ERISA
Affiliates has been made, a statement of the chief financial officer of Borrower
or such ERISA Affiliate setting forth details as to such Reportable Event or
other event and the action which Borrower or such ERISA Affiliate proposes to
take with respect thereto, together with a copy of the notice of such Reportable
Event or other event, if required by the applicable regulations under ERISA,
given to the PBGC; (ii) promptly (and in any event within 30 days) after the
filing thereof by Borrower or such ERISA Affiliate with the DOL, IRS or the
PBGC, copies of each annual and other report with respect to each Plan of
Borrower and its ERISA Affiliates; (iii) promptly (and in any event within 30
days) after receipt thereof, a copy of any adverse notice, determination letter,
ruling or opinion Borrower or such ERISA Affiliate may receive from the PBGC,
DOL or IRS with respect to any Plan of Borrower or any of its ERISA Affiliates;
(iv) promptly, and in any event within ten Business Days after receipt thereof,
a copy of any corre-
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spondence Borrower or such ERISA Affiliate receives from the plan sponsor (as
defined in ERISA Section 4001(a)(10)) of any Multiemployer Plan concerning
potential withdrawal liability pursuant to ERISA Section 4219 or Section 4202,
and a statement from the chief financial officer of Borrower or such ERISA
Affiliate setting forth details as to the events giving rise to such potential
withdrawal liability and the action which Borrower or such ERISA Affiliate
proposes to take with respect thereto; (v) notification within 30 days of any
material increase in the benefits of any existing Plan of Borrower or any of its
ERISA Affiliates which is not a Multiemployer Plan or the establishment of any
new Plan or the commencement of contributions to any Plan to which Borrower or
such ERISA Affiliate was not previously contributing; (vi) promptly, and in any
event within ten Business Days, after receipt thereof by Borrower or such ERISA
Affiliate from the PBGC, copies of each notice received by Borrower or such
ERISA Affiliate of the PBGC's intention to terminate any of their Plans or to
have a trustee appointed to administer any of their Plans; (vii) notification
within ten days of a request for a minimum funding waiver under IRC Section 412
with respect to any Plan and a copy of such request; (viii) notification within
two Business Days after Borrower or any of its ERISA Affiliates knows or has
reason to know that Borrower or such ERISA Affiliate has or intends to file a
notice of intent to terminate any Plan under a distress termination within the
meaning of Section 4041(c) of ERISA and a copy of such notice; and (ix) promptly
after the commencement thereof, notice of all actions, suits and proceedings
before any court or Governmental Authority, domestic or foreign, affecting
Borrower, any of its ERISA Affiliates or any Plan of Borrower or any of its
ERISA Affiliates except those which, if adversely determined, would not have a
reasonable likelihood of having a Material Adverse Effect.
6.11. MEDIA LICENSES. Borrower shall, and shall cause each of its
Subsidiaries to, keep in full force and effect all of their Media Licenses,
except those the loss of which individually or in the aggregate would not have a
Material Adverse Effect. Borrower shall furnish to Agent copies of all notices
which Borrower or any of its Subsidiaries shall have received from the FCC or
other Governmental Authorities concerning any Media License, other than
communications of a daily or routine nature, promptly after such receipt.
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6.12. LEASES; NEW REAL ESTATE. (a) Borrower shall, and shall cause
each of its Subsidiaries to, provide Agent with copies of all material leases of
real property or similar agreements with respect to real property (and all
amendments thereto) entered into by Borrower or any such Subsidiary after the
date hereof, whether as lessor or lessee. Borrower shall, and shall cause each
of its Subsidiaries to, comply in all material respects with all of its and
their obligations under all leases now existing or hereafter entered into or
assumed by it or them with respect to real property, including, without
limitation, all leases listed on Schedule 4.7(b) hereto, except where any
failures to comply would not, individually or in the aggregate, have a Material
Adverse Effect. Borrower shall, and shall cause each of its Subsidiaries to,
(i) provide Agent with a copy of each notice of default received by Borrower or
such Subsidiary under any such lease as soon as practicable after receipt of any
such notice and deliver to Agent a copy of each notice of default sent by
Borrower or such Subsidiary under any such lease simultaneously with its
delivery of such notice under such lease; (ii) notify Agent at least 14 days
prior to the date Borrower or such Subsidiary takes possession of material newly
leased premises or becomes liable under any material lease, whichever is
earlier; and (iii) obtain and deliver to Agent a non-disturbance agreement, in
form and substance satisfactory to Agent, prior to entering into any material
new Lease.
(b) If Borrower or any of its Subsidiaries shall acquire any Real
Estate or enter into a Lease which Agent designates as material to Borrower or
any of its Subsidiaries at any time prior to the Termination Date, Borrower or
such Subsidiary shall, at the request of Agent or any Lender, promptly execute
and deliver to Agent a first priority mortgage (or deed of trust, as
appropriate) in favor of Agent for the benefit of Lenders covering such Real
Estate or Lease, in form and substance reasonably satisfactory to Agent. In
such case, Borrower or such Subsidiary shall deliver to Agent with respect to
each mortgaged property an A.L.T.A. form B (or other form reasonably acceptable
to Agent) mortgagee policy of title insurance in an amount and issued by a title
insurance company satisfactory to Agent insuring that the relevant mortgage
relating thereto creates and constitutes a valid first Lien against such
mortgaged property in favor of Agent, subject only to exceptions and
reservations which do
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not impair the use of the premises and which are reasonably acceptable to
counsel to Agent, with such endorsements and affirmative insurance (including,
without limitation, survey coverage, perimeter, metes and bounds) endorsements
as Agent may reasonably request.
6.13. ENVIRONMENTAL MATTERS. (a) Borrower shall, and shall cause
each of its Subsidiaries to, (i) comply in all material respects with the
Environmental Laws applicable to it, (ii) notify Agent promptly after becoming
aware thereof of any Release, Adverse Environmental Condition or Environmental
Claim in connection with Borrower's or any of its Subsidiaries' Facilities, and
(iii) promptly forward to Agent a copy of any order, notice, permit, application
or any other communication or report received by Borrower or any of its
Subsidiaries in connection with any such matters as they may affect such
premises, if material.
(b) Borrower shall fully and promptly indemnify and hold harmless
Agent and each Lender, their respective Subsidiaries and Affiliates and each of
their respective officers, directors, employees and agents, from and against any
loss, liability, damage, deficiency, fine, penalty or expense, including,
without limitation, attorneys' fees, suffered or incurred by Agent or any
Lender, whether as mortgagee in possession, or as successor in interest to
Borrower or any of its Subsidiaries as lessee of any premises by virtue of
foreclosure or acceptance in lieu of foreclosure (i) under or on account of any
Environmental Law, including the assertion of any Lien thereunder; (ii) with
respect to any Release or Contaminant affecting such premises, whether or not
the same originates or emanates from such premises or any contiguous Real
Estate, including any loss of value of such premises as a result of a Release or
Contaminant; and (iii) with respect to any other matter affecting such premises
within the jurisdiction of any federal, state or municipal agency or official
administering any Environmental Law, except if caused by Agent's or any Lender's
gross negligence or willful misconduct.
(c) In the event of any Release or Contaminant affecting any premises
occupied by Borrower or any of its Subsidiaries, whether or not the same
originates or emanates from such premises or any contiguous Real Estate, and if
Borrower or such Subsidiary shall fail to comply with any of the requirements of
any Environmental Law, or in the case of
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any leasehold premises, if required to do so under the applicable Lease, Agent
or any Lender may, but shall not be obligated to, give such notices or cause
such work to be performed or take any and all actions deemed necessary or
desirable to remedy such Release or remove such Contaminant or cure such failure
to comply. Any amounts paid by Agent or any such Lender as a result thereof,
together with interest thereon at the rate set forth in Section 2.8 hereof then
applicable to Revolving Credit Advances which are Index Rate Advances, shall be
immediately due and payable by Borrower and, until paid, shall be added to the
Obligations. Nothing in this Agreement shall be construed as limiting or
impeding Borrower's rights and obligations to take any and all necessary or
desirable actions to address any Release or Adverse Environmental Condition or
to comply with any Environmental Law.
6.14. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to
Agent and each Lender (i) promptly after the filing thereof with the Securities
and Exchange Commission, a copy of each report, notice or other filing, if any,
by Borrower with the Securities and Exchange Commission, (ii) copies of all
notices which Borrower or any of its Subsidiaries shall have received from the
FCC or any other Governmental Authority concerning any Media License which
notices are (A) material to the business of Borrower and its Subsidiaries taken
as a whole or (B) relate to the revocation or renewal of, or default under, any
Media License, in each case promptly after each such receipt or delivery, and
(iii) a copy of each written report or other communication received by Borrower
from or delivered by Borrower to the Securities and Exchange Commission in each
case promptly after each such receipt or delivery.
6.15. POST-EFFECTIVE DATE ITEMS. On or prior to March 21, 1996 (or
April 14, 1996 with respect to clause (iii) below for any New York
corporations), Borrower shall deliver to Agent copies of (i) Schedules 4.8(a)
and 4.8(b) hereto, (ii) governmental certificates, dated the most recent
practicable date prior to such date, with telegram updates where available,
showing that Cablevision, Borrower and each of the Guarantors is organized and
in good standing in the jurisdiction of its organization and is qualified as a
foreign corporation or partnership and, if applicable, is in good standing in
all other jurisdictions in which it is qualified to transact business, and (iii)
the documents of
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each Loan Party referred to in Section 3.1(f) hereof (except any partnership
agreement) certified as of a recent date by the Secretary of State of the
jurisdiction of such Loan Party's organization, which Schedules, governmental
certificates and documents shall be in form and substance satisfactory to Agent.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the Required Lenders'
prior written consent, from and after the date hereof and until the Termination
Date:
7.1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower
shall, directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire any assets (other than in the ordinary course of
business) or capital stock of, or combine with, any Person, nor form or acquire
any Subsidiary, directly or indirectly, except for (i) the formation by Borrower
of any wholly-owned Subsidiary and (ii) any merger or consolidation of
Subsidiaries of Borrower or of Borrower and a Subsidiary of Borrower if Borrower
shall have given Agent 30 Business Days' prior written notice thereof
(describing such proposed transaction in reasonable detail) and Agent shall have
consented thereto; PROVIDED, HOWEVER, that, in the case of clauses (i) and (ii)
above, Borrower shall have taken all actions necessary to maintain the priority
and perfection of Lenders' Liens on the Collateral under the Loan Documents,
which obligation shall include the execution and delivery by all Persons
reasonably deemed appropriate by Agent of a guaranty, security agreement, pledge
agreement and any other similar document deemed appropriate by Agent, all
containing terms substantially similar to the Collateral Documents (as
applicable); and PROVIDED, FURTHER, that, in the case of any merger or
consolidation of Borrower and any of its Subsidiaries permitted hereunder,
Borrower shall be the surviving entity. Notwithstanding the foregoing,
Borrower shall be entitled to acquire another cable television system by means
of a simultaneous "swap" of cable television systems or franchises with a third
party (other than USC or any of its Subsidiaries) that is not an Affiliate of
Cablevision or Borrower, does not have any economic interest or investment in
Cablevision, V Cable, Borrower or any of their
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respective Subsidiaries and is not an officer of director of Cablevision, V
Cable, Borrower or any of their respective Subsidiaries, PROVIDED that
(x) Borrower shall demonstrate to the reasonable satisfaction of Agent that the
aggregate fair market value of all cable television systems or franchises
transferred by Borrower or any of its Subsidiaries in connection with any such
"swap" arrangement from or after the date of this Agreement will not exceed
$20,000,000, (y) no Default or Event of Default shall have occurred and be
continuing or result therefrom and (z) prior to the date of each such "swap",
Agent shall have received projected pro forma consolidated balance sheets and
statements of income and cash flows of Borrower and its Subsidiaries covering
the periods, and containing the supporting details, of the type required prior
to such date pursuant to Section 5.1(e) hereof, in form and substance reasonably
satisfactory to Agent, and Agent shall have determined that, based on such
statements, there will be no material adverse effect on Borrower's and its
Subsidiaries' collective ability to pay the Obligations in accordance with the
terms hereof and Borrower will remain in compliance with all of the Financial
Covenants. If Borrower or any of its Subsidiaries shall receive any cash
consideration in connection with any such "swap", such cash shall be applied to
the Term Loans in the manner provided in Section 7.11(a)(iv) hereof.
7.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted
by Section 7.3 or 7.4 hereof, Borrower shall not, and shall not permit any of
its Subsidiaries to, make any investment in, or make or accrue any loans or
advances of money to any Person, through the direct or indirect holding of
securities or otherwise; PROVIDED, HOWEVER, that Borrower shall be permitted
hereunder, and may permit hereunder its Subsidiaries to, (a) make one or more
investments in, or make or accrue one or more loans or advances of money to,
Borrower or any other Subsidiary of Borrower, (b) make one or more investments
not in excess of $1,000,000 in the aggregate outstanding at any time, and (c)
make loans or advances to V Cable in an amount equal to any payment of
principal, interest or fees required to be paid by V Cable pursuant to the V
Cable Loan Agreement (provided that such loans or advances are evidenced by
instruments in form reasonably satisfactory to Agent (and are subordinated to
all obligations of V Cable to GE Capital or any other Lender under the V Cable
Loan Agreement) and such instruments are pledged to Agent in a manner reasonably
satisfactory to Agent); and PROVIDED FURTHER, HOWEVER, that
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Borrower and its Subsidiaries may make and own investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and at the time of its acquisition having the
highest rating obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc., (iii) certificates of deposit, maturing no more than
one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America or any State
thereof, each having combined capital, surplus and undivided profits of not less
than $200,000,000 and having a rating of "A" or better by a nationally
recognized statistical rating organization, and (iv) time deposits, maturing no
more than 90 days from the date of creation thereof, with commercial banks or
savings banks or savings and loan associations, the deposits of which are
insured by the Federal Deposit Insurance Corporation, and in amounts not
exceeding the maximum amounts of insurance thereunder.
7.3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by
this Section 7.3 or this Agreement, Borrower shall not, and shall not permit any
of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, whether recourse or nonrecourse, whether superior or junior, and
whether secured or unsecured, except (i) Indebtedness secured by Liens permitted
under Section 7.9 hereof, (ii) the Obligations, (iii) trade credit incurred to
acquire goods, supplies, services (including, without limitation, obligations
incurred to employees for compensation for services rendered in the ordinary
course of business), or merchandise on terms similar to those granted to
purchasers in similar lines of business as Borrower or such Subsidiary as of the
date hereof and incurred in the ordinary and normal course of business,
(iv) lease payment obligations under Leases which Borrower or such Subsidiary is
not prohibited from entering into under the Loan Documents (provided that none
of Borrower nor any of its Subsidiaries shall become a party to or bound by
Capital Leases which, in the aggregate for all such companies and V Cable and
its Subsidiaries, require payments in excess of $11,000,000 prior to the
Termination Date), (v) deferred taxes, (vi) unfunded pension fund and other
employee benefit plan obligations and liabilities but only to the extent they
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are permitted to remain unfunded under applicable law, (vii) Indebtedness to any
Subsidiary of Borrower or to Borrower, (viii) Indebtedness of Subsidiaries of
Borrower created under the Newco Subsidiary Guaranty, (ix) Indebtedness in
connection with surety bonds provided in the ordinary course of business
securing obligations of V Cable, Borrower and their Subsidiaries not exceeding
$3,000,000 in the aggregate, (x) liabilities under Title IV of ERISA if such
liabilities, individually or in the aggregate, do not result in a violation of
Section 7.16 hereof, (xi) other Indebtedness for borrowed money to Lenders,
(xii) Indebtedness of Borrower and its Subsidiaries under the V Cable Subsidiary
Guaranty (as defined in the V Cable Loan Agreement), (xiii) accrued liabilities
of the Borrower and its Subsidiaries under Media Licenses and (xiv) Indebtedness
of the type referred to in clause (b)(iii) of the definition of "Indebtedness".
Notwithstanding anything herein to the contrary, this Section 7.3 shall in no
way limit the effect of Section 6.3 hereof.
(b) Except as provided in Section 7.11 hereof, Borrower shall not,
and shall not permit any of its Subsidiaries to, sell or transfer, either with
or without recourse, any assets, of any nature whatsoever, in respect of which a
Lien is granted or to be granted pursuant to any Loan Document or engage in any
sale-leaseback or similar transaction involving any of such assets.
7.4. EMPLOYEE LOANS. Borrower shall not, and shall not permit any of
its Subsidiaries to, make or accrue any loans or other advances of money to any
employee of Borrower or such Subsidiary, except for loans to employees (other
than persons who are also officers of Cablevision) not in excess at any one time
outstanding of $1,000,000 in the aggregate for all such loans, provided that
such loans are made only in the ordinary course of Borrower's or such
Subsidiary's business consistent with past practices.
7.5. CAPITAL STRUCTURE. Borrower shall not, and shall not permit any
of its Subsidiaries to, issue or agree to issue any of its authorized but not
outstanding Stock (including treasury shares).
7.6. MAINTENANCE OF BUSINESS. Except as otherwise permitted
hereunder, Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in any business
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other than constructing, owning, acquiring, altering, repairing, financing,
operating, promoting and otherwise exploiting cable television systems. In
addition, none of Borrower or any of its Subsidiaries shall acquire or operate
any cable television system (other than the Systems and systems acquired by
"swaps" permitted pursuant to Section 7.1 hereof) or acquire or commence any
alternate form of television program distribution, including, without
limitation, broadcast television, multipoint distribution services, multichannel
multipoint distribution services, satellite master antenna systems and direct
broadcast satellites.
7.7. TRANSACTIONS WITH AFFILIATES. (a) Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, enter into or be
a party to any transaction with any Affiliate of Borrower or such Subsidiary
(other than a Subsidiary of Borrower), on terms that are, taken as a whole, less
favorable to Borrower or such Subsidiary, as the case may be, than would be
available in a comparable transaction with a Person not an Affiliate of Borrower
or such Subsidiary; PROVIDED that the foregoing restriction shall not apply to
(i) any transaction permitted under Section 7.15 hereof; (ii) performance under
any contract or agreement in effect on the date hereof and set forth on Schedule
7.7 hereto; (iii) performance under any contract or agreement which was entered
into with a Person which was not an Affiliate of Borrower or any of its
Subsidiaries on the date of such contract or agreement other than a contract or
agreement entered into with a Person in anticipation of such Person's becoming
such an Affiliate or a holder of 10% of a class of equity securities of such
company; (iv) continued performance under any contract or arrangement which was
not less favorable to Borrower or such Subsidiary than would have been available
in a comparable transaction with an unrelated party at the date of the contract
or commencement of the arrangement; (v) payments by Borrower under the Newco
Management Agreement; (vi) transactions with any entity 10% or more of the Stock
of which is owned by any Person which also owns 10% or more of the Stock of
Borrower if (A) such other entity is not controlled by such Person and (B)
neither Borrower nor any of its Subsidiaries is aware of such Person's
investment in such other entity; and (vii) transactions pursuant to or
contemplated by the Guaranties, the V Cable Subsidiary Guaranty
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(as defined in the V Cable Loan Agreement) or otherwise pursuant to the
Prepayment Transactions.
(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any agreement or transaction to pay to any Person any management
or similar fee based on or related to Borrower's or any such Subsidiary's
operating performance or income or any percentage thereof or pay any management
or similar fee to an Affiliate, except as provided in the Newco Management
Agreement.
7.8. GUARANTIED INDEBTEDNESS. Borrower shall not, and shall not
permit any of its Subsidiaries to, incur any Guarantied Indebtedness (excluding
the Guarantied Indebtedness pursuant to the Guaranties) except (i) by
endorsement of instruments or items of payment for deposit to the account of
Borrower or such Subsidiary, (ii) for Guarantied Indebtedness incurred for the
benefit of Borrower or such Subsidiary if the primary obligation is permitted by
this Agreement, (iii) for liabilities under surety bonds permitted under
Section 7.3(a)(ix) hereof, and (iv) the V Cable Subsidiary Guaranty (as defined
in the V Cable Loan Agreement).
7.9. LIENS. Except as set forth on Schedule 7.9 hereto, Borrower
shall not, and shall not permit any of its Subsidiaries to, create or permit any
Lien on any of its properties or assets except:
(a) presently existing or hereafter created Liens in favor of Lenders
and lenders under the V Cable Loan Agreement; and
(b) Permitted Encumbrances.
7.10. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit
any of its Subsidiaries to, make Capital Expenditures that, in the aggregate,
exceed:
$84,000,000 for the Fiscal Year ending December 31, 1996;
$87,000,000 for the Fiscal Year ending December 31, 1997;
$78,000,000 for the Fiscal Year ending December 31, 1998;
$35,000,000 for the Fiscal Year ending December 31, 1999;
$22,000,000 for the Fiscal Year ending December 31, 2000;
and
$20,000,000 for the Fiscal Year ending December 31, 2001;
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PROVIDED, HOWEVER, that any excess of the amount provided above for any one
Fiscal Year over the actual aggregate Capital Expenditures of Borrower and its
Subsidiaries during such Fiscal Year may be carried forward only to, and made
available only for, the next succeeding Fiscal Year.
7.11. SALES OF ASSETS. (a) Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, transfer, convey or otherwise dispose of any
of its assets or properties; PROVIDED, HOWEVER, that the foregoing shall not
prohibit:
(i) the sale of surplus or obsolete equipment and fixtures or
transfers resulting from any casualty or condemnation of assets or properties,
PROVIDED that if the proceeds of such sales or transfers exceed $250,000 in any
one instance or $3,000,000 in the aggregate, Borrower shall, within 90 days
thereafter, prepay the Loans in accordance with the provisions of Section 2.4(b)
hereof, in an aggregate amount equal to the excess (the "Net Sales Proceeds") of
(x) the entire proceeds of any such single sale or transfer exceeding $250,000
(or the amount of such aggregate proceeds in excess of $3,000,000, as the case
may be), over (y) the amount expended by Borrower to repair or replace such
assets or properties prior to, or within 90 days after, the occurrence of such
sale or transfer;
(ii) any sale or other disposition of any asset of Borrower or its
Subsidiaries with the prior written consent of Agent and the Required Lenders
(which may be given or withheld in their sole discretion), it being agreed that
Borrower shall be required to prepay the Revolving Credit Loan and/or the Term
Loans out of the proceeds of any such permitted sale or disposition, in an
amount and in the manner specified by Agent and the Required Lenders in such
consent and may retain such portion of the proceeds as it may be permitted to
retain as provided in such consent;
(iii) any cable television "swap" expressly permitted pursuant to
Section 7.1 above; and
(iv) such other sales or dispositions which do not, individually or in
the aggregate, exceed $5,000,000, PROVIDED that the net sales proceeds thereof
shall, promptly after receipt thereof be applied to prepay the Loans in
accordance with the provisions of Section 2.4(b) hereof.
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(b) Notwithstanding the provisions of Section 7.11(a) hereof, so long
as no Default or Event of Default shall have occurred and be continuing,
Borrower may in good faith sell, in a bona fide third party transaction, all or
substantially all of its business and assets at such time and on such terms as
it shall deem appropriate, but only so long as (x) the net after tax cash
proceeds realized by Borrower on such sale (the "Disposition Proceeds") shall be
sufficient to prepay and discharge in full all Obligations and all Obligations
(as defined in the V Cable Loan Agreement) then outstanding, and (y) provision
reasonably satisfactory to Agent is made for the application of the Disposition
Proceeds immediately after such sale to discharge in full all such obligations.
In the event of any prepayment of the Obligations pursuant to the immediately
preceding sentence, Borrower's right to receive Revolving Credit Advances
hereunder, and GE Capital's obligation to incur Letter of Credit Obligations
hereunder, shall simultaneously terminate.
7.12. CANCELLATION OF INDEBTEDNESS. Borrower shall not, and shall
not permit any of its Subsidiaries to, cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business or
for sound business reasons.
7.13. EVENTS OF DEFAULT. Borrower shall not, and shall not permit
any of its Subsidiaries to, take or omit to take any action, which act or
omission would constitute a material default or event of default pursuant to, or
noncompliance with, any contract, Lease, mortgage, deed of trust or instrument
to which it is a party or by which it or any of its property is bound, or any
document creating a Lien, unless such default, event of default or non-
compliance would not have a Material Adverse Effect.
7.14. HEDGING TRANSACTIONS. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any interest rate hedging, swaps or
similar transaction, except as contemplated by this Agreement; PROVIDED,
HOWEVER, that Borrower and its Subsidiaries may engage in interest rate caps.
7.15. RESTRICTED PAYMENTS. Borrower shall not, and shall not permit
any of its Subsidiaries to, make any Restricted Payment nor shall Borrower
permit any Subsidiary
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of Borrower to do so with respect to Borrower's Stock. Nothing contained in
this Section 7.15 shall restrict (a) any payment required or permitted to be
made to Cablevision pursuant to the terms of the Newco Management Agreement or
(b) any transfer of cash by Borrower to V Cable for purposes of funding any
payment required to be made by V Cable pursuant to the Tax Sharing Agreement.
7.16. ERISA. Borrower shall not, directly or indirectly,
(a) terminate, or permit any of its ERISA Affiliates to directly or indirectly
terminate, any of their respective Plans subject to Title IV of ERISA so as to
result in any liability to Borrower or any of its ERISA Affiliates which would
have a Material Adverse Effect, (b) permit to exist any ERISA Event which would
have a Material Adverse Effect, (c) make or permit any of Borrower's ERISA
Affiliates to make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
material (in the opinion of Agent) liability to Borrower or any of its ERISA
Affiliates which would have a Material Adverse Effect, (d) permit, or permit its
Subsidiaries or any of Borrower's ERISA Affiliates to (i) satisfy any liability
under any Plan of Borrower or any of its ERISA Affiliates by purchasing
annuities from an insurance company or (ii) invest the assets of any Plan with
an insurance company, unless, in each case, such insurance company is rated AA
by Standard & Poor's Corporation and the equivalent by each other nationally
recognized statistical rating organization at the time of the investment, (e)
establish or become obligated to, or permit any of Borrower's ERISA Affiliates
to establish or become obligated to establish, any Welfare Plan, or modify any
Welfare Plan which would result in the present value of future liabilities under
any such plans to increase by more than $250,000, or (f) increase the benefits
of any of its Plans or the Plans of any of its ERISA Affiliates, or begin to
maintain or begin to contribute to any new Plan.
7.17. MODIFICATION OF CERTAIN AGREEMENTS. (a) Borrower shall not
amend, supplement or otherwise modify any of the provisions of its certificate
of incorporation or by-laws and shall not permit any of its Subsidiaries to
amend its organizational documents, including, without limitation, its
certificate of limited partnership or partnership agreements, without the prior
written consent of Agent.
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(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, (x) amend, supplement, modify or terminate any of the Newco Management
Agreement or the Non-Competition Agreement to which it is party without the
prior written consent of Agent and the Required Lenders or (y) consent to any
amendment, modification, cancellation or extension of any of Newco Management
Agreement, the Non-Competition Agreement or the Tax Sharing Agreement to which
it is a party without the prior written consent of Agent and the Required
Lenders.
8. TERM
8.1. TERMINATION. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Revolving Credit
Loan shall be in effect until (and only until) the Commitment Termination Date;
PROVIDED, HOWEVER, that in the event of a prepayment of any part of or the
entire Revolving Credit Loan prior to the Commitment Termination Date with funds
borrowed from any Person other than Lenders, then, without limiting any other
remedies of Lenders or Agent hereunder, Agent shall be entitled in its
discretion to require Borrower to simultaneously therewith pay to Lenders, in
immediately available funds, all Obligations in full, in accordance with the
terms of the agreements creating and instruments evidencing such Obligations.
8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
powers, obligations, duties, rights or liabilities of Borrower or the rights of
Agent or any Lender relating to any transaction or event occurring prior to such
termination. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations contained in the Loan Documents shall survive such termination
or cancellation and shall continue in full force and effect until such time as
all of the Obligations have been paid in full in accordance with the terms of
the agreements creating such Obligations, at which time the same shall
terminate.
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8.3. TERMINATION PRIOR TO EFFECTIVE DATE. In the event that the
Effective Date shall not have occurred on or prior to April 15, 1996, upon
notice by Agent to Borrower, all obligations of Agent and each Lender hereunder
shall forthwith be terminated. Notwithstanding any such termination, Borrower
shall continue to be obligated to indemnify Agent and each Lender pursuant to
the provisions of Section 2.15(a) hereof.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower shall fail to make any payment of principal of, interest
on or any other amount owing in respect of, the Revolving Credit Loan, the Term
Loans or any of the other Obligations when due and payable or declared due and
payable, except that (i) with respect to expenses payable under this Agreement,
or other Obligations owing under any Loan Document other than this Agreement,
such failure shall have remained unremedied for a period of ten days after
Borrower has received notice of such failure from Agent and (ii) with respect to
interest payable under this Agreement, Borrower shall be entitled to not more
than one ten-day grace period during any period of 365 consecutive days.
(b) Borrower (or, in the case of Section 6.3, V Cable) shall fail or
neglect to perform, keep or observe (i) any of the provisions of Section 6.3 or
7.10 (the "Financial Covenants") and the same shall not be cured within the
periods and in the manner provided in Section 9.5 hereof or (ii) Section 6.15
hereof or any other provision of Article 7 hereof.
(c) Borrower or any other Loan Party shall fail or neglect to
perform, keep or observe any other provision of this Agreement or of any of the
other Loan Documents and the same shall remain unremedied for a period of 30
days after Borrower or such other Loan Party shall become aware thereof.
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(d) A default shall occur under any other agreement, document or
instrument to which any Loan Party is a party or by which any such Loan Party or
any such Loan Party's property is bound and such default (i) involves the
failure to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) in respect of any Indebtedness of any Loan Party in an aggregate
amount exceeding $1,000,000 or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in an
aggregate amount exceeding $1,000,000 to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan Document, in
any written statement pursuant hereto or thereto, or in any report, financial
statement or certificate made or delivered to Agent or any Lender by any Loan
Party pursuant hereto or thereto, shall be untrue or incorrect in any material
respect as of the date when made or deemed made (including those made or deemed
made pursuant to Section 3.3 hereof).
(f) Any of the assets of any Loan Party shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Loan Party and shall remain unstayed or undismissed for 30
consecutive days; or any Person other than any Loan Party shall apply for the
appointment of a receiver, trustee or custodian for any of the assets of any
Loan Party and such application shall remain unstayed or undismissed for 30
consecutive days; or any Loan Party shall have concealed, removed or permitted
to be concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be fraudulent
under any bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any Loan
Party in a court having competent jurisdiction seeking a decree or order in
respect of such Loan Party (i) under title 11 of the United States Code, as now
constituted or hereafter amended, or any other appli-
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cable federal, state or foreign bankruptcy or other similar law, (ii) appointing
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of such Loan Party or of any substantial part of its properties or
(iii) ordering the winding-up or liquidation of the affairs of such Loan Party
and such case or proceeding shall remain undismissed or unstayed for 60
consecutive days or such court shall enter a decree or order granting the relief
sought in such case or proceeding.
(h) Any Loan Party shall (i) file a petition seeking relief under
title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
such Loan Party or of any substantial part of its properties, (iii) fail
generally to pay its debts as such debts become due or (iv) take any corporate
action in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $1,000,000 in the
aggregate shall be rendered against Borrower or any of its Subsidiaries and the
same shall not be (i) fully covered by insurance in accordance with Section 6.7
hereof or (ii) vacated, stayed, bonded, paid or discharged for a period of 15
days.
(j) With respect to any Plan of Borrower or any of its ERISA
Affiliates: (i) Borrower or any other party-in-interest or disqualified person
shall engage in any transactions which in the aggregate would reasonably be
expected to result in a direct or indirect liability of Borrower or any of its
ERISA Affiliates in excess of $1,000,000 under Section 409 or 502 of ERISA or
IRC Section 4975; (ii) Borrower or any of its ERISA Affiliates shall incur any
accumulated funding deficiency, as defined in IRC Section 412, in the aggregate
in excess of $1,000,000, or request a funding waiver from the IRS for
contributions in the aggregate in excess of $1,000,000; (iii) Borrower or any of
its ERISA Affiliates shall incur any withdrawal liability in the aggregate in
excess of $1,000,000 as a result of a complete or partial withdrawal within the
meaning of Section
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4203 or 4205 of ERISA; (iv) Borrower or any of its ERISA Affiliates shall notify
the PBGC of an intent to terminate, or the PBGC shall institute proceedings to
terminate, a Plan; (v) a Reportable Event shall occur with respect to a Plan,
and within 15 days after the reporting of such Reportable Event to any Lender,
such Lender shall have notified Borrower in writing that (A) it has made a
determination that, on the basis of such Reportable Event, there are reasonable
grounds under Section 4042(a)(1), (2) or (3) of ERISA for the termination of
such Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan and (B) as a result thereof
a Default or an Event of Default shall occur hereunder; (vi) a trustee shall be
appointed by a court of competent jurisdiction to administer any Plan or the
assets thereof; (vii) the benefits of any Plan shall be increased, or Borrower
or any of its ERISA Affiliates shall begin to maintain, or begin to contribute
to, any Plan, without the prior written consent of the Required Lenders; or
(viii) any ERISA Event with respect to a Plan shall have occurred, and 30 days
thereafter (A) such ERISA Event (if correctable) shall not have been corrected
and (B) the then present value of such Plan's vested benefits shall exceed the
then current value of assets accumulated in such Plan; PROVIDED, HOWEVER, that
the events listed in subsections (iv)-(viii) shall constitute Events of Default
only if, as of the date thereof or any subsequent date, the maximum amount of
liability Borrower or any of its ERISA Affiliates could incur in the aggregate
under Section 4062, 4063, 4064, 4219 or 4243 of ERISA or any other provision of
law with respect to all such Plans, computed by the actuary of the Plan taking
into account any applicable rules and regulations of the PBGC at such time, and
based on the actuarial assumptions used by the Plan, resulting from or otherwise
associated with such event, exceeds $1,000,000.
(k) Any material provision of any Collateral Document, after delivery
thereof pursuant to Section 3.1 hereof, shall for any reason cease to be valid
or enforceable in accordance with its terms, except as provided in the
Termination and Modification Documents, or any security interest created under
any Collateral Document shall cease to be a valid and perfected first priority
security interest or Lien (except as otherwise stated therein or permitted
thereunder and except as provided in
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the Termination and Modification Documents) in any material portion of the
Collateral purported to be covered thereby.
(l) Either (i) Cablevision shall cease to own 100% of the outstanding
Stock of V Cable or (ii) V Cable shall cease to own, directly or indirectly
through wholly-owned Subsidiaries, 100% of the outstanding Stock of each other
member of the V Cable Group, 100% of the Preferred USC Interest and 100% of the
outstanding Stock of Borrower.
(m) Cablevision, Borrower or any Subsidiary thereof shall (i) breach
any material obligation under the Newco Management Agreement (including any
obligation under Article III or Article VI thereof) and such breach shall remain
uncured for a period of 30 days, or breach any representation or warranty
thereunder in any material respect, (ii) breach any provision of the Tax Sharing
Agreement and such breach shall remain uncured for a period of 30 days or (iii)
breach any obligation under the NonCompetition Agreement.
(n) The Newco Management Agreement shall be terminated.
(o) An Event of Default (as defined in the V Cable Loan Agreement)
shall have occurred.
9.2. REMEDIES. (a) If any Event of Default shall have occurred and
be continuing, (i) GE Capital may terminate this facility with respect to
further Revolving Credit Advances (including Letter of Credit Obligations),
whereupon no further Revolving Credit Advances (including Letter of Credit
Obligations) shall be made or incurred hereunder, and/or (ii) Agent shall at the
request, or may with the consent, of the Required Lenders, declare all
Obligations to be forthwith due and payable, whereupon all such Obligations
shall become and be due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by Borrower;
PROVIDED, HOWEVER, that upon the occurrence of an Event of Default specified in
Section 9.1(g) or (h) hereof, such Obligations shall become due and payable
without declaration, notice or demand by Agent or any Lender.
(b) Agent shall take such action with respect to any Default or Event
of Default as shall be directed by the
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Required Lenders; PROVIDED, HOWEVER, that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of Agent and
Lenders taken as a whole, including any action (or failure to act) pursuant to
the Loan Documents.
9.3. WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement and to the extent permitted by applicable law, Borrower waives
(i) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent or any Lender on which Borrower
may in any way be liable and hereby ratifies and confirms whatever Agent or any
Lender may do in this regard, (ii) all rights to notice and a hearing prior to
Agent's or any Lender's taking possession or control of, or to Agent's or any
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Agent or any
Lender to exercise any of its remedies and (iii) the benefit of all valuation,
appraisal and exemption laws. Borrower acknowledges that it has been advised by
counsel of its choice with respect to this Agreement, the other Loan Documents
and the transactions evidenced by this Agreement and the other Loan Documents.
9.4. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of Borrower against any and all of
the obligations of Borrower now or hereafter existing under this Agreement and
the Notes held by such Lender, whether or not such Lender shall have made any
demand under this Agreement or any such Note and although such obligations may
be unmatured. Each Lender agrees promptly to notify Borrower after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice
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shall not affect the validity of such set-off and application. The rights of
each Lender under this Section 9.4 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Lender may
have.
9.5. CURE OF FINANCIAL COVENANT DEFAULT. Borrower shall be entitled
to cure any breach of the Financial Covenants set forth in Section 6.3 hereof if
V Cable or any other member of the V Cable Group (solely with new funds provided
by Cablevision as a capital contribution to such entity) shall make, during the
Fiscal Quarter or Fiscal Year, as the case may be, in respect of which such
breach occurred, or within 45 days thereafter, a capital contribution to
Borrower in cash, sufficient to cause Borrower to be in compliance with such
provisions for the applicable Fiscal Quarter or Fiscal Year. Borrower shall
also be entitled to cure any breach of the Financial Covenant set forth in
Section 7.10 hereof if V Cable or any member of the V Cable Group (solely with
new funds provided by Cablevision as a capital contribution to such entity)
shall make, during the Fiscal Year in respect of which such breach occurred or
within 90 days thereafter, a capital contribution to Borrower in cash, equal to
the excess of the amount of Capital Expenditures made by Borrower and its
Subsidiaries for the applicable Fiscal Year over the aggregate amount of Capital
Expenditures permitted to be made for such Fiscal Year pursuant to Section 7.10
hereof. Borrower shall notify Agent of the making by V Cable or any other
member of the V Cable Group of any capital contribution constituting a cure of
any breach of a Financial Covenant pursuant to this Section 9.5 within five days
after the making thereof, which notice shall also specify (i) the date any such
capital contribution was made, (ii) the amount of any such capital contribution
and (iii) whether such capital contribution is to be applied to cure a breach of
the Financial Covenants set forth in Section 6.3 or Section 7.10. No such
capital contribution applied to cure a breach of the provisions of Section 6.3
(a "Category 1 Capital Contribution") shall be counted for purposes of curing a
breach of the provisions of Section 7.10, and no such capital contribution
applied to cure a breach of the provisions of Section 7.10 (a "Category 2
Capital Contribution") shall be counted for purposes of curing a breach of the
provisions of Section 6.3.
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10. THE AGENT
10.1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders (including, without
limitation, (a) the application of payments in any manner other than as set
forth in Section 2.11 hereof and (b) if any prepayment of a LIBOR Advance in the
manner and at the times provided in this Agreement would result in any such
prepayment occurring prior to the last day of the Interest Period for such
Advance, directing Borrower to make (or not prohibiting Borrower from making)
such prepayment on a day other than the last day of the Interest Period
therefor), and such instructions shall be binding upon all Lenders; PROVIDED,
HOWEVER, that Agent shall not be required to take any action which exposes Agent
to personal liability or which is contrary to this Agreement or the other Loan
Documents or applicable law. Agent agrees to give each Lender prompt notice of
each notice given to it by Borrower pursuant to Article 2 or Section 6.6 hereof
(other than notices relating solely to the Revolving Credit Loan). Except for
the foregoing notices, and such other specific notices or reports received by
Agent from Borrower as any Lender may reasonably request, Agent shall have no
duty or responsibility to provide to any Lender any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of Borrower which may come into the
possession of Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence
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or wilful misconduct. Without limitation of the generality of the foregoing,
Agent: (i) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent; (ii) may consult with legal counsel
(including counsel for any Loan Party), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statement, warranty or
representation made in or in connection with this Agreement or the other Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan Party; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
10.3. GE CAPITAL AND AFFILIATES. With respect to its commitment
hereunder to make Revolving Credit Advances and the Term Loans made by it and to
incur Letter of Credit Obligations, GE Capital shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and
may exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital in its
individual capacity. GE Capital and its Affiliates may lend money to, and
generally engage in any kind of business with, any Loan Party, any Subsidiary or
Affiliate of any Loan Party and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary or Affiliate, all as if GE
Capital were not Agent and without any duty to account therefor to any Lender.
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10.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Section 4.5 hereof and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
10.5. INDEMNIFICATION. Each Lender agrees to indemnify Agent (to the
extent that Agent is not reimbursed by Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent under this Agreement; PROVIDED,
HOWEVER, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross negligence or wilful
misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Borrower.
10.6. SUCCESSOR AGENT. If GE Capital shall, consistent with Section
11.1 hereof, hold 50% or less of the aggregate principal amount of the Notes,
Agent may resign by giving written notice thereof to each Lender and Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders,
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and shall have accepted such appointment, within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
MISCELLANEOUS
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF
INTEREST. (a) The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered or amended except in accordance with Section 11.1(e) below.
(b) Borrower may not sell, assign or transfer any of the Loan
Documents or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
Borrower hereby consents to Agent's and any Lender's sale of participations,
assignment, transfer or other disposition (each, a "Sale"), at any time or
times, of any of the Loan Documents or of any portion thereof or interest
therein to any bank or other financial institution, including, without
limitation, Agent's and any Lender's rights, title, interests, remedies, powers
or duties thereunder, whether evidenced by a writing or not; PROVIDED, HOWEVER,
that unless an Event of Default has occurred and is continuing, no Lender shall
(without the written consent of Borrower and Agent) (i) effect any Sale of any
Term Loan (A) if such Sale would result in any increased tax withholding
obligation (or, in the case of a Sale by any Lender other than GE Capital, if
such Sale would result in any additional payment being required to be made by
Borrower pursuant to Section 2.15 hereof) and (B) unless GE Capital or any of
its
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Affiliates would after giving effect to such Sale retain more than 50% of the
aggregate principal amount of the Notes or (ii) effect a Sale of participations
to one or more banks or other financial institutions ("Participants") in or to
any of the Notes or any portion thereof or interest therein, PROVIDED that any
Lender may effect a Sale of such participations so long as (w) such Lender does
not sell (A) participations in an aggregate of 50% or more of the aggregate
principal amount of such Lender's Notes or (B) individual participations of less
than $5,000,000, (x) such Lender shall remain solely responsible for all of its
obligations under this Agreement and the Loan Documents, (y) Borrower, Agent and
each other Lender shall continue to be entitled to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and (z) no Participant shall be entitled to require such Lender to
take or omit to take any action hereunder; and PROVIDED FURTHER, HOWEVER, that,
in the event any Lender shall determine to effect a Sale of any portion of any
Term Note other than to an Affiliate of such Lender, such Lender shall (except
as otherwise agreed by Borrower) use reasonable good faith efforts to sell such
participations and assignments to institutions reasonably acceptable to Borrower
on terms acceptable to such Lender in such Lender's sole discretion. Each
Lender agrees that the Sale of any participations or assignments in any Loan
shall take place in accordance with all applicable laws, rules and regulations.
(c) Without limiting the provisions of Section 11.1(b) hereof, unless
an Event of Default occurs and is continuing, no Lender shall, without the prior
written consent of Agent, effect any Sale other than (x) a Sale to one or more
Affiliates of such Lender or as required by law, (y) a Sale to GE Capital or
(z) a Sale of participations to one or more banks or other financial
institutions in accordance with the limitations set forth in Section 11.1(b)(ii)
hereof (PROVIDED that, in the case of clauses (x), (y) and (z) of this Section
11.1(c), Agent shall have received prior written notice thereof). Any consent
of Agent contemplated hereunder may be given or withheld in its sole discretion
and without any consent or approval of Borrower being required.
(d) In the event Agent or any Lender effects a Sale or otherwise
transfers all or any part of any Note
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consistent with the terms of this Agreement, Borrower shall, upon the request of
Agent or such Lender, (i) issue new Notes to effect such assignment or transfer
and (ii) execute such amendments to this Agreement as Agent may reasonably deem
necessary or appropriate in order that the transferee may become a party
thereto.
(e) No amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure by Borrower
therefrom, nor release of any Collateral or Guaranty, shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED, HOWEVER, that
no amendment, waiver or consent shall (i) subject any Lender to any additional
obligations (without the written consent of such Lender) or (ii) amend this
Section 11.1(e) without the written consent of each Lender affected thereby; and
PROVIDED, FURTHER, HOWEVER, that no amendment, waiver or consent shall, unless
in writing and signed by Agent in addition to the Lenders required above to take
such action, affect the rights or duties of Agent under this Agreement, any Note
or any other Loan Document.
(f) If GE Capital shall effect a Sale of any participations in any of
the Term Loans to any Person, Borrower shall pay to GE Capital, from time to
time, all amounts that the holder of such participation would have been entitled
to receive pursuant to Section 2.15(b), 2.17(a) or 2.17(b) hereof if such holder
was a Lender under this Agreement and directly held that portion of the Notes
(or interest therein) underlying such participation (in which event GE Capital's
right to receive such amounts pursuant to such provisions shall be
correspondingly reduced).
11.2. FEES AND EXPENSES. Borrower shall pay all reasonable
out-of-pocket expenses of Agent in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its counsel
retained in connection with the Loan Documents and the transactions contemplated
thereby). If, at any time or times, regardless of the existence of an Event of
Default (except with respect to paragraphs (iii) and (iv) below, which shall be
subject to an Event of Default having occurred and continuing),
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Agent (or, in the case of paragraphs (iii) and (iv) below, any Lender) shall
employ counsel for advice or other representation or shall incur reasonable
legal or other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent with respect
to, any of the Loan Documents;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent or any Lender, Borrower, any Subsidiary of
Borrower or, subject to Section 2.15(a), any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection herewith;
(iii) any attempt to enforce any rights of Agent or any Lender against
Borrower, any Subsidiary of Borrower or any other Person that may be
obligated to any Lender by virtue of any of the Loan Documents; or
(iv) any attempt to verify, protect, collect, sell, liquidate or
otherwise dispose of the Collateral;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.2 shall be payable, on demand, by Borrower to Agent or such Lender
and shall be additional Obligations secured under this Agreement and the other
Loan Documents; PROVIDED, HOWEVER, that with respect to Lenders other than GE
Capital, Borrower shall be responsible for the attorneys' fees of only one
counsel for such other Lenders. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal services.
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11.3. NO WAIVER BY AGENT OR ANY LENDER. Agent's or any Lender's
failure, at any time or times, to require strict performance by any Loan Party
of any provision of this Agreement or any of the other Loan Documents shall not
waive, affect or diminish any right of Agent or such Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by Agent
or Lenders of an Event of Default by any Loan Party under any Loan Document
shall not suspend, waive or affect any other Event of Default by any Loan Party
under any Loan Document, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of any Loan Party
contained in this Agreement or in any of the other Loan Documents and no Event
of Default and no default by any Loan Party under any of the Loan Documents
shall be deemed to have been suspended or waived by Agent or Lenders, unless
such suspension or waiver is by an instrument in writing signed by an officer of
Agent and Required Lenders and directed to such Loan Party specifying such
suspension or waiver.
11.4. REMEDIES. Agent's and each Lender's rights and remedies under
this Agreement shall be cumulative and non-exclusive of any other rights and
remedies which Agent and Lenders may have under any other agreement, including,
without limitation, the Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.
11.5. WAIVER OF JURY TRIAL. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights under
the Loan Documents.
11.6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.7. PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower, Agent and
Lenders and the
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permitted assigns, transferees and endorsees of Agent and Lenders.
11.8. CONFLICT OF TERMS. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.9. AUTHORIZED SIGNATURE. Until Agent shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed on Schedule 11.9
hereto shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's Board
of Directors.
11.10. GOVERNING LAW. Except as otherwise expressly provided in any
of the Loan Documents, in all respects, including all matters of construction,
validity and performance, this Agreement and the Obligations arising hereunder
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws, and any
applicable laws of the United States of America. Agent, each Lender and
Borrower agree to submit to personal jurisdiction and to waive any objection as
to venue in the County of New York, State of New York. Service of process on
Borrower, Agent or any Lender in any action arising out of or relating to any of
the Loan Documents shall be effective if mailed to such party at the address
listed in Section 11.11 hereof. Nothing herein shall preclude Agent, any Lender
or Borrower from bringing suit or taking other legal action in any other
jurisdiction.
11.11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communi-
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cation shall be in writing and shall be delivered either in person with receipt
acknowledged, or by telecopy or by registered or certified mail, return receipt
requested, postage prepaid, or by overnight courier, addressed as follows:
(a) If to Agent at:
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Region Operations Manager
Telecopy: (203) 316-7810
With copies to:
General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, Georgia 30326
Attention: Thomas P. Waters
Telecopy: (404) 842-1533
and
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Commercial Finance
Legal Counsel
Telecopy: (203) 316-7889
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: William M. Gutowitz, Esq.
Norman D. Chirite, Esq.
Telecopy: (212) 310-8007
(b) If to Borrower at:
VC Holding, Inc.
One Media Crossways
Woodbury, New York 11797
Attention: General Counsel
Telecopy: (516) 496-1780
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With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John P. Mead, Esq.
Telecopy: (212) 558-3588
(c) If to any Lender, at its address indicated on the signature pages
hereof,
or, as to any party hereto, at such other address as may be substituted by
notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given or served on the date on which
personally delivered or transmitted by telecopy or three Business Days after the
same shall have been deposited in the United States mail or one Business Day
after the same shall have been deposited with an overnight courier. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the Persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
11.12. SURVIVAL. The representations and warranties of Borrower in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
11.13. SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.14. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed in New York,
New York as of the date first written above.
VC HOLDING, INC.
By: /s/ Barry J. O'Leary
-----------------------
Name: Barry J. O'Leary
Title: Senior Vice President, Finance
and Treasurer
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent
By: /s/ Thomas P. Waters
----------------------------------
Name: Thomas P. Waters
Title: Vice President
Revolving GENERAL ELECTRIC CAPITAL CORPORATION
Credit as Lender
Commitment
- ----------
$125,000,000 By: /s/ Thomas P. Waters
----------------------------------
Name: Thomas P. Waters
Title: Vice President
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PARTNERSHIP INTERESTS REDEMPTION AGREEMENT
by and among
U.S. CABLE TELEVISION GROUP, L.P.
and
U.S. CABLE PARTNERS
POMPADUR TRUST NO. 1
THE RULE TRUST DATED JUNE 11, 1987
ELLIOT H. STEIN
I. MARTIN POMPADUR
GENERAL ELECTRIC CAPITAL CORPORATION
_____________________
Dated as of March 18, 1996
_____________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.. . . . . . . . . . . . . . . . . . . . . . 3
1.2 Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
ASSIGNMENT AND REDEMPTION OF INTERESTS
2.1 Assignment and Redemption; Acquired Interests . . . . . . . . . 6
2.2 Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Deliveries by the Limited Partnership . . . . . . . . . . . . . 8
2.5 Deliveries by Transferors . . . . . . . . . . . . . . . . . . . 8
2.6 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Release of GE Capital . . . . . . . . . . . . . . . . . . . . . 8
2.8 Agreement With Respect To Section 13.10 Option. . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERSHIP
3.1 Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Lawsuits, Claims. . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFERORS
4.1 Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Governing Documents of Transferor . . . . . . . . . . . . . . . 13
4.5 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 14
4.7 Title to Interests. . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 15
-i-
<PAGE>
ARTICLE V
COVENANTS
5.1 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 15
5.2 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Notices of Certain Events . . . . . . . . . . . . . . . . . . . 15
5.4 Access to Books and Records . . . . . . . . . . . . . . . . . . 17
5.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Income Tax Reporting. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of the Parties. . . . . . . . . . 25
6.2 Conditions to the Obligations of the Limited Partnership. . . . 27
6.3 Conditions to the Obligations of Transferor . . . . . . . . . . 29
ARTICLE VII
SURVIVAL . . . . . . . . . . . . . . . . 32
ARTICLE VIII
TERMINATION
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX
MISCELLANEOUS
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . 37
9.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 38
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<PAGE>
9.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 38
9.13 Consent to Redemption . . . . . . . . . . . . . . . . . . . . . 39
9.14 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . 39
-iii-
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Annex I Pompadur Letter Agreement
Annex II USCP Letter Agreement
SCHEDULES
Schedule 3.6 Lawsuits; Claims
Schedule 3.7 Consents and Approvals
Schedule 4.3 Noncontravention
Schedule 4.6 Consents and Approvals
Schedule 4.7 Redemption Agreement
Schedule 5.6 Form of Balance Sheet
-iv-
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PARTNERSHIP INTERESTS REDEMPTION AGREEMENT
This PARTNERSHIP INTERESTS REDEMPTION AGREEMENT is made as of
March 18, 1996 by and among U.S. Cable Television Group, L.P., a limited
partnership organized under the laws of Delaware (the "LIMITED PARTNERSHIP"),
and U.S. CABLE PARTNERS, a partnership organized under the laws of New York
("USCP"), POMPADUR TRUST NO. 1, a trust organized under the laws of Connecticut
("PT1"), THE RULE TRUST DATED JUNE 11, 1987, a trust organized under the laws of
California ("RULE TRUST"), ELLIOT H. STEIN ("EHS"), I. MARTIN POMPADUR ("IMP"),
and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE CAPITAL")
(each of USCP, PT1, RULE TRUST, EHS, IMP as partners of the Limited Partnership
and GE Capital a "TRANSFEROR" and collectively, the "TRANSFERORS").
W I T N E S S E T H:
WHEREAS, each of PT1, RULE TRUST, EHS, IMP and GE Capital are limited
partners (the "LIMITED PARTNERS") in the Limited Partnership;
WHEREAS, USCP is a general partner in the Limited Partnership;
WHEREAS, the Limited Partnership is engaged in the business of owning
and operating cable television systems (such owned and operated systems
hereinafter referred to collectively as the "SYSTEM"); and
WHEREAS, each Transferor desires to transfer to the Limited
Partnership, and the Limited Partnership desires to redeem, all of such
Transferor's right, title and interest in and to the limited and general
partnership
<PAGE>
interests in the Limited Partnership owned by such Transferor (hereinafter
referred to as the "INTERESTS"), all as more fully set forth herein, on the
terms and subject to the conditions set forth herein; and
WHEREAS, Cablevision Systems Corporation, a Delaware corporation
("CSC"), is the manager of the Systems under a Management Agreement (the
"MANAGEMENT AGREEMENT"), dated as of December 31, 1992, by and among the Limited
Partnership, CSC and the Subsidiaries of the Limited Partnership listed on the
signature pages thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"AFFILIATES" mean, with respect to any Person, any Persons directly or
indirectly controlling, controlled by, or under common control with, such other
Person; PROVIDED, however, that no Transferor shall be deemed to be an Affiliate
of the Limited Partnership or its Subsidiaries.
"AGREEMENT" means this Partnership Interests Redemption Agreement, as
the same may be amended or supplemented from time to time in accordance with the
terms hereof.
"BUSINESS DAY" means 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.
"CLOSING" means the closing of the transactions contemplated by this
Agreement.
"CLOSING DATE" has the meaning set forth in Section 2.3 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CSC" has the meaning set forth in the recitals to this Agreement.
"EHS" has the meaning set forth in the preamble of this Agreement.
"ENCUMBRANCES" means liens, charges, encumbrances, security interests,
options, restrictions or any other claims or third party rights.
"EXCHANGE AGREEMENT" means the Exchange Agreement, dated as of
December 31, 1992, among V Cable, Inc., V Cable GP, Inc., the Limited
Partnership and GE Capital.
"EXCHANGE TERMINATION AGREEMENT" means the agreement dated as of the
date hereof, among the Limited
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Partnership, GE Capital, V Cable GP, Inc. and V Cable, Inc., terminating the
Exchange Agreement.
"GE CAPITAL" has the meaning set forth in the preamble to this
Agreement.
"GOVERNMENTAL AUTHORIZATIONS" means all franchises, licenses, permits,
certificates and other authorizations and approvals required under applicable
law, ordinance or regulation of any governmental authority, Federal, state or
local.
"H-S-R ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IMP" has the meaning set forth in the preamble to this Agreement.
"INTERESTS" shall have the meaning set forth in the recitals of this
Agreement.
"LIMITED PARTNERS" has the meaning set forth in the recitals of this
Agreement.
"LIMITED PARTNERSHIP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership of the Limited Partnership, dated as of
December 31, 1992 as amended through the date hereof.
"MANAGEMENT AGREEMENT" has the meaning set forth in the recitals of
this Agreement as amended through the date hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
assets, financial condition or results of operations of the Limited Partnership
or the System.
"MPA AGREEMENT" means the Management Performance Adjustment and
Interborrower Agreement, dated as of December 31, 1992, among V Cable, Inc., V
Cable GP, Inc., VC Holding, Inc., the V Cable, Inc. and VC Holding, Inc.
subsidiaries listed therein, the Limited Partnership and GE Capital.
"MPA TERMINATION AGREEMENT" means the agreement dated as of the date
hereof, terminating the MPA Agreement.
"PT1" has the meaning set forth in the preamble to this Agreement.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"POMPADUR LETTER AGREEMENT" means the letter agreement, dated as of
December 31, 1992, by and among the Limited Partnership, IMP, USCP, PT1, Rule
Trust, EHS and GE Capital annexed hereto as Annex I.
"REDEMPTION PRICE" has the meaning set forth in Section 2.2 hereof.
"REQUIRED APPROVALS" has the meaning set forth in Section 4.6 hereof.
"RULE TRUST" has the meaning set forth in the preamble to this
Agreement.
"STOCK PURCHASE AGREEMENT" means the Preferred Stock Purchase
Agreement dated as of February 2, 1996, between CSC and GE Capital as from time
to time amended, supplemented or otherwise modified.
"SYSTEM" has the meaning set forth in the recitals of this Agreement.
"TAXES" means all Federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes, real and
personal property taxes, transfer taxes, gains taxes, mortgage recording taxes,
transportation taxes or gross operating taxes, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.
"TRANSFEROR" has the meaning set forth in the preamble this Agreement.
"USC LOAN DOCUMENTS" has the meaning set forth in each of the Senior
and Junior Loan Agreements, each dated as of December 31, 1992, between the
Limited Partnership, GE Capital and the lenders named in each Agreement.
"USC JUNIOR LOAN AGREEMENT" means the Junior Loan Agreement, dated as
of December 31, 1992 between the Limited Partnership, GE Capital and the lenders
named therein.
"USC SENIOR LOAN AGREEMENT" means the Amended and Restated Senior Loan
Agreement, dated as of the date hereof
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between the Limited Partnership, GE Capital and the lenders named therein.
"USCP" has the meaning set forth in the recitals of this Agreement.
"USCP LETTER AGREEMENT" means the letter agreement, dated as of
December 31, 1992 between GE Capital and USCP annexed hereto as Annex II.
"V CABLE LOAN AGREEMENT" means the Loan Agreement dated as of December
31, 1992, among V Cable, Inc. ("V CABLE"), GE Capital and the lenders named
therein, as amended through the date hereof.
"VC HOLDING LOAN AGREEMENT" means the Amended and Restated Loan
Agreement dated as of the date hereof, among VC Holding, Inc. ("VC HOLDING"), GE
Capital and the lenders named therein.
1.2 CERTAIN TERMS. (i) The words "HEREOF", "HEREIN" and "HEREUNDER"
and words of similar import, when used in this Agreement, refer to this
Agreement as a whole and not to any particular provision of this Agreement
unless otherwise specifically stated to the contrary.
(ii) The terms defined in the singular have a comparable meaning when
used in the plural, and vice versa.
ARTICLE II
ASSIGNMENT AND REDEMPTION OF INTERESTS
2.1 ASSIGNMENT AND REDEMPTION; ACQUIRED INTERESTS. On the terms and
subject to the conditions set forth herein, and in reliance on the
representations, warranties, covenants and agreements of such Transferor
contained herein, at the Closing, upon payment of the Redemption Price (a) each
Transferor (severally and not jointly) shall and shall be deemed to have hereby
conveyed, transferred, assigned and delivered to the Limited Partnership, and
the Limited Partnership shall be deemed to have hereby redeemed all of such
Transferor's right, title and interest in and to the Interests, free of all
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Encumbrances as of the Closing Date, and (b) each Transferor (severally and not
jointly) (i) acknowledges that by its execution of this Agreement, and the
transfer of all of his right, title and interest to the Interests as of the
Closing, such Transferor, except as set forth in Section 5.4 and 5.6 hereof or
otherwise with respect to its rights as a former partner, will no longer have
rights in relation to the Partnership or under the Limited Partnership Agreement
and (ii) agrees to make the deliveries required of it under Section 2.5 hereof.
The Limited Partnership shall not assume any liabilities for Taxes, if any,
which may be imposed on any Transferor in connection with the transactions
contemplated by this Agreement, including without limitation any transfer taxes,
recapture of depreciation deductions or investment tax credits or any taxes
imposed by any taxing authority in lieu of income taxes.
2.2 REDEMPTION PRICE. On the terms and subject to the conditions set
forth herein, the Limited Partnership agrees to pay an amount in cash to each
Transferor at the Closing as follows:
USCP $ 160,000
PT1 $ 400,000
RULE TRUST $1,890,000
EHS $ 60,000
IMP $1,490,000
GE Capital $ 10,000
The sum of such amounts being hereinafter referred to as the "REDEMPTION PRICE".
2.3 CLOSING. The Closing shall take place at the offices of Weil,
Gotshal & Manges at 10:00 a.m., New York time, on the fifth Business Day
following the date on which all the conditions set forth in Article VI hereof,
other than those conditions which by their terms are to be satisfied as of
Closing, have been satisfied or waived, or at
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such other time and place as the parties hereto may mutually agree. The date on
which the Closing occurs is called the "CLOSING DATE".
2.4 DELIVERIES BY THE LIMITED PARTNERSHIP. At the Closing, the
Limited Partnership shall deliver the following to each Transferor: (i) such
Transferor's portion of the Redemption Price, as set forth in Section 2.2, in
immediately available funds by wire transfer and (ii) the opinions, certificates
and other documents to be delivered pursuant to Section 6.3 hereof.
2.5 DELIVERIES BY TRANSFERORS. At the Closing, each Transferor,
severally and not jointly, shall deliver to the Limited Partnership the
following:
(a) such other documents or instruments, in form and substance
reasonably acceptable to the Limited Partnership, as may be necessary to
consummate the transactions contemplated hereby and to comply with the terms
hereof; and
(b) the opinions, certificates, and other documents to be delivered
by such Transferor pursuant to Section 6.2 hereof.
2.6 RELEASE. The Partnership agrees that from and after the Closing
Date each Transferor shall be released from all of its liabilities under the
Limited Partnership Agreement.
2.7 RELEASE OF GE CAPITAL. USCP, with respect to the USCP Letter
Agreement, and each of IMP, USCP, PT1, Rule Trust and EHS, with respect to the
Pompadur Letter Agreement, hereby agree that, from and after the Closing Date,
GE Capital shall be released from any and all obligations to such party under
the USCP Letter Agreement and the Pompadur Letter Agreement to the extent, and
only to the extent, that GE Capital would have been released from
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any and all such obligations had GE Capital purchased such Transferor's interest
in the Limited Partnership pursuant to Section 13.10 of the Limited Partnership
Agreement.
2.8 AGREEMENT WITH RESPECT TO SECTION 13.10 OPTION. GE Capital
hereby agrees that (i) from and after the date hereof, so long as this Agreement
has not been terminated in accordance with Section 8 hereof, GE Capital will
not exercise, assign, transfer, or otherwise dispose of (including the naming of
any person as its designee under) the option or any interest in (including any
lien on or security interest in) the option granted to it pursuant to Section
13.10 of the Limited Partnership Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERSHIP
The Limited Partnership represents and warrants to each Transferor as
follows:
3.1 STATUS. The Limited Partnership is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, and is
duly qualified to do business in each jurisdiction in which such qualification
is required by applicable law.
3.2 AUTHORIZATION. The Limited Partnership has full power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder. The execution, delivery and performance by the Limited Partnership
of this Agreement have been duly and validly authorized by all necessary action,
and no additional authorization or consent is required in connection with the
execution, delivery and performance by the Limited Partnership of this
Agreement.
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3.3 NONCONTRAVENTION. The execution, delivery and performance by the
Limited Partnership of this Agreement, and the consummation of the transactions
contemplated hereby, does not and will not (i) violate any provision of the
Limited Partnership Agreement, (ii) except as set forth on Schedule 3.7 hereto,
conflict with, or result in a breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after the
filing of notice or lapse of time or both) of any right or obligation of the
Limited Partnership under, or to a loss of any benefit to which the Limited
Partnership is entitled under, any agreement, franchise, license, permit,
instrument or undertaking to which the Limited Partnership is a party or by
which it is bound or to which any of its assets are subject, including any
Governmental Authorization, or result in the creation of any Encumbrance upon
any of said assets, other than in each case under this clause (ii) any
violation, conflict, breach, default, termination, cancellation or acceleration,
loss or Encumbrance, that could not reasonably be expected to impair or delay
the Limited Partnership's ability to perform its obligations hereunder or
(iii) violate or result in a breach of or constitute a default under any
judgment, order, injunction, decree, law, rule, regulation or other restriction
of any court or governmental authority to which the Limited Partnership is
subject, including any Governmental Authorization, other than in each case under
this clause (iii), any violation, conflict, breach, default, termination,
cancellation, acceleration, loss or Encumbrance that could not reasonably be
expected to impair or delay the Limited Partnership's ability to perform its
obligations hereunder.
3.4 BINDING EFFECT. This Agreement constitutes a valid and legally
binding obligation of the Limited Partnership enforceable in accordance with its
terms, subject to
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the availability of the discretionary remedy of specific performance and to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights.
3.5 FINDER'S FEES. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission from the Limited
Partnership in connection with the transactions contemplated by this Agreement.
3.6 LAWSUITS, CLAIMS. Except as set forth in Schedule 3.6 hereto,
there is no civil, criminal or administrative action, suit, demand, claim,
hearing, proceeding or investigation pending or, to the knowledge of the Limited
Partnership, threatened against the Limited Partnership which could not
reasonably be expected to adversely affect the ability of the Limited
Partnership to consummate the Closing. The Limited Partnership is not subject
to any order, writ, judgment, award, injunction or decree of any court or
governmental or regulatory authority of competent jurisdiction or any arbitrator
or arbitrators which could not reasonably be expected to adversely affect the
ability of the Limited Partnership to consummate the Closing.
3.7 CONSENTS AND APPROVALS. Except for any filings under the H-S-R
Act and as specifically set forth in Schedule 3.7 hereto, no consent, approval,
permit, license, waiver or other authorization or approval is required to be
obtained by the Limited Partnership from, and no notice or filing is required to
be given by the Limited Partnership to or made by the Limited Partnership with,
any Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Limited
Partnership of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFERORS
Each Transferor, with respect only to such Transferor, represents and
warrants to the Limited Partnership severally and not jointly as follows:
4.1 STATUS. With respect to a Transferor that is not a natural
Person, such Transferor is duly organized and validly existing under the laws of
the state of its organization, and is duly qualified to do business in each
jurisdiction in which such qualification is required by applicable law except
where the failure to be so qualified would not adversely affect the ability of
such Transferor to complete the transactions contemplated hereby.
4.2 AUTHORIZATION. (i) With respect to any Transferor that is not a
natural person, such Transferor has full power and authority to execute and
deliver this Agreement, and to perform its obligations hereunder and no
additional authorization or consent is required in connection with the
execution, delivery and performance by such Transferor of this Agreement. (ii)
With respect to any Transferor that is a natural person, such Transferor has the
legal capacity and authority to enter into this Agreement and to perform its
obligations hereunder and no additional authorization or consent is required in
connection with the execution, delivery and performance by such Transferor of
this Agreement.
4.3 NONCONTRAVENTION. Except as set forth in Schedule 4.3 hereto,
the execution, delivery and performance by such Transferor of this Agreement,
and the consummation of the transactions contemplated hereby, does not and will
not (i) violate, in the case of any Transferor that is not a natural Person, any
organizational documents of such
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Transferor, (ii) conflict with, or result in a breach of, or constitute a
default under, or result in the termination, cancellation or acceleration
(whether after the filing of notice or lapse of time or both) of any right or
obligation of such Transferor under, or to a loss of any benefit to which such
Transferor is entitled under, any agreement, franchise, license, permit,
instrument or undertaking to which such Transferor is a party or by which it is
bound or to which any of its assets are subject, including any Governmental
Authorization, or result in the creation of any Encumbrance upon any of said
assets, other than in each case under this clause (ii) any violation, conflict,
breach, default, termination, cancellation or acceleration, loss or Encumbrance,
that will not impair or delay such Transferor's ability to perform its
obligations hereunder or (iii) violate or result in a breach of or constitute a
default under any judgment, order, injunction, decree, law, rule, regulation or
other restriction of any court or governmental authority to which such
Transferor is subject, including any Governmental Authorization other than in
each case under this clause (iii), any violation, conflict, breach, default,
termination, cancellation, acceleration, loss or Encumbrance that would not
impair or delay any such Transferor's ability to perform its obligations
hereunder.
4.4 GOVERNING DOCUMENTS OF TRANSFEROR. Such Transferor (other than
GE Capital) has heretofore delivered to the Limited Partnership true and
complete copies of its organizational documents, if any, each as in full force
and effect on the date hereof.
4.5 BINDING EFFECT. This Agreement constitutes a valid and legally
binding obligation of such Transferor enforceable against such Transferor in
accordance with its terms, subject to the availability of the discretionary
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remedy of specific performance and to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights.
4.6 CONSENTS AND APPROVALS. Except (i) any filings under the H-S-R
Act, (ii) any consent, approval, permit, license, waiver or other authorization
required as a result of the particular nature of the business or assets of the
Limited Partnership and (iii) as specifically set forth in Schedule 4.6 hereto,
no consent, approval, permit, license, waiver or other authorization or approval
is required to be obtained by such Transferor from, and no notice or filing is
required to be given by such Transferor to or made by such Transferor with, any
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by such Transferor of
this Agreement, and the consummation by such Transferor of the transactions
contemplated hereby (together with the consents, approvals, permits, licenses,
waivers, authorizations, notices and filings referred to in Section 3.7 hereof,
the "REQUIRED APPROVALS").
4.7 TITLE TO INTERESTS. Such Transferor has good and valid title to
the Interests held by such Transferor as set forth in Schedule 4.7 hereto and is
conveying the Interests held by such Transferor free and clear of any
Encumbrances (other than liens securing indebtedness under the USC Senior Loan
Agreement which GE Capital agrees shall be released upon the occurrence of the
condition set forth in Section 6.1(e)) and to the best of such Transferor's
knowledge, except as previously disclosed (but subsequent to the date of the
Stock Purchase Agreement) to V Cable GP, Inc. and V Cable, Inc. in writing, no
other interests in the Partnership other than as set forth on Schedule 4.7 are
in existence.
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4.8 FINDER'S FEES. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission from such
Transferor in connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS
5.1 CONSENTS AND APPROVALS. The parties hereto agree to cooperate
with each other to secure as promptly as practicable all Required Approvals.
All costs of obtaining the Required Approvals shall be borne by the Limited
Partnership. The Limited Partnership shall file within sixty (60) days of the
date hereof the Notification Form under the H-S-R Act with respect to the
transactions contemplated hereby. Each Transferor agrees to cooperate with the
Limited Partnership in the preparation and filing of such Notification Form.
5.2 REASONABLE EFFORTS. Each party hereto shall take all reasonable
steps to fulfill the conditions precedent to such party's obligations and to
each other party's obligations hereunder to the extent applicable to such party.
5.3 NOTICES OF CERTAIN EVENTS. (i) During the period beginning on
the date hereof and ending on the Closing Date, each Transferor shall promptly
notify the Limited Partnership, V Cable and V Cable GP, Inc. and each other
Transferor of:
(a) any notice or other communication received by such
Transferor from any Person alleging that the consent of such person is
or may be required in connection with the transactions contemplated by
this Agreement (other than notice in respect of a consent disclosed in
any Schedule hereto);
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(b) any notice or other communication received by such
Transferor from any governmental authority in connection with the
transactions contemplated by this Agreement;
(c) any actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge of such
Transferor, threatened against such Transferor insofar as they relate
to the transactions contemplated by this Agreement; and
(d) any fact or circumstance known to such Transferor which
would prevent such Transferor from meeting the conditions set forth in
Section 6.1 hereof;
PROVIDED, HOWEVER, that no such notification shall in any way limit the
representations and warranties set forth in this Agreement.
(ii) During the period beginning on the date hereof and ending on the
Closing Date, the Limited Partnership, V Cable and V Cable GP, Inc. shall
promptly notify each Transferor of:
(a) any notice or other communication received by the
Limited Partnership from any Person alleging that the consent of such
person is or may be required in connection with the transactions
contemplated by this Agreement (other than notice in respect of a
consent disclosed in any Schedule hereto);
(b) any notice or other communication received by the
Limited Partnership from any governmental authority in connection with
the transactions contemplated by this Agreement;
(c) any actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge of the
Limited Partnership, threatened against the Limited Partnership
insofar as they relate to the transactions contemplated by this
Agreement; and
(d) any fact or circumstance known to the Limited
Partnership which would prevent the
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Limited Partnership from meeting the conditions set forth in Section 6.2
hereof;
PROVIDED, HOWEVER, that no such notification shall in any way limit the
representations and warranties set forth in this Agreement.
5.4 ACCESS TO BOOKS AND RECORDS. The Limited Partnership agrees to
provide each Transferor, his or its accountants, counsel and other
representatives, during normal business hours and upon reasonable notice, for a
period of ten years after the Closing Date, reasonable access to, and to copy at
such Transferor's expense, the books, records, income tax returns, contracts and
other underlying data and documentation relating to the Limited Partnership and
to make available to such Transferor personnel of the Limited Partnership in
such Transferor's review thereof for the purpose of enabling such Transferor
(i) to determine and calculate any tax liabilities in connection with the
Interests or (ii) to defend or prosecute any actual or threatened litigation
arising out of or relating to such Transferor's Interest. A Transferor may, by
written notice, extend such ten-year period for another ten years if reasonably
necessary to protect the Transferor's rights under clauses (i) and (ii) in the
preceding sentence. The Limited Partnership agrees that, for such ten-year
period (or as extended), it will preserve and keep intact all such books and
records. Except as required by law, with respect to any such access, each
Transferor agrees to treat all information regarding the Limited Partnership and
the Interests as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except in connection with determining and
calculating any tax liabilities or in defending or prosecuting any action
arising out of or relating to such Transferor's Interest and such Transferor
will, except as required by law, use all
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reasonable efforts to maintain such confidentiality, including, without
limitation, instructing its employees and agents who have had access to such
information, unless such information is now, or is hereafter disclosed, through
no act or omission of such party, in any manner making it available to the
general public. The Limited Partnership and each Transferor agrees that GE
Capital shall continue to have the benefits of Sections 12.3 and 12.4.3 of the
Limited Partnership Agreement for so long and only for so long as is necessary
to resolve with the Internal Revenue Service or any state or local tax authority
all matters regarding the taxation of the Limited Partnership during those tax
years that any Transferor was a partner of the Limited Partnership. Nothing in
this Section 5.4 shall limit GE Capital's rights or reduce CSC's obligations
under Section 5.6(h).
5.5 TAXES. Each Transferor agrees that Taxes imposed upon a
Transferor arising from or incident to the transfer of such Transferor's
Interests shall be paid by such Transferor.
5.6 INCOME TAX REPORTING. (i) The parties agree that they will each
report the transactions provided for in this Agreement for income tax purposes
in accordance with the following agreements:
(a) REDEMPTION TRANSACTION. The parties hereto agree that the
redemption of the Interest of each Transferor will be treated, for income
tax purposes, as a complete liquidation of such Transferor's interest in
the Limited Partnership. In connection therewith, GE Capital agrees that
it will report for federal income tax purposes gain or income of at least
$134,000,000, or $132,000,000 if the Limited Partnership's 1992 Federal
income tax return is not amended. Moreover, the parties recognize that
Section
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751(b) of the Code may apply to the transaction provided for in this
Agreement, and, accordingly, agree that (i) the value of the Limited
Partnership's assets (other than the Government Authorizations and the
Limited Partnership's goodwill) is equal to such assets' adjusted basis for
federal income tax purposes; and (ii) any excess of the amount received by
a Transferor over its adjusted basis, for federal income tax purposes, in
its Interest is attributable to the excess of the value of the Limited
Partnership's Government Authorizations and goodwill over their respective
adjusted basis.
(b) CLOSING OF BOOKS. The parties agree that for purposes of
reporting each Transferor's share of the Limited Partnership's income or
loss (and items thereof) for the taxable year in which the Closing occurs,
the Limited Partnership shall close its books as of the day before the
Closing Date. The Transferors will be allocated their respective share of
the Limited Partnership's income or loss for the portion of the taxable
year ending on the day before the Closing Date in accordance with such
closing of the books; PROVIDED, HOWEVER, that for this purpose such income
or loss shall include (x) any item of income or loss recognized or realized
by the Limited Partnership in connection with the transactions provided for
in this Agreement (I.E., the redemption of the Interests of the
Transferors) other than income or loss recognized by the Limited
Partnership pursuant to Section 751 of the Code (provided, however, that
this clause (x) shall not apply to any Transferor other than GE Capital)
and (y) any income or gain recognized by the Limited Partnership in
connection with the contribution or termination of the Junior Subordinated
Loan Agreement,
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dated as of December 31, 1992, between the Limited Partnership and GE
Capital shall be specially allocated to GE Capital. Except as provided in
the preceding sentence, the Limited Partnership (and the partners thereof
other than the Transferors) will be allocated all items of income or loss
of the Limited Partnership for all periods beginning on the Closing Date.
The parties understand that the transactions provided by this Agreement
(I.E., the redemption of the Interests of the Transferors) will not result
in the recognition of any income or loss by the Limited Partnership (other
than income or loss recognized by the Limited Partnership pursuant to
Section 751 of the Code) and agree that the income tax return for the
Limited Partnership for the period including the closing of the
transactions provided for in this Agreement will be filed in a manner
consistent with the understanding.
(ii) GE Capital represents that the gain or income to be recognized
by GE Capital for federal income tax purposes as a result of the redemption of
its interest in the Limited Partnership pursuant to this Agreement (the
"GE Capital Gain") will not be less than $134,000,000, or $132,000,000 if the
Limited Partnership's 1992 Federal income tax return is not amended.
(a) In the event of a breach of the representation contained in
Section 5.6(ii) or the second sentence of Section 5.6(i)(a), GE Capital
shall be liable for and indemnify CSC for the amount of any "Tax Damages"
(as defined below), incurred by CSC resulting therefrom. CSC agrees that
(i) the sole and exclusive remedy for any breach of the representation
contained in Section 5.6(ii) or the second sentence of Section 5.6(i)(a)
shall be to seek Tax Damages and (ii) the liability of GE Capital for any
such breach shall not
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exceed the amount of Tax Damages determined pursuant to this Section
5.6(ii).
(b) A breach shall be considered to occur only if (i) GE Capital
fails to report, for federal income tax purposes, a GE Capital Gain of at
least $134,000,000, or $132,000,000 if the Limited Partnership's 1992
Federal income tax return is not amended, or (ii) there is a
"determination" as such term is defined in Section 1313(a) of the Code with
respect to GE Capital, or the Limited Partnership or the Limited
Partnership or GE Capital executes an Internal Revenue Service Form 870AD,
which, in either case, reduces the amount of the GE Capital Gain.
(c) No breach shall be considered to have occurred to the
extent the decrease in the amount of GE Capital Gain is attributable to any
adjustment made to the federal income tax returns of the Limited
Partnership which is attributable to any item of income, gain, loss or
deduction arising from the ordinary operation of the Limited Partnership's
business for 1992 and to any other item of income, gain, loss or deduction
attributable to any year ending after 1992.
(d) The amount of any breach shall be reduced by the following
items; and no breach will be considered to have occurred if the amount of
these items exceeds the amount of the decrease in the GE Capital Gain:
(v) the amount of income or gain, up to $4,000,000,
recognized for Federal income tax purposes by the Transferors (other
than GE Capital) as a result of the redemption of Interests provided
for by this Agreement (and increased above $4,000,000, but in no event
increased more than $2,000,000, to the extent the Limited Partnership
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actually receives an increase in the basis of its assets of more than
$4,000,000 as a consequence of the redemption of the Interests of such
Transferors);
(w) The aggregate amount of all net operating loss carry
forwards of the consolidated group of corporations of which ECC
Holdings, Inc. ("ECC") is the common parent, generated during taxable
years ending after 1991;
(x) The amount of all net operating loss carryforwards of
ECC actually used, to the extent such amount exceeds the amount
described in (w) above.
(y) The aggregate amount of any tax basis in assets either
used to reduce gain or increase loss realized upon the sale of ECC
assets to a third party or which increases the depreciation,
amortization or other deductions available to ECC or CSC; provided
that the amount thereof shall not be taken into account if already
taken into account pursuant to clauses (w), (x) or (z) of this
subsection (d).
(z) The amount of any adjustment to items of income, gain,
deduction or loss reflected on the Limited Partnership's federal
income tax returns for all taxable years that results in an increase
in the GE Capital Gain.
(e) "Tax Damages" shall mean the excess, if any, of the
aggregate amount of Adjusted Taxes over the aggregate amount of Projected
Taxes, as such terms are defined below. Adjusted Taxes and Projected Taxes
shall be calculated for each taxable year from and after the year in which
a reduction in the GE Capital Gain occurs and results in a breach under
this
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<PAGE>
Section 5.6 until the year in which no deductions or tax basis step up
resulting from the transaction contemplated in this Agreement may be
claimed by the CSC Group (as defined below) or are included in the
carryover effects of a "net operating loss" by the CSC Group. GE Capital
will pay to CSC the amount of Tax Damages determined hereunder for the
first taxable in which there are Tax Damages. For each subsequent taxable
year, GE Capital and CSC shall make payments to one another to the extent
required such that CSC shall have received, in the aggregate, the net
amount of Tax Damages then determined to be owing to CSC through such
subsequent taxable year.
(f) "Projected Taxes" shall mean the federal income tax
liability of the consolidated group of corporations of which CSC is the
common Parent (the "CSC Group"), as shown on the CSC Group's tax returns,
as amended, except that such tax liability shall be recomputed using the
following assumptions:
(y) All federal income tax returns of the Limited
Partnership are true and correct as filed or, where applicable, as
amended as of the date hereof.
(z) CSC had purchased the assets of the Limited Partnership
and ECC on the Closing Date for an amount equal to the amount of
outstanding debt owed to GE Capital on such date. The allocation of
such purchase price shall be as set forth on the tax basis balance
sheet as agreed upon and attached hereto in the form of Schedule 5.6.
No account shall be taken of any loss which might be available in
connection with the liquidation of ECC. For purposes of this
determination, the outstanding amount of GE Capital debt will be
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<PAGE>
considered to be the amount of the debt due under the USC Senior Loan
Agreement (excluding, however, the Zero Coupon Loan and that portion
of the Series B Term Loan required to be assumed by V Cable pursuant
to the terms of the MPA Agreement). All capitalized terms in the
preceding sentence not otherwise defined herein shall have the meaning
assigned to them in the USC Senior Loan Agreement. GE Capital and CSC
agree that the tax basis balance sheet will reflect as an asset
"goodwill" which is neither amortizable nor depreciable and that in
the computation of Adjusted Taxes such asset shall be assumed to be
neither amortizable nor depreciable.
(g) "Adjusted Taxes" shall mean, in the event of a breach of the
representation contained in Section 5.6(ii) or the second sentence of
5.6(i), the federal income tax liability of the CSC Group as shown on its
federal income tax returns, as amended, taking into account the amount of
the reduction in the GE Capital Gain that gives rise to the breach of such
representation, provided that Adjusted Taxes shall not exceed the actual
tax liability of the CSC Group for each taxable year after a reduction in
the GE Capital Gain.
(h) In the event of any claim for damages, CSC shall provide to
GE Capital reasonable access to CSC's tax returns and any workpapers
establishing the existence of Tax Damages. In the event of any audit or
other administrative or judicial proceeding that could result in the
adjustment of items of income, gain, deduction or loss that causes a
reduction of the GE Capital Gain pursuant to which GE Capital would be
obligated to indemnify CSC hereunder, CSC shall provide
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<PAGE>
GE Capital with notice of such proceeding and GE Capital shall participate
in the negotiation, settlement and pursuit of litigation, and GE Capital
shall control all decisions regarding the settlement, resolution or
concession of such proceedings with the reasonable consent of CSC. GE
Capital shall be entitled to reimbursement, with interest, of any funds
paid by GE Capital as Tax Damages, in the event that Tax Damages is later
reduced as a result of any administrative or judicial proceeding.
(i) GE Capital will promptly inform the Limited Partnership and
CSC of the amount of the GE Capital Gain actually reported on its Federal
income tax return for the period in which the redemption contemplated by
this Agreement occurs.
(j) The parties hereto shall cooperate with each other in
connection with the application of this Section 5.6.
(k) On or prior to the Closing Date, each Transferor other than
GE Capital shall advise the Partnership and GE Capital in writing of the
amount of estimated net gain that will be reported by such Transferor
resulting from the redemption pursuant hereto. In making such
determination, such Transferor shall assume it was allocated no gain or
loss for the 1996 year.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The obligations of
the parties hereto to effect the Closing
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<PAGE>
are subject to the satisfaction, except as otherwise indicated, prior to the
Closing of the following conditions:
(a) H-S-R. Any required filings shall have been made and any
required waiting period under the H-S-R Act applicable to the transactions
contemplated hereby shall have expired or been earlier terminated.
(b) NO INJUNCTIONS. No court or governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, or non-appealable judgment, decree, injunction or
other order which is in effect on the Closing Date and prohibits the
consummation of the Closing.
(c) CONSENTS AND APPROVALS. The Limited Partnership shall have
certified to such Transferor that all Required Approvals shall have been
obtained and are in full force and effect, free of material burdensome
conditions or restrictions.
(d) SIMULTANEOUS CLOSING. The closing of each redemption hereunder
is expressly conditioned on the simultaneous closing of each other redemption
hereunder and no such transaction shall close unless all such transactions
close, unless otherwise agreed to in writing by the Limited Partnership and each
Transferor whose transaction is to close; provided, however, that so long as
that portion of the Redemption Price to be paid to any Transferor is not
affected, such agreement may be signed by GE Capital and IMP (on behalf of each
Transferor other than GE Capital).
(e) SENIOR LOAN REPAYMENT. All principal, interest and other
obligations under the USC Senior Loan Agreement shall be repaid prior to or
simultaneously with the Closing.
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<PAGE>
The foregoing conditions set forth in this Section 6.1 may be waived
by IMP on behalf of itself and each other Transferor other than GE Capital, but
may not be waived on behalf of GE Capital without GE Capital's consent.
6.2 CONDITIONS TO THE OBLIGATIONS OF THE LIMITED PARTNERSHIP. The
obligation of the Limited Partnership to effect the Closing is subject to the
satisfaction (or waiver) prior to the Closing, of the following conditions,
except for those conditions which must by their terms be true as of the Closing,
in which case the Limited Partnership's obligation is subject to such conditions
being true as of the Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Transferor contained herein shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects as of the Closing, as if made as of the Closing, and the Limited
Partnership shall have received a certificate from each Transferor to such
effect dated the Closing Date and duly executed by such Transferor, together
with such backup documentation as the Limited Partnership may reasonably
request.
(b) COVENANTS. The covenants and agreements of each Transferor to be
performed on or prior to the Closing shall have been duly performed in all
material respects, and the Limited Partnership shall have received a certificate
to such effect dated the Closing Date from each Transferor and duly executed by
such Transferor, together with such backup documentation as the Limited
Partnership may reasonably request.
(c) LEGAL OPINIONS. On or prior to the Closing, the Limited
Partnership shall have received from each
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<PAGE>
Transferor an opinion of counsel reasonably satisfactory to the Limited
Partnership, dated as of the date hereof, substantially to the effect that
(provided that such counsel need express no opinion with respect to
Section 5.6(b)):
(i) With respect to a Transferor that is not a natural
Person, such Transferor is duly organized and validly existing under
the laws of the state of its organization;
(ii) With respect to any Transferor that is not a natural
Person, such Transferor has full corporation, partnership or trust
power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder;
(iii) Except as set forth in Schedule 4.3 hereto, the
execution, delivery and performance by such Transferor of this
Agreement, and the consummation of the transactions contemplated
hereby, do not and will not (i) violate, in the case of any Transferor
that is not a natural Person, any organizational documents of such
Transferor, (ii) conflict with, or result in a breach of, or
constitute a default under, any agreement to which such Transferor is
a party or by which it is bound or to which any of its assets are
subject, in each case known to such counsel other than in each case
under this clause (ii) any violation, conflict, breach, or default
that will not impair or delay such Transferor's ability to perform its
obligations hereunder or (iii) violate any New York, [law of
jurisdiction of organization] or federal law, rule or regulation or
any judgment, order, injunction, decree, or other restriction of any
court or governmental authority to which such Transferor is subject
known to such counsel, other than in each case under this clause
(iii), any violation, conflict, breach, default, termination,
cancellation, acceleration, or loss that would not impair or delay,
any such Transferor's ability to perform its obligations hereunder;
provided, that, such counsel need express no opinion with respect to
any (i) consents or approvals and authorizations that may be required
pursuant to any media license or any laws, rules or regulations of the
United States or any state thereof or locality therein relating
particularly to the construction, ownership, operation, promotion,
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<PAGE>
extension or other exploitation of any type of communication, broadcasting
or transmission system, including without limitation, any cable television
system, (ii) any violation that may result from the nature of the business
or assets of the Limited Partnership, (iii) fraudulent transfer laws, and
(iv) bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights; and
(iv) Such Transferor has duly executed and delivered this
Agreement and this Agreement constitutes a valid and legally binding
obligation of such Transferor enforceable against such Transferor in
accordance with its terms, subject to the availability of the
discretionary remedy of specific performance and to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights.
(d) LITIGATION. No litigation, investigation or other proceeding
shall have been commenced or threatened which questions the validity or legality
of any of the transactions contemplated hereby.
(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred prior
to the Closing any change, or any development involving a prospective change, in
or affecting the assets, financial condition or results of operation of the
System or the Limited Partnership that has had or could reasonably be expected
to have a Material Adverse Effect.
(f) UCC REPORT. On the Closing Date, there shall have been delivered
by each Transferor, a report, dated as of the most recent practicable date,
showing an absence of Uniform Commercial Code filings with respect to such
Transferor's Interest.
6.3 CONDITIONS TO THE OBLIGATIONS OF TRANSFEROR. The obligation of
each Transferor, only with respect to such Transferor, to effect the Closing is
subject to the satisfaction (or waiver by such Transferor or by IMP on behalf of
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<PAGE>
any such Transferor other than GE Capital) prior to the Closing of the following
conditions, except for those conditions which must by their terms be true as of
the Closing, in which case such Transferor's obligation is subject to such
conditions being true as of the Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Limited Partnership and, with respect to the obligation of GE
Capital to effect the Closing, each other Transferor contained herein shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing, as if made as of the
Closing, and such Transferor shall have received a certificate to such effect
dated the Closing Date and executed by an officer of the Limited Partnership.
(b) COVENANTS. The covenants and agreements of the Limited
Partnership and, with respect to the obligation of GE Capital to effect the
Closing, each other Transferor to be performed on or prior to the Closing shall
have been duly performed in all material respects, and such Transferor shall
have received a certificate to such effect dated the Closing Date and executed
by an officer of the Limited Partnership.
(c) LEGAL OPINIONS. (i) Such Transferor shall have received the
opinion of Sullivan & Cromwell or other counsel reasonably satisfactory to a
majority of the Transferors, dated as of the Closing Date, addressed to such
Transferor, substantially to the effect that (provided that such counsel need
express no opinion with respect to Section 5.6(b)):
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<PAGE>
(A) The Limited Partnership has been duly organized and is
an existing limited partnership in good standing under the laws of the
State of Delaware;
(B) The Limited Partnership has all necessary partnership
power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder;
(C) This Agreement has been duly authorized, executed and
delivered by the Limited Partnership and constitutes a valid and
legally binding obligation of the Limited Partnership enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles affecting creditors' rights; and
(D) The execution, delivery and performance by the Limited
Partnership of this Agreement and the consummation of the transactions
contemplated hereby will not violate any New York, Delaware corporate
or Federal law or regulation, in each case applicable to the Limited
Partnership; provided, that, such counsel need express no opinion with
respect to filings under the H-S-R Act or to (i) any consents,
approvals or authorizations (including those set forth in Schedule 3.7
to this Agreement) that may be required pursuant to any media license
or any laws, rules or regulations of the United States or any state
thereof or locality therein relating particularly to the construction,
ownership, operation, promotion, extension or other exploitation of
any type of communication, broadcasting or transmission system,
including without limitation, any cable television system, (ii) any
violation that may result from the nature of the business or assets of
the Limited Partnership, (iii) fraudulent transfer laws, and (iv)
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights.
(ii) Such Transferor shall have received the opinion of Robert S.
Lemle, Esq., Executive Vice President, General Counsel and Secretary of CSC,
dated as of the
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<PAGE>
Closing Date, addressed to such Transferor, substantially to the effect that:
(A) The Limited Partnership is duly qualified to do
business in each jurisdiction in which it owns or leases property, or
in which the conduct of its business requires it to so qualify, except
where the failure to do so would not have a material adverse effect on
the business, of the Limited Partnership.
(B) The execution, delivery and performance by the Limited
Partnership of this Agreement and the consummation of the transactions
contemplated hereby (i) will not violate any statute or rule or
regulation or any order known to such counsel of any court or
governmental instrumentality binding upon the Limited Partnership,
(ii) will not conflict with or result in a breach of termination of,
or constitute a default under any indenture, mortgage, deed of trust,
lease, agreement or other instrument known to such counsel to which
the Limited Partnership may be a party or by which any of its
properties may be bound, and (iii) except as set forth in Schedule 3.7
to this Agreement and except for filings under the H-S-R Act, do not
require the consent, authorization or approval or other action or
filing with any federal governmental body, agency or authority.
ARTICLE VII
SURVIVAL
Except for those representations, warranties and covenants set forth
in Sections 2.6, 2.7, 4.7, 5.4, 5.5, 5.6 and 9.12, the representations,
warranties and covenants contained in this Agreement shall not survive the
Closing. The representations, warranties and covenants set forth in
Sections 2.6, 2.7, 5.4, 5.5, 5.6(i) and 9.12 shall survive only until the
expiration of the applicable statute of limitations and the representations,
warranties and obligations of the parties set forth in Sections 4.7 and 5.6(ii)
shall survive indefinitely.
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<PAGE>
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by agreement of the Limited Partnership, IMP on behalf of each
other Transferor (other than GE Capital) and GE Capital;
(b) by either the Limited Partnership or any Transferor if there
shall be in effect on the Closing Date any law or regulation that prohibits the
consummation of the Closing or if consummation on the Closing Date of the
Closing would violate any non-appealable final order, decree or judgment of any
court or governmental body having competent jurisdiction; or
(c) by the Limited Partnership, GE Capital or IMP in the event the
Closing Date shall not have occurred on or prior to March 18, 1997.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement in accordance with Section 8.1 hereof, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability to
the other party hereto or their respective Affiliates, trustees, directors,
officers or employees, except for the obligations of the parties hereto
contained in this Section 8.2 and in Section 9.6 hereof, and except that nothing
herein will relieve any party from liability for any breach of this Agreement
prior to such termination.
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<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by telecopier, PROVIDED that the telecopy is promptly confirmed by
telephone confirmation thereof, to the person at the address set forth below, or
such other address as may be designated in writing hereafter, in the same
manner, by such person:
To the Limited Partnership:
U.S. Cablevision Television Group, L.P.
c/o CABLEVISION SYSTEMS CORPORATION
One Media Crossways
Woodbury, New York 11797
Telephone: (516) 496-1532
Telecopy: (516) 496-1780
Attn: General Counsel
With copies to:
1) SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: John P. Mead
Patricia A. Ceruzzi
2) GENERAL ELECTRIC CAPITAL
CORPORATION
3379 Peachtree Road, N.E.
Suite 600
Atlanta, GA 30326
Telecopy: (404) 814-3104
Attn: Michael Cummings
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<PAGE>
3) WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8167
Telecopy: (212) 310-8007
Attn: William M. Gutowitz
Norman D. Chiritie
To Transferors:
If to USCP: U.S. Cable Partners
350 Park Avenue
New York, New York 10022
Attn: I. Martin Pompadur
With a copy to: Proskauer Rose
Goetz & Mendelson LLP
1585 Broadway
New York, New York
Attn: Lawrence H. Budish
If to PT1: POMPADUR TRUST NO. 1
10 Highland Farm Road
Greenwich CT 06831
Attn: I. Martin Pompadur
With a copy to: Proskauer Rose
Goetz & Mendelson LLP
1585 Broadway
New York, New York
Attn: Lawrence H. Budish
If to RULE TRUST: THE RULE TRUST
Attn: c/o Hayes, Hume, Petas,
Richards & Cohanne
10000 Santa Monica
Blvd. Suite 450
Los Angeles, California
90069
Telecopy:
Attention: Mary
Muir, Esq.
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<PAGE>
If to EHS: Elliot H. Stein
Attn: c/o Commonwealth
Partners
245 Park Avenue
New York, NY 10017
If to IMP: I. Martin Pompadur
10 Highland Farm Road
Greenwich, CT 06831
With a copy to: Proskauer Rose
Goetz & Mendelson LLP
1585 Broadway
New York, New York
Attn: Lawrence H. Budish
If to GE
Capital: GENERAL ELECTRIC CAPITAL
CORPORATION
3379 Peachtree Road, N.E.
Suite 600
Atlanta, GA 30326
Telecopy: (404) 814-3104
Attn: Michael Cummings
With a copy to:
WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8167
Telecopy: (212) 310-8007
Attn: William M. Gutowitz
Norman D. Chirite
9.2 AMENDMENT; WAIVER. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Limited Partnership and each
Transferor, or in the case of a waiver, by the party against whom the waiver is
to be effective; PROVIDED, HOWEVER, that for any amendment or waiver that does
not affect that
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<PAGE>
portion of the Redemption Price to be paid to any Transferor, such amendment or
waiver may be signed by IMP on behalf of each other Transferor (other than GE
Capital) and by GE Capital. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
9.3 ASSIGNMENT. No party to this Agreement may assign any of it
rights or obligations under this Agreement without the prior written consent of
the other parties hereto.
9.4 ENTIRE AGREEMENT. This Agreement (including all Schedules and
Annexes hereto) contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters.
9.5 PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Except as provided in the Section 9.6, nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the Limited Partnership, each Transferor, or their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
9.6 THIRD PARTY BENEFICIARY. Each of the parties hereto acknowledge
and agree that they intend Cablevision Systems Corporation and its subsidiaries
to be a third party beneficiary of the agreements contained herein and that
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<PAGE>
Cablevision Systems Corporation shall be entitled to enforce the provisions of
this Agreement to the same extent as if it were a party hereto.
9.7 EXPENSES. Except as otherwise provided in this Agreement or the
Stock Purchase Agreement, each of the parties hereto shall bear its own expenses
incurred in connection with this Agreement and with the performance of its
obligations hereunder.
9.8 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
9.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
9.10 HEADINGS. The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
9.11 SEVERABILITY. The unenforceability or invalidity of any
paragraph or subparagraph of this Agreement shall not affect the enforceability
or validity of the balance of this Agreement.
9.12 FURTHER ASSURANCES. Each Transferor, on the one hand, and the
Limited Partnership, on the other, agree, at any time and from time to time
after the Closing, upon the request of the Limited Partnership, at the cost and
expense of the Limited Partnership, to do, execute, acknowledge and deliver, or
to cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and
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assurances as may be required for the better assigning, transferring, conveying,
and confirming to the Limited Partnership, or to its successors and assigns, or
for the aiding, assisting, collecting and reducing to possession of, any or all
of the Interests. Notwithstanding anything to the contrary contained herein and
in recognition of the nature of this Agreement, the parties hereto agree that
the Limited Partnership is not assuming any liabilities, contingent or
otherwise, of such Transferor.
9.13 CONSENT TO REDEMPTION. By his execution hereof, each party
hereto expressly consents to the execution of this Agreement by the Limited
Partnership and each other party hereto and to the consummation of the
transaction contemplated hereby for all purposes for which such consent may be
necessary or desirable.
9.14 EFFECTIVENESS. Notwithstanding anything herein to the contrary,
GE Capital shall have no obligations or liability hereunder unless and until the
Prepayment Transactions shall have occurred under the Second Amended and
Restated Agreement of Limited Partnership of the Limited Partnership dated as of
the date hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.
U.S. CABLE TELEVISION GROUP, L.P.
V CABLE GP, INC.
By: /s/ Barry O'Leary
------------------
Name: Barry O'Leary
Title: Senior Vice President,
Finance and Treasurer
U.S. CABLE PARTNERS
By: IMP CABLE MANAGEMENT, INC.,
a general partner
By: /s/ I. Martin Pompadur
----------------------
Name: I. Martin Pompadur
Title: President
GOLDEN HOLDINGS INC.,
a general partner
By: /s/ I. Martin Pompadur
----------------------
Name: I. Martin Pompadur
Title: President
/s/ Elliot H. Stein, Jr.
------------------------
Elliot H. Stein, Jr.
/s/ I. Martin Pompadur
----------------------
I. Martin Pompadur
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POMPADUR TRUST NO. 1
By: /s/ Marian Pompadur
-------------------
Marian Pompadur, Trustee
By: /s/ Bertram A. Abrams
---------------------
Bertram A. Abrams, Trustee
By:
------------------------
Jana Pompadur, Trustee
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Thomas P. Waters
--------------------
Name: Thomas P. Waters
Title: Vice President
THE RULE TRUST DATED
JUNE 11, 1987
By: /s/ Betty L. Rule
-----------------
Betty L. Rule, Trustee
V CABLE, INC.
By: /s/ Barry O'Leary
------------------
Name: Barry O'Leary
Title:
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<PAGE>
SCHEDULE 3.6
LAWSUITS; CLAIMS
[NONE]
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<PAGE>
SCHEDULE 4.3
Noncontravention
[NONE]
-43-
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SCHEDULE 3.7
SCHEDULE 4.6
CONSENTS AND APPROVALS
FRANCHISE CONSENTS
A. KENTUCKY REGION
10-31-95
SUBSCRIBERS
-----------
1. Crittenden, KY 212
2. Guthrie, KY 345
3. Marion, KY 1,092
4. Salem, KY 212
5. Smithton, IL 414
---
TOTAL KENTUCKY 2,275
B. MISSOURI REGION
10-31-95
SUBSCRIBERS
-----------
1. Excelsior Springs, MO 2,809
2. Marshfield, MO 745
3. Rogersville, MO 178
4. Seymour, MO 241
5. Willard, MO 422
6. Cameron, MO 1,518
-----
TOTAL MISSOURI 5,914
C. NORTH CAROLINA REGION
10-31-95
SUBSCRIBERS
-----------
1. Ashe County, NC 1,674
2. Chowan County, NC 633
3. Edenton, NC 1,829
4. Hertford, NC 722
5. Perquimans County, NC 714
6. Washington County, NC 689
7. Jefferson, NC 560
8. Henderson County, NC* 15,035
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9. Hendersonville, NC* 2,333
10. Laurel Park, NC* 784
11. West Jefferson, NC* 589
------
TOTAL NORTH CAROLINA 25,707
D. FLORIDA REGION
10-31-95
SUBSCRIBERS
-----------
1. Mobile, AL (city) 221
2. Santa Rosa County, FL 9,592
3. Tyndall Air Force Base, FL 1,025
4. Whiting Naval Station, FL 234
5. Brewton, AL* 2,157
6. Clarke County, AL* 65
7. Evergreen, AL* 1,203
8. Havana, FL* 601
9. Jackson, AL* 1,752
10. Monroe County, AL* 172
11. Pensacola NAS, FL* 719
12. Thomasville, AL* 1,578
13. York County, AL 886
------
TOTAL FLORIDA 19,952
E. ALABAMA REGION*
1. Louisville, MS 2,443
- ---------------------------------------------------------------
- ---------------------------------------------------------------
TOTAL SUBSCRIBERS 56,240
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------
* Approval necessary in connection with an Essex roll-up.
-45-
<PAGE>
SCHEDULE 4.7
REDEMPTION AGREEMENT
SCHEDULE A
U.S. CABLE TELEVISION GROUP, L.P.
Names of Partners, Type of Partner,
Percentage Interest and Class of Partnership Interest
Type of Partner Initial
(i.e., general or Percentage Class of
Partner limited) Interest Interests
------- ----------------- ---------- ---------
V Cable GP, Inc. Class I General 1% Class I General
c/o Cablevision Partner, a general Partnership
Systems Corporation partner Interest
One Media Crossways
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
V Cable, Inc. Class I Limited 19% Class I Limited
c/o Cablevision Systems Partner, a limited Partnership
Corporation partner Interest
One Media Crossways
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
U.S. Cable Partners Class II General 1% Class II General
350 Park Avenue Partner, a general Partnership
New York, partner Interest
New York 10022
Attention: I. Martin
Pompadur
Telecopy: (212)
980-8374
I. Martin Pompadur Class II Limited 2.71586% Class II Limited
10 Highland Farm Road Partner, a limited Partnership
Greenwich partner Interest
CT 06831
Telecopy: (203)
622-4876
-46-
<PAGE>
Type of Partner Initial
(i.e., general or Percentage Class of
Partner limited) Interest Interests
------- ----------------- ---------- ---------
The Rule Trust dated Class II Limited 3.44556% Class II Limited
June 11, 1987 Partner, a limited Partnership
c/o Hayes, Hume, Petas, partner Interest
Richards & Cohanne
10000 Santa Monica
Blvd. Suite 450
Los Angeles, California
90069
Telecopy:
Attention: Mary
Muir, Esq.
Pompadur Trust No. 1 Class II Limited 0.72898% Class II Limited
10 Highland Farm Road Partner, a limited Partnership
Greenwich CT partner Interest
06831
Attention: I. Martin
Pompadur
Telecopy: (203)
622-4876
Elliot H. Stein, Jr. Class II Limited 0.10960% Class II Limited
c/o Commonwealth Partner, a limited Partnership
Partners partner Interest
245 Park Avenue
New York, NY 10017
Telecopy:
General Electric Class III Limited 0% Class III Limited
Capital Corporation Partner, a limited Partnership
260 Long Ridge Road partner Interest
Stamford, Connecticut
06902
Attention: Region
Operations Manager
and John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047, respectively
-47-
<PAGE>
Type of Partner Initial
(i.e., general or Percentage Class of
Partner limited) Interest Interests
------- ----------------- ---------- ---------
General Electric Class IV Limited 72% Class IV Limited
Capital Corporation Partner, a limited Partnership
260 Long Ridge Road partner Interest
Stamford Connecticut
06902
Attention: Region
Operations Manager and
John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047, respectively
General Electric Class V Limited 0% Class V Limited
Capital Corporation Partner, a limited Partnership
260 Long Ridge Road partner Interest
Stamford Connecticut
06902
Attention: Region
Operations Manager and
John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047, respectively
V Cable, Inc. Class VI Limited 0% Class VI Limited
c/o Cablevision Partner, a limited Partnership
Systems Corporation partner Interest
One Media Crossways
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
-48-
<PAGE>
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
U.S. CABLE TELEVISION GROUP, L.P.
Dated as of
March 18, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 THE LIMITED PARTNERSHIP. . . . . . . . . . . . . . . . . . . . 4
1.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Certificate of Limited Partnership . . . . . . . . . . . . . 4
1.3 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Principal Offices. . . . . . . . . . . . . . . . . . . . . . 5
1.6 Registered Office; Agent for Service of Process. . . . . . . 5
1.7 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Term of the Partnership. . . . . . . . . . . . . . . . . . . 6
1.9 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Other Definitions. . . . . . . . . . . . . . . . . . . . . .18
ARTICLE 3 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .18
ARTICLE 4 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .19
ARTICLE 5 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .19
ARTICLE 6 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . .19
6.1 Percentage Interests . . . . . . . . . . . . . . . . . . . .19
6.2 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.3 Capital Contributions. . . . . . . . . . . . . . . . . . . .19
6.4 Additional Contributions and Withdrawals . . . . . . . . . .21
6.5 Negative Capital Accounts. . . . . . . . . . . . . . . . . .21
6.6 No Liability for Capital Contributions . . . . . . . . . . .21
6.7 Liability of Limited Partners. . . . . . . . . . . . . . . .22
6.8 No Interest; Consent to Distributions. . . . . . . . . . . .22
6.9 Maintenance of Capital Accounts. . . . . . . . . . . . . . .22
6.10 Additional Limited Partner . . . . . . . . . . . . . . . . .24
6.11 Conversion Right of Class II Partners. . . . . . . . . . . .24
6.12 Withdrawal of Class VI Limited Partner. . . . . . . . . . . . . . .25
ARTICLE 7 CASH DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . .25
7.1 Time of Distributions. . . . . . . . . . . . . . . . . . . .25
7.2 Allocation of Cash Distributions from Partnership
Operations . . . . . . . . . . . . . . . . . . . . . . . .26
7.3 Distribution of Newco Stock. . . . . . . . . . . . . . . . .26
ARTICLE 8 ALLOCATION OF INCOME, GAINS AND LOSSES . . . . . . . . . . . .27
8.1 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . .27
8.2 Allocation of Income and Gains . . . . . . . . . . . . . . .27
8.3 Allocation of Losses . . . . . . . . . . . . . . . . . . . .28
8.3.1 Allocation of Net Losses. . . . . . . . . . . . . . .28
8.3.2 [Intentionally Omitted].. . . . . . . . . . . . . . .30
8.3.3 Allocation of Losses and Gross Income
to the Class I Partners . . . . . . . . . . . . . . 30
8.4 Special Allocations. . . . . . . . . . . . . . . . . . . . .30
8.4.1 Minimum Gain Chargeback . . . . . . . . . . . . . . .31
8.4.2 Partner Minimum Gain Chargeback . . . . . . . . . . .31
-i-
<PAGE>
8.4.3 Qualified Income Offset . . . . . . . . . . . . . . .32
8.4.4 Nonrecourse Deductions. . . . . . . . . . . . . . . .32
8.4.5 Partner Nonrecourse Deductions. . . . . . . . . . . .32
8.4.6 Negation Allocation . . . . . . . . . . . . . . . . .32
8.5 Cancellation of Indebtedness Income. . . . . . . . . . . . .33
8.6 Interest of the General Partners . . . . . . . . . . . . . .33
8.7 Adjustments to Allocations . . . . . . . . . . . . . . . . .33
8.8 Allocation of Interest Income. . . . . . . . . . . . . . . .34
8.9 Allocation of Gain or Loss on Distribution of,
or with Respect to Newco Stock . . . . . . . . . . . . . .34
8.10 Continuation of Treatment. . . . . . . . . . . . . . . . . .34
ARTICLE 9 MANAGEMENT OF THE PARTNERSHIP. . . . . . . . . . . . . . . . .35
9.1 Management of the Partnership's Business . . . . . . . . . .35
9.2 USC Partners' Committee. . . . . . . . . . . . . . . . . . .36
9.3 Extraordinary Decisions. . . . . . . . . . . . . . . . . . .39
9.4 Limitation on Agency . . . . . . . . . . . . . . . . . . . .41
9.5 Approval by Certain Limited Partners . . . . . . . . . . . .42
9.6 Liability of the General Partners and the
Members of USC Partners' Committee . . . . . . . . . . . .42
9.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . .44
9.8 Removal of Manager . . . . . . . . . . . . . . . . . . . . .45
9.9 Contingent Authority of Existing General Partner . . . . . .45
9.10 Other Cable Television Systems . . . . . . . . . . . . . . .45
9.11 Exempt Limited Partners. . . . . . . . . . . . . . . . . . .46
ARTICLE 10 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . .48
10.1 Compensation to Pompadur Representative . . . . . . . . . .48
10.2 Compensation Restricted . . . . . . . . . . . . . . . . . .48
ARTICLE 11 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . .49
ARTICLE 12 ACCOUNTING, ACCOUNTS, RETURNS AND TAX MATTERS . . . . . . . .49
12.1 Books . . . . . . . . . . . . . . . . . . . . . . . . . . .49
12.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . .49
12.3 Filing of Tax Returns and Tax Reports to
Current and Former Partners. . . . . . . . . . . . . . . .49
12.4.1 Elections. . . . . . . . . . . . . . . . . . . . .50
12.4.2 Change of Partners' Interests. . . . . . . . . . . 51
12.4.3 Tax Matters Partner. . . . . . . . . . . . . . . . 51
ARTICLE 13 TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . .54
13.1 General Partners. . . . . . . . . . . . . . . . . . . . . .54
13.2 Transfer of Limited Partner's Interest. . . . . . . . . . .57
13.3 Transferee's Rights . . . . . . . . . . . . . . . . . . . .59
13.4 Allocations and Distributions Subsequent
to Transfer. . . . . . . . . . . . . . . . . . . . . . . .60
13.5 Satisfactory Written Transfer Required. . . . . . . . . . .60
-ii-
<PAGE>
13.6 Substituted Limited Partner . . . . . . . . . . . . . . . .60
13.7 Substitution Required for Vote. . . . . . . . . . . . . . .61
13.8 Effective Date; Schedule A. . . . . . . . . . . . . . . . .62
13.9 Death, Bankruptcy, Dissolution or Incapacity of a
Limited Partner. . . . . . . . . . . . . . . . . . . . . .62
13.10 Option on the Class II Partnership Interests. . . . . . . .62
13.11 Rights Subsequent to Transfer of Interests . . . . . . . . 63
ARTICLE 14 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . .62
14.1 Events of Dissolution . . . . . . . . . . . . . . . . . . .62
14.2 Final Accounting. . . . . . . . . . . . . . . . . . . . . .64
14.3 Liquidation and Distribution of Assets. . . . . . . . . . .64
14.4 Cancellation of Certificate . . . . . . . . . . . . . . . .65
ARTICLE 15 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .65
15.1 Appointment of New General Partner. . . . . . . . . . . . .65
15.2 Duration of Power . . . . . . . . . . . . . . . . . . . . .66
15.3 Further Assurances. . . . . . . . . . . . . . . . . . . . .67
ARTICLE 16 AMENDMENTS TO AGREEMENT . . . . . . . . . . . . . . . . . . .67
ARTICLE 17 MEETINGS OF THE PARTNERS. . . . . . . . . . . . . . . . . . .67
17.1 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . .67
17.2 Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . .68
17.3 Written Consents. . . . . . . . . . . . . . . . . . . . . .68
ARTICLE 18 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . .68
18.1 Method for Notices. . . . . . . . . . . . . . . . . . . . .68
18.2 Routine Communications. . . . . . . . . . . . . . . . . . .69
18.3 Computation of Time . . . . . . . . . . . . . . . . . . . .69
ARTICLE 19 INVESTMENT REPRESENTATIONS. . . . . . . . . . . . . . . . . .69
19.1 Investment Purpose. . . . . . . . . . . . . . . . . . . . .69
19.2 Investment Restriction. . . . . . . . . . . . . . . . . . .69
ARTICLE 20 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . .69
20.1 Entire Agreement. . . . . . . . . . . . . . . . . . . . . .69
20.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . .70
20.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . .70
20.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . .70
20.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . .70
20.6 Separability. . . . . . . . . . . . . . . . . . . . . . . .70
20.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . .70
20.8 Gender and Number . . . . . . . . . . . . . . . . . . . . .70
20.9 Waiver of Partition . . . . . . . . . . . . . . . . . . . .70
20.10 Partnership Tax Reporting . . . . . . . . . . . . . . . . .70
-iii-
<PAGE>
Schedule A - Partners and Percentage Interests
Schedule B - Cable Brokers
Schedule C - Exempt Limited Partners
Annex 1 - Business Plan
Annex 2 - Not Used
Annex 3 - Supplemental Side Letter
-iv-
<PAGE>
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
U.S. CABLE TELEVISION GROUP, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
entered into as of the 18th day of March, 1996 (the "Agreement"), by and among
U.S. Cable Partners, a Delaware general partnership, as a general partner (the
"Existing General Partner" or "Class II General Partner"), V Cable GP, Inc., a
Delaware corporation ("V Cable GP"), as a general partner (the "New General
Partner" or the "Class I General Partner"; and, together with the Existing
General Partner, the "General Partners"), and those Persons who have executed,
either personally or by an attorney-in-fact, this Agreement as limited partners
and who are identified as limited partners and whose addresses are set forth in
Schedule A annexed hereto, as the same may be amended from time to time pursuant
to Section 13.8 hereof (the "Limited Partners"). The General Partners and the
Limited Partners are referred to herein collectively as the "Partners."
WHEREAS, U.S. CABLE TELEVISION GROUP, L.P. (the "Partnership" or
"USC") was formed, in accordance with the Delaware Revised Uniform Limited
Partnership Act, 6 DEL. C. Section 17-101, ET. SEQ. (the "Act"), by the filing
by the Existing General Partner of a Certificate of Limited Partnership with the
office of the Secretary of State of the State of Delaware on October 20, 1987
(as amended or restated, the "Certificate"), to acquire and operate cable
television systems and entities that have interests in cable television systems,
and conduct all activities incidental or reasonably related to any of those
purposes; and
WHEREAS, V Cable, Inc., a Delaware corporation ("V Cable") and the
sole owner of all of the outstanding common stock of the New General Partner,
and the New General Partner have previously acquired a limited partner interest
and general partner interest, respectively, in the Partnership and (ii) the
Partnership has acquired shares of Class B Common Stock of VC Holding, Inc., a
Delaware corporation ("Newco") that as of the date of this Agreement owns and
operates the assets previously held by V Cable and owns all of the outstanding
capital stock of certain subsidiaries of V Cable; and
<PAGE>
WHEREAS, simultaneously with the execution of this Agreement, the
Partnership is entering into a Partnership Interests Redemption Agreement
pursuant to which the interests of the Original Limited Partners, the Existing
General Partner and General Electric Capital Corporation ("GE Capital") will be
redeemed; and
WHEREAS, concurrently with the execution and delivery hereof:
(a) Cablevision Systems Corporation ("CSC") is making an equity
capital contribution to V Cable in the amount of $570,000,000;
(b) V Cable is applying such funds as follows:
(i) to prepay the outstanding principal amount of the Term
Loan under the V Cable Loan Agreement plus interest accrued thereon
in an aggregate amount of $27,797,797;
(ii) to make an equity capital contribution to V Cable GP
in the amount of $2,000,000, which is being contributed concurrently
by V Cable GP to the equity capital of the Partnership on the terms
set forth in this Agreement;
(iii) to make an equity capital contribution to the
Partnership in the amount of $181,605,958 on the terms set forth in
this Agreement; and
(iv) to make an equity capital contribution to Newco in the
amount of $358,596,245;
(c) the Partnership is applying the funds referred to in clause
(b)(iii) immediately above as follows:
(i) to prepay (A) the Accreted Value of the Zero Coupon
Loan (as defined in the USC Senior Loan Agreement) in the aggregate
amount of $98,835,321, less an agreed upon portion of the credit
referred to in Section 2.20 of the VC Holding Loan Agreement as in
effect immediately prior to the date hereof in the amount of
$2,156,571, and (B) to prepay the Allocable Term Loan Amount (as
defined in the USC Senior Loan Agreement) in the aggregate amount of
$812,039; and
(ii) to make an equity capital contribution to Newco in the
amount of $84,115,169; and
-2-
<PAGE>
(d) Newco is applying the funds referred to in clauses (b) (iv) and
(c) (ii) immediately above (i) to prepay in full the outstanding Floating Series
A Loan (as defined in the VC Holding Loan Agreement) plus interest accrued
thereon in the aggregate amount of $248,686,673.09, (ii) to prepay a portion of
the remaining outstanding principal amount of the Series A Term Loan (as defined
in the VC Holding Loan Agreement) plus interest accrued thereon in the aggregate
amount of $126,024,741, and (iii) to make an equity capital contribution to the
Partnership in the amount of $68,000,000 in return for the Class VII Limited
Partnership Interest (as defined herein); and
(e) The Partnership is applying the funds referred to in clauses
(b)(ii) and (d)(iii) to prepay an outstanding principal amount of the Series B
Term Loan (as defined in the USC Senior Loan Agreement) plus interest accrued
thereon in an aggregate amount of $70,000,000; and
(f) CSC is paying to GE Capital on the date hereof the sum of
$742,358.13 as partial payment of or reimbursement for GE Capital's legal fees
and expenses incurred in connection with the (i) consummation of the
transactions contemplated hereby and (ii) execution of the Preferred Stock
Purchase Agreement, dated as of February 2, 1996, by and among GE Capital and
CSC (the "Preferred Stock Purchase Agreement") (the transactions described in
clauses (a), (b), (c), (d), (e) and (f) of this recital are herein referred to
collectively as the "Prepayment Transactions" and the date of the consummation
of the Prepayment Transactions shall hereinafter be referred to as the
"Prepayment Transactions Date"); and
WHEREAS, on the Prepayment Transactions Date the Partnership will
distribute to V Cable the stock of Newco; and
WHEREAS, on the Prepayment Transactions Date CSC is entering into an
Amended and Restated Management Agreement, dated as of March 18, 1996, with the
Partnership, in substantially the form of Exhibit I to the Preferred Stock
Purchase Agreement, providing for the management by CSC of the Partnership and
certain of its subsidiaries (as the same may be amended, modified or
supplemented from time to time, the "Management Agreement"); and
WHEREAS, effective as of the Prepayment Transactions Date, certain
agreements among V Cable, each of those direct and indirect subsidiaries of V
Cable set forth on the signature pages thereto (the "VC Subsidiaries"), the New
General Partner, Newco, the Partnership and GE Capital,
-3-
<PAGE>
in its individual capacity and as Agent and Lender under the loan documents
referred to below, are being terminated or amended, including the MPA Agreement
(as such term is hereinafter defined) and the Exchange Agreement (as such term
is hereinafter defined); and
WHEREAS, effective as of the Prepayment Transactions Date,
GE Capital and USC are (A) modifying that certain Senior Loan Agreement, dated
as of December 31, 1992, between USC and GE Capital (as the same has been and
may be amended, modified or supplemented from time to time, the "USC Loan
Agreement") and (B) terminating that certain Junior Subordinated Loan Agreement,
dated as of December 31, 1992, between USC and GE Capital (as the same may be
amended, modified or supplemented from time to time, the "Junior Subordinated
Loan Agreement"); and
WHEREAS, in connection with all of the foregoing, the Partners
desire to, among other things, (i) provide for such capital contributions and
distributions and (ii) modify the interests of the general and limited partners
in the Partnership; and (iii) make such amendments, restatements and revisions
to the Agreement of Limited Partnership of the Partnership as in effect
immediately prior to the execution and delivery of this Agreement (the "Original
Amended Agreement") as set forth below.
NOW, THEREFORE, to reflect the foregoing, the parties hereto agree
that the Original Amended Agreement hereby is amended and restated, effective as
of the Effective Date (as defined herein) to read in its entirety as follows:
ARTICLE 1
THE LIMITED PARTNERSHIP
1.1 FORMATION. The Partnership was formed as a limited partnership
pursuant to the Act.
1.2 CERTIFICATE OF LIMITED PARTNERSHIP. The Partners, acting
personally or through an attorney-in-fact, shall execute such further documents
(including amendments and/or restatements to the Certificate) and take such
further action as shall be appropriate to comply with all requirements of law
for the formation and operation of a limited partnership in the State of
Delaware and all other counties and states where the Partnership may elect to
conduct its operations. A Limited Partner may obtain a copy
-4-
<PAGE>
of the Certificate or any amendment and/or restatement thereto upon written
request to the New General Partner.
1.3 NAME. The name of the Partnership shall be U.S. CABLE
TELEVISION GROUP, L.P. but the operations of the Partnership may be conducted
under any other name designated by the New General Partner and, in such event,
the New General Partner shall notify the other Partners of such name change
promptly thereafter.
1.4 PURPOSES. The Partnership shall have as its purpose investing,
directly or indirectly through other entities, in the business of owning,
operating, repairing, maintaining, promoting, leasing, selling and otherwise
exploiting cable television systems and conducting related businesses and
activities. Without limiting the foregoing, the Partnership shall have the
power to own shares of Class B Common Stock of Newco and its limited partner
interest in the Missouri Partnership. The Partnership may maintain one or more
offices and engage personnel for the conduct of the Partnership's activities;
and it may enter into, make and perform contracts, agreements and undertakings
of all kinds as may be necessary, advisable or incidental to the carrying out of
its purposes. In addition to the powers specified above, the Partnership shall
have the power to do all and everything necessary, appropriate or advisable for
the accomplishment of or in furtherance of any of the purposes set forth herein,
and to do every other thing or things incidental or appurtenant to or arising
from or connected with any of such purposes; PROVIDED, HOWEVER, that nothing set
forth herein shall be construed as authorizing the Partnership to possess any
purpose or power, or to do any act or thing, forbidden by law to a limited
partnership formed under the laws of the State of Delaware.
1.5 PRINCIPAL OFFICES. The location of the principal offices of
the Partnership shall be c/o Cablevision Systems Corporation, One Media
Crossways, Woodbury, NY 11797-2013, or at such other location as may be selected
from time to time by the New General Partner. If the New General Partner
changes the location of the principal offices of the Partnership, the other
Partners shall be notified promptly thereafter by the New General Partner. The
Partnership may maintain such other offices at such other places as the New
General Partner deems advisable.
1.6 REGISTERED OFFICE; AGENT FOR SERVICE OF PROCESS. The address
of the Partnership's registered office in the State of Delaware is c/o United
Corporate Services, Inc., 15 East North Street, Dover, Kent County, Delaware
-5-
<PAGE>
19901, and the name of the registered agent for service of process on the
Partnership is United Corporate Services, Inc.
1.7 FISCAL YEAR. The fiscal year of the Partnership shall be the
same as the taxable year of the Partnership for federal income tax purposes (the
"Partnership Year"). The taxable year of the Partnership for federal income tax
purposes shall be selected by the Tax Matters Partner (as such term is
hereinafter defined), subject to the approval of the Class III Limited Partner,
the Class IV Limited Partner and the Class V Limited Partner, in accordance with
the rules contained in the Code (as such term is hereinafter defined).
1.8 TERM OF THE PARTNERSHIP. The term of the Partnership commenced
on October 20, 1987 and shall continue until the earlier of (a) December 1,
2030, or (b) the date the Partnership is dissolved in accordance with Article 14
hereof.
1.9 EFFECTIVE DATE. (a) This Agreement shall be effective as
of the date of the occurrence of the following: (i) the consummation of the
Prepayment Transactions and (ii) the delivery to GE Capital of a certificate
from the Partnership to the effect that the USC System Cash Flow Ratio of the
Partnership and its Subsidiaries, after giving effect to the Prepayment
Transactions and this Amendment on a pro forma basis, does not exceed 5.94:1.0.
(b) GE Capital agrees that upon receipt of the certificate from
CSC referred to in clause (a) above, it shall deliver to CSC a receipt to the
effect that the Prepayment Transactions have been consummated.
ARTICLE 2
DEFINITIONS
2.1 DEFINITIONS. The following defined terms used in this
Agreement shall have the respective meanings specified below.
"Accreted Value" means a cumulative, compounded, annual 16% return
on $35,000,000, payable to the Class III Limited Partner, pursuant to
Section 7.2(f) hereof.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such
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Partner's Capital Account as of the end of the relevant Partnership Year, after
giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Partner is
deemed to be obligated to restore to the Partnership pursuant to the next-
to-last sentences of Treas. Reg. Section 1.704-2(g)(1) and Treas. Reg.
Section 1.704-2(i)(5), and
(ii) Debit to such Capital Account the items described in Treas. Reg.
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Affiliate" of a Person means (i) any Person directly or indirectly
controlling, controlled by, or under common control with, such Person, (ii) a
Person owning or controlling ten percent (10%) or more of the outstanding voting
securities of such Person, (iii) any officer, director, partner or employee of
such Person and (iv) any other entity for which any Person identified in clause
(iii) acts in any such capacity.
"Annualized Consolidated System Cash Flow" shall mean for any Fiscal
Quarter, the product of (i) System Cash Flow for such Fiscal Quarter multiplied
by (ii) 4.
"Bankruptcy" of a Partner shall mean (i) the filing by a Partner of
a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
or any other federal or state insolvency law, or a Partner's filing an answer
consenting to or acquiescing in any such petition, (ii) the making by a Partner
of any assignment for the benefit of its creditors or (iii) the expiration of
sixty days after the filing of an involuntary petition under Title 11 of the
United States Code, an application for the appointment of a receiver for the
assets of a Partner, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other federal
or state insolvency law, provided that the same shall not have been vacated, set
aside or stayed within such sixty-day period.
"Bankruptcy Code" shall mean 11 U.S.C. Sections 101 ET SEQ.
"Business Plan" means the ten (10) year Business Plan of the
Partnership, commencing as of the date of the Original Amended Agreement, in the
form annexed hereto as Annex 1.
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"Cablevision" or "CSC" means Cablevision Systems Corporation, a
Delaware corporation.
"Capital Account" means the account maintained for each Partner on
the books of account of the Partnership in accordance with Section 6.9 hereof.
"Capital Contributions" means, with respect to any Partner, the
amount of cash and the fair market value of any other property contributed or
deemed contributed to the capital of the Partnership by or on behalf of such
Partner, net of any liabilities secured by such property that the Partnership is
considered to assume under, or take subject to under, Code Section 752.
"Change in Control" means (i) any Person or group of Persons, other
than I. Martin Pompadur or, at his death, his estate, or a trust or trusts for
the exclusive benefit of his spouse and/or children of which he (or another
person acceptable to the Class III Limited Partner, the Class IV Limited Partner
and the Class V Limited Partner) is the sole trustee, becomes after the date
hereof the beneficial owner (as defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, as in effect
on the date hereof) of a majority of the general partnership interests in the
Existing General Partner, (ii) any Person or group of Persons other than I.
Martin Pompadur or, at his death, his estate, or a trust or trusts for the
exclusive benefit of his spouse and/or children of which he (or another person
acceptable to the Class III Limited Partner, the Class IV Limited Partner and
the Class V Limited Partner) is the sole trustee, obtains effective control over
the management or policies of the Existing General Partner, or (iii) any Person
or group of Persons acquires all or substantially all of the assets of the
Existing General Partner; PROVIDED, HOWEVER, that (A) the purchase by IMP Cable
Management, Inc. of EHR Cable Management, Inc.'s general partner interest in the
Existing General Partner or the redemption of that interest, (B) the transfer of
any of the general partnership interests in the Existing General Partner or of
any or all of the assets of the Existing General Partner to GE Capital or any of
its Affiliates, (C) GE Capital's (or any of its Affiliate's) obtaining effective
control over the management or policies of the Existing General Partner, or (D)
a change in any Class II Partners due to the exercise of the option in Section
13.10 shall not constitute a Change in Control for purposes of this Agreement.
"Class B Common Stock" means the Class B Common Stock, par value
$.01 per share, of Newco.
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"Class I General Partner" means the holder of the Class I General
Partnership Interest that is admitted to the Partnership as a general partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class I
General Partner of the Partnership.
"Class I General Partnership Interest" means a 1% Percentage
Interest in the Partnership, which interest shall be held by the New General
Partner.
"Class I Limited Partner" means the holder of the Class I Limited
Partnership Interest that is admitted to the Partnership as a limited partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class I
Limited Partner of the Partnership.
"Class I Limited Partnership Interest" means a 19% Percentage
Interest in the Partnership, which interest shall initially be held by V Cable.
"Class I Partners" means the Class I General Partner and the Class I
Limited Partner.
"Class I Partnership Interests" means the Class I General
Partnership Interest and the Class I Limited Partnership Interest.
"Class II General Partner" means the holder of the Class II General
Partnership Interest that is admitted to the Partnership as a general partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class II
General Partner of the Partnership.
"Class II General Partnership Interest" means a 1% Percentage
Interest in the Partnership, which interest shall initially be held by the
Existing General Partner. Such Class II General Partnership Interest shall have
a preference on distributions from the Partnership with respect to its Class II
Unrecovered Capital, in accordance with Section 7.2(b) hereof.
"Class II Limited Partner" means a holder of a Class II Limited
Partnership Interest that is admitted to the Partnership as a limited partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as a Class II
Limited Partner of the Partnership.
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"Class II Limited Partnership Interests" means partnership interests
having initially, in the aggregate, a 7% Percentage Interest in the Partnership,
which interests shall initially be held by the Persons specified on Schedule A
hereto, in the proportions set forth opposite each of their respective names.
Any Percentage Interest converted pursuant to Section 6.11 hereof will decrease
the Percentage Interest of the Class II Limited Partners and will increase the
Percentage Interest of the Class IV Limited Partner by a like amount.
"Class II Partners" means the Class II General Partner and the
Class II Limited Partners.
"Class II Partnership Interests" means the Class II General
Partnership Interest and the Class II Limited Partnership Interests.
"Class II Unrecovered Capital" means $4,000,000 minus (i) any
amounts previously distributed to the Class II Partners pursuant to
Section 7.2(b) hereof and (ii) the amount of any senior debt into which any
Class II Limited Partnership Interest is converted pursuant to Section 6.11
hereof.
"Class III Limited Partner" means the holder of the Class III
Limited Partnership Interest that is admitted to the Partnership as a limited
partner and is shown on the books and records of the Partnership and Schedule A
annexed hereto (as such Schedule A may be amended from time to time) as the
Class III Limited Partner of the Partnership.
"Class III Limited Partnership Interest" means an interest in the
Partnership, which interest shall not have a Percentage Interest. The Class III
Limited Partnership Interest shall initially be held by GE Capital. Such
Partnership Interest will have a preference on distributions from the
Partnership with respect to its Class III Unrecovered Capital, in accordance
with Sections 7.2(b) and 7.2(c) hereof, and with respect to its Class III
Unrecovered Accreted Value in accordance with Section 7.2(d) hereof.
"Class III Unrecovered Accreted Value" means the amount of the
Accreted Value minus any amounts previously distributed to the Class III Limited
Partner pursuant to Section 7.2(d) hereof or its predecessor under the Original
Amended Agreement.
"Class III Unrecovered Capital" means $35,000,000 minus any amounts
previously distributed to the Class III Limited Partner pursuant to
Sections 7.2(b) and 7.2(c)
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hereof or its predecessor under the Original Amended Agreement.
"Class IV Limited Partner" means the holder of the Class IV Limited
Partnership Interest that is admitted to the Partnership as a limited partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class IV
Limited Partner of the Partnership.
"Class IV Limited Partnership Interest" means a 72% Percentage
Interest in the Partnership. The Percentage Interest of such Class IV Limited
Partnership Interest shall automatically increase by the amount of Percentage
Interest (on a fully diluted basis), if any, converted by the Class II Partners
into senior debt of the Partnership in accordance with Section 6.11 hereof.
"Class V Limited Partner" means the holder of the Class V Limited
Partnership Interest that is admitted to the Partnership as a limited partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class V
Limited Partner of the Partnership.
"Class V Limited Partnership Interest" means an interest in the
Partnership, which interest shall have no Percentage Interest. The Class V
Limited Partnership Interest shall initially be held by GE Capital. Such Limited
Partnership Interest will have a preference on distributions from the
Partnership with respect to the Class V Unrecovered Capital in accordance with
Section 7.2(e) hereof or its predecessor under the Original Amended Agreement.
"Class V Unrecovered Capital" means (A) the sum of (i) the amount
the Class V Limited Partner is entitled to receive under the Junior Subordinated
Loan Agreement as of the date hereof and (ii) $165,761,293 together with an
amount equal to the amount of interest that would accrue thereon at the same
rate and compounded in the same manner as provided for the Junior Subordinated
Loan minus (B) any amounts previously distributed to the Class V Limited Partner
pursuant to Section 7.2(e) hereof.
"Class VI Limited Partner" means the holder of the Class VI Limited
Partnership Interest that is admitted to the Partnership as a limited partner
and is shown on the books and records of the Partnership and Schedule A annexed
hereto (as such Schedule A may be amended from time to time) as the Class VI
Limited Partner of the Partnership.
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"Class VI Limited Partnership Interest" means an interest in the
Partnership, which interest shall have no Percentage Interest. The Class VI
Limited Partnership Interest has been issued to V Cable as provided in
Section 6.3(f) hereof and is being redeemed and canceled simultaneously with the
Effective Date of this Agreement as provided in Section 6.12.
"Class VII Limited Partner" means the holder of the Class VII
Limited Partnership Interest that is admitted to the Partnership as a limited
partner and is shown on the books and records of the Partnership and Schedule A
annexed hereto (as such Schedule A may be amended from time to time) as the
Class VII Limited Partner of the Partnership.
"Class VII Limited Partnership Interest" means an interest in the
Partnership, which interest shall have no Percentage Interest. The Class VII
Limited Partnership Interest shall initially be held by VC Holding. Such Limited
Partnership Interest will have a preference on distributions from the
Partnership with respect to the Class VII Unrecovered Capital in accordance with
Section 7.2(a) hereof.
"Class VII Unrecovered Capital" means the excess, if any, of the sum
of (i) all capital contributions made by the Class VII Limited Partner pursuant
to Section 6.3(g) hereof and (ii) a preferred return on such capital
contributions computed at a rate per annum equal to 10.62% per annum, compounded
semiannually, over all amounts theretofore distributed to the Class VII Limited
Partner pursuant to Section 7.2(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time (or any corresponding provisions of succeeding law).
"Exchange Agreement" means the Exchange Agreement, dated as of
December 31, 1992, among the New General Partner, V Cable, the Partnership and
GE Capital, in the form annexed hereto as Annex 2 to the Original Amended
Agreement, as the same has been amended, modified or supplemented from time to
time.
"Excluded Assets" shall have the meaning set forth in Section
9.5(c)(vi) hereof.
"Exempt Limited Partners" shall mean those Limited Partners listed
on Schedule C hereto (as such Schedule may be modified from time to time
pursuant to Section 9.11 hereof). The interests of the Exempt Limited Partners
in
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the Partnership are intended to be nonattributable and exempt from reporting
requirements under FCC Regulations. The involvement of Exempt Limited Partners
in the media-related activities of the Partnership shall be restricted as
provided in Section 9.11.
"Existing U.S. Cable Partners" means the Existing General Partner,
The Rule Trust dated June 11, 1987, I. Martin Pompadur, Elliot H. Stein, Jr. and
Pompadur Trust No. 1.
"Extraordinary Decision" shall have the meaning set forth in Section
9.3 hereof.
"FCC" means the Federal Communications Commission.
"FCC Regulations" means all FCC regulations, rules, orders and
policies related to attribution of ownership of cable television systems,
including but not limited to the regulations published at 47 CFR 73.3555 and
76.501.
"Fiscal Quarter" means a calendar quarter ending on March 31,
June 30, September 30 or December 31 of any year.
"Indebtedness" means, for the Partnership and its consolidated
Subsidiaries, (i) all indebtedness of the Partnership and its consolidated
Subsidiaries for borrowed money or for the deferred purchase price of property
or services (including, without limitation, reimbursement and all other
obligations with respect to letters of credit and bankers' acceptances, whether
or not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations of the Partnership and its
consolidated Subsidiaries evidenced by notes, bonds, debentures or similar
instruments, (iii) all indebtedness of the Partnership and its consolidated
Subsidiaries created or arising under any conditional sale or other title
retention agreement with respect to property acquired by the Partnership and its
consolidated Subsidiaries (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iv) all Capital Lease Obligations of the Partnership
and its consolidated Subsidiaries, (v) all Guaranteed Indebtedness of the
Partnership and its consolidated Subsidiaries, (vii) all indebtedness of others
of the types referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise,
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to be secured by) any Lien upon or in property (including, without limitation,
accounts and contract rights) owned by the Partnership or any of its
consolidated Subsidiaries, even though the Partnership or such Subsidiaries has
not assumed or become liable for the payment of such indebtedness, and (vii) all
Unfunded Pension Liabilities and all Withdrawal Liabilities (each as defined in
the USC Senior Loan Agreement) of the Partnership and its consolidated
Subsidiaries;
"Interest" or "Partnership Interest" means interest(s) in the
Partnership owned by a Partner.
"Investment Agreement" means the Investment Agreement, dated as of
June 30, 1992, by and among V Cable, the New General Partner, the Partnership
and the Existing General Partner (as the same may be amended, modified or
supplemented from time to time).
"Junior Subordinated Loan" shall mean the "Loans" as defined in the
Junior Subordinated Loan Agreement.
"Junior Subordinated Loan Agreement" shall have the meaning set
forth in the recitals hereto.
"Manager" means CSC in its capacity as the Manager under the USC
Management Agreement.
"Missouri Partnership" means Missouri Cable Partners, L.P., which
has been formed to hold the assets of the five cable television systems serving
Albany, Bethany, Cameron, Excelsior Springs and Richmond, Missouri pursuant to
that certain Limited Partnership Agreement dated June 30, 1992 between the
Partnership and V-C Mo. G.P., Inc.
"MPA Agreement" means the Management Performance Adjustment and
Interborrower Agreement, dated as of December 31, 1992, among V Cable, the VC
Subsidiaries, the New General Partner, Newco, the Partnership and GE Capital in
the form annexed as Annex 3 to the Original Amended Agreement (as the same has
been amended, modified or supplemented from time to time).
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's net income or loss for federal
income tax purposes, determined in accordance with the accounting methods it has
adopted for such purposes and computed by (i) including any items of non-taxable
income or nondeductible expense of the Partnership, and (ii) excluding any items
of
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income or loss specially allocated pursuant to the provisions of Sections 8.3.3,
8.4, 8.5, 8.8 and 8.9 hereof.
"Nonrecourse Deductions" has the meaning set forth in Treas. Reg.
Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a fiscal year
shall equal the net increase, if any, in the amount of Partnership Minimum Gain
during such fiscal year reduced by any distributions during such fiscal year of
proceeds of a Nonrecourse Liability that are allocable to an increase in
Partnership Minimum Gain, determined according to the provisions of Treas. Reg.
Section 1.704-2(c) and Treas. Reg. Section 1.704-2(h).
"Nonrecourse Liability" has the meaning set forth in Treas. Reg.
Section 1.704-2(b)(3), but shall not include, for any purpose under this
Agreement, any Partnership liability that would otherwise be considered a
Nonrecourse Liability under such Section of the Treasury Regulations to the
extent there is outstanding with respect to such liability guaranties and/or
letter of credit commitments provided by Partners (or VC Guarantors, as defined
in the MPA Agreement) as contemplated by this Agreement.
"Obligations" has the meaning set forth in the USC Loan Agreement.
"Original Limited Partners" shall have the meaning set forth in
Section 6.3(b)(ii) hereof.
"Partner Nonrecourse Debt" has the meaning set forth in Treas. Reg.
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Treas. Reg. Section 1.704-2(i).
"Partner Nonrecourse Deductions" has the meaning set forth in Treas.
Reg. Section 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a fiscal year equals the net increase,
if any, in Partner Nonrecourse Debt Minimum Gain during such fiscal year
attributable to such Partner Nonrecourse Debt, reduced by any distributions
during that fiscal year to the Partner that bears the economic risk of loss for
such Partner Nonrecourse Debt to the extent that such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an increase in
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt,
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determined according to the provisions of Treas. Reg. Section 1.704-2(h) and
Treas. Reg. Section 1.704-2(i).
"Partnership Interests Redemption Agreement" means the Partnership
Interests Redemption Agreement, dated as of the date of, by and among the
Partnership, GE Capital, each of the Class II Partners, and V Cable.
"Partnership Minimum Gain" shall have the meaning set forth in
Treas. Reg. Section 1.704-2(d).
"Partnership Year" shall have the meaning set forth in Section 1.7
hereof.
"Percentage Interest" means, with respect to any Partner, the amount
specified in Schedule A hereto and for each class of Partners shall be equal to
the amount specified in the definition of such class; PROVIDED that the
Percentage Interests of the Partners shall be subject to adjustment as provided
in this Agreement.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Pompadur Representative" shall have the meaning set forth in
Section 6.11 hereof.
"Preferred USC Interest Pledge Agreement" means the Preferred USC
Interest Pledge Agreement, dated as of the Original Amended Agreement hereof,
among V Cable, V Cable GP and GE Capital, as Agent (as the same may be amended,
modified or supplemented from time to time).
"Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary power (other than stock having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned by such Person.
"Supplemental Side Letter" means that certain side letter executed
by Cablevision, V Cable and GE Capital, substantially in the form of Annex 3
hereto.
"System Cash Flow" mean, for the Partnership and its consolidated
Subsidiaries during any period, the consolidated operating income (before
extraordinary items, interest, taxes, depreciation, amortization, non-cash
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charges and other non-cash items and, with respect to the Partnership, amounts
constituting Allocation items (as defined in the Management Agreement) that are
payable (whether or not paid) pursuant to the terms of the Management Agreement,
and expenses and costs directly related to the consummation of the Prepayment
Transactions) of the Partnership and its consolidated Subsidiaries (including,
without limitation, Missouri Cable Partners, L.P.) determined in accordance with
GAAP (as defined in the USC Senior Loan Agreement) and (to the extent consistent
with GAAP) in a manner consistent with the past practices of USC; PROVIDED,
HOWEVER, that such amounts shall be determined on the basis of the
capitalization polices of CSC and its affiliates as specified in Schedule 1 to
the USC Senior Loan Agreement; and PROVIDED FURTHER, HOWEVER, that to the extent
that CSC or any of its affiliates provides to any of the Partnership or any of
its Subsidiaries goods or services for consideration which is below the fairly
allocable cost thereof, for purposes of the calculations herein, such goods and
services shall be deemed to be provided at the fairly allocable cost.
"Tax Matters Partner" shall have the meaning set forth in Section
12.4.3 hereof.
"Tier I USC Priority Distribution" means the total amount of cash
that would be distributable pursuant to Section 7.2(a) hereof if there were
sufficient cash available to make such distribution.
"Tier II USC Priority Distribution" means the total amount of cash
that would be distributable pursuant to Section 7.2(b) hereof if there were
sufficient cash available to make such distribution.
"Tier III USC Priority Distribution" means the total amount of cash
that would be distributable pursuant to Section 7.2(c) hereof if there were
sufficient cash available to make such distribution.
"Tier IV USC Priority Distribution" means the total amount of cash
that would be distributable pursuant to Section 7.2(d) hereof if there were
sufficient cash available to make such distribution.
"Tier V USC Priority Distribution" means the total amount of cash
that would be distributable pursuant to Section 7.2(e) hereof if there were
sufficient cash available to make such distribution.
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"USC Loan Agreement" shall have the meaning set forth in the
recitals hereto.
"USC Loan Documents" means the USC Loan Agreement and all other
agreements, instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments, contracts,
notices and all other written matter executed by or on behalf of USC in
connection with the USC Loan Agreement or the transactions contemplated thereby
as the same have been or may be amended (including, without limitation, the
"Loan Documents" as defined therein).
"USC Partners' Committee" shall have the meaning set forth in
Section 9.2 hereof.
"USC Priority Distributions" means all of the Tier I USC Priority
Distribution, Tier II USC Priority Distribution, Tier III USC Priority
Distribution, Tier IV USC Priority Distribution and Tier V USC Priority
Distribution.
"USC System Cash Flow Ratio" means, on any date of determination,
for the Partnership and its consolidated Subsidiaries, the ratio of
(i) Indebtedness of the Partnership and its consolidated Subsidiaries as of such
date to (ii) Annualized Consolidated System Cash Flow for the Fiscal Quarter
most recently ended prior to such date.
"V Cable Loan Agreement" means the loan agreement, dated December
31, 1992, among GE Capital, as agent, the lenders named therein, and V Cable, as
amended and from time to time in effect.
"VC Holding Loan Agreement" means the loan agreement, dated as of
the date hereof, among GE Capital, as agent, the lenders named therein, and
Newco, as amended and from time to time in effect.
2.2 OTHER DEFINITIONS. Certain additional defined terms used in
this Agreement shall have the meanings specified throughout this Agreement.
ARTICLE 3
[Intentionally Omitted.]
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ARTICLE 4
[Intentionally Omitted.]
ARTICLE 5
[Intentionally Omitted.]
ARTICLE 6
CAPITAL CONTRIBUTIONS
6.1 PERCENTAGE INTERESTS. This Agreement provides for the
determination of certain matters on the basis of the Partners' "Percentage
Interests." From and after the Effective Date, the Partners shall have the
Percentage Interests set forth on Schedule A to this Agreement and Newco will be
admitted as a Class VII Limited Partner without the need for any further action
on the part of the Partners.
6.2 CAPITAL. The capital of the Partnership shall consist of the
amount of the Capital Contributions made to the Partnership pursuant to this
Article 6.
6.3 CAPITAL CONTRIBUTIONS. The Capital Contributions of the
Partners shall be as follows:
(a) CLASS I PARTNERSHIP INTERESTS.
(i) The New General Partner has contributed $1,000,000 to the
capital of the Partnership, and the Partnership has issued to the New General
Partner, in exchange therefor, the Class I General Partnership Interest.
(ii) V Cable has contributed $18,970,000 to the capital of the
Partnership, and the Partnership has issued to V Cable, in exchange therefor,
the Class I Limited Partnership Interest.
(iii) On the Prepayment Transactions Date, V Cable is
contributing $181,605,958 and the New General Partner is contributing $2,000,000
to the Partnership, which contributions shall be treated as additional Capital
Contributions in respect of the Class I Limited Partnership Interest and Class I
General Partnership Interest, respectively. Upon receipt of such contribution,
the Partnership shall use such capital contribution to
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consummate the Prepayment Transactions to which it is a part.
(iv) Any payments made by V Cable to the Partnership pursuant
to Section 9.5 of the USC Loan Agreement shall be treated as additional Capital
Contributions in respect of the Class I Limited Partnership Interest.
(b) CLASS II PARTNERSHIP INTERESTS.
(i) The Existing General Partner has previously contributed
$160,000 to the capital of the Partnership in exchange for a general partner
interest which interest was reclassified as the Class II General Partnership
Interest.
(ii) Those Persons specified in Schedule A hereto as Class II
Limited Partners have previously contributed, or are the permitted transferees
of Persons which have previously contributed (collectively, the "Original
Limited Partners"), an aggregate of $3,840,000 to the capital of the Partnership
in exchange for limited partner interests in the respective amounts set forth
opposite each of their names on such schedule, which interests were reclassified
as Class II Limited Partnership Interests.
(c) CLASS III LIMITED PARTNERSHIP INTEREST. GE Capital has
contributed $35,000,000 to the capital of the Partnership by means of the
cancellation of indebtedness owed to GE Capital. In exchange therefor, the
Partnership has issued to GE Capital the Class III Limited Partnership Interest.
(d) CLASS IV LIMITED PARTNERSHIP INTEREST. GE Capital has
contributed $1,000,000 to the capital of the Partnership by means of the
cancellation of indebtedness owed to GE Capital. In exchange therefor, the
Partnership has issued to GE Capital the Class IV Limited Partnership Interest.
(e) CLASS V LIMITED PARTNER. On the Effective Date, GE Capital is
contributing to capital all amounts due under the Junior Subordinated Loan
Agreement. GE Capital, as lender under the Junior Subordinated Loan, and the
Partners have agreed that for income tax purposes, the Junior Subordinated Loan
has been and will be treated as an equity interest in the Partnership. In
addition, GE Capital has contributed $162,799,947 to the capital of the
Partnership by means of the cancellation of debt owed to GE
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Capital. The Partnership has issued to GE Capital, in exchange for all such
contributions, the Class V Limited Partnership Interest.
(f) CLASS VI LIMITED PARTNER. The Partnership has issued the
Class VI Limited Partnership Interest to V Cable in exchange for V Cable's
commitment to make Capital Contributions to the Partnership pursuant to
Sections 3(c), 4(a)(ii)(B) and 4(c) of the MPA Agreement. No such capital
contributions were made and such interest is being redeemed and canceled
simultaneously with the Effective Date.
(g) CLASS VII LIMITED PARTNER. On the Prepayment Transactions
Date, VC Holding is contributing to the capital of the Partnership $68,000,000
and the Partnership is issuing to VC Holding, in exchange therefor, the Class
VII Limited Partnership Interest. Notwithstanding anything herein to the
contrary, in the event that GE Capital has pursuant to the USC Loan Agreement
provided notice to CSC or the Partnership that the certificate delivered to GE
Capital pursuant to Section 1.9(a) hereof was not accurate when made, then VC
Holding shall be entitled to make additional capital contributions to the
Partnership that will be reflected in its Class VII Limited Partnership
Interest.
6.4 ADDITIONAL CONTRIBUTIONS AND WITHDRAWALS. No Partner shall be
entitled or required to make any Capital Contribution to the Partnership other
than the contributions set forth in this Article 6 and Section 9.5 of the USC
Loan Agreement. All Capital Contributions shall be held or expended by the New
General Partner as specified in this Article 6 or in furtherance of the purposes
of the Partnership. Except as set forth in Section 6.11 hereof, no Partner
shall have the right to withdraw from the Partnership or to demand a return of
all or any part of its Capital Contribution during the term of the Partnership,
and any return of such Capital Contribution shall be made solely from the assets
of the Partnership and only in accordance with the terms of this Agreement.
6.5 NEGATIVE CAPITAL ACCOUNTS. At no time during the term of the
Partnership or upon dissolution and liquidation thereof shall a Partner with a
negative balance in its Capital Account have any obligation to the Partnership
or the other Partners to restore such negative balance, except as may be
required by law or in respect of any negative balance resulting from a
withdrawal of capital or dissolution in contravention of this Agreement.
6.6 NO LIABILITY FOR CAPITAL CONTRIBUTIONS. No Partner shall be
personally liable for the return of any
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portion of the Capital Contributions of any of the other Partners; the return of
those Capital Contributions shall be made solely from the Partnership's assets.
6.7 LIABILITY OF LIMITED PARTNERS. Each Limited Partner shall be
liable for the repayment and discharge of debts and obligations of the
Partnership only to the extent of the amounts required to be contributed by that
Limited Partner as provided in this Article 6 and to the extent provided by the
Act. The Limited Partners shall not otherwise have any liability with respect
to the debts and obligations of the Partnership and shall not otherwise be
obligated to make any Capital Contribution to the Partnership beyond that
required in this Article 6.
6. NO INTEREST; CONSENT TO DISTRIBUTIONS. No Partner shall
receive any interest on his Capital Contributions or Capital Account and no
General Partner shall be entitled to any payments or other compensation for
assuming personal liability for any debt or obligation of the Partnership. To
the extent any monies that any Partner is entitled to receive pursuant to this
Agreement would constitute a return of capital, each Partner consents to the
withdrawal of that capital.
6.9 MAINTENANCE OF CAPITAL ACCOUNTS. The Partnership shall
maintain a Capital Account for each Partner for purposes of implementing and
recording the allocations of Partnership income, loss and distributions
attributable to each Partner's interest in the Partnership. Each Partner,
regardless of whether it owns more than one class of interest in the
Partnership, shall only have one Capital Account; PROVIDED, HOWEVER, that, for
purposes of implementing the allocation provisions of Article 8 that refer to
Partners' Capital Account balances, the portion of each Partner's Capital
Account that is attributable to Capital Contributions, allocations and
distributions relating to each class of interest in the Partnership held by such
Partner shall be separately computed and treated as a separate account and
references in such provisions of Article 8 to capital account balances shall be
deemed to refer to such separate portions of each account with respect to which
an allocation is to be made. The balance of each Partner's Capital Account
shall be determined on the basis of an account maintained for that Partner on
the books of account of the Partnership, in accordance with the following
provisions:
(a) The Capital Account of any Partner who was a Partner prior to
the date hereof shall be credited or
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debited with the positive or negative balance of such Partner's Capital Account
to date.
(b) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions.
(c) To each Partner's Capital Account there shall also be credited
such Partner's distributive share of Net Income allocated to such Partner
pursuant to Sections 8.2 and 8.3.3 and any other items of Partnership income
specially allocated to the Partner pursuant to Sections 8.4, 8.5, 8.6, 8.8 and
8.9 hereof.
(d) To each Partner's Capital Account there shall be debited the
amount of cash and the fair market value of any Partnership property distributed
to such Partner pursuant to Sections 7.2, 7.3, 8.6 and 14.3 hereof (net of any
liabilities secured by such property that such Partner is considered to assume,
or take subject to, under Code Section 752), such Partner's distributive share
of Net Losses allocated to such Partner pursuant to Sections 8.3.1 and 8.3.2,
and any other items of Partnership loss specially allocated to the Partner
pursuant to Sections 8.4 and 8.6 hereof.
(e) In the event any Partnership Interest is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Partnership Interest.
(f) The foregoing provisions of this Section 6.9 and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Treas. Reg. Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Treasury Regulations. In the event
that the New General Partner, with the consent of the Class IV Limited Partner,
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to comply with
such Treasury Regulations, the New General Partner may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Partner pursuant to Section 14 hereof upon the dissolution
of the Partnership. The New General Partner, with the consent of the Class IV
Limited Partner, also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Treas. Reg.
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Section 1.704-1(b)(2)(iv)(q); (ii) make any adjustments that are necessary if at
any time Partnership property is reflected on the books of the Partnership at
values which are different than their tax basis; and (iii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Treas. Reg. Section 1.704-1(b).
6.10 ADDITIONAL LIMITED PARTNER. Except as contemplated by Section
6.1, Section 6.3 and Article 13, no Person shall become an additional Limited
Partner.
6.11 CONVERSION RIGHT OF CLASS II PARTNERS. Upon the earliest to
occur of:
(a) the sale (including, without limitation, a sale pursuant to a
foreclosure) of all or substantially all of the assets of the Partnership and
its Subsidiaries (which shall be deemed to include any sale that satisfies the
conditions set forth in Section 9.5(c) hereof;
(b) the resignation of I. Martin Pompadur ("Pompadur") and any
other Person designated by the Class II General Partner to serve with him as
representatives of the Class II General Partner on the USC Partners' Committee
(for purposes of this Section 6.11 and Section 10.1 and Article 9 hereof,
Pompadur and any Person designated by the Class II General Partner to serve with
him as the representatives of the Class II General Partner on the USC Partners'
Committee are hereinafter referred to collectively as the "Pompadur
Representative"), from the USC Partners' Committee at the request of the Class I
General Partner (with the approval of the Class IV Limited Partner) for any
reason other than cause; and
(c) the tenth anniversary of the date of the Original Amended
Agreement;
then, so long as the Pompadur Representative (or a substitute designated by the
Class II General Partner (or upon Pompadur's death, a substitute designated by
his estate)) is then serving on the USC Partners' Committee, the Class II
Partners (acting unanimously) shall be entitled to elect within 60 days after
receipt of notice of the occurrence of the earliest to occur of the events set
forth in clauses (A), (B) and (C) above to convert Class II Limited Partnership
Interests representing 100% of the aggregate Percentage Interest of the Class II
Partnership Interests into an immediately payable debt obligation of the
Partnership in the amount of $4,000,000 that is senior to all other debt for
borrowed money of the Partnership.
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Notwithstanding the foregoing, if the Pompadur Representative is no longer
serving on the USC Partners' Committee immediately prior to the event which
triggers the conversion right described in this Section 6.11, then the Class II
Partners (acting unanimously) shall only be entitled to convert a portion of the
Class II Limited Partnership Interests representing a Percentage Interest equal
to the product of (x) 100% of the aggregate Percentage Interest of the Class II
Partnership Interests, multiplied by (y) a fraction (not greater than one) (the
"Fraction"), the numerator of which is the number of full years the Pompadur
Representative has served on the USC Partners' Committee, and the denominator of
which is ten. If the aggregate Percentage Interest which can be converted by
the Class II Partners is reduced in accordance with the preceding sentence, then
the amount of the debt obligation into which such reduced Percentage Interest
can be converted shall be reduced to an amount equal to $4,000,000 multiplied by
the Fraction. Any conversion made pursuant to this Section 6.11 shall be
treated as if there had been a distribution of Partnership cash in an amount
equal to the face amount of the debt into which the interests have been
converted. Upon any conversion pursuant to this Section 6.11, each Class II
Limited Partner shall continue to be a Class II Limited Partner of the
Partnership with respect to its remaining unconverted Class II Limited
Partnership Interest. For the purposes of this Section 6.11, "cause" shall be
defined as an act of fraud or any act of willful misconduct materially injurious
to the Partnership or against the Partnership (or any of its Subsidiaries) and,
in any case, if such act is not cured promptly after notice thereof to the
Pompadur Representative by the Partnership. The determination as to whether
"cause" (as defined above) shall exist shall be made by a court or other
appropriate tribunal.
6.12 WITHDRAWAL OF CLASS VI LIMITED PARTNER. In exchange for the
cancellation of its obligations to make capital contributions to the
Partnership, V Cable hereby withdraws as the Class VI Limited Partner, and
without the need for any action by any Partner, such interest in the Partnership
is hereby redeemed and canceled.
ARTICLE 7
CASH DISTRIBUTIONS
7.1 TIME OF DISTRIBUTIONS. Distributions of cash or other property
(other than pursuant to Section 14) shall be made by the New General Partner as
set forth in
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Sections 7.2 and Section 7.3 below; PROVIDED, HOWEVER, that no distributions
pursuant to Section 7.2 shall be made unless expressly permitted by the USC Loan
Agreement.
7.2 ALLOCATION OF CASH DISTRIBUTIONS FROM PARTNERSHIP OPERATIONS.
Subject to Section 14.3 hereof, all net cash from Partnership operations and net
cash from sales or refinancings of Partnership assets or debt, respectively,
shall be distributed to the Partners as follows and in the following order of
priority:
(a) first, with respect to the Class VII Limited Partnership
Interest, in an amount equal to the Class VII Unrecovered Capital; PROVIDED,
HOWEVER, that no amount shall be paid or distributed pursuant to this Section
7.2(a) until one year and one day following repayment in full of the obligations
of USC under the USC Senior Loan Agreement;
(b) next, with respect to the Class II Partnership Interests, in an
amount equal to the Class II Unrecovered Capital, and with respect to the Class
III Limited Partnership Interest, in an amount equal to the Class III
Unrecovered Capital, in proportion to the relative amounts of Class II
Unrecovered Capital and Class III Unrecovered Capital;
(c) next, with respect to the Class III Limited Partnership
Interest, an amount equal to the Class III Unrecovered Capital;
(d) next, with respect to the Class III Limited Partnership
Interest, an amount equal to the Class III Unrecovered Accreted Value;
(e) next, with respect to the Class V Limited Partnership Interest,
an amount equal to the Class V Unrecovered Capital; and
(f) the balance, if any, in accordance with the Partner's
Percentage Interests.
Distributions (other than the distribution provided for in Section 7.3) shall be
made (i) only to the extent the Manager, subject to the supervision of the New
General Partner, determines that the Partnership has cash available for
distribution (after taking into account the needs of the Partnership's business,
including reasonable reserves), (ii) subject to Section 7.2(a), within 90 days
after the end of the Partnership Year with respect to such year and (iii) after
the computation of the Net Income and Net Loss have been made with respect to
such year.
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7.3 DISTRIBUTION OF NEWCO STOCK. On the Prepayment Transactions
Date, and after V Cable, the New General Partner and VC Holding have made the
capital contributions required under this Agreement, the Partnership shall
distribute to V Cable all of the Class B Common Stock of Newco owned by the
Partnership. The capital account of V Cable shall be charged with an amount
equal to the tax basis of the Class B Common Stock of Newco distributed pursuant
to this Section 7.3.
ARTICLE 8
ALLOCATION OF INCOME, GAINS AND LOSSES
8.1 [Intentionally Omitted.]
8.2 ALLOCATION OF INCOME AND GAINS. After giving effect to the
special allocations set forth in Section 8.4 hereof, Net Income shall be
allocated for each Partnership Year as follows and in the following order of
priority:
(a) first, any Net Income shall be allocated with respect to
classes of interest to the extent that, in the aggregate, the Capital Accounts
of the Partners holding such classes of interests have a negative balance
(computed before taking into account any distributions to be made pursuant to
Sections 7.2 and 7.3 with respect to such year) at the close of such Partnership
Year, such income to be allocated in proportion to such negative balances, until
each such negative balance is eliminated;
(b) next, with respect to the Class VII Partnership Interest, to
the extent necessary to create a positive Capital Account balance with respect
to such interest equal to the Tier I USC Priority Distribution as of the end of
such Partnership Year;
(c) next, with respect to the Class II Partnership Interest and the
Class III Limited Partnership Interest, to the extent necessary to create a
positive Capital Account balance with respect to each such interest equal to
such interest's share of the Tier II USC Priority Distribution as of the end of
such Partnership Year, such amounts to be allocated in proportion to such
relative shares;
(d) then, with respect to the Class III Limited Partnership
Interest, to the extent necessary to create a positive Capital Account balance
with respect to such interest in an amount equal to the sum of (x) its share of
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the Tier II USC Priority Distribution, (y) the Tier III USC Priority
Distribution and (z) the Tier IV USC Priority Distribution, as of the end of
such Partnership Year;
(e) then, with respect to the Class V Limited Partnership Interest,
to the extent necessary to create a positive Capital Account balance with
respect to such interest in an amount equal to the Tier V USC Priority
Distribution, as of the end of such Partnership Year;
(f) next, if any one or more classes of interest has a Capital
Account positive balance attributable to such interest that is in excess of such
interest's share, if any, of the USC Priority Distributions, with respect to the
classes of interest, to the extent necessary to make the relative excesses for
all interests to be in the ratio of the Partners' respective Percentage
Interests as of the end of such Partnership Year; and
(g) the balance, if any, in accordance with the Partners'
respective Percentage Interests.
8.3 ALLOCATION OF LOSSES.
8.3.1 ALLOCATION OF NET LOSSES. (a) Net Losses (other than those
realized from the sale of all or substantially all of the Partnership's assets),
shall be allocated for each Partnership Year (i) 96% with respect to the Class I
Partnership Interests, in the following manner and order of priority: (x) an
amount equal to 1% of such Net Losses shall be allocated to the Class I General
Partnership Interest, and (y) the balance, if any, with respect to the Class I
Limited Partnership Interest; and (ii) 4% with respect to the Class V
Partnership Interest.
(b) Net Losses realized from the sale or disposition of all or
substantially all of the Partnership's assets shall be allocated in the
following manner and order of priority:
(i) first, with respect to each class of interest, the portion of
the Capital Account positive balance attributable thereto that is in
excess of the sum of each such interest's share, if any, of the USC
Priority Distributions, in proportion to such relative excesses, to
the extent necessary to make such relative excesses in the ratio of
the Partners' respective Percentage Interests;
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(ii) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, in proportion to each such interest's Percentage Interest,
until each such positive balance is equal to the sum of each such
interest's share, if any, of the USC Priority Distributions;
(iii) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, to the extent necessary to make each such positive balance
equal to the sum of each such interest's share, if any, of the Tier
I USC Priority Distribution, Tier II USC Priority Distribution, Tier
III USC Priority Distribution, Tier IV USC Priority Distribution and
Tier V USC Priority Distribution, in proportion to such shares;
(iv) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, to the extent necessary to make each such positive balance
equal to the sum of each such interest's share, if any, of the Tier
I USC Priority Distribution, Tier II USC Priority Distribution, Tier
III USC Priority Distribution and Tier IV USC Priority Distribution,
in proportion to such shares;
(v) next, with respect to each class of interest, the portion of
the Capital Account balance attributable thereto which is positive,
to the extent necessary to make each such positive balance equal to
the sum of each such interest's share, if any, of the Tier I USC
Priority Distribution, Tier II USC Priority Distribution and Tier
III USC Priority Distribution, as of the end of such Partnership
Year, in proportion to such shares;
(vi) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, to the extent necessary to make each such positive balance
equal to the amount of each such interest's share, if any, of the
Tier I USC Priority Distribution and Tier II USC Priority
Distribution, as of the end of such Partnership Year, in proportion
to such shares;
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(vii) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, to the extent necessary to make each such positive balance
equal to the amount of each such interest's share, if any, of the
Tier I USC Priority Distribution, as of the end of such Partnership
Year, in proportion to such shares;
(viii) next, with respect to each class of interest, the portion
of the Capital Account balance attributable thereto which is
positive, in proportion to such positive balances, until each such
balance has been reduced to zero; and
(ix) the balance, if any, (x) 96% with respect to the Class I
Partnership Interests, in proportion to their relative Percentage
Interests, and (y) 4% with respect to the Class V Limited
Partnership Interest.
8.3.2 [Intentionally Omitted].
8.3.3 ALLOCATION OF LOSSES AND GROSS INCOME TO THE CLASS I
PARTNERS. (A) Notwithstanding any other provision of this Article 8, no
allocation of Partnership loss shall be made with respect to the Class I Limited
Partnership Interest which would create or increase a deficit balance in the
portion of the Capital Account balance attributable to such interest (as
maintained in accordance with Section 6.9 hereof; if, nevertheless, at the end
of any Partnership Year, the portion of the Capital Account attributable to the
Class I Limited Partnership Interest would have a deficit (determined as
described above and after taking into account all other allocations and
distributions with respect to such year), then there shall be allocated with
respect to the Class I Limited Partnership Interest for such year items of gross
income (which items shall be credited to the portion of the Capital Account
attributable to such interest) in an amount sufficient to eliminate such
deficit.
(B) If, at the end of any Partnership Year, the portion of the
Capital Account attributable to the Class I General Partnership Interest would
have a deficit (determined after taking into account all other allocations and
distributions with respect to such year), then there shall be allocated with
respect to the Class I General Partnership Interest for such year items of gross
income (which items shall be credited to the portion of the Capital
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Account attributable to such interest) in an amount sufficient to eliminate such
deficit.
8.4 SPECIAL ALLOCATIONS. The following special allocations shall
be made in the following order:
8.4.1 MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision
of this Article 8, if there is a net decrease in Partnership Minimum Gain during
any Partnership Year, each Partner shall be specially allocated items of
Partnership income and gain for such Partnership Year (and, if necessary,
subsequent Partnership Years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, determined in accordance with Treas.
Reg. Section 1.704-2(f) and Treas. Reg. Section 1.704-2(g)(2). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Treas. Reg. Section
1.704-2(f)(6) and Treas. Reg. Section 1.704-2(j)(2)(i) and (iii). The
Partnership shall, however, (i) waive the Minimum Gain Chargeback required by
this Section 8.4.1 and (ii) apply to the Commissioner of the Internal Revenue
Service for approval of such waiver in the event that (x) the Partners have made
Capital Contributions or received income allocations that have restored any
previous Nonrecourse Deductions claimed or any distributions attributable to the
proceeds of a Nonrecourse Liability, and (y) the Minimum Gain Chargeback
requirement would distort the Partners' economic arrangement as reflected in
this Agreement and as evidenced over the term of the Partnership by the
Partnership's allocations and distributions and the Partners' Capital
Contributions and it is not expected that the Partnership will have sufficient
other income to correct that distortion. Except as otherwise modified herein,
this Section 8.4.1 is intended to comply with the Minimum Gain Chargeback
requirement in Treas. Reg. Section 1.704-2(f) and shall be interpreted
consistently therewith.
8.4.2 PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article 8 except Section 8.4.1, if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any Partnership Year, each Partner
who has a share of the Partner Nonrecourse Debt Minimum Gain, determined in
accordance with Treas. Reg. Section 1.704-2(i)(5), shall be specially allocated
items of Partnership income and gain for such Partnership Year (and, if
necessary, subsequent Partnership Years) in an amount equal to such Partner's
share of the net decrease in Partner Nonrecourse Debt Minimum Gain, determined
in accordance with Treas. Reg. Section 1.704-2(g)(2) and Treas. Reg. Section
1.704-2(i)(4).
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Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Treas. Reg.
Section 1.704-2(f)(5), Treas. Reg. Section 1.704-2(i)(4) and Treas. Reg. Section
1.704-2(j)(2)(ii) and (iii). Except as otherwise modified herein, this
Section 8.4.2 is intended to comply with the Partner Nonrecourse Debt Minimum
Gain Chargeback requirement in Treas. Reg. Section 1.704-2(i)(4) and shall be
interpreted consistently therewith. In addition, rules consistent with the
provisions of Treas. Reg. Section 1.704-2(f)(2), (3), (4) and (5) (including
rules regarding a waiver of the type discussed in Section 8.4.1 above) will
apply to the special allocation required by this Section 8.4.2.
8.4.3 QUALIFIED INCOME OFFSET. In the event any Partner
unexpectedly received any adjustments, allocations, or distributions described
in Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
income and gain shall be specially allocated to such Partner (in respect of its
Capital Account) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 8.4.3 shall be made only if and to the extent that such Partner would
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Article 8 have been tentatively made as if this Section 8.4.3 were
not in the Agreement.
8.4.4 NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Partnership Year or other period shall be specially allocated among the Partners
in accordance with their Percentage Interests.
8.4.5 PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any Partnership Year or other period shall be specially allocated
to the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Treas. Reg. Section 1.704-2(i).
8.4.6 NEGATION ALLOCATION. Notwithstanding any provision of this
Agreement, to the extent any allocation is made in any Partnership Year to any
Partner pursuant to the provisions of Section 8.4.1, Section 8.4.2, Section
8.4.3, Section 8.4.4, Section 8.4.5 or Section 8.6, such Partner shall
thereafter be specially allocated items of Partnership gross income or deduction
in order to negate the above-
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described allocations in the same Partnership Year if sufficient items of gross
income or deduction are available and, if not available, in each succeeding
Partnership Year until the aggregate amount of the above described allocations
are fully negated.
8.5 CANCELLATION OF INDEBTEDNESS INCOME. Notwithstanding any other
provision of this Article 8, for purposes of this Agreement (a) any cancellation
of indebtedness income arising from the restructuring of the debt of the
Partnership which was effected in connection with the Original Amended Agreement
will be deemed to be realized and recognized by the Partnership immediately
prior to the admission of V Cable and V Cable GP as partners to the Partnership
and will be specially allocated among the Partners at that time in accordance
with the provisions of the Original Agreement (as defined in the Original
Amended Agreement) and (b) any cancellation of indebtedness income arising from
the contribution to capital and termination of the Junior Subordinated Loan will
be specially allocated to the Class V Limited Partner.
8.6 INTEREST OF THE GENERAL PARTNERS. Notwithstanding the
provisions of Article 7 and Sections 8.2 through 8.5 (but not including Section
8.3.3(B) hereof), the Class I General Partner shall be allocated an amount of
each material item of income, gain, loss, deduction or credit of the Partnership
for any Partnership Year, other than items of income, gain, loss, deduction or
credit allocated pursuant to Section 8.4 hereof, and shall be distributed a
portion of cash of the Partnership with respect to any Partnership Year so that,
after taking into account the allocation and distribution of each such item to
the Class II General Partner pursuant to Article 7 and Sections 8.2 through 8.5
hereof, there will be allocated and distributed not less than 1% of each such
item to the Class I and Class II General Partners in the aggregate and the
amount of any item allocated to the Class I General Partner pursuant to this
Section 8.6 shall reduce, by the same amount, the amount of such item otherwise
allocable to the Class I Limited Partner. If, at any time after the date
hereof, the Class II General Partner shall be the only general partner, for each
Partnership Year there shall be allocated and distributed to such general
partner an aggregate amount of not less than 1% of each such material item. In
addition, if an allocation of income shall be made pursuant to the preceding
sentence, there shall also be allocated to the Class II General Partner an
amount of loss equal to the lesser of (i) the amount of income so allocated or
(ii) the excess of 1% of the aggregate amount of losses of the Partnership for
the period the Class II General Partner was
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a general partner over the aggregate amount of losses previously allocated to
the Class II General Partner for such period.
8.7 ADJUSTMENTS TO ALLOCATIONS. The New General Partner, with the
consent of the Class IV Limited Partner (and the consent of the Class II General
Partner with respect to any change which will have an adverse effect on the
Class II Partners), shall have the authority to make changes in the allocations
provided for in this Article 8 to the extent necessary to conform to the
requirements of Section 704(b) of the Code and any regulations promulgated
thereunder, provided that such changes are not likely to have a material effect
on the amounts distributable to any Partner pursuant to Section 14 hereof upon
the dissolution of the Partnership.
8.8 ALLOCATION OF INTEREST INCOME. Notwithstanding any other
provision of this Article 8, there shall be specially allocated to the Class IV
Limited Partner for each of the taxable years set forth below an amount of
interest income equal to the excess of (x) the amount of interest income
received or accrued by the Partnership for federal income tax purposes with
respect to its loans to Essex Communications Corp. pursuant to those certain
notes dated as of January 1, 1993 over (y) the base amount set forth below for
each such taxable year:
Year Base Amount
---- -----------
1993 5,222,000
1994 5,508,000
1995 5,790,000
1996 6,058,000
1997 6,221,000
1998 6,420,000
1999 6,621,000
2000 6,841,000
2001 7,217,000
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8.9 ALLOCATION OF GAIN OR LOSS ON DISTRIBUTION OF, OR WITH RESPECT
TO NEWCO STOCK. Notwithstanding any other provision of this Agreement, income,
gain or loss, if any, recognized (or to be recognized) by the Partnership in
connection with the distribution of the Class B Common Stock of Newco to V Cable
shall be allocated to V Cable and the amount by which the capital account of V
Cable is charged to reflect such distribution shall be increased or decreased,
as the case may be, to offset the effect of such allocation.
8.10 CONTINUATION OF TREATMENT. The Partners and the Partnership
understand that the Prepayment Transactions will not result in the recognition
of any income, gain or loss by the Partnership and agree that the income tax
return for the Partnership and for each of the Partners for the period including
the closing of the Prepayment Transactions will be filed in a manner consistent
with this understanding.
ARTICLE 9
MANAGEMENT OF THE PARTNERSHIP
9.1 MANAGEMENT OF THE PARTNERSHIP'S BUSINESS.
(a) The General Partners, on behalf of the Partnership, have
entered into the Management Agreement, pursuant to which the Manager will
perform certain management services and duties for, and on behalf of, the
Partnership. Except for actions and determinations which, pursuant to the terms
of this Agreement, are to be taken or made (i) by the New General Partner (or,
following (x) the removal, withdrawal, resignation, liquidation or Bankruptcy of
the New General Partner or any other event that caused the New General Partner
to cease to be a general partner of the Partnership or (y) the termination of
the Management Agreement, the Existing General Partner in accordance with
Section 9.9 hereof) or (ii) only with the consent of the Partners, the Limited
Partners or the Class III Limited Partner, the Class IV Limited Partner and/or
the Class V Limited Partner, as the case may be, the business and affairs of the
Partnership shall be managed and directed exclusively by the New General
Partner, subject to the provisions of this Agreement with respect to the USC
Partners' Committee. Notwithstanding any provision of this Agreement to the
contrary, the New General Partner is hereby expressly authorized to execute the
Partnership Interests Redemption Agreement on behalf of the Partnership and the
Partnership, and the New General Partner acting on behalf of the Partnership, is
expressly authorized to consummate the
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transactions contemplated thereby. Subject to the ultimate authority of the New
General Partner to supervise the Manager, the New General Partner has delegated
certain authority to the Manager in accordance with, and subject to the terms
and provisions contained in, the Management Agreement for so long as the
Management Agreement shall be in effect. Subject to the terms and conditions of
the Management Agreement, the Manager may delegate such of its respective powers
and authority to managers, employees and agents of the Manager or the
Partnership as it shall deem necessary or appropriate for the conduct of the
Partnership's business. The Partners have previously approved the Business
Plan.
(b) Without limiting the generality of the foregoing and except to
the extent consented to by the Class III Limited Partner, the Class IV Limited
Partner and the Class V Limited Partner, the New General Partner, on behalf of
the Partnership, shall maintain in effect during the term of this Agreement
liability insurance in connection with the operation of the Partnership in
substantially the same amount and with substantially the same coverage as the
liability insurance maintained by the Partnership as of the date of the
Investment Agreement.
(c) Notwithstanding the foregoing exceptions to the authority of
the Manager, nothing contained in this Article 9 shall impose any obligation on
any Person (other than CSC or an Affiliate of CSC) doing business or dealing
with the Partnership to inquire as to whether the Manager has exceeded its
authority in executing any contract, agreement, lease, mortgage, note, deed or
other instrument in the name and on behalf of the Partnership, and any such
Person shall be fully protected in relying upon the plenary authority of the
Manager.
(d) No provision of this Agreement or the Management Agreement nor
any action taken by the Manager in accordance with the provisions of this
Agreement or the Management Agreement shall be construed to constitute the
Manager a general partner of the Partnership or to impose on the Manager any
duties, liabilities or obligations except as expressly provided by the
Management Agreement.
(e) The Manager shall keep the USC Partners' Committee informed
with respect to all matters relating to the business and affairs of the
Partnership and its Partners and shall in any event report to the USC Partners'
Committee not less frequently than once each calendar quarter.
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(f) Any action that may be taken under this Agreement by a
general partner of the Partnership, except as provided in Section 9.1(a) or
unless this Agreement provides that a specific General Partner (the New General
Partner, the Tax Matters Partner or the Existing General Partner) may or shall
take such action, may be taken only by joint action of all of the General
Partners of the Partnership, if there is more than one General Partner of the
Partnership at the time of the taking of any such action.
9.2 USC PARTNERS' COMMITTEE.
(a) Each of the General Partners shall designate two individuals,
for a total of four members, to serve on a Partners' Committee of the
Partnership (the "USC Partners' Committee") which shall be responsible for
taking all action required under this Agreement to be taken by the USC Partners'
Committee; PROVIDED, HOWEVER, that in the event of a Change in Control, the
Class IV Limited Partner and the New General Partner shall each appoint an
additional member of the USC Partners' Committee; and PROVIDED, FURTHER, that if
the Class IV Limited Partner shall determine in good faith that the appointment
by it of any such member would conflict with Section 9.11 of this Agreement, the
Class IV Limited Partner shall, instead, assign its right to make such
appointment to such third party not affiliated with GE Capital as the New
General Partner shall reasonably select. If any General Partner shall cease to
be a General Partner under this Agreement pursuant to Section 13.1(e) or
otherwise, such former General Partner shall no longer be entitled to appoint
any member of the USC Partners' Committee, and all members of such committee
appointed by such former General Partner shall automatically be removed. Any
additional member of the USC Partners' Committee appointed by the Class IV
Limited Partner shall be reasonably acceptable to the New General Partner. Each
member of the USC Partners' Committee shall have one vote on all matters to be
voted on by the USC Partners' Committee, except that a Partner may, instead of
appointing two members with one vote each (if it shall otherwise be entitled to
do so), appoint to the USC Partners' Committee one member having the power to
cast two votes on all matters to be voted on by the USC Partners' Committee;
PROVIDED, HOWEVER, if the number of Persons entitled to serve on the USC
Partners' Committee increases to six following a Change in Control, the New
General Partner may, instead of appointing three members with one vote each,
appoint to the USC Partners' Committee one member having the power to cast three
votes on all matters to be voted on by the USC Partners' Committee.
Notwithstanding anything herein to the contrary, the initial Class IV Limited
Partner, or a transferee
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reasonably acceptable to the New General Partner of all or more than 50% of its
Class IV Limited Partnership Interest, shall be entitled, at its option, to
designate one member of the USC Partners' Committee (in addition to any other
member designated by it pursuant to the first sentence of this Section 9.2(a)),
with a single vote, to take the place of one of the then incumbent members of
the USC Partners' Committee (such incumbent member to be replaced shall be
selected by the Class II General Partner) serving as representative of the
Existing General Partner (or, if such representative of the Existing General
Partner shall have been designated to cast two votes, the new member shall be in
addition to the then incumbent members of the USC Partners' Committee, and the
incumbent representative of the Existing General Partner shall then only be
entitled to cast one vote), and any such replaced incumbent member of the USC
Partners' Committee shall be automatically removed from the USC Partners'
Committee; PROVIDED, HOWEVER, that if the Class IV Limited Partner shall
determine in good faith that the appointment by it of any such member would
conflict with Section 9.11 of this Agreement, the Class IV Limited Partner
shall, instead, assign its right to make such appointment to such third party
not affiliated with GE Capital as the New General Partner shall reasonably
select. The USC Partners' Committee shall meet by telephone or, at the request
of any member of the USC Partners' Committee, in Person, as often as shall be
necessary to make any Extraordinary Decision or take any other action required
to be taken or approved by the USC Partners' Committee. Any action that may be
taken at a meeting of the USC Partners' Committee may be taken without a meeting
by written consent of the members of the USC Partners' Committee; PROVIDED,
HOWEVER, that any such written consent shall include the consent of at least one
representative of each Partner that shall then have a representative on the USC
Partners' Committee. Each member of the USC Partners' Committee shall be an
agent for the purposes provided for in this Agreement of the Partner that
appointed such member and shall not be an agent of the Partnership.
(b) The Manager, either General Partner or any member of the USC
Partners' Committee shall have the right to call a meeting of the USC Partners'
Committee by giving three (3) days' prior written notice of the time, date and
location (which shall be at the principal office of the Partnership unless
otherwise agreed) or means of conducting such meeting to the General Partners,
the members of the
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USC Partners' Committee and the Manager. The presence or participation of
members of the USC Partners' Committee entitled to cast at least a majority of
the total number of votes which may be cast by all of the then members of the
USC Partners' Committee shall constitute a quorum for the taking of any action.
Any action required or permitted to be taken by the USC Partners' Committee must
be by an affirmative vote of, or written consent representing, at least a
majority of the total number of votes which may be cast by all of the then
members of the USC Partners' Committee. Notwithstanding anything in this
Article 9 to the contrary, the Class III Limited Partner shall have the right to
designate, from time to time, one observer (the "Class III Observer") to attend
meetings of the USC Partners' Committee. The Manager shall give the Class III
Observer written notice of each meeting of the USC Partners' Committee at the
same time as the Manager receives notice of, or itself schedules, a meeting of
the USC Partners' Committee. The Class III Observer shall be entitled to
attend, as a non-voting observer, all meetings of the USC Partners' Committee,
shall receive reasonable advance notice of all such meetings and shall receive
copies of all materials and information provided to members of the USC Partners'
Committee (whether provided prior to, during or after any such meetings) except
to the extent that the provision of such information would be inconsistent with
Section 9.11 of this Agreement. If the USC Partners' Committee proposes to take
any action by written consent in lieu of a meeting, the Manager shall give
written notice thereof to the Class III Observer prior to the effective date of
such consent, describing in reasonable detail the nature and substance of such
action.
(c) Any member of the USC Partners' Committee may be removed with
or without cause at any time by the Partner which designated such member. If at
any time any Partner entitled to designate one or more representatives to the
USC Partners' Committee removes one or more of such representatives, such
Partner shall give written notice of such removal to the Manager, the General
Partners and any other Partner having a representative then serving on the USC
Partners' Committee (other than the Person or Persons to be removed), and shall
promptly appoint a successor member or members to represent such Partner on the
USC Partners' Committee by giving written notice of such appointment to the
Manager, the General Partners and any other Partner having a representative then
serving on the USC Partners' Committee; PROVIDED, HOWEVER, that any such
successor member or members (i) if appointed by the New General Partner, shall
be a director, officer or employee of CSC or one of its Subsidiaries; (ii) if
appointed by the Existing General Partner, shall be reasonably acceptable to the
New General Partner and (iii) if appointed by the Class IV Limited Partner,
shall be reasonably acceptable to the New General Partner. In the absence of
written notice to the contrary,
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the appointed representatives of any Partner on the USC Partners' Committee
shall be conclusively presumed to be the duly appointed representatives of such
Partner on such USC Partners' Committee. Except as set forth in Section 10.1
hereof, members of the USC Partners' Committee shall serve as such without
compensation.
(d) Any Person acting as a representative of the Existing General
Partner on the USC Partners' Committee may be removed by the New General Partner
for "cause" as such term is defined in Section 6.11 hereof. Any such removal
shall be without prejudice to the right of the Existing General Partner to
select a successor representative in accordance with Section 9.2(c) hereof.
9.3 EXTRAORDINARY DECISIONS. The following actions involving the
Partnership ("Extraordinary Decisions") may be taken only with the prior
approval of the USC Partners' Committee:
(i) subject to Section 9.5 hereof, any sale of all or of a
substantial portion of the operating assets of the Partnership on
terms not contemplated or permitted by the Business Plan or by any
agreement evidencing debt for borrowed money of the Partnership;
(ii) any purchase by the Partnership of material assets on
terms not contemplated or permitted by any agreement evidencing debt
for borrowed money of the Partnership or the Business Plan;
(iii) the incurrence of financial obligations or the making of
any investments by the Partnership not contemplated or permitted by
(a) any agreement evidencing debt for borrowed money of the
Partnership or (b) Section 6.3(a)(iii) hereof;
(iv) subject to Section 9.9 hereof, the undertaking by the USC
Partners' Committee of any management function covered by the
Management Agreement, the discharge of the Manager, the appointment
of a successor manager, any amendment to the Management Agreement or
the termination of the Management Agreement;
(v) any material amendment to the Business Plan, but only to
the extent not contemplated or permitted by any agreement evidencing
debt for borrowed money of the Partnership;
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the admission to the Partnership of any new partner other
than pursuant to Article 13 hereof;
(vii) providing any General or Limited Partner with the authority
to act on behalf of the Partnership, except as otherwise provided in
this Agreement or the Management Agreement or required under
applicable law; or
(viii) subject to Section 9.5 hereof, any action by or on behalf of
the Partnership or any of its Subsidiaries to commence or bring
about, or to file or consent to the filing of any petition
commencing or requesting, (a) appointment of a receiver, custodian,
liquidator or trustee (or similar official) for the Partnership or
any of its Subsidiaries or any substantial part of their respective
assets, (b) any assignment by the Partnership or any of its
Subsidiaries for the benefit of creditors, (c) any dissolution,
liquidation or winding-up of the affairs of the Partnership or any
of its Subsidiaries, (d) any case, proceeding or other relief
involving the Partnership or any of its Subsidiaries or any
substantial part of their respective assets under the Bankruptcy
Code, or any other applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law.
9.4 LIMITATION ON AGENCY. (a) For so long as the Management
Agreement shall be in effect and subject to the ultimate authority of the New
General Partner to supervise the Manager, the Manager shall have exclusive
authority to act for and to assume any obligation or responsibility on behalf of
the Partnership except as (i) otherwise expressly provided in this Agreement and
(ii) expressly restricted by this Agreement or the Management Agreement, and,
without the approval of the USC Partners' Committee, no General Partner or
Limited Partner shall have any authority to act for, or to assume any obligation
or responsibility on behalf of, another Partner or the Partnership (or to
authorize any other Person to do so) except as otherwise expressly provided
herein with respect to a particular General Partner or under the terms of the
Management Agreement. Notwithstanding the previous sentence, whenever a
decision made as to the Partnership or its affairs in accordance with the
limitations set forth in this Agreement and the Management Agreement requires
for its implementation the execution of documents or other action by a Partner
of the Partnership in order to bind the
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Partnership, the New General Partner shall have the exclusive authority to take
action to bind the Partnership in accordance with such decision. Nothing in
this Section 9.4 shall limit any consent or other rights granted to any Limited
Partner under this Agreement.
(b) Each General Partner agrees for the benefit of the Partnership
and the other Partners not to take any action on behalf of the Partnership,
except as otherwise expressly provided herein.
(c) Notwithstanding anything in this Agreement to the contrary, GE
Capital may lend money to and transact other business with the Partnership and,
subject to applicable law, shall have the same rights and obligations with
respect thereto (including, without limitation, pursuant to the USC Loan
Documents) as a Person who is not a partner of the Partnership. If a Limited
Partner is a lender, in exercising its rights as a lender, including in making
its decision on whether to foreclose on property of the Partnership, such lender
will have no duty to consider (i) its status as a partner of the Partnership,
(ii) the interests of the Partnership, or (iii) any duty (including fiduciary
duties) it may have to any Partner or the Partnership.
9.5 APPROVAL BY CERTAIN LIMITED PARTNERS.
(a) Notwithstanding anything in this Agreement, without the prior
written approval of the Class III Limited Partner, the Class IV Limited Partner
and the Class V Limited Partner, none of the Partnership, any Partner acting on
behalf of the Partnership or the Manager shall take any of the following actions
in respect of the Partnership or any of its Subsidiaries: (x) other than in the
ordinary course of business, any sale, transfer or other disposition (including
by means of any transfer of stock or assets by merger or consolidation) of any
material amount of assets of USC or any of its Subsidiaries (any such
transaction is hereinafter referred to as a "Disposition")) or (y) any action
described in Section 9.3(vii) hereof.
(b) The Partnership will not (i) assign, transfer or otherwise
dispose of its limited partnership interest in the Missouri Partnership, or
(ii), in its capacity as a limited partner of the Missouri Partnership, give its
consent under Section 9.4, 10 or 15 of that certain Limited Partnership
Agreement of the Missouri Partnership.
(c) In exercising any approval or other rights granted to the Class
III Limited Partner, the Class IV
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Limited Partner and the Class V Limited Partner in this Agreement, the Act or
any other agreement, such limited partner of the Partnership, shall be entitled
to consider only such interests and factors as it desires and may consider its
own interests, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or other Partners.
9.6 LIABILITY OF THE GENERAL PARTNERS AND THE MEMBERS OF USC
PARTNERS' COMMITTEE. (a) No General Partner shall be liable, in damages or
otherwise, to the Partnership or any Partner for any act or failure to act on
behalf of the Partnership by such General Partner, unless (i) such act or
omission constituted fraudulent or willful misconduct (including an intentional
breach of Section 9.1 or 9.8 of this Agreement or any breach of Section 9.1 or
9.8 of this Agreement arising out of the gross negligence of such General
Partner), or (ii) such act or omission constituted a breach of any of the terms
and conditions of this Agreement other than Sections 9.1 and 9.8 or an act
outside the scope of the authority conferred on such General Partner by this
Agreement, was performed or omitted in bad faith or constituted gross negligence
or a violation of law, provided that, solely for purposes of this clause (ii),
in the case of any act or failure to act with respect to any matter (A)
responsibility for which has been delegated to the Manager pursuant to the
Management Agreement and (B) for which the New General Partner may be deemed to
be responsible pursuant to this Agreement and (C) which does not constitute an
express obligation of the New General Partner pursuant to this Agreement, the
New General Partner shall be liable only if the Manager would be liable to the
Partnership pursuant to the Management Agreement if the Manager had so acted or
failed to act. To the fullest extent permitted by law, each General Partner
shall be indemnified by the Partnership against liability for any claim, demand,
loss, damage, liability or expense (including, without limitation, amounts paid
in settlement, reasonable costs of investigation and reasonable legal expenses)
resulting from any threatened, pending or completed action, suit or proceeding
naming as a defendant the Partnership or such General Partner resulting from or
in connection with the discharge of its duties and responsibilities under this
Agreement, unless such General Partner's actions or omissions were of any of the
types referred to in clauses (i) or (ii) above.
(b) No Person serving on the USC Partners' Committee from time
to time shall be liable, in damages or otherwise, to the Partnership or any
Partner for any act or failure to act on behalf of the Partnership by such
Person, unless such act or omission constituted fraudulent or will-
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ful misconduct (including an act outside the scope of the authority conferred on
such Person by this Agreement), was performed or omitted in bad faith or
constituted gross negligence or a violation of law. To the fullest extent
permitted by law, each Person serving on the USC Partners' Committee shall be
indemnified by the Partnership against liability for any claim, demand, loss,
damage, liability or expense (including, without limitation, amounts paid in
settlement, reasonable costs of investigation and reasonable legal expenses)
resulting from any threatened, pending or completed action, suit or proceeding
naming as a defendant the Partnership or such Person serving on the USC
Partners' Committee resulting from or in connection with the discharge of such
Person's duties and responsibilities under this Agreement, provided such
Person's actions were in good faith and did not constitute gross negligence,
fraud, willful misconduct (including an act outside the scope of the authority
conferred on such Person by this Agreement) or a violation of law.
(c) It is expressly agreed that no Limited Partner will be required
to make a Capital Contribution to the Partnership to satisfy any indemnification
obligation of the Partnership. Notwithstanding the foregoing, nothing in
Sections 9.6(a) or 9.6(b) shall provide for any exculpation or indemnification
of V Cable or Newco with respect to any obligation it may have under the
Supplemental Side Letter.
9.7 INDEMNIFICATION. Any Person asserting a right to
indemnification under Section 9.6 shall so notify the Partnership in writing.
If the facts giving rise to such indemnification shall involve any actual or
threatened claim or demand by or against a third party, the Partnership shall be
entitled to assume the conduct of the defense or prosecution of such claim or
demand in the name of indemnified Person, with counsel reasonably satisfactory
to the indemnified Person, if the Partnership notifies the indemnified Person in
writing of its intention to do so within twenty (20) days of the receipt of such
notice by the Partnership, without prejudice, however, to the right of the
indemnified Person to participate therein through counsel of the indemnified
Person's own choosing, which participation shall be at the indemnified Person's
sole expense unless (i) the indemnified Person shall have been advised by its
counsel that use of the same counsel to represent both the Partnership and the
indemnified Person would present a conflict of interest (which shall be deemed
to include any case where there may be a legal defense or claim available to the
indemnified Person which is different from or additional to those available to
the Partnership), in which case the Partnership shall not have the right to
direct the
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defense of such action on behalf of the indemnified Person, or (ii) the
Partnership shall fail diligently to defend or prosecute such claim or demand
within a reasonable time. Whether or not the Partnership chooses to defend or
prosecute such claim, the parties hereto shall cooperate in the prosecution or
defense of such claim and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may reasonably be requested in connection therewith. The Partnership shall
not settle or permit the settlement of any such third party claim or action
without the prior written consent of the indemnified Person. Notwithstanding
the foregoing, nothing in this Section 9.7 shall provide for any exculpation or
indemnification of V Cable or Newco with respect to any obligation under the
Supplemental Side Letter.
9.8 REMOVAL OF MANAGER.
(a) The Manager may be removed or discharged by the USC
Partners' Committee as set forth in Section 9.3 only if the Partnership would
then be entitled to terminate the Management Agreement in accordance with the
terms thereof.
(b) Upon the removal of the Manager in accordance with this
Agreement and the Management Agreement, a new manager shall be appointed by the
USC Partners' Committee as set forth in Section 9.2; PROVIDED, HOWEVER, that,
until a successor manager has been appointed, the Partnership shall be managed
by the New General Partner consistent with the provisions of the Management
Agreement; and PROVIDED FURTHER that during such period the USC Partners'
Committee shall direct the New General Partner in the management of the
Partnership and the New General Partner shall act in accordance with such
direction.
9.9 CONTINGENT AUTHORITY OF EXISTING GENERAL PARTNER.
(a) Notwithstanding anything in this Agreement to the contrary, if an
Event of Default occurs under Section 9.1(m)(i) of the V Cable Loan Agreement
with respect to the Management Agreement and such default is not waived by GE
Capital, then the Existing General Partner, upon receipt of notice of such
default from GE Capital which declares such default to be a "material management
default," shall have the authority to terminate the Management Agreement on
behalf of the Partnership.
(b) In the event that (x) the Management Agreement is terminated in
accordance with the terms thereof or
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(y) the New General Partner withdraws or resigns as general partner of the
Partnership, liquidates or is subject to a Bankruptcy or any other event has
occurred that would cause the New General Partner to cease to be a general
partner of the Partnership, then, without any further action by the Partnership
or the Partners, each of the duties expressly conferred upon the New General
Partner by this Agreement (including those duties conferred upon the New General
Partner in its capacity as Tax Matters Partner) shall devolve upon the Existing
General Partner MUTATIS MUTANDIS.
9.10 OTHER CABLE TELEVISION SYSTEMS. It is understood that,
subject to the provisions of the Non-Competition Agreement, Cablevision and its
Affiliates (including V Cable) may possess interests in and operate other cable
television systems whether or not currently so engaged, which activities may
include (without limitation) the acquisition, construction, management,
operation and sale of cable television systems and the creation and distribution
of programming therefor, and may generally have other business interests and
engage in other business activities in direct competition with the Partnership,
for their own account and for the account of others, and neither the Partnership
nor any of its partners shall have any rights in or to such independent
ventures, businesses or activities or the income or profits derived therefrom;
provided, that nothing in this sentence shall be construed to permit CSC or any
of its Affiliates to own or possess any interest or engage in any activity in
violation of the Non-Competition Agreement, as the same may be amended from time
to time. It is also understood that, except as set forth in Section 6.1 of the
Management Agreement, there is no obligation on the part of Cablevision and its
Affiliates (including V Cable) to offer or provide any interest in such
independent ventures, businesses or activities or any of their own business
opportunities to the Partnership, or any of its Subsidiaries or any of its
partners.
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9.11 EXEMPT LIMITED PARTNERS. It is the express purpose and intent
of the Partners that each Exempt Limited Partner shall be sufficiently insulated
from, and uninvolved in, the media-related activities of the Partnership so as
to be non-attributable pursuant to (and within the meaning of) the FCC
Regulations. Accordingly, the following provisions shall be read and
interpreted with reference to all applicable FCC rules, orders or
interpretations from time to time in effect, and shall apply notwithstanding
anything to the contrary contained in this Agreement:
No Exempt Limited Partner may act as an employee of the Limited Partnership
if said employee's functions, directly or indirectly, relate to the media
enterprises of the Partnership;
No Exempt Limited Partner may serve, in any material capacity, as an
independent contractor or agent with respect to the Partnership's
media enterprises;
No Exempt Limited Partner may communicate with the licensee of the
Partnership's media enterprises or any of the General Partners on
matters pertaining to the day-to-day operations of the Partnership's
media-related business;
The New General Partner (or, if the New General Partner shall cease to
be a general partner of the Partnership, the Existing General Partner)
may veto any admissions of additional General Partners admitted by
vote of the Exempt Limited Partners;
No Exempt Limited Partner may vote on the removal of a General Partner
as a general partner of the Partnership except in situations where
such General Partner is subject to bankruptcy proceedings, as
described in Sections 402 (4)-(5) of the Delaware Revised Uniform
Limited Partnership Act, is adjudicated incompetent by a court of
competent jurisdiction, or is removed for cause, as determined by an
independent party;
No Exempt Limited Partner may perform any services for the Partnership
materially relating to its media activities, with the exception of
making loans to, or acting as a surety for, its businesses; and
Exempt Limited Partners are prohibited from becoming actively involved
in the management or
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operation of the media businesses of the Partnership.
An Exempt Limited Partner may, upon prior written notice to the General Partners
and each other Limited Partner, elect to cease to be deemed an "Exempt Limited
Partner" (and, if applicable FCC Regulations so provide, such Limited Partner
shall thereupon become an attributable Limited Partner), in which case the
prohibitions of this Section 9.11 shall cease to apply to such Limited Partner.
Upon such election, (i) Schedule C hereto shall be appropriately amended to
delete such Limited Partner therefrom and (ii) the New General Partner shall
take such steps (if any) as may be necessary to comply with then-current FCC
Regulations in a prompt and timely fashion, including the filing of any required
notices and/or applications, and the Limited Partner that makes the election
shall cooperate with the New General Partner in that regard.
In addition, if any Exempt Limited Partner shall furnish to the Partnership an
opinion of counsel that any of the prohibitions or other limitations set forth
in this Section 9.11 (or elsewhere in this Agreement with respect to Exempt
Limited Partners) are no longer necessary in order for such Exempt Limited
Partner to maintain its non-attributable status, then (1) such limitations
shall, with respect to such Limited Partner, automatically be null and void and
of no further force and effect, and shall not thereafter apply in any context to
such Limited Partner or (2) to the extent that such opinion states that a
modified form of prohibition or limitation would be sufficient to retain such
partner's non-attributable status (and specifies such modified limitations),
such limitations shall be automatically modified to be consistent with such
opinion.
Each Exempt Limited Partner further agrees that it will not exercise its right,
pursuant to the GE Capital Option, to remove the New General Partner unless such
Exempt Limited Partner has either (i) theretofore exercised its right to cease
to be an "Exempt Limited Partner" as provided above or (ii) furnished the
Partnership with an opinion of counsel that the exercise of such right will not
cause such Limited Partner to become an attributed Limited Partner.
ARTICLE 10
COMPENSATION
10.1 COMPENSATION TO POMPADUR REPRESENTATIVE. The Partnership will
pay to the Pompadur Representative
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$50,000 per annum (payable in quarterly installments in arrears) in
consideration of the Pompadur Representative's services on the USC Partners'
Committee plus all reasonable out-of-pocket expenses incurred by the Pompadur
Representative in connection with the performance of its services as a member of
the USC Partners' Committee. Notwithstanding anything to the contrary in this
Agreement, the right of the Pompadur Representative to receive the compensation
set forth in the immediately preceding sentence shall forthwith terminate
simultaneously with (A) the removal of the Pompadur Representative from service
on the USC Partners' Committee in accordance with Section 9.2(d) hereof or (B)
the voluntary resignation for any reason of the Pompadur Representative from
service on the USC Partners' Committee.
10.2 COMPENSATION RESTRICTED. Except for the payments set forth in
Section 10.1 above, payments made pursuant to the Management Agreement, payments
made pursuant to Sections 9.6 and 9.7 hereof, and the right to be reimbursed in
accordance with Section 12.4.3(b) hereof, neither the General Partners nor their
respective Affiliates shall receive any other compensation or reimbursement of
expenses from the Partnership for services as General Partners.
ARTICLE 11
[Intentionally Omitted]
ARTICLE 12
ACCOUNTING, ACCOUNTS, RETURNS AND TAX MATTERS
12.1 BOOKS. The New General Partner shall maintain, or cause to be
maintained at the Partnership's expense, complete and accurate books of account
of the Partnership's affairs at the Partnership's principal place of business,
including a list of the names and addresses of all Partners and the Partnership
Interests held by each Partner. The books of account of the Partnership shall
be kept on the accrual basis of accounting in accordance with generally accepted
accounting practices applied in a consistent manner. Each Partner shall have
the right to inspect and copy the Partnership's books and records (including the
list of the names and addresses of Partners) at any reasonable time upon advance
request to the New General Partner. Notwithstanding anything in the Act
(including Section 17-305(b) of the Act) or this Agreement
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to the contrary, the General Partners shall not have the right to keep
confidential from the Class III Limited Partner, the Class IV Limited Partner or
the Class V Limited Partner, any information concerning the Partnership.
12.2 REPORTS. The books of account shall be closed promptly after
the end of each Partnership Year. The independent public accountants of the
Partnership shall initially be KPMG Peat Marwick; PROVIDED, HOWEVER, that in the
event that such firm shall be unable or unwilling to so act, the New General
Partner may select another nationally recognized "Big 6" accounting firm (other
than a firm that is utilized by Cablevision) to act as the independent public
accountants of the Partnership. The books and records of the Partnership shall
be audited by the independent public accountants as of the end of each
Partnership Year and audited financial statements (which shall include a
statement of profits and losses and cash flows for the year ended and a balance
sheet as of the close of the Partnership Year) prepared in accordance with
generally accepted accounting principles shall be distributed to the Partners
within ninety (90) days of the end of each Partnership Year.
12.3 FILING OF TAX RETURNS AND TAX REPORTS TO CURRENT AND FORMER
PARTNERS. (a) The New General Partner shall cause the independent public
accountants of the Partnership, selected pursuant to Section 12.2 hereof, to, at
the expense of the Partnership, prepare and timely file a federal information
tax return in compliance with section 6031 of the Code and any required state
and local income tax and information returns for each Partnership Year.
Notwithstanding the preceding sentence, in order to preserve and protect the
financial investments of such partners (and avoid self-dealing by the New
General Partner), no Partnership income tax or information return and no income
tax or information return of any entity owned or controlled by the Partnership
(including the Missouri Partnership) shall be filed with the Internal Revenue
Service or any state and local tax authority unless, at least 30 days prior to
the time for the filing of any such returns, including any extension of time for
filing (but in no event later then three and a half months after the end of each
Partnership Year), such returns have been submitted to the Class III Limited
Partner, the Class IV Limited Partner and the Class V Limited Partner for review
and approval and the New General Partner, the Class III Limited Partner, the
Class IV Limited Partner and the Class V Limited Partner have consented to the
filing of such returns. The New General Partner, at the Partnership's expense,
shall cause the independent public accountants, selected pursuant to Section
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12.2 hereof, to prepare any reports or analyses with respect to the return
requested by any Partner.
(b) Within ninety (90) days of the end of each Partnership Year,
the Partnership shall prepare and mail, or cause its independent public
accountants, selected pursuant to Section 12.2 hereof, to prepare and mail, to
each Partner and, to the extent necessary, to each former Partner (or his or its
legal representatives), a report setting forth in sufficient detail such
information as is required to be furnished to such Partners by law (E.G.,
Section 6031(b) of the Code and the regulations thereunder) which shall enable
such Partners or former Partners (or his, its or their legal representatives) to
prepare their respective federal and state and local income tax or information
returns in accordance with the laws, rules and regulations then prevailing.
12.4.1 ELECTIONS. To the extent that the Partnership may be or is
required, to make elections for federal, state or local income tax purposes, and
to the extent that Partners may be or are required to make elections concerning
the business and properties of the Partnership and those elections may not be
made in different ways by different Partners, the elections shall be made by the
New General Partner, with the prior written consent of the Class IV Limited
Partner (in order to preserve and protect the financial investments of each
partner and avoid self-dealing by the New General Partner). The Partners shall
be required to treat a Partnership item for any taxable year on their federal,
state or local income tax returns in a manner that is consistent with the
treatment of the Partnership item on the Partnership federal, state or local
income tax return with respect to such year.
12.4.2 CHANGE OF PARTNERS' INTERESTS. If there is a change in
the Percentage Interests of the Partners during a Partnership Year, the New
General Partner may elect, subject to the prior written consent of the Class IV
Limited Partner, to adopt either (1) the interim closing of the books method,
whereby the portion of the Partnership Year beginning with the first day of the
Partnership Year (or the first day following an earlier change during that year)
and ending with the date of the change shall be treated as if it were a separate
Partnership Year and the Partnership's Net Income or Net Loss for the entire
Partnership Year (excluding any net gains or losses from dispositions of
Partnership property) shall be allocated
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to the separate Partnership Years in proportion to the number of days in each;
and the Partnership's net gains and losses from dispositions of Partnership
property shall be allocated to the separate Partnership Years in which the
dispositions were consummated; or (2) the pro rata method, whereby the
Partnership's Net Income or Net Loss (including any net gains or losses from
dispositions of Partnership property) shall be prorated among the Partners
according to some reasonable method, previously consented to by the Class IV
Limited Partner, which reflects the portion of the Partnership Year for which
the Partner was a partner of the Partnership.
12.4.3 TAX MATTERS PARTNER. (a) The New General Partner shall be
the "tax matters partner" (as such term is defined in Section 6231(a)(7) of the
Code or under any corresponding provisions of state or local law) for the
Partnership.
(b) The Tax Matters Partner shall exercise the duties and
responsibilities provided in Subchapter C of Chapter 63 of the Code and this
Agreement. Notwithstanding the previous sentence, the Tax Matters Partner,
unless otherwise required by law, (i) shall not take any action pursuant to this
Section 12.4.3 unless such action has been consented to by the Class III Limited
Partner, the Class IV Limited Partner and the Class V Limited Partner and (ii)
in its capacity as Tax Matters Partner, shall perform all such duties and
responsibilities as directed by the Class IV Limited Partner; PROVIDED, HOWEVER,
that in the event the Tax Matters Partner is required to give its approval or
consent in its capacity as the New General Partner with respect to a matter
under this Agreement, the Tax Matters Partner shall not be subject to clauses
(i) and (ii) of this sentence in the giving or withholding of such approval or
consent. The Tax Matters Partner shall be reimbursed by the Partnership for
reasonable expenses incurred as a result of acting in that capacity, including
fees of outside counsel and public accountants.
(c) The Tax Matters Partner shall keep each Partner informed of all
administrative and judicial proceedings for the adjustment at the Partnership
level of Partnership items, and shall provide the Class IV Limited Partner and
any other Partners copies of any notices or communications received from the
Internal Revenue Service or any state or local tax authority. The other
Partners shall promptly provide to the Tax Matters Partner copies of all
correspondence to or from, or summaries of any other communications with, the
Internal Revenue Service or any state or local tax authority regarding any
aspect of the Partnership and Partnership items.
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(d) The Tax Matters Partner shall be responsible for all
negotiations on behalf of the Partnership with the Internal Revenue Service or
the Departments of the Treasury or Justice or any state or local tax authority
with respect to the income tax treatment of Partnership items, and shall provide
the Class IV Limited Partner the opportunity to participate, at its expense, in
any such negotiations. Moreover, the Tax Matters Partner shall not bind the
Class III Limited Partner, the Class IV Limited Partner, the Class V Limited
Partner or any other Partner to a settlement agreement unless that Partner has
given its written consent to such agreement. In addition, the New General
Partner or Tax Matters Partner (whichever may have the authority) shall not
agree to any settlement of any examination or audit of any entity in which the
Partnership owns an interest without the consent of the Class III Limited
Partner, the Class IV Limited Partner and the Class V Limited Partner.
(e) The Tax Matters Partner shall not file a (i) request for an
administrative adjustment of any Partnership item under Section 6227(b) of the
Code, (ii) petition for readjustment of Partnership items under Section 6226(a)
of the Code, or (iii) petition for an adjustment with respect to Partnership
items under Section 6226(a) of the Code without first receiving the written
approval of the Class IV Limited Partner and notifying all other Partners of the
intended action (including the proposed treatment of the Partnership item(s) and
the proposed court, if applicable). No Partner shall file a (1) request for an
administrative adjustment of Partnership items under Section 6227(a) of the
Code, (2) petition for readjustment of Partnership items under Section 6226(b)
of the Code, or (3) civil action for refund under Section 6228(b)(2) of the Code
without first giving reasonable advance notice of the intended action (including
the proposed treatment of the Partnership item(s) and the proposed court, if
applicable) to the New General Partner, the Class III Limited Partner, the Class
IV Limited Partner and the Class V Limited Partner, and no Partner shall appear
before a court in connection with any of the foregoing actions or file a request
for an administrative adjustment of Partnership items under Section 6227(a) of
the Code without first receiving written approval of the New General Partner,
the Class III Limited Partner, the Class IV Limited Partner and the Class V
Limited Partner.
(f) The Tax Matters Partner has an obligation to perform its duties
as Tax Matters Partner in such a manner as will give effect to the terms of this
Agreement and will best serve the interests of the Partnership and the
respective interests of all the Partners, including the Tax Matters Partner.
Notwithstanding the foregoing, the Tax
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Matters Partner shall not be liable to the Partnership, any Partner or any third
party, for any action taken or omitted to be taken by the Tax Matters Partner in
reliance on (i) an express provision of this Agreement, (ii) the instructions of
the Class IV Limited Partner or (iii) the advice of the Partnership's
independent public accountants selected pursuant to Section 12.2 hereof or the
opinion of tax counsel of recognized standing, in each case that such action or
omission to act is required by law or the provisions of this Agreement.
(g) The provisions of this Section regarding the Tax Matters
Partner shall survive the termination of this Agreement or the termination of
any Partner's interest under this Agreement and shall remain binding on the
Partners for a period of time necessary to resolve with the Internal Revenue
Service or any state or local tax authority all matters regarding the taxation
of the Partnership. The terms used in this Section 12.4.1 through 12.4.3 shall
have the meaning accorded them in Sections 6221 through 6232 of the Code.
ARTICLE 13
TRANSFERS
13.1 GENERAL PARTNERS.
(a) Except as otherwise expressly permitted in Section 13.10 hereof
and as provided in the Partnership Interests Redemption Agreement, none of the
General Partners shall resign, withdraw from the Partnership, liquidate, take
any action that would constitute an event of Bankruptcy or any other event that
would cause such General Partner to cease to be a general partner of the
Partnership, or assign, transfer or otherwise dispose of any of its interest as
a general partner of the Partnership.
(b) For purposes of this Section 13.1, if Cablevision, V Cable or
any of their respective Subsidiaries proposes to enter into any transaction or
series of transactions whereby V Cable GP, Inc. would cease to be a directly or
indirectly wholly-owned Subsidiary of Cablevision and V Cable, such transaction
or series of transactions, unless consented to (to the extent permitted by
applicable law) by the Class IV Limited Partner, shall be deemed to be an
assignment of V Cable GP, Inc.'s Partnership Interest and shall be subject to
the provisions of this Section 13.1. For purposes of this Section 13.1, a
Change in Control shall be deemed to be an assignment of the
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Existing General Partner's Partnership Interest and shall be subject to the
provisions of this Section 13.1.
(c) Any other provision of this Agreement to the contrary
notwithstanding, if any General Partner resigns or withdraws from the
Partnership in violation of this Agreement or takes any action of the type
described in Section 9.3(vii) hereof with respect to itself, or any other event
occurs that would cause a General Partner to cease to be a general partner of
the Partnership, then such General Partner or former General Partner shall not
in respect of such resignation, withdrawal, action or event be entitled to the
return of, or any payment in respect of, its Capital Contribution, and shall not
be entitled to continue to participate in any profits, income or gain of the
Partnership accruing after the date of such resignation, withdrawal, action or
event or have any other rights and powers of a general partner hereunder and
shall not be entitled to any distribution which exceeds the positive balance, if
any, of the balance of its Capital Account as of the end of the month in which
such resignation, withdrawal, action or event took place (based on an unaudited
interim closing of the Partnership's books as of the end of such month), except
that such General Partner or former General Partner and its Capital Account
shall be subject to continuing losses of the Partnership. Such payment shall be
made at the time as such amount would have been distributed (subject to the
preceding sentence) if the General Partner resigning, withdrawing or taking such
action or as to which such an event has occurred had remained as a General
Partner in the Partnership. Upon any such resignation or withdrawal from the
Partnership of a General Partner in violation of this Agreement or other event
that would cause a General Partner to cease to be a general partner of the
Partnership, other than in each case with respect to the sole remaining general
partner of the Partnership, the interest of such General Partner shall for all
purposes of this Agreement automatically be converted into a limited partner
interest and such General Partner shall remain a limited partner of the
Partnership until such time as such General Partner would have been able to
resign or withdraw from the Partnership without violation of this Agreement. In
the event of such resignation or withdrawal by the then sole remaining General
Partner or the taking of any action by the sole remaining General Partner of the
type described in Section 9.3(vii) as to itself, the Partnership shall be
dissolved unless the Partners elect to carry on the business of the Partnership
by election of one or more substitute general partners as provided in Section
14.1 hereof. If such resigning or withdrawing General Partner is the Existing
General Partner and the Existing General Partner is
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the then sole remaining General Partner, any substitute general partner elected
in accordance with the immediately preceding sentence shall acquire a 1%
Percentage Interest. Upon the payment of a Capital Contribution by any such
substitute general partner to the Partnership of an amount equal to the fair
market value of the interest in the Partnership received by it (which shall be
determined by the Class IV Limited Partner) or upon the acquisition from one or
more other Partners of at least a 1% Percentage Interest, the written agreement
of the substitute general partner to be bound by the terms of this Agreement and
the admission of the substitute general partner as a general partner of the
Partnership, the Existing General Partner shall cease to be a general partner of
the Partnership and the substitute general partner shall thereafter serve as a
general partner of the Partnership subject to all of the terms, conditions and
liabilities to which the Existing General Partner was then subject. In no event
shall a substitute general partner have any greater rights in the Partnership
than the former Existing General Partner. Except with respect to a sale of the
Existing General Partner's Interest to the substitute general partner, upon the
admission of a substitute general partner as a replacement for the Existing
General Partner, the Existing General Partner's Partnership Interest shall for
all purposes of this Agreement automatically be converted into a limited partner
interest. Notwithstanding anything in this paragraph (c) to the contrary, upon
any foreclosure pursuant to the G.P. and L.P. Non-Recourse Guarantee and Pledge
Agreement (as defined in the USC Loan Documents), GE Capital or any Person
designated by GE Capital may, to the extent not prohibited by applicable law,
become a substitute general partner, which shall then hold the Existing General
Partner's Partnership Interest previously held by the Existing General Partner
prior to the conversion of such interest into a limited partner interest
pursuant to this Section 13.1(c). Nothing in this Section 13.1(c) shall limit
any other remedies available to the Partnership or any Partner in connection
with any breach of this Agreement.
(d) No General Partner may pledge, mortgage or otherwise
encumber or grant any security interest or lien in or against all or any portion
of his or its Interest except for a pledge to GE Capital or any other lender or
assignee under the USC Loan Documents of his or its Partnership Interest or
right to receive distributions (including liquidating distributions) from the
Partnership.
(e) The Class I Partners have entered into this Agreement in
reliance upon the duties of loyalty, trust and confidence which the Class II
General Partner will undertake
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as a general partner entitled to designate members of the USC Partners'
Committee. The Class II General Partner accepts this relationship of loyalty,
trust and confidence the Class I Partners have placed in the Class II General
Partner under this Agreement. Accordingly, the Class II General Partner agrees
that the Class I Partners shall not be required to accept performance (including
the designation of members of the USC Partners' Committee) under this Agreement
from the Class II General Partner if there occurs a Change in Control of the
Class II General Partner, including, without limitation, an event of Bankruptcy
of the Class II General Partner (including, without limitation, instances where
the Class II General Partner becomes a debtor in possession under the Bankruptcy
Code, or any trustee is appointed for the Class II General Partner under the
Bankruptcy Code). If any such event occurs, unless the Class II General Partner
is then the sole remaining general partner of the Partnership, the interest of
the Class II General Partner shall for all purposes of this Agreement
automatically be converted into a limited partner interest (on the same terms as
provided for in Section 13.1(c) above) for all purposes under this Agreement.
13.2 TRANSFER OF LIMITED PARTNER'S INTEREST.
(a) Except as expressly permitted by this Section 13.2 and as
provided in the Partnership Interests Redemption Agreement, no Limited Partner
may sell, transfer, assign, pledge, mortgage, bequeath or otherwise dispose of
or encumber or grant any security interest or lien in or against (each, a
"Transfer") all or any portion of his or its Interest; PROVIDED, HOWEVER, that
each of the Class III Limited Partner, the Class IV Limited Partner and the
Class V Limited Partner and their respective assignees may transfer their
respective interests to a Subsidiary of General Electric Company that consents
in writing in form reasonably satisfactory to the New General Partner to be
bound by the terms of this Agreement, including without limitation, the
agreements contained in Article 15, as if it were the assignor.
(b) Notwithstanding the provisions of Section 13.2(a):
(i) any Original Limited Partner may Transfer any part of
his or its Partnership Interest to any other Original Limited Partner
to the extent permitted by the USC Loan Documents;
(ii) any Original Limited Partner who is a natural Person
may Transfer any part of his
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Partnership Interest to any of his parents, spouse, children or siblings or
to a trustee or trustees of a trust for the benefit of one or more of them
or their issue to the extent permitted by the USC Loan Documents;
(iii) any Original Limited Partner that is a trust may
Transfer any part of its Partnership Interest to the beneficiary or
beneficiaries of that trust, to the issue or a sibling of that
beneficiary, or to a trust that has the same classes of beneficiaries
as the transferor trust to the extent permitted by the USC Loan
Documents;
(iv) any Partner may at any time make a pledge to GE
Capital of his or its Partnership Interest or right to receive
distributions (including liquidating distributions) from the
Partnership;
(v) the Class III Limited Partner and any transferee
thereof may Transfer its Class III Partnership Interest without
restriction;
(vi) at any time after the sale of all or substantially
all of the assets of the Partnership the Class IV Limited Partner and
any transferee thereof may Transfer its Class IV Partnership Interest
without restriction; and
(vii) the Class V Limited Partner and any transferee
thereof may Transfer its Class V Partnership Interest without
restriction.
PROVIDED, HOWEVER, that as part of any Transfer made pursuant to this Section
13.2(b), no Original Limited Partner may assign his or its right to any
distribution pursuant to Section 7.2(h) of this Agreement; and PROVIDED,
FURTHER, that no Transfer permitted by this Section 13.2(b) shall be effective
for any purpose unless:
(i) the transferee consents in writing in form reasonably
satisfactory to the New General Partner to be bound by the terms of
this Agreement, including without limitation, the agreements
contained in Article 15, as if it were the assignor;
(ii) the New General Partner consents in writing to the
Transfer, which consent shall be
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given unless such assignment would, in the discretion of the New
General Partner, jeopardize the status of the Partnership as a
partnership for federal income tax purposes, or would violate, or
cause the Partnership to violate, any applicable law or governmental
rule or regulation;
(iii) if reasonably requested by the New General Partner or the
Class IV Limited Partner, an opinion from counsel to the transferee
(which counsel and opinion shall be satisfactory to the New General
Partner or the Class IV Limited Partner, as the case may be) is
furnished to the Partnership stating that, in the opinion of said
counsel, such Transfer would not jeopardize the status of the
Partnership as a partnership for federal income tax purposes, cause
a termination of the Partnership for purposes of the then applicable
provisions of the Code or violate, or cause the Partnership to
violate, any applicable law or governmental rule or regulation.
By executing this Agreement, each Limited Partner shall be deemed to have
consented to any assignment of a Limited Partner Interest consented to by the
New General Partner. Notwithstanding the provisions of this Section 13.2, no
transferee of any Limited Partner Interest shall become a limited partner of the
Partnership except as and to the extent provided in Section 13.6 hereof.
(c) Except for the transactions contemplated by the Partnership
Interests Redemption Agreement, if General Electric Company or any of its
Subsidiaries proposes to enter into any transaction or series of transactions
whereby any Subsidiary of General Electric Company that holds a Class III
Limited Partnership Interest, a Class IV Limited Partnership Interest or a
Class V Limited Partnership Interest (as the case may be) would cease to be a
Subsidiary of General Electric Company, such transaction or series of
transactions shall be deemed to be a Transfer of such Class III Limited
Partnership Interest, Class IV Limited Partnership Interest or Class V Limited
Partnership Interest (as the case may be) and shall be subject to the provisions
of this Section 13.2. If Cablevision or any of its Subsidiaries proposes to
enter into any transaction or series of transactions whereby V Cable would cease
to be a directly or indirectly wholly-owned Subsidiary of Cablevision, such
transaction or series of transactions shall be deemed to be a Transfer of V
Cable's Class I Limited Partnership Interest and Class VI Limited Partnership
Interest.
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(d) Each Limited Partner agrees, upon request of the New General
Partner, to execute such certificates or other documents and perform such acts
as the New General Partner reasonably deems appropriate to preserve the status
of the Partnership as a limited partnership after the completion of any Transfer
of an Interest under the laws of the jurisdiction in which the Partnership is
conducting its operations. For purposes of this Section 13.2, any transfer of
an Interest, whether voluntary or by operation of law, shall be considered a
Transfer.
(e) Each assigning Limited Partner agrees to pay, prior to the time
the New General Partner consents to a Transfer of its Interest, all expenses,
including attorneys' fees, incurred by the Partnership in connection with such
Transfer.
13.3 TRANSFEREE'S RIGHTS. Any purported Transfer of an Interest or
rights attributable to an Interest which is not in compliance with this
Agreement is hereby declared to be null and void and of no force and effect
whatsoever. A permitted transferee of any Interest shall be entitled to receive
distributions of cash or other property from the Partnership and to receive
allocations of the income, gains, credits, deductions, profits and losses of the
Partnership attributable to such Interest after the effective date of the
Transfer, but shall not be entitled to exercise any other of the rights of a
limited partner against the Partnership or any Partner, unless such transferee
shall become a limited partner of the Partnership in accordance with Section
13.6. The "effective date" of a Transfer of an Interest in the Partnership
under the provisions of this Section 13.3, except as otherwise consented to by
the New General Partner, shall be the first day of the next month, following
receipt by the New General Partner of written notice of Transfer and fulfillment
of all conditions precedent to such Transfer provided for in this Agreement.
13.4 ALLOCATIONS AND DISTRIBUTIONS SUBSEQUENT TO TRANSFER. All
profits and losses of the Partnership attributable to any Interest transferred
by reason of a Transfer and any distributions made with respect thereto shall be
allocated (a) in respect of the portion of the Partnership Year ending on the
effective date of the Transfer, to the transferor and (b) in respect of
subsequent periods, to the transferee.
13.5 SATISFACTORY WRITTEN TRANSFER REQUIRED. Anything herein to
the contrary notwithstanding, the Partnership, the General Partners and the
Manager shall be entitled to treat the transferor of an Interest in the
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Partnership as the absolute owner thereof in all respects, and shall incur no
liability for distributions made in good faith to it, until such time as a
written Transfer that conforms to the requirements of this Article 13 has been
received by and recorded on the books of the Partnership and the transferee has
complied with the requirements of Section 13.2(a)(i).
13.6 SUBSTITUTED LIMITED PARTNER. Notwithstanding anything in this
Agreement to the contrary, in addition to the requirements of Section 13.2(a),
the transferee of any limited partner interest in the Partnership shall not
become a substituted limited partner in place of its transferor without the
written consent of the New General Partner, which consent may be granted or
withheld in the sole and absolute discretion of the New General Partner and in
any event will not be given effect unless all of the following conditions are
satisfied:
(a) a duly executed and acknowledged written instrument of
Transfer, being either a certificate evidencing the Interest in the Partnership
owned by the transferor prior to such Transfer or some other instrument approved
by the New General Partner, is filed with the Partnership setting forth the
intention of the transferor that the transferee become a substituted limited
partner in its place;
(b) the transferee agrees in writing to be bound by the terms of
this Agreement and such transferee (other than a transferee of the Class III
Limited Partnership Interest, the Class IV Limited Partnership Interest or the
Class V Limited Partnership Interest) executes an irrevocable Power of Attorney,
satisfactory to the New General Partner, appointing the New General Partner as
the transferee's lawful attorney-in-fact for the purposes specified in Article
15;
(c) the transferor and transferee execute and acknowledge such
other instruments, in form and substance reasonably satisfactory to the New
General Partner, as the New General Partner may deem necessary or desirable to
effect such substitution;
(d) prior to the substitution, the transferring Limited Partner
pays all reasonable expenses, including attorneys' fees, incurred by the
Partnership in connection with such Transfer and substitution; and
(e) if requested by the New General Partner, an opinion from
counsel to the transferee (which opinion shall
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be satisfactory to the New General Partner) is furnished to the Partnership
stating that, in the opinion of said counsel, such substitution would not
jeopardize the status of the Partnership as a partnership for federal income tax
purposes, or cause a termination of the Partnership for the purposes of the
then-applicable provisions of the Code, or violate, or cause the Partnership to
violate, any applicable law or governmental rule or regulation.
By executing this Agreement, each Limited Partner shall be deemed to
have consented to any substitution of a transferee in the place and stead of a
transferring Limited Partner permitted by the New General Partner and, if
required by Section 13.6 hereof, the Class IV Limited Partner.
13.7 SUBSTITUTION REQUIRED FOR VOTE. Unless and until a transferee
of an Interest becomes a substituted Limited Partner, such transferee shall not
be entitled to exercise or withhold any vote or consent with respect to such
Interest.
13.8 EFFECTIVE DATE; SCHEDULE A. The effective date of a
substitution shall be the first day of the next month following receipt by the
New General Partner of the instrument of assignment effecting substitution and
fulfillment of all conditions precedent to such substitution provided for in
this Agreement. Schedule A hereto shall be automatically amended upon the
effective date of each such substitution to reflect such substitution.
13.9 DEATH, BANKRUPTCY, DISSOLUTION OR INCAPACITY OF A LIMITED
PARTNER. The death, Bankruptcy, dissolution or adjudicated incompetency of a
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the profits and losses of the Partnership,
to receive distributions and to assign its Interest pursuant to Section 13.2(a)
or cause the substitution of a substitute limited partner pursuant to
Section 13.6 shall, on the happening of such an event, devolve on its successor,
executor, administrator, guardian, conservator or other legal representative for
the purpose of settling its estate or administering its property, or in the
event of the death of one whose interest is held in joint tenancy, pass to the
surviving joint tenant, subject to the terms and conditions of this Agreement,
and the Partnership shall continue as a limited partnership. Such successor or
Personal representative, however, shall become a substituted limited partner
only as provided in Section 13.6 with respect to an assignee of a Limited
Partner's Interest. The successor or estate of the Limited Partner shall be
liable
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for all the obligations of the deceased, bankrupt, dissolved or incapacitated
Limited Partner.
13.10 OPTION ON THE CLASS II PARTNERSHIP INTERESTS. Subject to the
provisions of Section 9.11 of this Agreement, the Class IV Limited Partner or
its designee, which designee shall be either (i) a direct or indirect Subsidiary
of General Electric Company, or (ii) satisfactory to the New General Partner in
its sole discretion, shall have the option, exercisable at any time upon not
less than five (5) business days' notice to the Class II Partners, to purchase
from the Class II Partners all of the Class II Partnership Interests for an
aggregate of $4 million in cash LESS any amounts previously received by the
Class II Partners pursuant to Sections 6.11 and 7.2(b) hereof, such amount to be
allocated among the Class II Partners in accordance with their relative
Percentage Interests; PROVIDED, however, that as long as the Partnership shall
not have defaulted under the Partnership Interests Redemption Agreement or such
agreement has not terminated, the Class IV Limited Partners agree not to
exercise or transfer to any person (other than the New General Partner or an
affiliate thereof) the option granted pursuant to this Section 13.10.
13.11 RIGHTS SUBSEQUENT TO TRANSFER OF INTERESTS
Upon the Transfer of any Partner's Interest or Interests, as the case may
be, all of such Partner's rights under this Agreement, except for those rights
held by a former Partner with respect to the time such person was a partner,
shall be extinguished.
ARTICLE 14
DISSOLUTION
14.1 EVENTS OF DISSOLUTION.
(a) The Partnership shall continue until December 31, 2030.
Notwithstanding the foregoing, the Partnership shall be dissolved upon the
earliest to occur of the following events:
(i) the removal, withdrawal, resignation, liquidation, event
of Bankruptcy or any other event that causes a General Partner to
cease to be a general partner of the Partnership (an "Event of
Withdrawal") of any General Partner (subject to
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the right to continue the Partnership pursuant to the second proviso
below);
(ii) the Partnership's operations terminate and the Partnership
sells, exchanges or otherwise disposes of all or substantially all
of its assets, which shall cause an immediate dissolution of the
Partnership; or
(iii) the New General Partner and the Class IV Limited Partner
elect to dissolve the Partnership;
PROVIDED, HOWEVER, that upon the occurrence of an Event of Withdrawal, the
Partnership shall not be dissolved if (i) at the time of such Event of
Withdrawal there is at least one remaining General Partner who agrees to carry
on the business of the Partnership (and such remaining General Partner is hereby
authorized to carry on the business of the Partnership upon such an Event of
Withdrawal), or (ii) within ninety (90) days after such Event of Withdrawal all
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of such Event of Withdrawal, of one or
more general partners of the Partnership.
(b) In the event of the continuation of the Partnership as provided
in this Section 14.1, the successor general partner(s) will exercise the rights,
powers and obligations hereunder of the Former General Partner (excluding,
however, any obligations of the Former General Partner to the Partners
occasioned by any breach or other violation by the Former General Partner of the
terms of this Agreement or by the Former General Partner's resignation or
withdrawal as general partner in violation of this Agreement), and shall have
such interest in the profits, losses and distributions of the Partnership as
shall be agreed upon by the successor general partner(s) and the Class III
Limited Partner, the Class IV Limited Partner and the Class V Limited Partner
upon the execution by such successor general partner(s) of a written acceptance
of this Agreement.
14.2 FINAL ACCOUNTING. Upon the dissolution of the Partnership and
the failure to continue the Partnership as provided in Section 14.1, a proper
accounting shall be made by the Partnership's independent public accountants
from the date of the last previous accounting to the date of dissolution.
14.3 LIQUIDATION AND DISTRIBUTION OF ASSETS. Upon the dissolution
of the Partnership, the Class I General
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Partner or a liquidating trustee appointed by the Class I General Partner, with
the approval (subject to the provisions of Section 9.11 of this Agreement) of
the Class IV Limited Partner, shall proceed to sell or liquidate the
Partnership's assets within a reasonable time and, after paying or making
reasonable provision for all liabilities (including contingent, conditional or
unmatured liabilities known to the Partnership) to creditors, including Partners
who are creditors, of the Partnership, shall distribute the Partnership's cash
and other assets among the Partners in accordance with the provisions of this
Section 14.3.
14.3.1 The proceeds derived from the sale or liquidation of the
Partnership's assets, together with any assets to be distributed in kind, shall
be distributed to the Partners in the amounts and order of priority set forth in
Section 7.2 hereof; PROVIDED, HOWEVER, that no Partner shall receive a
distribution of an amount which exceeds its positive Capital Account balance
(determined as provided below). If a Partner would be entitled to receive a
distribution which exceeds its positive Capital Account balance, such excess
amount shall instead be distributed (i) first, to Partners whose Capital
Accounts shall have positive balances (after taking into account all other
distributions to be made under this Section 14.3.1 and Section 14.3.2), in the
proportions thereof, until such positive balances shall have been eliminated;
and (ii) the balance, if any, in accordance with the Partners' respective
Percentage Interests.
14.3.2 For purposes of this Section 14.3, (a) Net Income and Net
Loss shall include, in the case of assets distributed in kind, the gain or loss
that would have been recognized by the Partnership if such assets were sold at
their fair market value in a fully taxable transaction, and (b) the Partners'
Capital Accounts shall be determined after making all allocations of Net Income
or Net Loss, and all special allocations required pursuant to Article 8 hereof,
for the year ending with the liquidation of the Partnership and after taking
into account all Capital Contributions or other distributions made, or otherwise
required to be made, for such year.
14.4 CANCELLATION OF CERTIFICATE. Upon the completion of the
distribution of Partnership assets as provided in Section 14.3, or at such other
time as may be required by law, a certificate of cancellation, signed by all
General Partners or, if the General Partners are not winding up the
Partnership's affairs, then by the liquidating trustee, shall be filed with the
Secretary of State of the State of Delaware. The liquidating trustee
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shall take such other actions as may be necessary or appropriate to terminate
the Partnership.
ARTICLE 15
POWER OF ATTORNEY
15.1 APPOINTMENT OF NEW GENERAL PARTNER. Each Limited Partner
(other than the Class I Limited Partner, the Class III Limited Partner, the
Class IV Limited Partner, the Class V Limited Partner and the Class VII Limited
Partner), by the execution of this Agreement, does irrevocably constitute and
appoint the New General Partner, with full power of substitution, as its true
and lawful attorney, in its name, place and stead, to execute, acknowledge,
swear to, deliver, record and/or file, as appropriate (a) this Agreement and any
amendment and/or restatement to this Agreement, (b) the original Certificate and
all amendments thereto required or permitted by law or the provisions of this
Agreement, (c) all certificates and other instruments deemed necessary or
advisable by the New General Partner to carry out the provisions of this
Agreement or to qualify or continue the Partnership as a limited partnership or
partnership wherein the Limited Partners have limited liability in the states
where the Partnership may be conducting its operations, (d) all instruments that
the New General Partner deems appropriate to reflect a change or modification of
this Agreement or the Partnership in accordance with this Agreement, including,
without limitation, the substitution of assignees as substituted limited
partners pursuant to Section 13.6, (e) all conveyances and other instruments
deemed necessary or advisable by the New General Partner to effect the
dissolution and termination of the Partnership, (f) all fictitious or assumed
name certificates required or permitted to be filed on behalf of the Partnership
and (g) all other instruments or papers which may be required or permitted by
law to be filed on behalf of the Partnership.
15.2 DURATION OF POWER. The power of attorney granted pursuant to
Section 15.1 (i) is coupled with an interest and shall be irrevocable and
survive the death, incompetency, Bankruptcy or dissolution of the grantor; (ii)
may be exercised by the New General Partner either by signing separately as
attorney-in-fact for each Limited Partner (other than the Class I Limited
Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class
V Limited Partner and the Class VII Limited Partner) or, after listing all of
the Limited Partners (other than the Class I Limited Partner, the Class III
Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and
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the Class VII Limited Partner) executing an instrument, by signature of the New
General Partner acting as attorneys-in-fact for all of them; and (iii) shall
survive the delivery of an assignment by a Limited Partner (other than the Class
I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner,
the Class V Limited Partner and the Class VII Limited Partner) of the whole or
any fraction of its Partnership Interest, except that, where the assignee of the
whole of such Limited Partner's Partnership Interest has been approved by the
New General Partner and the Class IV Limited Partner, as the case may be, for
admission to the Partnership as a substituted limited partner, the power of
attorney of the assignor shall survive the delivery of such assignment for the
sole purpose of enabling the New General Partner to execute, acknowledge, swear
to, deliver, record and file any instrument necessary or appropriate to effect
such substitution. In the event of any conflict between this Agreement and any
document, instrument, conveyance or certificate executed or filed by the New
General Partner pursuant to such power of attorney, this Agreement shall
control.
15.3 FURTHER ASSURANCES. Each Limited Partner shall execute and
deliver to the New General Partner, within five days after the receipt of the
New General Partner's request therefor, such further designations, powers of
attorney and other instruments as the New General Partner deems reasonably
necessary or appropriate to carry out the provisions of this Agreement.
ARTICLE 16
AMENDMENTS TO AGREEMENT
Except for Section 14.1 hereof, which may only be amended with the
approval or written consent of all of the Partners, this Agreement may be
amended with the approval or written consent of the New General Partner, the
Class I Limited Partner, the Class III Limited Partner, the Class IV Limited
Partner, the Class V Limited Partner and the Class VII Limited Partner.
Notwithstanding anything to the contrary in this Article 16, without the
approval of (i) a majority in Percentage Interest of the Class II Partners
affected thereby, no amendment shall change, alter or modify the provisions of
Section 6.6, Section 6.7, Section 6.11, Section 7.2(a), Section 7.2(b),
Section 7.2(f), Section 10.1 or the provisions of this Article 16 in an
adverse manner to such affected Class II Partner or the provisions of Article 9
in a manner materially adverse to such affected Class II Partner, and (ii) the
Existing General Partner, no amendment
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shall change, alter or modify the provisions of (A) Section 7.2 so as to add any
additional cash distributions prior to the distribution provided for in Section
7.2(b), (B) Section 8.2 so as to allocate additional USC Net Income to the
Existing General Partner or the Class II Limited Partner or (C) Section 6.4 or
Article 8 in an adverse manner to the Existing General Partner or to the Class
II Limited Partners. The New General Partner shall give written notice to all
Partners promptly after any amendment adopted in accordance with this Article 16
has become effective.
ARTICLE 17
MEETINGS OF THE PARTNERS
17.1 MEETINGS. Meetings of the Limited Partners, for any purpose
permitted by this Agreement, may be called by the New General Partner from time
to time, in its discretion. Such meeting shall be held at the principal office
of the Partnership, or at such other place as may be designated by the New
General Partner. Notice of any such meeting shall be delivered to all Partners
in the manner prescribed in Article 18 not fewer than fifteen days nor more than
sixty days before the date of such meeting. The notice shall state the place,
date, hour and purpose or purposes of the meeting. At each meeting of the
Limited Partners, the Limited Partners present or represented by proxy shall
adopt such rules for the conduct of such meeting as they shall deem appropriate.
The expenses of any such meeting, including the cost of providing notice
thereof, shall be borne by the Partnership.
17.2 PROXY. Each Limited Partner may authorize any Person or
Persons to act for it by proxy in all matters in which a Limited Partner is
entitled to participate. Every proxy must be signed by the Limited Partner or
its attorney-in-fact (other than the New General Partner). No proxy shall be
valid after the expiration of six months from the date thereof. Every proxy
shall be revocable by the Limited Partner executing it.
17.3 WRITTEN CONSENTS. Whenever Partners are required or permitted
to take any action by vote or at a meeting, such action may be taken without a
meeting, without prior notice and without a vote, if a written consent setting
forth the action so taken is signed by the Limited Partners owning not less than
the minimum Interests that would be necessary to authorize or take such action
by vote or at a meeting. Notice of any action so taken by written consent shall
be given by the New General Partner to all
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Partners, in the manner prescribed in Article 18, promptly after the taking of
such action.
ARTICLE 18
NOTICES
18.1 METHOD FOR NOTICES. All notices and other communications
hereunder shall be given in writing and shall be deemed to have been duly given
if delivered personally or by overnight courier with receipt acknowledged, upon
such delivery, if transmitted by telecopier to the number(s) designated either
below the signature of each such Person or on Schedule A hereto, upon receipt,
or if mailed by registered or certified mail, postage prepaid, return receipt
requested, five days after being placed in the mail, to the address(es)
designated either below the signature of each such Person or on Schedule A
hereto, or to such other address(es) as any party may specify to the Partnership
in writing from time to time.
18.2 ROUTINE COMMUNICATIONS. Notwithstanding the provisions of
Section 18.1, routine communications such as distribution checks or financial
statements of the Partnership may be sent by first-class mail, postage prepaid.
18.3 COMPUTATION OF TIME. In computing any period of time under
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. The last day of the period
so computed shall be included, unless it is a Saturday, Sunday or legal holiday
in the State of Delaware, in which event the period shall run until the end of
the next day which is not a Saturday, Sunday or legal holiday in the State of
Delaware.
ARTICLE 19
INVESTMENT REPRESENTATIONS
19.1 INVESTMENT PURPOSE. Each Limited Partner represents and
warrants to the General Partners that it has acquired its Partnership Interests
for its own account, for investment only and not with a view to the distribution
thereof. Each Limited Partner recognizes that an investment in the Partnership
is speculative and involves certain risks.
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19.2 INVESTMENT RESTRICTION. Each Limited Partner recognizes that
(a) the Interests have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon an exemption from such
registration, and agrees that it will not sell, offer for sale, transfer, pledge
or hypothecate its Interests in the absence of an effective registration
statement covering such Interests under the Securities Act, unless such sale,
offer of sale, transfer, pledge or hypothecation is exempt from registration for
any proposed sale and (b) the restrictions on transfer may severely affect the
liquidity of its investment.
ARTICLE 20
GENERAL PROVISIONS
20.1 ENTIRE AGREEMENT. This Agreement, the Partnership Interests
Redemption Agreement and the Business Plan, constitutes the entire agreement
among the parties thereto with respect to the subject matter thereof, and
supersedes any prior agreement or understanding among the parties thereto with
respect to the subject matter thereof.
20.2 AMENDMENT; WAIVER. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by an
instrument in writing signed by the party sought to be charged with such
amendment or waiver.
20.3 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
giving effect to the provisions, policies or principles thereof relating to
choice or conflict of laws.
20.4 BINDING EFFECT. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, heirs, successors and
assigns.
20.5 COUNTERPARTS. This Agreement may be executed either
personally or by an attorney-in-fact, in any number of counterparts, each of
which shall be considered an original.
20.6 SEPARABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to
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the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
20.7 HEADINGS. The sections and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
20.8 GENDER AND NUMBER. Whenever required by the context hereof,
the singular shall include the plural and the plural shall include the singular.
The neuter gender shall include the feminine and masculine genders.
20.9 WAIVER OF PARTITION. Each Partner hereby irrevocably waives,
during the term of the Partnership, any right that he may have to maintain any
action for partition with respect to any Partnership property.
20.10 PARTNERSHIP TAX REPORTING. All parties to this Agreement
agree that, for all federal, state and local income tax purposes, including,
without limitation, the filing of all tax returns, reports or information
returns or communication with the Internal Revenue Service, they shall not take
a position which is inconsistent with the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
either directly or by an attorney-in-fact, to be effective as of the day and
year first above written.
GENERAL PARTNERS: LIMITED PARTNERS:
V CABLE GP, INC. Those Persons named on
Schedule A hereto
By:/s/ Barry O'Leary /s/ Elliot H. Stein, Jr.
----------------- ------------------------
Name: Barry O'Leary Elliot H. Stein, Jr.
Title:
U.S. CABLE PARTNERS /s/ I. Martin Pompadur
----------------------
I. Martin Pompadur
By: IMP Cable Management, Inc., POMPADUR TRUST NO. 1
a general partner
By:/s/ I. Martin Pompadur By:/s/ Marian Pompadur
---------------------- -------------------
Name: I. Martin Pompadur Marian Pompadur, Trustee
Title: President
By:/s/ Bertram A. Abrams
---------------------
Bertram A. Abrams, Trustee
By:___________________________
Jana Pompadur, Trustee
By: Golden Holdings Inc., V CABLE, INC.
a general partner
By:I. Martin Pompadur By: B. O'Leary
------------------ ----------
Name: Name:
Title: Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Thomas P. Waters
--------------------
Name: Thomas P. Waters
Title: Vice President
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THE RULE TRUST DATED
June 11, 1987
By: /s/ Betty L. Rule
------------------
Betty L. Rule, Trustee
VC HOLDING, INC.
By: /s/ Barry O'Leary
-----------------
Name: Barry O'Leary
Title:
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<PAGE>
SCHEDULE A
U.S. CABLE TELEVISION GROUP, L.P.
Names of Partners, Type of Partner,
Percentage Interest and Class of Partnership Interest
<TABLE>
<CAPTION>
Type of
Partner (i.e., Initial
general or Percentage Class of
Partner limited) Interest Interests
- ------- -------------- ---------- ---------
<S> <C> <C> <C>
V Cable GP, Inc. Class I General 1% Class I General
c/o Cablevision Partner, a general Partnership
Systems Corporation partner Interest
One Media Crossways
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
V Cable, Inc. Class I Limited 19% Class I Limited
c/o Cablevision Partner, a limited Partnership
Systems Corporation partner Interest
One Media Crossways
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
U.S. Cable Partners Class II General 1% Class II General
350 Park Avenue Partner, a general Partnership
New York, partner Interest
New York 10022
Attention: I. Martin
Pompadur
Telecopy: (212)
980-8374
I. Martin Pompadur Class II Limited 2.71586% Class II Limited
10 Highland Court Partner, a limited Partnership
Greenwich, partner Interest
CT 06381
Telecopy: ( )
[ ]
A-1
<PAGE>
<CAPTION>
Type of
Partner (i.e., Initial
general or Percentage Class of
Partner limited) Interest Interests
- ------- -------------- ---------- ---------
The Rule Trust dated Class II Limited 3.44556% Class II Limited
June 11, 1987 Partner, a limited Partnership
c/o Hayes, Hume, partner Interest
Petas, Richards &
Cohanne
10000 San Monica
Blvd. Suite 450
Los Angeles,
California 90069
Telecopy:
Attention : Mary
Muir, Esq.
Pompadur Trust No. 1 Class II Limited 0.72898% Class II Limited
350 Park Avenue Partner, a limited Partnership
New York, partner Interest
New York 10022
Attention: I. Martin
Pompadur
Telecopy: (212)
[ ]
Elliot H. Stein, Jr. Class II Limited 0.10960% Class II Limited
c/o Commonwealth Partner, a limited Partnership
Partners partner Interest
245 Park Avenue
New York, NY 10017
Telecopy:
General Electric Class III Limited 0% Class III
Capital Corporation Partner, a limited Limited
260 Long Ridge Road partner Patnership
Stamford, Connecticut Interest
06902
Attention: Region
Operations Manager
and John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047,
respectively.
A-2
<PAGE>
<CAPTION>
Type of
Partner (i.e., Initial
general or Percentage Class of
Partner limited) Interest Interests
- ------- -------------- ---------- ---------
General Electric Class IV Limited 72% Class IV Limited
Capital Corporation Partner, a limited Partnership
260 Long Ridge Road partner Interest
Stamford, Connecticut
06902
Attention: Region
Operations Manager
and John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047,
respectively
General Electric Class V Limited 0% Class V Limited
Capital Corporation Partner, a limited Partnership
260 Long Ridge Road partner Interest
Stamford, Connecticut
06902
Attention: Region
Operation Manager and
John Sprole
Telecopy: (203)
357-4025 and (203)
357-3047,
respectively
VC Holding, Inc. Class VII Limited 0% Class VII
c/o Cablevision Partner, a limited Limited
Systems Corporation partner Partnership
One Media Crossways Interest
Woodbury, New York
11797
Attention: General
Counsel
Telecopy: (516)
496-1780
</TABLE>
A-3
<PAGE>
SCHEDULE B
CABLE BROKERS
Communications Equity Associates Inc.
Daniels & Associates
Waller Capital Corporation
Lazard Freres & Co.
Merrill Lynch, Pierce, Fenner & Smith, Inc.
B-1
<PAGE>
SCHEDULE C
EXEMPT LIMITED PARTNERS
General Electric Capital Corporation, as Class III Limited Partner,
Class IV Limited Partner and Class V Limited Partner.
C-1
<PAGE>
CABLEVISION SYSTEMS CORPORATION
1996 EMPLOYEE STOCK PLAN
1. PURPOSE. The purpose of the Cablevision Systems Corporation 1996
Employee Stock Plan, is to compensate key employees of the Company and its
Affiliates who are and have been largely responsible for the management and
growth of the business of the Company and its Affiliates and to advance the
interests of the Company by encouraging and enabling the acquisition of a larger
personal proprietary interest in the Company by key employees upon whose
judgment and keen interest the Company and its Affiliates are largely dependent
for the successful conduct of their operations. It is anticipated that such
compensation and the acquisition of such proprietary interest in the Company
will stimulate the efforts of such key employees on behalf of the Company and
its Affiliates, and strengthen their desire to remain with the Company and its
Affiliates. It is also expected that such compensation and the opportunity to
acquire such a proprietary interest will enable the Company and its Affiliates
to attract desirable personnel.
2. DEFINITIONS. When used in this Plan, unless the context otherwise
requires:
(a) "Affiliate" shall mean (i) any corporation controlling,
controlled by, or under common control with the Company or any other
Affiliate, (ii) any corporation in which the Company owns at least five
percent of the outstanding shares of all classes of common shares of such
corporation, (iii) any unincorporated trade or business controlling,
controlled by, or under common control with the Company or any other
Affiliate, and (iv) any unincorporated trade or business in which the
Company owns at least a five percent interest in the capital or profits of
such trade or business.
(b) "Awards" shall mean options, Rights, Restricted Shares or Bonus
Awards which are granted or made under the Plan.
(c) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted at any time.
(d) "Bonus Awards" shall mean awards made pursuant to Section 12.
(e) "Committee" shall mean the Committee of the Board of Directors, as
described in Section 3.
(f) "Company" shall mean Cablevision Systems Corporation, a Delaware
corporation.
(g) "Fair Market Value" on a specified date shall mean the average of
the bid and asked closing prices at which one Share is traded on the over-
the-counter market, as reported on the National Association of Securities
Dealers Automated Quotation System, or the closing price for a Share on the
stock exchange, if any, on which such Shares are primarily traded, but if
no Shares were traded on such date, then on the last previous date on which
a Share was so traded, or, if none of the above is applicable, the value of
a Share as established by the Committee for such date using any reasonable
method of valuation.
<PAGE>
(h) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
(i) "Options" shall mean the stock options issued pursuant to this
Plan.
(j) "Plan" shall mean the Cablevision Systems Corporation 1996
Employee Stock Plan.
(k) "Restricted Period" shall mean the period of time during which
Restrictions shall apply to a Restricted Share, as determined by the
Committee pursuant to Section 11 hereof.
(l) "Restricted Shares" shall mean the Shares granted pursuant to
Section 11 hereof.
(m) "Restrictions" shall mean the restrictions upon the sale,
assignment, transfer, pledge or other disposal or encumbrance on a
Restricted Share as set forth in Section 11 hereof.
(n) "Rights" shall mean the stock appreciation rights issued to the
grantee of an Option pursuant to Section 7 of the Plan to receive from the
Company cash or Shares or a combination of cash or Shares, based on the
excess of the Fair Market Value of the Shares at the time of exercise over
the exercise price of the Shares subject to the related option, subject to
the terms and conditions of the Plan.
(o) "Share" shall mean a share of Class A common stock of the Company,
par value $.Ol.
(p) "Subsidiary" shall mean any "subsidiary corporation," as defined
in Section 424(f) of the Internal Revenue Code.
3. ADMINISTRATION. The Plan shall be administered by the Committee,
which shall consist of at least three members of the Board of Directors of the
Company who shall be appointed by, and shall serve at the pleasure of, the Board
of Directors of the Company. No member of the Committee shall (i) be eligible
to receive an Award under the Plan while serving on the Committee or at any time
within one year prior to his appointment to the Committee, or (ii) receive an
award of equity securities under any other plan of the Company or any of its
Affiliates while serving on the Committee or at any time prior to his
appointment to the Committee, except as permitted by Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") without the member ceasing
to be considered a disinterested person thereunder.
The Committee shall have full authority, subject to the terms of the Plan,
to select the persons to whom Awards shall be granted or made under the Plan, to
set the date of any such Award and any terms or conditions associated with any
such Award. The Committee also shall have the authority to establish such rules
and regulations; not inconsistent with the provisions of the Plan, for the
proper administration of the Plan and to make such determinations and
interpretations under and in connection with the Plan as it deems necessary or
advisable. The
2
<PAGE>
Plan, and all such rules, regulations, determinations and interpretations, shall
be binding and conclusive upon the Company, its stockholders and all employees,
and upon their respective legal representatives, heirs, beneficiaries,
successors and assigns and upon all other persons claiming under or through any
of them.
4. PARTICIPANTS. Except as hereinafter provided, all officers and key
employees of the Company or an Affiliate shall be eligible to receive Awards
under the Plan, except that Options that are intended to qualify as incentive
stock options within the meaning of Section 422 of the Internal Revenue Code
shall be granted only to employees of the Company or a Subsidiary. In addition,
Charles F. Dolan shall not be eligible to receive Awards under the Plan.
Nothing herein contained shall be construed to prevent the making of one or more
Awards at the same or different times to the same employee.
5. SHARES. The Committee may make Awards under this Plan for up to an
aggregate number of Shares equal to the sum of (i) 2,500,000 Shares, which may
be either treasury Shares or authorized but unissued Shares, and (ii) the number
of Restricted Shares, if any, purchased from employees by the Company. If an
Award shall be paid or settled or shall expire, lapse, terminate or be cancelled
for any reason without the issuance of Shares, or if Restricted Shares shall
revert back to the Company, then the Committee may grant Awards with respect to
the Shares subject to any such prior Award or the Restricted Shares which have
reverted back to the Company. Awards payable only in cash shall not reduce the
aggregate remaining number of Shares with respect to which Awards may be made
under the Plan.
The maximum number of Shares which may be issued under the Plan and the
number of Shares with respect to which Awards may be made shall be adjusted to
the extent necessary to accommodate the adjustments provided for in Section 13
hereof as well as those adjustments provided for in grants or awards made prior
to the effective date of the Plan.
6. OPTIONS. Options granted under the Plan shall be either incentive
stock options, within the meaning of Section 422 of the Internal Revenue Code,
or non-qualified options, as determined by the Committee in its sole discretion.
(a) TERMS AND CONDITIONS. The form, terms and conditions of each Option
shall be determined by the Committee and shall be set forth in a certificate or
agreement (the "Option Certificate") signed by the Option holder and an officer
of the Company. The Option Certificate shall state whether or not the option is
an incentive stock option. The Committee may, in its sole discretion, establish
one or more conditions to the exercise of an Option including, without
limitation, conditions the satisfaction of which are measured by performance
criteria applicable to the recipient or the Company, as the Committee may deem
appropriate, provided that, if such Option is designated as an incentive stock
option, then such condition or conditions shall not be inconsistent with Section
422 of the Internal Revenue Code.
(b) EXERCISE PRICE FOR OPTIONS. The exercise price per Share of the
Shares to be purchased pursuant to any Option shall be fixed by the Committee at
the time an Option is granted, but in no event shall it be less than the Fair
Market Value of a Share on the day on which the Option is granted. Such
exercise price shall thereafter be subject to adjustment as required by the
Option certificate relating to each Option.
3
<PAGE>
(c) DURATION OF OPTIONS. The duration of any Option granted under this
Plan shall be for a period fixed by the Committee but shall, except as described
in the next sentence, in no event be more than ten years. Notwithstanding the
foregoing, the Option Certificate issued in connection with a nonqualified
Option granted under this Plan may provide that, in the event the Option holder
dies while the Option is exercisable, the Option will remain exercisable by the
holder's estate or beneficiary until the first anniversary of the holder's date
of death, whether or not such first anniversary occurs prior to the expiration
of ten years from the date the Option was granted.
(d) OPTIONS GRANTED TO TEN PERCENT STOCKHOLDERS. No Option which is
intended to qualify as an incentive stock option shall be granted under this
Plan to any employee who, at the time the Option is granted, owns, or is
considered as owning, within the meaning of Section 422 of the Internal Revenue
Code, shares possessing more than ten percent of the total combined voting power
or value of all classes of stock of the Company or any Subsidiary, unless the
exercise price under such Option is at least 110 percent of the Fair Market
Value of a Share on the date such Option is granted and the duration of such
option is no more than five years.
(e) INITIAL EXERCISABILITY LIMITATION. The aggregate Fair Market Value
(determined at the time that an Option is granted) of the Shares with respect to
incentive stock options granted in any calendar year under all stock option
plans of the Company or any corporation which (at the time of the granting of
such incentive stock option) was a parent or Subsidiary of the Company, or of
any predecessor corporation of any such corporation, which are exercisable for
the first time by an Option holder during any calendar year shall not exceed
$100,000.
(f) SETTLEMENT OF AN OPTION. When an Option is exercised pursuant to
Section 9 hereof, the Committee, in its sole discretion, may elect, in lieu of
issuing Shares pursuant to the terms of the Option, to settle the Option by
paying the Option holder an amount equal to the product obtained by multiplying
(i) the excess of the Fair Market Value of one Share on the date the Option is
exercised over the exercise price of the Option (the "Option Spread") by (ii)
the number of Shares with respect to which the Option is exercised. The amount
payable to the Option holder in these circumstances shall be paid by the Company
either in cash or in Shares having a Fair Market Value equal to the Option
Spread, or a combination thereof, as the Committee shall determine at the time
the Option is exercised or at the time the Option is granted.
7. RIGHTS. At the time an Option is granted, or anytime thereafter prior
to its expiration, the Committee, in its sole discretion, may issue to the
recipient of such Option related Rights with respect to the same number of
Shares as are covered by the Option, subject to adjustment pursuant to the terms
of Section 13 hereof. The duration of any such Right shall be coextensive with
the duration of the related Option.
(a) CONJUNCTIVE AND ALTERNATIVE RIGHTS. Such Rights shall entitle the
holder to receive cash from the Company:
(i) in addition to the right to exercise the related Option (such
Rights being hereinafter referred to as "Conjunctive Rights");
and\or
4
<PAGE>
(ii) in lieu of the right to exercise the related Option (such Rights
being hereinafter referred to as "Alternative Rights");
as the Committee may determine, in its sole discretion, at the time the Right is
granted. If the Option holder is granted Conjunctive Rights, he may exercise
such Rights only if, and to the extent that, the related Option is exercisable.
If the Option holder is granted Alternative Rights, he may exercise such Rights
only to the extent such related Option is exercisable and the exercise of such
Alternative Rights shall result in the cancellation of the related Option to the
extent of the number of Shares with respect to which such Alternative Rights
have been exercised and the exercise of the related Option shall result in the
cancellation of the Alternative Rights to the extent of the number of Shares
with respect to which such Option has been exercised.
(b) TERMS AND CONDITIONS. Upon the exercise of any Rights, the Option
holder shall be entitled to receive from the Company an amount in cash equal to
the product obtained by multiplying (i) the excess of the Fair Market Value of
one Share on the date the Rights are exercised over the exercise price of the
related Option (the "Rights Spread") by (ii) the number of Shares with respect
to which such Rights are exercised. The form, terms and conditions of Rights
shall be determined by the Committee. A certificate of Rights (the "Rights
Certificate") signed by an officer of the Company shall be issued to each person
to whom Rights are granted.
8. NON-TRANSFERABILITY OF OPTIONS AND RIGHTS. Options and any related
Rights may be exercised or surrendered during the holder's lifetime only by the
holder thereof, and all rights thereunder shall be non-transferable and non-
assignable by the holder thereof, other than by will or the laws of descent or
distribution.
9. EXERCISE OF OPTIONS AND RIGHTS. Except as otherwise provided herein,
an Option (and any related Rights), after the grant thereof, shall be
exercisable by the holder at such rate and times as may be fixed by the
Committee at the time the Option and the related Rights, if any, are granted;
provided, however, that any Rights issued to the Option holder shall be
exercisable only at the times and in the amounts at which the related Option
shall be exercisable.
All or any part of any remaining unexercised Options (and any related
Rights) granted to any person shall be exercisable in full upon the occurrence
of such special circumstances or events as, in the sole discretion of the
Committee, merits special consideration.
An Option shall be exercised by the delivery to any person who has been
designated by the Company for the purpose of receiving the same, of a written
notice duly signed by the Option holder thereof (or the representative of the
estate or the heirs of a deceased Option holder) to such effect. Unless the
Company chooses to settle the Option in cash, Shares or a combination thereof
pursuant to Section 6(f) hereof, the holder of the Option shall be required to
deliver to the Company, within five days of the delivery of the notice described
above, either cash, a check payable to the order of the Company or Shares duly
endorsed over to the Company (which Shares shall be valued at their Fair Market
Value as of the date preceding the day of such exercise) or any combination of
such methods of payment, which together amount to the full exercise price of the
Shares purchased pursuant to the exercise of the Option.
5
<PAGE>
Notwithstanding the preceding sentence, the Company and the holder of the
Option may agree upon any other reasonable manner of providing for payment of
the exercise price of the Option.
Any Rights may be exercised by the holder thereof (or the representative of
the estate or the heirs of a deceased Option holder), by delivery of a written
notice of exercise of such Rights, together with the Rights Certificate to any
person who has been designated by the Company for the purpose of receiving the
same. No Option (or related Rights) may be granted pursuant to the Plan or
exercised at any time when such Option or Rights, or the granting or exercise
thereof, may result in the violation of any law or governmental order or
regulation.
Unless the Committee chooses to settle an Option in cash, Shares or a
combination thereof pursuant to Section 6(f) hereof, within a reasonable time
after exercise of an Option the Company shall cause to be delivered to the
person entitled thereto (i) a certificate for the Shares purchased pursuant to
the exercise of the Option and (ii) a check for the cash payable, if any, upon
the exercise of the Rights. If the Option and/or related Rights shall have been
exercised with respect to less than all of the Shares subject to the Option, the
Company shall also cause to be delivered to the person entitled thereto a new
Option Certificate and Rights Certificate, if applicable, in replacement of the
Option Certificate and the Rights Certificate surrendered at the time of the
exercise of the Option and Rights, indicating the number of Shares with respect
to which the Option and related Rights remain available for exercise, or the
original Option Certificate and Rights Certificate, if any, shall be endorsed to
give effect to the partial exercise thereof.
10. TERMINATION OF OPTIONS AND RIGHTS UPON TERMINATION OF EMPLOYMENT. At
the time an Option and the related Rights, if any, are granted, the Committee
shall determine the period of time during which the Option holder may exercise
such Option and related Rights, if any, following his termination of employment
with the Company and its Affiliates; provided, however, that an Option shall be
exercisable only to the extent such Option, by its terms, is exercisable as of
the date the Option holder's employment is terminated, unless such Option is
made fully exercisable by the Committee pursuant to Section 9 hereof, and such
exercise must be accomplished prior to the expiration of the term of such Option
and related Rights. The Committee may fix different periods of time during
which such Option and related Rights may be exercised following the Option
holder's termination of employment, depending on the cause for the Option
holder's termination of employment. The Committee shall decide whether, and
under what conditions, the Options and related Rights may continue in force in
the event of an approved leave of absence.
11. RESTRICTED SHARES. The Committee, in its sole discretion, may grant
to employees the right to receive such number of Restricted Shares, as
determined by the Committee in its sole discretion.
(a) ISSUANCE. The employee shall have forty-five (45) business days from
the date of such grant to pay to the Company, in cash or by check, an amount
equal to the par value of a Share multiplied by the number of Restricted Shares
which have been granted to the employee by the Committee. Subject to the
provisions of Section 16 hereof, upon the receipt of such payment, the Company
shall issue to the employee a certificate representing such Restricted Shares.
The terms and conditions of the grant of such Restricted Shares and the
Restrictions
6
<PAGE>
applicable to such Shares shall be set forth in writing, in an agreement signed
by the employee and an officer of the Company (the "Restricted Shares
Agreement"). In the event the employee fails to make payment to the Company for
such Restricted Shares within ten (10) business days of the grant thereof, the
grant of Restricted Shares shall lapse and the Committee may again grant Awards
with respect to such Shares.
(b) RESTRICTIONS ON SHARES. In no event shall a Restricted Share be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered until the
expiration of the Restricted Period which relates to such Restricted Share. As
of the date the Restricted Shares are granted, the Committee, in its sole
discretion, shall specify the dates as of which, and the number of Shares with
respect to which, Restrictions upon the Restricted Shares shall cease. Without
limiting the foregoing, the Committee may provide with respect to any grant of
Restricted Shares, that the termination of Restrictions on such Restricted
Shares may be subject to, among other things, conditions, the satisfaction of
which are measured by performance criteria applicable to the recipient or the
Company, as the Committee may deem appropriate.
(c) FORFEITURE OF RESTRICTED SHARES. If the employment of an employee by
the Company and its Affiliates ceases prior to the end of the Restricted Period
for any one of the reasons specified by the Committee at the time the Restricted
Shares are granted and set forth in the Restricted Shares Agreement, Restricted
Shares held by such employee which are subject to Restrictions shall revert back
and belong to the Company. In the event that any Restricted Shares should
revert back and belong to the Company pursuant to this section, any stock
certificate or certificates representing such Restricted Shares shall be
cancelled and the Restricted Shares shall be returned to the treasury of the
Company. Upon the reversion of such Restricted Shares, the Company shall repay
to the employee or (in the case of death) to the representative of the
employee's estate, the full amount paid to the Company by the employee for such
Restricted Shares. Notwithstanding the preceding, the Restrictions upon the
Restricted Shares shall cease and upon the termination of the employee's
employment with the Company and its Affiliates the Restricted Shares shall not
revert back and belong to the Company, upon the occurrence of such special
circumstances or events, as in the sole discretion of the Committee, merits
special consideration.
(d) RIGHT TO VOTE AND RECEIVE DIVIDENDS ON RESTRICTED SHARES. Each holder
of Restricted Shares shall, during the Restricted Period, be the beneficial and
record owner of such Restricted Shares and shall have full voting rights with
respect thereto. During the Restricted Period, all dividends and distributions
paid upon any Restricted Share shall be retained by the Company for the account
of the holder of such Restricted Share. Such dividends and distributions shall
revert back to the Company if for any reason the Restricted Share upon which
such dividends and distributions were paid reverts back to the Company. Upon
the expiration of the Restricted Period, all dividends and distributions made on
such Restricted Share and retained by the Company will be paid to the holder.
12. BONUS AWARDS.
(a) GRANT AND TERMS OF AWARDS. The Committee shall determine the
employees that shall receive Bonus Awards, the number of Shares to be so
awarded, and the terms and conditions of such Bonus Awards. The Committee shall
determine whether, and under what
7
<PAGE>
conditions, Bonus Awards shall remain in force in the event of the termination
of the awardee's employment with the Company and its Affiliates.
(b) TIME FOR ISSUANCE OF BONUS AWARD SHARES. Each grantee of a Bonus
Award under the Plan shall receive a letter (the "Bonus Award Letter") after he
has been selected to receive such Bonus Award, which letter shall state the
terms of the Bonus Award, including, without limitation, the amount of the Bonus
Award, the number of Shares proposed to be issued to him, the vesting schedule
for such Bonus Award and the date or dates and the conditions upon which such
Bonus Award shall be paid to the grantee. Without limiting the foregoing, the
Committee may provide with respect to any Bonus Award, that the vesting of such
Bonus Award may be subject to, among other things, conditions, the satisfaction
of which are measured by performance criteria applicable to the recipient or the
Company, as the Committee may deem appropriate. The time of issuance of Shares
to any grantee may be accelerated by the Committee in its sole discretion. The
Committee, in its sole discretion, may instruct the Company to pay on the date
when Shares would otherwise be issued pursuant to a Bonus Award, in lieu of such
Shares, a cash amount equal to the number of such Shares multiplied by the Fair
Market Value of a Share on the date when Shares would otherwise have been
issued. If a grantee is entitled to receive other stock, securities or other
property as a result of adjustment, pursuant to Section 13 hereof, the
Committee, in its sole discretion, may instruct the Company to pay, in lieu of
such other stock, securities or other property, cash equal to the fair market
value thereof as determined in good faith by the Committee.
13. CERTAIN ADJUSTMENTS.
(a) DIVIDENDS, STOCK SPLITS, SPIN-OFFS, CONVERSIONS, ETC. If, during the
period prior to complete exercise of any Option or Right (as to such Option or
Right) or during the Restricted Period (as to Restricted Stock) or prior to the
issuance and delivery of Shares pursuant to a Bonus Award (as to such Bonus
Award) (such period being referred to herein as the "Award Period"), there shall
be declared and paid a stock or property dividend or any other distribution by
way of dividend, stock split (including a reverse stock split), or spin-off with
respect to the Shares, or if the Class A common stock of the Company shall be
converted, exchanged, reclassified or recapitalized, or if the Shares shall be
in any way substituted for in a merger in which the entity surviving such merger
or its parent is a public Company, then:
(i) in the case of an Option or Right, the Option or Right, to the
extent that it has not been exercised, shall entitle the holder thereof
upon the future exercise of the Option or Right to such number and kind of
securities or cash or other property, subject to the terms of the Option or
Right, to which he would have been entitled had he actually owned the
Shares subject to the unexercised portion of the Option or Right at the
time of the occurrence of such dividend, stock split, spin-off, conversion,
exchange, reclassification, recapitalization or substitution, and the
aggregate purchase price upon the future exercise of the Option or Right
shall be the same as if the Shares originally subject to the Option or
Right were being purchased or used to determine the amount of the payment
to which the holder is entitled thereunder;
(ii) in the case of a Restricted Share, the holder of the Restricted
Share shall receive, subject to the provisions of Section 11(c) hereof, the
same securities or other
8
<PAGE>
property as are received by the other holders of the Company's Shares
pursuant to such dividend, stock split, spin-off, conversion, exchange,
reclassification, recapitalization or substitution; and
(iii) in the case of a Bonus Award, the Bonus Award shall entitle the
holder thereof upon the future issuance and delivery of Shares pursuant to
a Bonus Award to such number and kind of securities or cash or other
property, subject to the terms of the Bonus Award, to which he would have
been entitled had he actually owned the Shares subject to the Bonus Award
at the time of the occurrence of such dividend, stock split, spin-off,
conversion, exchange, reclassification, recapitalization or substitution.
(b) OTHER EVENTS RESULTING IN DILUTION. If, during the Award Period,
there occurs any event as to which the provisions against the effect of dilution
contained in the Plan are not strictly applicable, but the failure to make any
adjustment would not fairly protect the rights represented by the Award in
accordance with the essential intent and principles thereof, then, in each such
case, the Company shall appoint a firm of independent certified public
accountants of recognized national standing, which shall give its opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in the Plan, which they believe is necessary to preserve
without dilution, the rights represented by the Award. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the holder and shall
make the adjustment described therein.
(c) FRACTIONAL SHARES OR SECURITIES. Any fractional shares or securities
payable upon the exercise of the Option or Right or to the holder of a
Restricted Share or pursuant to a Bonus Award as a result of an adjustment
pursuant to this Section 13 shall, at the election of the Committee, be payable
in cash, Shares, or a combination thereof, based upon the fair market value of
such shares or securities at the time of exercise.
14. NO RIGHTS OF A STOCKHOLDER. An Option holder, Rights holder or
grantee of a Bonus Award shall not be deemed to be the holder of, or have any of
the rights of a stockholder with respect to, any Shares subject to such Option,
any related Rights or the Bonus Award unless and until (i) the Option and/or
related Rights shall have been exercised pursuant to the terms thereof or the
Shares subject to the Bonus Award shall have vested, (ii) the Company shall have
issued and delivered Shares to the Option holder or grantee of a Bonus Award,
and (iii) said holder's name shall have been entered as a stockholder of record
on the books of the Company. Thereupon, said holder shall have full voting,
dividend and other ownership rights with respect to such Shares.
The Company will not be obligated to issue or deliver any Shares unless and
until all legal matters in connection with the issuance and delivery of Shares
have been approved by the Company's counsel and the Company's counsel determines
that all applicable federal, state and other laws and regulations have been
complied with and all listing requirements for relevant stock exchanges have
been met.
15. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein or in any
Options or Rights Certificate, Restricted Share Agreement or Bonus Award Letter
shall be construed to confer on any employee any right to continue in the employ
of the Company or any Affiliate or
9
<PAGE>
derogate from the right of the Company and any Affiliate to retire, request the
resignation of, or discharge such employee, at any time, with or without cause.
16. ISSUANCE OF SHARES AND COMPLIANCE WITH THE SECURITIES LAWS.
(a) CERTAIN ASSURANCES. Before issuing or delivering any Shares to an
Option holder or at any time prior to the end of the Restricted Period as to any
Shares, the Company may: (i) require the holder to give satisfactory assurances
that such Shares are being purchased for investment and not with a view to
resale or distribution, and will not be transferred in violation of the
applicable securities laws; (ii) restrict the transferability of such Shares and
require a legend to be endorsed on the certificates representing the Shares; and
(iii) condition the issuance and delivery of such Shares upon the listing,
registration or qualification of such Shares upon a securities exchange or under
applicable securities laws. The Company may also condition the issuance and
delivery of Shares upon compliance with all applicable federal, state and other
laws and regulations, as determined by the Company's counsel.
(b) REGISTRATION RIGHTS INCIDENT TO AWARDS. Prior to the issuance of
Shares pursuant to an Award under the Plan, the Company will cause an
appropriate registration statement covering the shares to be issued pursuant to
the Plan to be filed with the Securities and Exchange Commission under the
Securities Act, if required, and, in any event, will cause a registration
statement covering the reoffer and resale of Shares by grantees who may be
deemed to be affiliates of the Company to be so filed, and shall use its best
efforts to cause each such registration statement to become and remain effective
for a period of at least two years from the date such Shares offered for resale
were issued by the Company.
(c) LEGENDED STOCK. Each stock certificate representing Restricted Shares
shall contain an appropriate legend referring to the Plan and the Restrictions
upon such Restricted Shares. Simultaneously with delivery of each stock
certificate for Restricted Shares, the Company may cause a stop transfer order
with respect to such certificate to be placed with the transfer agent of the
Shares.
17. WITHHOLDING. If the Company or an Affiliate shall be required to
withhold any amounts by reason of any federal, state or local tax laws, rules or
regulations in respect of the payment of cash or the issuance of Shares pursuant
to the exercise of an Option or Rights, an award of Restricted Stock or a Bonus
Award, the Company or an Affiliate shall be entitled to deduct or withhold such
amounts from any cash payments to be made to the holder. In any event, the
holder shall make available to the Company or Affiliate, promptly when requested
by the Company or such Affiliate, sufficient funds to meet the requirements of
such withholding and the Company or Affiliate shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds made
available to the Company or Affiliate out of any funds or property to become due
to the holder.
The holder may elect, subject to the approval of the Committee, to satisfy
the requirements of such tax withholding, in whole or in part, by having the
Company withhold from the Shares which would otherwise be issued to the holder
pursuant to the exercise of an Option or Rights or a Bonus Award, Shares having
a Fair Market Value which is equal to the amount of tax required to be withheld.
The election must be irrevocable and must be made on
10
<PAGE>
or before the date on which the amount of tax to be withheld is determined. In
addition, elections by holders who are subject to the restrictions of Section
16(b) of the Exchange Act either (i) must be made at least six months before the
date on which the amount of tax to be withheld is determined, or (ii) (A) must
be made in the "window period" beginning on the third business day following the
release of the Company's quarterly or annual earnings and ending on the twelfth
business day following such release, or be made outside of such "window period"
but will only take effect in such window period, and (B) must not be made within
six months of the grant or award of the Option, Right or Bonus Award (unless the
holder's death or disability occurs prior to six months from such grant or
award).
18. ADMINISTRATION AND AMENDMENT OF THE PLAN. The Board of Directors or
the Committee may discontinue the Plan at any time and from time to time may
amend or revise the terms of the Plan, as permitted by applicable law, except
that it may not revoke or alter, in any manner unfavorable to the recipient of
an outstanding award under the Plan, any award made under the Plan, without the
consent of the recipient of that award, nor may it amend the Plan without the
approval of the stockholders of the Company if such approval is required by Rule
16b-3 under the Exchange Act for transactions pursuant to the Plan to continue
to be exempt thereunder.
19. EFFECTIVE DATE. This Plan shall become effective upon its adoption by
the Board of Directors or the Committee and shall be submitted to the
stockholders of the Company for their approval. In the event that the Plan is
not approved by stockholders within 12 months of its adoption by the Board of
Directors, the Plan and any awards granted hereunder on or after the date of
adoption by the Board of Directors shall become null and void, notwithstanding
any other provisions of the Plan to the contrary.
20. ASSUMPTION OF OPTIONS. The Committee, in its sole discretion, may,
with the consent of the Option holder, elect to treat as an Option issued under
this Plan (but not as an incentive stock Option, within the meaning of Section
422 of the Internal Revenue Code) an Option to purchase Shares (the "Assumed
Option") which has been granted by any person other than the Company to a person
who, as of the date such Assumed Option was granted, was an employee of the
Company or an Affiliate. Thereafter, such Assumed Option shall be subject to
the terms and conditions of this Plan except that for determining the exercise
price of such Assumed Option, when and to what extent such Assumed Option may be
exercised and the expiration date of such Assumed Option, the date as of which
such Option was granted by such third party shall be treated as the date of
grant for purposes of the Plan. Subject to the foregoing, to the extent that
there is any conflict between the terms and conditions of this Plan and the
Assumed Option, the terms and conditions of this Plan shall control. The number
of Shares which may be purchased upon the exercise of any Assumed Option shall
reduce, by the same amount, the number of Shares with respect to which Options,
related Rights, Restricted Shares and Bonus Awards remain to be granted under
the Plan pursuant to Section 5 hereof. In exchange for assuming an Option
granted by someone other than the Company, the Company shall receive such
consideration, if any, from such third party which the Committee, in its sole
discretion, deems appropriate.
21. FINAL ISSUANCE DATE. No Awards shall be made under this Plan after
February __, 2006.
11
<PAGE>
Exhibit 22
SUBSIDIARIES
OF
CABLEVISION SYSTEMS CORPORATION
State of
Name Organization
- ---- ------------
A-R Cable Investments, Inc. Delaware
A-R Cable Services, Inc. Massachusetts
Rainbow Programming Holdings, Inc. New York
V Cable, Inc. Delaware
NYC LP Corp. Delaware
Cablevision of New York City - Master L.P. Delaware
Cablevision MFR, Inc. Delaware
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in the registration
statements (numbers 33-05987, 33-08768, 33-19409, 33-20583 and 33-54346)
filed on Forms S-8 and in the registration statements (numbers 33-29192,
33-33596 and 33-62313) filed on Forms S-3 of Cablevision Systems Corporation
of our reports dated March 18, 1996 relating to: (i) the consolidated balance
sheets of Cablevision Systems Corporation and Subsidiaries as of December 31,
1995 and 1994 and the related consolidated statements of operations,
stockholders' deficiency and cash flows and related schedule for each of the
years in the three-year period ended December 31, 1995, and (ii) the
consolidated balance sheets of A-R Cable Services, Inc. and Subsidiaries as
of December 31, 1995 and 1994 and the related consolidated statements of
operations, stockholder's deficiency and cash flows for each of the years in
the three-year period ended December 31, 1995, which reports appear in the
December 31, 1995 annual report on Form 10-K of Cablevision Systems
Corporation.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Jericho, New York
March 21, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 15,332
<SECURITIES> 0
<RECEIVABLES> 113,184
<ALLOWANCES> (12,678)
<INVENTORY> 143,916
<CURRENT-ASSETS> 0
<PP&E> 1,869,870
<DEPRECIATION> (843,515)
<TOTAL-ASSETS> 2,502,305
<CURRENT-LIABILITIES> 0
<BONDS> 3,157,107
257,751
15
<COMMON> 258
<OTHER-SE> (1,891,949)
<TOTAL-LIABILITY-AND-EQUITY> 2,502,305
<SALES> 0
<TOTAL-REVENUES> 1,092,611
<CGS> 0
<TOTAL-COSTS> 412,479
<OTHER-EXPENSES> 319,929
<LOSS-PROVISION> (14,551)
<INTEREST-EXPENSE> 313,850
<INCOME-PRETAX> (317,458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (317,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (317,458)
<EPS-PRIMARY> (14.17)
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented as the resultant computation would be a decrease in net loss per
share and therefore not meaningful.
</FN>
</TABLE>
