<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996
REGISTRATION NO. 333-02527
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CABLEVISION SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 4841 11-2776686
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION) ----------------
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
(516) 364-8450
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROBERT S. LEMLE
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
(516) 364-8450
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
JOHN P. MEAD
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the Securities registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depositary Shares each
representing
a one one-hundredth
interest in a share of
Series M Redeemable
Exchangeable Preferred
Stock................. $677,573,000 100% $677,573,000 $233,646(2)
- --------------------------------------------------------------------------------
Series M Redeemable
Exchangeable Preferred
Stock................. 677,573,000 (3) (3) (3)
- --------------------------------------------------------------------------------
11 1/8% Senior
Subordinated Debentures
due 2008.............. 677,573,000 (4) (4) (4)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Of which amount $227,323 was paid on April 15, 1996.
(3) The Depositary Shares each represent a one one-hundredth interest in a
share of Series M Redeemable Exchangeable Preferred Stock. Holders of the
Depositary Receipts evidencing the Depositary Shares may receive shares of
Series M Redeemable Exchangeable Preferred Stock upon surrender of such
Depositary Receipts. No additional registration fee is payable in respect
of the Series M Redeemable Exchangeable Preferred Stock.
(4) The Series M Redeemable Exchangeable Preferred Stock is exchangeable, in
whole but not in part, at the option of the Company for the 11 1/8% Senior
Subordinated Debentures due 2008. No additional registration fee is payable
in respect of the 11 1/8% Senior Subordinated Debentures due 2008.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE SHEET
LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY
PART I OF FORM S-4
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN PROSPECTUS
-------- ------- ----------------------
<C> <S> <C>
Item 1 Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus........ Facing Page of Registration
Statement; Cross-Reference
Sheet; Outside Front and Inside
Front Cover Page of Prospectus
Item 2 Inside Front and Outside Back
Cover Pages of Prospectus....... Inside Front Cover Pages of
Prospectus
Item 3 Risk Factors, Ratio of Earnings
to Fixed Charges, and Other
Information..................... Summary; Risk Factors; The
Company
Item 4 Terms of the Transaction......... The Exchange Offer; Description
of New Depositary Shares, Series
M Preferred Stock and Exchange
Debentures; Certain Federal
Income Tax Considerations
Item 5 Pro Forma Financial Information.. Not Applicable
Item 6 Material Contracts With the
Company Being Acquired.......... Not Applicable
Item 7 Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters.................... Plan of Distribution
Item 8 Interests of Named Experts and
Counsel......................... Not Applicable
Item 9 Disclosure of Commission Position
on Indemnification for
Securities Act Liabilities...... Not Applicable
Item 10 Information with Respect to S-3
Registrants..................... Incorporation of Certain
Documents by Reference
Item 11 Incorporation of Certain
Information by Reference........ Incorporation of Certain
Documents by Reference
Item 12 Information with Respect to S-2
or S-3 Registrants.............. Not Applicable
Item 13 Incorporation of Certain
Information by Reference........ Not Applicable
Item 14 Information with Respect to
Registrants Other than S-3 or S-
2 Registrants................... Not Applicable
Item 15 Information With Respect to S-3
Companies....................... Not Applicable
Item 16 Information With Respect to S-2
or S-3 Companies................ Not Applicable
Item 17 Information With Respect to
Companies Other Than S-2 or S-3
Companies....................... Not Applicable
Item 18 Information if Proxies, Consents
or Authorizations Are to be
Solicited....................... Not Applicable
Item 19 Information if Proxies, Consents
or Authorizations are Not to be
Solicited, or in an Exchange
Offer........................... Summary; The Exchange Offer;
Description of New Depositary
Shares, Series M Preferred Stock
and Exchange Debentures; Certain
Federal Income Tax
Considerations
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 12, 1996
OFFER TO EXCHANGE
ALL OUTSTANDING DEPOSITARY SHARES
EACH REPRESENTING A ONE ONE-HUNDREDTH INTEREST IN A SHARE OF
11 1/8 SERIES L REDEEMABLE
EXCHANGEABLE PREFERRED STOCK
($677,573,000 AGGREGATE LIQUIDATION PREFERENCE)
FOR
DEPOSITARY SHARES
EACH REPRESENTING A ONE ONE-HUNDREDTH INTEREST IN A SHARE OF
11 1/8% SERIES M REDEEMABLE
EXCHANGEABLE PREFERRED STOCK
OF
CABLEVISION SYSTEMS CORPORATION
----------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY ,
1996, UNLESS EXTENDED
----------
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $100 aggregate liquidation preference of its Depositary Shares (the
"New Depositary Shares") each representing a one one-hundredth interest in a
share of its 11 1/8% Series M Redeemable Exchangeable Preferred Stock (the
"Series M Preferred Stock"), which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement (as defined herein) of which this Prospectus constitutes a part, for
each $100 aggregate liquidation preference of its Depositary Shares (the "Old
Depositary Shares") each representing a one one-hundredth interest in a share
of the outstanding 11 1/8% Series L Redeemable Exchangeable Preferred Stock
(the "Series L Preferred Stock") of the Company. The New Depositary Shares and
the Old Depositary Shares are collectively referred to herein as the
"Depositary Shares".
The Company will accept for exchange any and all Old Depositary Shares that
are validly tendered on or prior to 5:00 p.m., New York City time, on the date
the Exchange Offer expires, which will be July , 1996, unless the Exchange
Offer is extended to a date not later than August , 1996 (the "Expiration
Date"). Tenders of Old Depositary Shares may be withdrawn at any time prior to
5:00 p.m., New York City time, on the business day prior to the Expiration
Date, unless previously accepted for exchange. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Depositary Shares being
tendered for exchange. However, the Exchange Offer is subject to certain
conditions which may be waived by the Company and to the terms and provisions
of the Registration Rights Agreement (as defined herein). See "The Exchange
Offer".
The form and terms of the New Depositary Shares are the same in all material
respects as the form and terms of the Old Depositary Shares except that the New
Depositary Shares have been registered under the Securities Act and will not
contain terms restricting the transfer of such New Depositary Shares. Following
the completion of the Exchange Offer, none of the Depositary Shares will be
entitled to the benefits of the Registration Rights Agreement, relating to
contingent increases in the dividend rate provided for pursuant thereto. See
"The Exchange Offer".
INVESTMENT IN THE DEPOSITARY SHARES INVOLVES SIGNIFICANT RISKS DISCUSSED UNDER
"RISK FACTORS" ON PAGE 18 WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS.
Dividends on the shares of Series M Preferred Stock represented by the New
Depositary Shares are payable out of legally available funds and are cumulative
from the most recent dividend payment date to which dividends on the Old
Depositary Shares were paid (the "Accrual Date"). Holders of Old Depositary
Shares whose Old Depositary Shares are
(Continued on next page)
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is June , 1996.
<PAGE>
(Continued from previous page)
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of dividends on the Old Depositary Shares accumulated from
the Accrual Date to the date of the issuance of the New Depositary Shares.
Consequently, holders who exchange their Old Depositary Shares for New
Depositary Shares will receive the same dividend payment on the next dividend
payment date after consummation of the Exchange Offer (expected to be October
1, 1996) that they would have received had they not accepted the Exchange
Offer, except that if such dividend is not paid in cash, it will be paid in New
Depositary Shares instead of Old Depositary Shares. The Company paid dividends
on April 1, 1996 and intends to pay dividends on July 1, 1996 with respect to
the Old Depositary Shares by issuing additional Old Depositary Shares (the
"Dividend Shares"). Dividend Shares may be exchanged for New Depositary Shares.
Dividends on the shares of Series M Preferred Stock represented by the New
Depositary Shares are payable quarterly in arrears on January 1, April 1, July
1 and October 1 of each year, commencing October 1, 1996, accumulating from the
Accrual Date at the annual rate of 11 1/8% per New Depositary Share.
Before April 1, 2001, dividends may, at the option of the Company, be paid in
cash or by issuing New Depositary Shares representing fully paid and
nonassessable shares of Series M Preferred Stock with an aggregate liquidation
preference equal to the amount of such dividends. On and after April 1, 2001,
dividends must be paid in cash. The Series M Preferred Stock has a liquidation
preference of $10,000 per share (equivalent to $100 per New Depositary Share)
plus accumulated and unpaid dividends thereon.
Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, the Company believes the New
Depositary Shares issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by holders thereof (other than a
"Restricted Holder," being (i) a broker-dealer who acquires such New Depositary
Shares directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (ii) a person that is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Depositary Shares are
acquired in the ordinary course of such holders' business and such holders have
no arrangements with any person to participate in the distribution of such New
Depositary Shares. Eligible holders wishing to accept the Exchange Offer must
represent to the Company that such conditions have been met. Each broker-dealer
that receives New Depositary Shares for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Depositary Shares. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New
Depositary Shares received in exchange for Old Depositary Shares where such Old
Depositary Shares were acquired by such broker-dealer as a result of market-
making activities or other trading activities. The Company has agreed that it
will make this Prospectus and any amendment or supplement to this Prospectus
available to any broker-dealer for use in connection with any such resale for a
period of 90 days from the date of this Prospectus, or such shorter period as
will terminate when all Old Depositary Shares acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities have been exchanged for New Depositary Shares and resold by such
broker-dealers. See "Plan of Distribution".
The Company will not receive any proceeds from this offering, and no
underwriter is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD DEPOSITARY SHARES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE
IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
The New Depositary Shares are new securities for which there currently is no
public market. If a market for the New Depositary Shares should develop, the
New Depositary Shares could trade at a discount from their aggregate
liquidation preference. The Company does not intend to list the New Depositary
Shares on a national securities exchange or to apply for quotation of the New
Depositary Shares through the National Association of Securities Dealers
Automated Quotation System. There can be no assurance that an active public
market for the New Depositary Shares will develop.
The Company has been advised by Bear, Stearns & Co. Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated that
they intend to make a market in the New Depositary Shares; however, such
entities are under no obligation to do so and any market making activities with
respect to the New Depositary Shares may be discontinued at any time.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices: Seven World Trade Center,
13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and copies of such material can be
obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information also may be inspected at the
offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference is
hereby made to the Registration Statement and the exhibits and schedules
thereto for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of any
documents filed as an exhibit to the Registration Statement or otherwise filed
with the Commission are not necessarily complete, and in each instance
reference is made to the copy of such document so filed. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (the "Form 10-K");
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 (the "Form 10-Q");
(c) the Company's Current Reports on Form 8-K filed March 26, 1996 and
May 17, 1996 (the "May Form 8-K"); and
(d) all documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act on or after the date of this Prospectus and
prior to the termination of the offering made hereby.
Any statement contained herein or in any documents incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a subsequent
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
As used herein, unless the context otherwise requires, the term "Company"
refers to Cablevision Systems Corporation and its subsidiaries. The term
"Consolidated Financial Statements" refers to the Company's Consolidated
Financial Statements and the notes thereto incorporated by reference from the
Form 10-K and the term "Management's Discussion and Analysis" refers to the
Management's Discussion and Analysis of Financial Condition and Results of
Operations incorporated by reference from the Form 10-K and the Form 10-Q. The
term "Condensed Pro Forma Consolidated Financial Statements" refers to the
Condensed Pro Forma Consolidated Financial Statements incorporated by reference
from the May Form 8-K.
3
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM ROBERT S. LEMLE, EXECUTIVE VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICES LOCATED AT ONE MEDIA CROSSWAYS, WOODBURY, NEW YORK 11797, TELEPHONE
NUMBER (516) 364-8450. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY JULY , 1996.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Summary................................................................... 5
Risk Factors.............................................................. 18
The Company............................................................... 22
Use of Proceeds........................................................... 25
The Exchange Offer........................................................ 26
Capitalization............................................................ 33
Description of Capital Stock.............................................. 35
Description of New Depositary Shares, Series M Preferred Stock and Ex-
change Debentures........................................................ 45
Certain Federal Income Tax Considerations................................. 65
Plan of Distribution...................................................... 66
Validity of the New Depositary Shares..................................... 66
Experts................................................................... 67
</TABLE>
4
<PAGE>
SUMMARY
The following information is qualified in its entirety by the more detailed
information, financial statements and pro forma financial information appearing
elsewhere in this Prospectus or incorporated by reference herein. Investment in
the securities offered hereby involves significant risks. See "Risk Factors".
THE COMPANY
The Company is one of the largest operators of cable television systems in
the United States, with approximately 2,752,000 subscribers in 19 states as of
March 31, 1996 based on the number of basic subscribers in systems which the
Company manages and which it owns or in which it has investments. The Company
also has ownership interests in companies that produce and distribute national
and regional programming services and provide advertising sales services for
the cable television industry. The Company was formed in 1985 to effect a
reorganization of its predecessors.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable television systems") served approximately
2,085,000 subscribers as of March 31, 1996 in New York, Ohio, Connecticut, New
Jersey, Michigan and Massachusetts. In addition, the Company has non-majority
investments in and manages cable television systems which served approximately
667,000 subscribers as of March 31, 1996 in Alabama, Arkansas, Florida,
Illinois, Kansas, Kentucky, Maine, Massachusetts, Mississippi, Missouri, New
Jersey, New York, North Carolina, Oklahoma, Pennsylvania and Tennessee. The
Company's cable television systems have generally been characterized by
relatively high revenues per subscriber ($37.28 for March 1996) and ratios of
premium service units to basic subscribers (1.8:1 for March 1996). In
calculating revenue per subscriber, the Company includes only recurring service
revenues and excludes installation charges and certain other revenues such as
advertising, pay-per-view and home shopping revenues.
On May 10, 1996, the Company entered into an agreement with Warburg, Pincus
Investors, L.P. ("Warburg") to acquire (the "Pending Warburg Transactions")
from Warburg the interests in A-R Cable Services, Inc. ("A-R Cable"), A-R Cable
Partners, Cablevision of Newark and Cablevision of Framingham Holdings, Inc.
("CFHI") that the Company does not already own. See "Recent Developments--
Pending Warburg Transactions" in the May Form 8-K.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow Programming
Holdings, Inc. ("Rainbow Programming"), its wholly-owned subsidiary, and
through subsidiaries of Rainbow Programming in partnership with certain
unaffiliated entities, including National Broadcasting Company, Inc. ("NBC")
and Liberty Media Corporation. Rainbow Programming's businesses include eight
regional SportsChannel services, four national entertainment services (American
Movie Classics Company, Bravo Network, MuchMusic and the Independent Film
Channel), Rainbow News 12 (regional news services serving 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, L.P.
ADVERTISING SERVICES
Rainbow Advertising Sales Corporation sells advertising time to national,
regional and local advertisers on behalf of the Company's cable television
systems and the SportsChannel and Rainbow News 12 programming services, as well
as on behalf of unaffiliated cable television systems.
5
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to 6,775,730 Old Depositary
Shares representing shares of Series L Preferred Stock with an aggregate
liquidation preference of $677,573,000 for up to 6,775,730 New Depositary
Shares representing shares of Series M Preferred Stock with the same aggregate
liquidation preference. The form and terms of the New Depositary Shares are the
same as the form and terms of the Old Depositary Shares except that the New
Depositary Shares have been registered under the Securities Act and will not
contain terms restricting the transfer of such New Depositary Shares (and hence
are not entitled to the benefits of the Registration Rights Agreement relating
to the contingent increases in the dividend rate provided for pursuant
thereto). The Old Depositary Shares and the New Depositary Shares are herein
collectively referred to as the "Depositary Shares". See "Description of New
Depositary Shares, Series M Preferred Stock and Exchange Debentures".
The Exchange Offer...... One New Depositary Share representing a one one-
hundredth interest in a share of Series M
Preferred Stock with an aggregate liquidation
preference of $10,000 (equivalent to $100 per
New Depositary Share) will be issued in exchange
for each Old Depositary Share representing a one
one-hundredth interest in a share of Series L
Preferred Stock with an aggregate liquidation
preference of $10,000 (equivalent to $100 per
Old Depositary Share). As of the date hereof,
6,592,379 Old Depositary Shares representing
shares of Series L Preferred Stock with an
aggregate liquidation preference of $659,237,900
are issued and outstanding. The Company will
issue the New Depositary Shares to tendering
holders of Old Depositary Shares on or promptly
after the Expiration Date.
Resale.................. The Company believes that the New Depositary
Shares issued pursuant to the Exchange Offer
generally will be freely transferable by the
holders thereof without registration or any
prospectus delivery requirement under the
Securities Act, except that a "dealer" or any of
the Company's "affiliates", as such terms are
defined under the Securities Act, that exchanges
Old Depositary Shares held for its own account
(a "Restricted Holder") may be required to
deliver copies of this Prospectus in connection
with any resale of New Depositary Shares (the
"Resale Depositary Shares") issued in exchange
for such Old Depositary Shares (the "Prospectus
Delivery Requirement"). See "The Exchange
Offer--General" and "Plan of Distribution".
Expiration Date.........
5:00 p.m., New York City time, on July , 1996,
unless the Exchange Offer is extended to a date
not later than August , 1996, in which case the
term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended.
The maximum period that the Exchange Offer will
remain in effect shall be from the date of this
Prospectus until the Expiration Date. See "The
Exchange Offer--Expiration Date; Extensions;
Amendments".
Accumulated Dividends
on the New Depositary
Shares and the Old
Depositary Shares......
Dividends on the shares of Series M Preferred
Stock represented by the New Depositary Shares
will accumulate from the Accrual
6
<PAGE>
Date. Holders of Old Depositary Shares whose Old
Depositary Shares are accepted for exchange will
be deemed to have waived the right to receive
any payment in respect of dividends on the
Series L Preferred Stock represented by such Old
Depositary Shares accumulated from the Accrual
Date to the date of the issuance of the New
Depositary Shares. Consequently, holders who
exchange their Old Depositary Shares for New
Depositary Shares will receive the same dividend
payment on the next dividend payment date after
the consummation of the Exchange Offer (expected
to be October 1, 1996) that they would have
received had they not accepted the Exchange
Offer, except that if such dividend is not paid
in cash, it will be paid by issuing New
Depositary Shares instead of Old Depositary
Shares. See "The Exchange Offer--Dividends on
the Series M Preferred Stock".
Termination of the
Exchange Offer......... The Company may terminate the Exchange Offer if
it determines that its ability to proceed with
the Exchange Offer could be materially impaired
due to any legal or governmental action, any new
law, statute, rule or regulation or any
interpretation of the staff of the Commission of
any existing law, statute, rule or regulation or
if the Company reasonably deems it advisable to
terminate the Exchange Offer. Holders of Old
Depositary Shares will have certain rights
against the Company under the Registration
Rights Agreement should the Company fail to
consummate the Exchange Offer. See "The Exchange
Offer--Termination".
No federal or state regulatory requirements must
be complied with or approvals obtained in
connection with the Exchange Offer, other than
applicable requirements under federal and state
securities laws.
Procedures For
Tendering Old
Depositary Shares...... Each holder of Old Depositary Shares wishing to
accept the Exchange Offer must complete, sign
and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the depositary receipts (the "Depositary
Receipts") evidencing Old Depositary Shares to
be exchanged and any other required
documentation to The First National Bank of
Boston, as Exchange Agent, at the address set
forth herein and therein or effect a tender of
Old Depositary Shares pursuant to the procedures
for book-entry transfer as provided for herein.
See "The Exchange Offer--Procedures for
Tendering".
Special Procedures for
Beneficial Holders .... Any beneficial holder whose Old Depositary Shares
are registered in the name of his broker,
dealer, commercial bank, trust company or other
nominee and who wishes to tender in the Exchange
Offer should contact such registered holder
promptly
7
<PAGE>
and instruct such registered holder to tender on
his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder
must, prior to completing and executing the
Letter of Transmittal and delivering the
Depositary Receipts evidencing his Old
Depositary Shares, either make appropriate
arrangements to register ownership of the Old
Depositary Shares in such holder's name or
obtain a properly completed stock power from the
registered holder. The transfer of record
ownership may take considerable time. See "The
Exchange Offer--Procedures for Tendering".
Guaranteed Delivery Holders of Old Depositary Shares who wish to
Procedures............. tender their Old Depositary Shares and whose Old
Depositary Shares are not immediately available
or who cannot deliver the Depositary Receipts
evidencing their Old Depositary Shares and a
properly completed Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date may tender their Old Depositary
Shares according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures".
Withdrawal Rights....... Tenders of Old Depositary Shares may be withdrawn
at any time prior to 5:00 p.m., New York City
time, on the business day prior to the
Expiration Date, unless previously accepted for
exchange. See "The Exchange Offer--Withdrawal of
Tenders".
Acceptance of Old
Depositary Shares and
Delivery of New
Depositary Shares......
Subject to certain conditions (as summarized
above in "Termination of the Exchange Offer" and
described more fully in "The Exchange Offer--
Termination"), the Company will accept for
exchange any and all Old Depositary Shares which
are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The New Depositary Shares
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration
Date. See "The Exchange Offer--General".
Certain Tax The exchange pursuant to the Exchange Offer will
Considerations......... generally not be a taxable event for federal
income tax purposes. See "Certain Federal Income
Tax Considerations".
Exchange Agent.......... The First National Bank of Boston is serving as
exchange agent (the "Exchange Agent") in
connection with the Exchange Offer.
Use of Proceeds......... There will be no cash proceeds payable to the
Company from the issuance of the New Depositary
Shares pursuant to the Exchange Offer. Of the
net proceeds received by the Company from the
sale of the Old Depositary Shares, approximately
$570.0 million was applied to make a capital
contribution to V
8
<PAGE>
Cable, Inc. ("V Cable"). Such proceeds were used
to repay approximately $500.0 million of
indebtedness of V Cable and VC Holding, Inc. and
to make a capital contribution of approximately
$70.0 million to U.S. Cable Television Group,
L.P. The Company applied the balance of
approximately $55.0 million to repay borrowings
under the Company's principal bank credit
agreement (the "Credit Agreement"). The Company
expects to reborrow the amount repaid under the
Credit Agreement in the future for general
corporate purposes. See "Use of Proceeds".
SUMMARY OF TERMS OF THE NEW DEPOSITARY SHARES, SERIES M PREFERRED STOCK AND THE
EXCHANGE DEBENTURES
NEW DEPOSITARY SHARES AND SERIES M PREFERRED STOCK
Dividends...............
Cumulative at 11 1/8% per annum out of legally
available funds. Dividends will accumulate from
the Accrual Date and are payable quarterly in
arrears on January 1, April 1, July 1 and
October 1 of each year, commencing October 1,
1996. The rights to dividends on the Series M
Preferred Stock represented by the New
Depositary Shares will be cumulative (whether or
not earned or declared) on a daily basis. Before
April 1, 2001, dividends may, at the option of
the Company, be paid in cash or by issuing New
Depositary Shares representing additional fully
paid and nonassessable shares of Series M
Preferred Stock with an aggregate liquidation
preference equal to the amount of such
dividends. On or after April 1, 2001, dividends
are payable only in cash. For federal income tax
purposes, distributions with respect to the New
Depositary Shares will not qualify as dividends
and will be treated as a return of capital until
the Company has earnings and profits. See "Risk
Factors--Risks Related to the Securities--
Certain Federal Income Tax Consequences".
Liquidation Preference.. $10,000 per share of Series M Preferred Stock
(equivalent to $100 per New Depositary Share)
plus accumulated and unpaid dividends thereon.
Voting.................. Holders of the Series M Preferred Stock have no
general voting rights except as provided by law
and as provided in the Certificate of
Designations therefor. Upon the failure of the
Company to (i) pay dividends on the Series L
Preferred Stock or the Series M Preferred Stock
in cash or, to the extent permitted by its
terms, by the issuance of additional Old
Depositary Shares or New Depositary Shares, as
the case may be, for more than six quarters or
(ii) discharge any redemption obligation with
respect to the Series L Preferred Stock or the
Series M Preferred Stock, the size of the
Company's Board of Directors will be increased
by one director, and holders of a majority of
the outstanding shares of Series L Preferred
Stock and the Series M Preferred Stock, voting
or consenting, as the
9
<PAGE>
case may be, as a single class, will be entitled
to elect a director to fill the newly created
vacancy. The Company may not issue any new class
of Senior Securities (as defined herein) without
the approval of the holders of at least a
majority of the shares of the Series L Preferred
Stock and the Series M Preferred Stock then
outstanding, voting or consenting, as the case
may be, as a single class.
Mandatory Redemption.... The Company is required to redeem the Series M
Preferred Stock out of legally available funds
on April 1, 2008 at a redemption price equal to
the liquidation preference of $10,000 per share
(equivalent to $100 per New Depositary Share),
plus accumulated and unpaid dividends thereon to
the date of redemption.
Optional Redemption..... On and after April 1, 2003, the Series M
Preferred Stock is redeemable, at the option of
the Company, in whole or in part, at the
redemption prices set forth herein, plus
accumulated and unpaid dividends thereon to the
date of redemption. In addition, shares of the
Series M Preferred Stock representing up to 50%
of the aggregate liquidation preference of the
Series M Preferred Stock may be redeemed before
April 1, 1999 at a redemption price per share
equal to the liquidation preference of $10,000
per share (equivalent to $100 per New Depositary
Share) plus accumulated and unpaid dividends
thereon plus a premium of $1,000 per share
(equivalent to $10 per New Depositary Share) of
Series M Preferred Stock out of the net proceeds
of a sale of Junior Stock (as defined herein) to
a Strategic Equity Investor (as defined herein)
or a public offering of Class A Common Stock,
provided that following such redemption at least
3,250,000 Depositary Shares (representing at
least 50% of the amount of Depositary Shares
initially issued) remain outstanding.
Furthermore, the Company may, at its option,
prior to April 1, 2003, redeem the Series M
Preferred Stock, in whole but not in part, at
any time within 180 days after a Change of
Control (as defined herein), at a redemption
price per share equal to the sum of (i) the
liquidation preference of $10,000 per share
(equivalent to $100 per New Depositary Share)
plus (ii) accumulated and unpaid dividends to
the date of redemption plus (iii) the Make-Whole
Premium (as defined herein), which is based on a
discount rate equal to the Treasury Rate (as
defined herein) plus 50 basis points.
Exchange Feature........ The New Depositary Shares are exchangeable into
the Exchange Debentures at the option of the
Company, in whole but not in part.
Ranking................. The Series M Preferred Stock represented by the
New Depositary Shares will rank, subject to
certain conditions, junior as to payment of
dividends upon liquidation, winding-up or
dissolution of the Company to (i) each class of
capital stock of the Company or series of
preferred stock issued by the
10
<PAGE>
Company established after the initial issuance
of the Series M Preferred Stock the terms of
which specifically provide that such class or
series will rank senior to the Series M
Preferred Stock as to dividends and
distributions upon the liquidation, winding-up
or dissolution of the Company and (ii) all
liabilities and obligations (whether or not for
borrowed money) of the Company. The Series M
Preferred Stock will rank on a parity with the
Series L Preferred Stock and the Company's
Series B Cumulative Preferred Stock, 8% Series C
Cumulative Preferred Stock ("Series C Preferred
Stock"), 8% Series D Cumulative Preferred Stock
(which may be issued in exchange for shares of
Series C Preferred Stock), 11 3/4% Series G
Redeemable Exchangeable Preferred Stock ("Series
G Preferred Stock") and 11 3/4% Series H
Redeemable Exchangeable Preferred Stock ("Series
H Preferred Stock") (which have been issued in
exchange for shares of Series G Preferred Stock)
and 8 1/2% Series I Cumulative Convertible
Exchangeable Preferred Stock ("Series I
Preferred Stock").
Exchange Offer
Registration Rights ...
The Company has entered into a registration
rights agreement with the Initial Purchasers of
the Old Depositary Shares (the "Registration
Rights Agreement") pursuant to which the Company
agreed, for the benefit of the holders of the
Old Depositary Shares, at the Company's cost (i)
within 60 days after the date of original issue
of the Old Depositary Shares, to file a
registration statement (the "Exchange Offer
Registration Statement") with the Commission
with respect to a registered offer to exchange
(the "Exchange Offer") the Old Depositary Shares
for the New Depositary Shares and (ii) use its
best efforts to cause the Exchange Offer
Registration Statement to be declared effective
under the Securities Act within 180 days after
the date of original issuance of the Old
Depositary Shares. Upon the Exchange Offer
Registration Statement being declared effective,
the Company agreed to offer the New Depositary
Shares in exchange for surrender of the Old
Depositary Shares. For each Old Depositary Share
surrendered to the Company pursuant to the
Exchange Offer, the holder of such Old
Depositary Share will receive a New Depositary
Share. In the event that the Exchange Offer is
not consummated within 240 days of the date of
issuance of the Old Depositary Shares, the
Company has agreed, at its cost, as promptly as
practicable to file a shelf registration
statement (the "Shelf Registration Statement")
covering resales of the Old Depositary Shares
and use its best efforts to cause the Shelf
Registration Statement to be declared effective
under the Securities Act.
In the event that the Exchange Offer is not
consummated or the Shelf Registration Statement
is not declared effective on or prior to the
240th calendar day following the date of
original issue of the Old Depositary Shares, the
dividend rate borne by the Series L Preferred
Stock shall be increased by one-quarter of
11
<PAGE>
one percent per annum for the first 90 days
following such 240-day period. Such dividend
rate will increase by an additional one-quarter
of one percent per annum at the beginning of
each subsequent 90-day period, up to a maximum
aggregate increase of one percent per annum.
Upon the consummation of the Exchange Offer or
the effectiveness of the Shelf Registration
Statement, as the case may be, the dividend rate
borne by the Series L Preferred Stock will be
reduced to the original dividend rate. Dividends
on the Series M Preferred Stock will accumulate
at the original dividend rate accruing on the
Series L Preferred Stock.
Absence of Public The New Depositary Shares are new securities for
Market................. which there currently is no market. Although
Bear, Stearns & Co. Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley &
Co. Incorporated, the initial purchasers of the
Old Depositary Shares (collectively, the
"Initial Purchasers"), have informed the Company
that they currently intend to make a market in
the Old Depositary Shares, the New Depositary
Shares and, if issued, the Exchange Debentures,
they are not obligated to do so and any such
market making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity of
any market for the Old Depositary Shares, the
New Depositary Shares and, if issued, the
Exchange Debentures. The Company does not intend
to apply for listing of the Old Depositary
Shares, the New Depositary Shares or, if issued,
the Exchange Debentures on any securities
exchange or for quotation through the National
Association of Securities Dealers Automated
Quotation System.
EXCHANGE DEBENTURES
Maturity Date........... April 1, 2008.
Interest................ Interest will accrue at the dividend rate of the
Series M Preferred Stock and be payable in
arrears on January 1 and July 1 of each year,
commencing with the first of such dates to occur
after the date upon which Exchange Debentures
are issued in exchange for the New Depositary
Shares ("Exchange Date"). Before April 1, 2001,
interest may, at the option of the Company, be
paid in cash or by issuing additional Exchange
Debentures with a principal amount equal to such
interest. On and after April 1, 2001, interest
on the Exchange Debentures may be paid only in
cash.
Optional Redemption..... At any time on and after April 1, 2003, the
Exchange Debentures are redeemable, at the
option of the Company, in whole or in part, at
the redemption prices set forth herein plus
accrued and unpaid interest thereon to the
redemption date. In addition, prior to April 1,
1999 up to 50% in aggregate principal amount of
the Exchange Debentures may be redeemed at a
price of 110% of the principal amount thereof,
plus accrued and unpaid interest thereon, out of
the net proceeds of a sale of Junior Stock
12
<PAGE>
to a Strategic Equity Investor or a public
offering of Class A Common Stock, provided that
following such redemption at least $325,000,000
principal amount of Exchange Debentures remains
outstanding. See "Description of New Depositary
Shares, Series M Preferred Stock and Exchange
Debentures".
Subordination...........
The Exchange Debentures will be subordinated to
all existing and future Senior Indebtedness (as
defined) of the Company and will rank pari passu
with the Company's $275,000,000 of 10 3/4%
Senior Subordinated Debentures due 2004,
$200,000,000 of 9 7/8% Senior Subordinated
Debentures due 2013, $150,000,000 of 9 7/8%
Senior Subordinated Debentures due 2023,
$300,000,000 of 9 1/4% Senior Subordinated Notes
due 2005, $250,000,000 of 10 1/2% Senior
Subordinated Debentures due 2016, $150,000,000
of 9 7/8% Senior Subordinated Notes due 2006, 8
1/2% Convertible Subordinated Debentures due
2007 (that may be issued in exchange for the
Series I Preferred Stock) and 11 3/4% Senior
Subordinated Debentures due 2007 (that may be
issued in exchange for the Series G Preferred
Stock and the Series H Preferred Stock)
(collectively, the "Existing Debentures"). The
amount of Senior Indebtedness outstanding at
March 31, 1996, adjusted to give pro forma
effect to the transactions described under
"Capitalization" and the application of the net
proceeds to the Company from the offering of the
Series L Preferred Stock represented by Old
Depositary Shares, would have been approximately
$569.4 million. At March 31, 1996, the Company
also had outstanding, adjusted to give pro forma
effect to the transactions described under
"Capitalization", $1,663 million of senior
subordinated indebtedness and obligations
(including $339.7 million of indebtedness of
subsidiaries guaranteed by the Company) that
would have ranked pari passu with the Exchange
Debentures. Also, at March 31, 1996,
consolidated subsidiaries of the Company had
outstanding, adjusted to give pro forma effect
to the transactions described under
"Capitalization", approximately $1,346 million
of indebtedness (not including $339.7 million of
indebtedness of subsidiaries guaranteed by the
Company, described above) which, insofar as the
assets of those subsidiaries are concerned,
would have been effectively senior to the
Exchange Debentures.
Certain Restrictions.... The Indenture for the Exchange Debentures, among
other things, contains restrictions (with
certain exceptions) on the ability of the
Company and its Restricted Subsidiaries (as
defined) to incur additional indebtedness, make
certain dividend payments or payments to redeem
or retire capital stock, invest in Unrestricted
Subsidiaries (as defined) or affiliates, engage
in certain transactions with affiliates and
merge or consolidate with or transfer all or
substantially all of their assets to another
entity. The Indenture also prohibits the Company
from issuing any indebtedness that is senior in
right of payment to the Exchange Debentures and
expressly subordinate in right of payment to any
other indebtedness of the Company.
13
<PAGE>
SELECTED FINANCIAL DATA
The historical consolidated statement of operations data (except for book
value per common share, deficiency of earnings available to cover fixed charges
and deficiency of earnings available to cover fixed charges and preferred stock
dividends) and balance sheet data for each year ended December 31 and as of
December 31 in each year in the five-year period ended December 31, 1995,
included in the following selected financial data have been derived from the
Consolidated Financial Statements of the Company, audited by KPMG Peat Marwick
LLP, independent certified public accountants. The historical consolidated
statement of operations data and balance sheet data for the periods ended and
as of March 31, 1996 and 1995 included in the following selected financial data
have been derived from financial statements of the Company that have not been
audited, but that, in the opinion of the management of the Company, reflect all
adjustments necessary for the fair presentation of such data for the interim
periods. The results of operations for the three-month period ended March 31,
1996 are not necessarily indicative of the results of operations for the full
year, although the Company expects to incur a substantial loss for the year
ended December 31, 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- ------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- ---------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS
DATA(1):
Net revenues............ $ 304,165 $ 245,401 $1,078,060 $ 837,169 $ 666,724 $ 572,487 $ 603,272
Operating expenses:
Technical............... 128,690 93,225 412,479 302,885 241,877 204,449 213,059
Selling, general and ad-
ministrative........... 72,888 55,817 266,209 195,942 172,687 120,356 121,527
Restructuring charge.... -- -- -- 4,306(2) -- -- --
Depreciation and amorti-
zation................. 84,694 82,654 319,929 271,343 194,904 168,538 215,326
--------- --------- ---------- --------- --------- --------- ---------
Operating profit........ 17,893 13,705 79,443 62,693 57,256 79,144 53,360
Other income (expense):
Interest expense, net... (67,895) (75,328) (311,887) (261,781) (230,327) (193,379) (257,189)
Provision for preferen-
tial payment to
related party.......... (1,400) (1,400) (5,600) (5,600) (5,600) (2,662) --
Provision for loss on
Olympics venture....... -- -- -- -- -- (50,000)(3) --
Loss on sale of pre-
ferred stock........... -- -- -- -- -- (20,000)(4) --
Write-off of deferred
financing costs........ -- (2,888)(5) (5,517)(5) (9,884)(5) (1,044)(5) (12,284)(5) --
Loss on redemption of
debentures............. -- -- -- (7,088)(5) -- -- --
Share of affiliates' net
loss................... (20,968) (29,105) (93,024) (82,864) (61,017) (47,278) (23,780)
Gain (loss) on sale of
programming
and affiliate inter-
ests, net.............. -- -- 35,989 -- (330) 7,053 15,505
Minority interest....... (2,355) (2,110) (8,637) (3,429) 3,000 -- --
Gain on sale of
marketable securities,
net.................... -- -- -- -- -- 733 5,806
Settlement of litigation
and related matters.... -- -- -- -- -- (5,655) (9,677)
Miscellaneous, net...... (1,577) (1,376) (8,225) (7,198) (8,720) (6,175) (11,224)
--------- --------- ---------- --------- --------- --------- ---------
Net loss................ (76,302) (98,502) (317,458) (315,151) (246,782) (250,503) (227,199)
Dividend requirements
applicable to preferred
stock.................. (24,378) (2,471) (20,249) (6,385) (885) (885) (4,464)
--------- --------- ---------- --------- --------- --------- ---------
Net loss applicable to
common shareholders.... $(100,680) $(100,973) $ (337,707) $(321,536) $(247,667) $(251,388) $(231,663)
========= ========= ========== ========= ========= ========= =========
Net loss per common
share.................. $ (4.06) $ (4.27) $ (14.17) $ (13.72) $ (10.83) $ (11.17) $ (10.32)
========= ========= ========== ========= ========= ========= =========
Average number of common
shares
outstanding (in thou-
sands)................. 24,810 23,669 23,826 23,444 22,859 22,512 22,446
========= ========= ========== ========= ========= ========= =========
Book value per common
share.................. $ (81.17) $ (81.16) $ (76.61) $ (76.93) $ (64.61) $ (55.28) $ (41.49)
========= ========= ========== ========= ========= ========= =========
Deficiency of earnings
available to cover
fixed charges.......... $ (76,283) $ (98,484) $ (317,384) $(315,003) $(246,644) $(250,429) $(227,124)
========= ========= ========== ========= ========= ========= =========
Deficiency of earnings
available to cover
fixed charges and
preferred stock
dividends.............. $(100,661) $(100,955) $ (337,633) $(321,388) $(247,529) $(251,314) $(231,588)
========= ========= ========== ========= ========= ========= =========
</TABLE>
(footnotes on following page)
14
<PAGE>
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, ----------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA(1):
Total assets........... $2,593,106 $2,502,305 $2,176,413 $1,327,418 $1,251,157 $1,475,672
Total debt............. 2,696,580 3,157,107 3,169,236 2,235,499 2,004,452 2,211,056
Redeemable preferred
stock(4)............... 924,574 257,751 -- -- -- 32,094(4)
Stockholders'
deficiency............. (2,014,893) (1,891,676) (1,818,535) (1,503,244) (1,250,248) (932,428)
STATISTICAL DATA(1):
Homes passed(6)........ 3,339,000 3,328,000 2,899,000 2,240,000 2,019,000 2,005,000
Basic service
subscribers............ 2,085,000 2,061,000 1,768,000 1,379,000 1,262,000 1,372,000
Basic penetration(7)... 62.4% 61.9% 61.0% 61.6% 62.5% 68.4%
Number of premium
television units....... 3,841,000 3,990,000 3,208,000 3,003,000 2,802,000 2,326,000
Average number of
premium units per
basic
subscriber............ 1.8 1.9 1.8 2.2 2.2 1.7
Average monthly revenue
per basic
subscriber(8)......... $ 37.28 $ 37.07 $ 36.33 $ 36.59 $ 37.64 $ 34.43
</TABLE>
- --------
(1) The consolidated statement of operations, balance sheet and statistical
data reflect (i) the deconsolidation of A-R Cable, effective as of January
1, 1992, as a result of the restructuring of A-R Cable, (ii) the
acquisition of Cablevision of New York City ("Cablevision of NYC"),
effective as of July 10, 1992, and (iii) various acquisitions of cable
television systems and other businesses during the periods presented. (See
"Business--Cable Television Operations" in the Form 10-K and "Condensed Pro
Forma Consolidated Financial Information" herein.) Acquisitions made by the
Company during the periods presented were accounted for under the purchase
method of accounting and, accordingly, the acquisition costs were allocated
to the net assets acquired based on their fair value, except for the
acquisition of partnership interests in Cablevision of NYC from Charles F.
Dolan and entities affiliated with him, which were recorded at Mr. Dolan's
and such entities' historical costs. Acquisitions are reflected in the
consolidated statement of operations, balance sheet and statistical data
from the time of acquisition. Certain reclassifications have been made to
the 1991 financial statement amounts to conform to the 1992 presentation.
(2) The Company recorded a one-time charge in the first quarter of 1994 to
provide for employee severance and related costs resulting from a
restructuring of its operations.
(3) In 1992, the Company recognized a $50.0 million loss in connection with
Rainbow Programming's commitment in respect of its venture with NBC
relating to the 1992 Summer Olympics, which the Company paid in January
1993.
(4) In connection with the 1992 reorganization of V Cable, Inc. ("V Cable"),
the Company redeemed A-R Cable's redeemable preferred stock on May 11,
1992, incurring a loss of $20 million.
(5) In connection with the 1992 reorganization of V Cable, the Company wrote
off approximately $7.5 million of deferred financing costs related to the
debt of V Cable, Inc. Also, a portion of the Company's deferred financing
costs of approximately $4.8 million in 1992 and $1.0 million in 1993,
related to the replacement of bank debt with subordinated debt, were
written off. In October 1994, the Company entered into a new bank credit
agreement and redeemed $200 million of its reset debentures. The related
deferred financing costs and unamortized discount relating to each were
written off (the portions relating to Cablevision of NYC and Cablevision of
New Jersey amounting to $3.2 million were written off in 1995) and
approximately $2.0 million in redemption fees were incurred in connection
with the redemption of the reset debentures. In January 1995, Rainbow
Programming amended its credit agreement to refinance its existing
borrowings and to provide funds for the acquisition of SportsChannel
Associates and Rainbow News 12, resulting in an approximately $2.3 million
write-off of deferred financing costs.
(6) Homes passed is based upon homes passed by cable actually marketed and does
not include multiple dwelling units passed by the cable plant that are not
connected to it.
(7) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(8) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month of the period, divided by average basic
subscribers for that month.
15
<PAGE>
SUPPLEMENTAL FINANCIAL AND OPERATING DATA
The following tables set forth information concerning the Company's
Restricted Group (as defined under "The Company") and Unrestricted Cable (as
defined under "The Company") on the date or for the period indicated, as the
Restricted Group and Unrestricted Cable were constituted on March 31, 1996, and
for the periods ended and as of March 31, 1996 and December 31, 1995,
respectively, adjusted to give pro forma effect to the transactions described
under "Condensed Pro Forma Consolidated Financial Information" in the May Form
8-K, and assuming that U.S. Cable Television Group, L.P., A-R Cable Partners
and CFHI become part of Unrestricted Cable and Cablevision of Newark becomes
part of the Restricted Group. The data should be read in conjunction with the
Company's Consolidated Financial Statements and "Management's Discussion and
Analysis".
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------------------------- -----------------------------------------------------
FINANCIAL DATA 1996 1995 1995 1994 1993
-------------- ------------------------- ---------- ------------------------ ---------- ----------
PRO FORMA ACTUAL PRO FORMA ACTUAL
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED GROUP:
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 207,634 $ 194,181 $ 157,737 $ 793,112 $ 679,025 $ 584,567 $ 495,354
Operating profit before
depreciation and
amortization(1)....... 83,593 76,233 69,041 330,381 275,323 249,316 215,563
Depreciation and amor-
tization.............. 54,549 49,672 41,631 212,800 168,067 154,187 111,366
Operating profit....... 29,044 26,561 27,410 117,581 117,256 95,129 104,197
Total interest expense. 51,771(2) 38,092(2) 41,254(2) 179,991(2) 170,863(2) 153,923(2) 137,960
BALANCE SHEET DATA:
Total assets........... $2,242,067 $2,021,231 $1,207,405 $1,582,936 $1,415,777 $1,119,882 $ 838,746
Senior debt............ 569,387 601,029 1,108,950 472,229 567,249 969,895 488,128
Subordinated debt...... 1,474,012(2) 1,064,895(2) 764,820(2) 1,473,993(2) 1,064,876(2) 764,802(2) 822,781
Obligation to related
party................. 188,713 188,713 188,845 192,945 192,945 193,079 91,619
Total debt............. 2,232,112(2) 1,854,637(2) 2,062,615(2) 2,139,167(2) 1,825,070(2) 1,927,776(2) 1,402,528
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and
amortization to
revenues.............. 40.3% 39.3% 43.8% 41.7% 42.0% 42.6% 43.5%
Total debt to operating
profit before
depreciation and
amortization.......... 6.7x(3) 6.1x(3) 7.5x(3) 6.5x 6.4x 7.7x 6.5x
Operating profit before
depreciation and
amortization to total
interest expense...... 1.6x 2.0x 1.7x 1.8x 1.7x 1.6x 1.6x
Capital expenditures... $ 53,674 $ 53,597 $ 44,053 $ 247,369 $ 234,516 $ 251,078 $ 193,048
UNRESTRICTED CABLE:
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 104,879 $ 57,657 $ 53,624 $ 407,887 $ 226,130 $ 169,826 $ 137,853
Operating profit before
depreciation and
amortization(1)....... 40,198 25,764 25,401 167,002 107,093 84,932 65,789
Depreciation and
amortization.......... 44,567 26,714 35,273 187,096 124,488 105,938 80,287
Operating profit
(loss)................ (4,369) (950) (9,872) (20,094) (17,395) (21,006) (14,498)
Total interest expense. 25,900 26,269 30,844 107,545 123,741 103,803 94,452
BALANCE SHEET DATA:
Total assets........... $1,217,339 $ 778,090 $ 788,346 $1,056,916 $ 716,399 $ 823,363 $ 536,629
Total debt............. 1,111,970 608,160 1,101,919 1,091,813 1,094,003 1,092,440 832,964
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and
amortization to net
revenues.............. 38.3% 44.7% 47.4% 40.9% 47.4% 50.0% 47.7%
Total debt to operating
profit before
depreciation and
amortization.......... 6.9x(4) 5.9x(4) 10.8x(3) 6.5x 10.2x 9.9x(4) 12.7x
Operating profit before
depreciation and
amortization to total
interest expense...... 1.6x 1.0x 0.8x 1.6x 0.9x 0.8x 0.7x
Capital expenditures... $ 32,854 $ 21,646 $ 7,279 $ 90,753 $ 43,707 $ 24,195 $ 20,304
</TABLE>
(footnotes on following page)
16
<PAGE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1996 AS OF DECEMBER 31,
---------------------- ------------------------------------
STATISTICAL DATA PRO FORMA ACTUAL 1995 1994 1993
---------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RESTRICTED GROUP:
Homes passed(4)........ 2,665,000 2,559,000 2,549,000 2,138,000 1,731,000
Basic service
subscribers at end of
period................ 1,657,000 1,534,000 1,512,000 1,243,000 1,029,000
Basic penetration(5)... 62.2% 59.9% 59.3% 58.1% 59.4%
Number of premium
television units...... 3,397,000 3,269,000 3,375,000 2,699,000 2,557,000
Average number of
premium units per
basic subscriber...... 2.1 2.2 2.2 2.2 2.5
Average revenue per
basic subscriber(6)... $ 38.52 $ 38.92 $ 38.82 $ 38.29 $ 38.65
UNRESTRICTED CABLE:
Homes passed(4)........ 1,665,000 780,000 779,000 760,000 509,000
Basic service
subscribers at end of
period................ 1,095,000 551,000 549,000 525,000 350,000
Basic penetration(5)... 65.8% 70.6% 70.5% 69.1% 68.7%
Number of premium
television units...... 1,201,000 572,000 615,000 508,000(7) 446,000
Average number of
premium units per
basic subscriber...... 1.1 1.0 1.1 1.0 1.3
Average revenue per
basic subscriber(6)... $ 30.58 $ 32.74 $ 32.45 $ 31.72 $ 30.56
</TABLE>
FOOTNOTES
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(2) Excludes Cablevision MFR, Inc. seller note in the amount of approximately
$141.3 million that is, together with related interest expense, guaranteed
by the Restricted Group and, for pro forma amounts, also includes CFMI
seller note in the amount of approximately $9.7 million.
(3) Operating profit before depreciation and amortization is annualized for
purposes of preparing interim financial ratios that include balance sheet
items.
(4) Cablevision MFR, Inc. was acquired in August 1994, and operating profit
before depreciation and amortization for 1994 is annualized for purposes of
preparing financial ratios.
(5) Homes passed is based upon homes passed by cable actually marketed and does
not include multiple dwelling units passed by the cable plant that are not
connected to it.
(6) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(7) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month in the period presented, divided by the
average number of basic subscribers for that month.
17
<PAGE>
RISK FACTORS
Purchase of the New Depositary Shares representing the Series M Preferred
Stock offered hereby (the "Offering") involves various risks, including the
following principal factors, which, together with the other matters set forth
herein or incorporated by reference herein, should be carefully considered by
prospective investors.
Substantial Indebtedness and High Degree of Leverage. The Company has
incurred substantial indebtedness, primarily to finance acquisitions and
expansion of its operations and, to a lesser extent, for investments in and
advances to affiliates. The Company's consolidated debt plus the 11 3/4% Series
G Redeemable Exchangeable Preferred Stock (the "Series G Preferred Stock") and
Series L Preferred Stock aggregated approximately $3.6 billion at March 31,
1996 ($4.5 billion on a pro forma basis after giving effect to the transactions
described under "Capitalization") with varying maturities to 2023, including an
aggregate of approximately $539.5 million ($1,149.8 million on a pro forma
basis after giving effect to the transactions described under "Capitalization")
maturing on or prior to December 31, 2000. See Note 4 of Notes to the
Consolidated Financial Statements.
Net Losses and Stockholders' Deficit. The Company reported net losses for the
three months ended March 31, 1996 and 1995 of $76.3 million and $98.5 million,
respectively, and for the years ended December 31, 1995, 1994 and 1993 of
$317.5 million, $315.2 million and $246.8 million, respectively. At March 31,
1996, the Company had a stockholders' deficiency of $2.0 billion. The net
losses primarily reflect high levels of interest expense and depreciation and
amortization charges relating to the depreciation of assets obtained through,
and debt incurred to finance, acquisitions. Interest expense and depreciation
and amortization charges remained at a high level throughout 1993, 1994, 1995
and the first quarter of 1996 and will continue at high levels throughout the
remainder of 1996 and future years as a result of previously completed, pending
and future acquisitions, expected capital expenditures and additional
investments in the Company's programming operations. The Company expects to
continue incurring substantial losses for at least the next several years. See
"Management's Discussion and Analysis--Liquidity and Capital Resources".
Need for Additional Financing. The Company's business requires substantial
investment on a continuing basis to finance capital expenditures and related
expenses for, among other things, upgrade of the Company's cable plant
(including the need to make cable system upgrades mandated by franchise
authorities), the offering of new services and the servicing, repayment or
refinancing of its indebtedness. The Company will require significant
additional financing, through debt and/or equity issuances, to meet its capital
expenditure plans and to pay its debt and preferred stock obligations. There
can be no assurance that the Company will be able to issue additional debt or
obtain additional equity capital on satisfactory terms, or at all, to meet its
future financing needs. See "Management's Discussion and Analysis--Liquidity
and Capital Resources".
Future Capital Expenditures and Programming Commitments. The Company's cable
systems have commitments for capital expenditures, including major system
upgrades, which will involve substantial expenditures over the next several
years. In addition, the Company, through Rainbow Programming, has entered into
numerous contracts relating to cable television programming, including rights
agreements with professional and other sports teams. These contracts typically
require substantial payments over extended periods of time. See Note 11 of
Notes to Consolidated Financial Statements for a discussion of commitments.
Rainbow Programming has the right to acquire interests in Madison Square
Garden, L.P. ("MSG Holdings") from ITT Corporation ("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. See
"The Company--Programming Services". 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 amounts borrowed under the Company's
18
<PAGE>
principal bank credit agreement (the "Credit Agreement"). Accordingly, the
Company funded an approximate $29 million interest payment on March 11, 1996
and the $2.2 million and $1.8 million monthly interest payments on April 15,
1996 and May 15, 1996, respectively, from funds available under the Credit
Agreement. The Company has not yet identified specific funding sources for the
up to $250 million that could be required in connection with the ITT/MSG
Holdings transactions. The Company also has a commitment to fund annual
payments to Charles F. Dolan related to Cablevision of New York City
("Cablevision of NYC"). See "Business--Consolidated Cable Affiliates--
Cablevision of New York City" and "Business--Programming Operations" in the
Form 10-K and "Management's Discussion and Analysis--Liquidity and Capital
Resources".
Intangible Assets. The Company had total assets at March 31, 1996 of
approximately $2.6 billion, of which approximately $1.0 billion were intangible
assets, principally franchises, affiliation agreements, excess cost over fair
value of net assets acquired, deferred financing, acquisition and other costs
and deferred interest expense. It is possible that no cash would be recoverable
from the voluntary or involuntary sale of these intangible assets.
Voting Control by Majority Stockholders; Disparate Voting Rights. As of March
31, 1996, Charles F. Dolan beneficially owned and possessed sole voting power
with respect to 259,306 shares or 1.8% of the Company's outstanding Class A
Common Stock and 2,346,281 shares or 20.3% of the Company's outstanding Class B
common stock (the "Class B Common Stock" and, collectively with the Class A
Common Stock, the "Common Stock"). In addition, as of March 31, 1996, an
aggregate of 4,000,000 shares or 34.6% of the outstanding Class B Common Stock
were held by two Grantor Retained Annuity Trusts (the "GRA Trusts") established
by Mr. Dolan for estate planning purposes. Mr. Dolan may be deemed to have
beneficial ownership of the shares of Class B Common Stock held by the GRA
Trusts due to his right to reacquire the Class B Common Stock held by the GRA
Trusts by substituting other property of equivalent value, but, until such
event, each of the GRA Trusts, through their co-trustees (who are family
members of Mr. Dolan) has the power to vote and dispose of the shares of Class
B Common Stock held by the GRA Trusts. As a result of his beneficial ownership
of the shares held by the GRA Trusts, as of March 31, 1996, Mr. Dolan
beneficially owned 259,306 shares or 1.8% of the Company's outstanding Class A
Common Stock and 6,346,281 shares or 54.8% of the Company's outstanding Class B
Common Stock. On a combined basis, these shares represented 25.5% of the total
number of shares of both classes of Common Stock and 49.0% of the total voting
power of the classes. Other trusts established by Mr. Dolan for the benefit of
certain Dolan family members, and as to which Mr. Dolan disclaims beneficial
ownership, owned, as of March 31, 1996, an additional 500,000 shares of Class A
Common Stock or 3.5% of the Class A Common Stock and 5,225,928 shares of the
Class B Common Stock, or 45.2% of the Class B Common Stock and 40.6% of the
total voting power of all classes of the Common Stock. As a result of this
stock ownership, Dolan family members have the power to elect all the directors
subject to election by holders of the Class B Common Stock, which directors
constitute 75% of the entire Board of Directors of the Company. Moreover,
because holders of Class B Common Stock are entitled to ten votes per share
while holders of Class A Common Stock are entitled to one vote per share, Dolan
family members may control stockholder decisions on matters in which holders of
Class A and Class B Common Stock vote together as a class. These matters
include the amendment of certain provisions of the Company's certificate of
incorporation (the "Certificate of Incorporation") and the approval of
fundamental corporate transactions, including mergers. In addition, because the
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Class B Common Stock, voting separately as a class,
is required to approve (i) the authorization or issuance of any additional
shares of Class B Common Stock and (ii) any amendment, alteration or repeal of
any of the provisions of the Certificate of Incorporation of the Company which
adversely affects the powers, preferences or rights of the Class B Common
Stock, Dolan family members also have the power to prevent such issuance or
amendment. The voting rights of the Class B Common Stock beneficially owned by
Mr. Dolan will not be modified as a result of any transfer of legal or
beneficial ownership thereof.
Restrictive Covenants. The Company's Credit Agreement and certain of the
Company's other debt instruments contain various financial and operating
covenants which, among other things, require the
19
<PAGE>
maintenance of certain financial ratios and restrict the Company's ability to
borrow funds from other sources and to utilize funds for various purposes,
including investments in certain subsidiaries. Violation of the covenants in
the Credit Agreement could result in a default under the Credit Agreement which
would permit the bank lenders thereunder to restrict the Company's ability to
borrow undrawn funds under the Credit Agreement and to accelerate the maturity
of borrowings thereunder. See "Management's Discussion and Analysis--Liquidity
and Capital Resources".
Risks Related to Regulation. The Company's cable television operations may be
adversely affected by government regulation, the impact of competitive forces
and technological changes. In 1992, Congress enacted the 1992 Cable Act, which
represented a significant change in the regulatory framework under which cable
television systems operate. In April 1993 and February 1994, the FCC ordered
reductions in cable television rates. In June 1995, a Federal appeals court
upheld the material aspects of the FCC's rate regulation scheme. Congress has
enacted legislation (the "Telecommunications Act of 1996") that relaxes the
regulation of cable television rates. The FCC is formulating rules to implement
the Telecommunications Act of 1996. These rules will determine the effect of
the legislation on the Company. See "Business--Cable Television Operations--
Competition" and "Business--Cable Television Operations--Regulation" in the
Form 10-K.
Risk of Competition. Cable operators compete with a variety of distribution
systems, including broadcast television stations, multichannel multipoint
distribution services ("MMDS"), satellite master antenna systems ("SMATV"),
direct broadcast satellite systems ("DBS"), and private home dish earth
stations. For example, CAI Wireless Systems, Inc., an MMDS operator, has
received investments from Bell Atlantic Corporation and NYNEX Corporation and
owns operating systems or spectrum rights in a significant portion of the
Company's systems areas. In addition, four DBS systems are now operational in
the United States and recently AT&T Corp. announced an investment in Hughes
Electronics Corp.'s DirecTv system. The 1992 Cable Act prohibits a cable
programmer that is owned by or affiliated with a cable operator (such as
Rainbow Programming) from unreasonably discriminating among or between cable
operators and other multichannel video distribution systems with respect to the
price, terms and conditions of sale or distribution of the programmer's service
and from unreasonably refusing to sell service to any multichannel video
programming distributor. Cable systems also compete with the entities that make
videotaped movies and programs available for home rental. The 1992 Cable Act
regulates the ownership by cable operators of MMDS and SMATV. Under the
Telecommunications Act of 1996, the cross-ownership provisions do not apply to
any cable operator in a franchise area in which a cable operator faces
competition from video programming distributors meeting certain statutory
requirements. In July 1992, the FCC voted to authorize additional competition
to cable television by video programmers using broadband common carrier
facilities constructed by telephone companies. The FCC allowed telephone
companies to take ownership interests of up to 5% in such programmers. The FCC
also reaffirmed an earlier holding, upheld on appeal by a Federal appeals
court, that programmers using such a telephone company-provided "video
dialtone" system would not need to obtain a state or municipal franchise.
Several telephone companies have sought approval from the FCC to build such
"video dialtone" systems. Such a system has been proposed in several
communities in which the Company currently holds a cable franchise and several
of such systems have been approved by the FCC. The Telecommunications Act of
1996 repeals the "video dialtone" rules, but gives telephone companies (and
cable companies, to the extent permitted by the FCC) the option of providing
video programming to subscribers through "open video systems" that closely
resemble video dialtone systems and that would not require a local cable
franchise. Additional competition to cable systems is possible if the FCC
authorizes the licensing of local multipoint distribution services ("LMDS").
The FCC has proposed to license this type of service to providers.
Competition from Telephone Companies. The 1984 Cable Act barred co-ownership
of telephone companies and cable television systems operating in the same
service areas. Numerous Federal district courts held this prohibition to be
unconstitutional. Several of these decisions have been upheld on appeal. The
Telecommunications Act of 1996 repeals this restriction and permits a telephone
company to provide video programming directly to subscribers in its telephone
service territory, subject to certain regulatory
20
<PAGE>
requirements, but generally prohibits a telephone company from acquiring an in-
region cable operator, except in certain small markets under certain
circumstances. Telephone companies (Ameritech Corp. in Ohio and Southern New
England Telephone Co. in Connecticut) have obtained or applied for local
franchises to construct and operate cable television systems in several
communities in which the Company currently holds cable franchises. Neither the
1984 Cable Act nor the 1992 Cable Act bars a telephone company from acquiring
cable systems outside its telephone service area, and several Regional Bell
operating companies have purchased or made investments in cable systems. See
"Business--Cable Television Operations--Regulation" in the Form 10-K.
Risk of Non-Exclusive Franchises and Franchise Renewals. The Company's cable
television systems are operated primarily under nonexclusive franchise
agreements with local government franchising authorities, in some cases with
the approval of state cable television authorities. The Company's business is
dependent on its ability to obtain and renew its franchises. Although the
Company has never lost a franchise as a result of a failure to obtain a
renewal, its franchises are subject to non-renewal or termination under certain
circumstances. In certain cases, franchises have not been renewed at expiration
and the Company operates under temporary licenses while negotiating renewal
terms with the franchising authorities. See "Business--Cable Television
Operations--Franchises" in the Form 10-K.
Risks Related to the Securities.
Absence of Public Market. The New Depositary Shares are new securities for
which there currently is no market. Although Bear, Stearns & Co. Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated, the initial purchasers of the Old Depositary Shares
(collectively, the "Initial Purchasers"), have informed the Company that they
currently intend to make a market in the Old Depositary Shares, the New
Depositary Shares and, if issued, the Exchange Debentures, they are not
obligated to do so and any such market making may be discontinued at any time
without notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Old Depositary Shares, the New Depositary
Shares and, if issued, the Exchange Debentures. The Company does not intend to
apply for listing of the New Depositary Shares or, if issued, the Exchange
Debentures on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
Restrictions on Company's Ability to Pay Dividends on the Series L Preferred
Stock and the Series M Preferred Stock. Certain of the Company's debt
instruments contain covenants that restrict the Company's ability to pay, or
may prevent the payment of, dividends on the Company's preferred stock,
including the Series L Preferred Stock and the Series M Preferred Stock. In
addition, under Delaware law, dividends on capital stock may only be paid from
"surplus" or if there is no surplus from the corporation's net profits for the
then current or the preceding fiscal year. The Company does not anticipate
having net profits for the foreseeable future and its ability to pay dividends
on the Series L Preferred Stock and the Series M Preferred Stock will require
the availability of adequate "surplus", which is defined as the excess, if any,
of the Company's net assets (total assets less total liabilities) over its
capital (generally the par value of its issued capital stock). As of March 31,
1996, the Company's total liabilities, including deficit investment in
affiliates and Series G Preferred Stock, exceeded its total assets by $2.0
billion. Accordingly, in connection with dividend payments on the Series L
Preferred Stock or the Series M Preferred Stock, the Company's Board of
Directors will have to determine that the Company has adequate surplus on the
basis of valuations of the Company's assets at higher amounts than are
reflected in the Company's financial statements. There can be no assurance that
the Company's Board of Directors will be able to make such determination and
that adequate surplus will be available to pay dividends on the Series L
Preferred Stock or the Series M Preferred Stock.
Certain Federal Income Tax Consequences. The Company believes that it does
not presently have any current or accumulated earnings and profits as
determined under United States federal income tax principles and that it is
unlikely to have current or accumulated earnings and profits for the
foreseeable future. As a result, until such time as the Company does have
earnings and profits, distributions on the New Depositary
21
<PAGE>
Shares will be treated as a nontaxable return of capital and will be applied
against and reduce the adjusted tax basis of the New Depositary Shares in the
hands of each holder (but not below zero), thus increasing the amount of any
gain (or reducing the amount of any loss) which would otherwise be realized by
such holder upon the disposition of such New Depositary Shares. Consequently,
distributions with respect to the New Depositary Shares will not qualify as
dividends for federal income tax purposes and, as a result, will not be
eligible for the dividends-received deduction.
THE COMPANY
The Company is one of the largest operators of cable television systems in
the United States, with approximately 2,752,000 subscribers in 19 states as of
March 31, 1996 based on the number of basic subscribers in systems which the
Company manages and which it owns or in which it has investments. The Company
also has ownership interests in companies that produce and distribute national
and regional programming services and provide advertising sales services for
the cable television industry.
For financing purposes, the Company is structured as a restricted group
(collectively, the "Restricted Group"), including Cablevision of NYC and, as of
December 15, 1995, a subsidiary holding the cable television assets previously
a part of Cablevision of Boston, and an unrestricted group of subsidiaries. The
unrestricted group of subsidiaries consists primarily of Cablevision of Ohio
(as defined under "Recent Developments--V Cable Transactions" in the Form 10-
K), Cablevision MFR, Inc. ("Cablevision MFR" and, collectively with Cablevision
of Ohio, "Unrestricted Cable") and Rainbow Programming Holdings, Inc.
(including Rainbow Advertising Sales Corporation ("Rainbow Advertising"),
American Movie Classics and SportsChannel Associates ("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 Holding, Inc. ("CFHI"), A-R Cable Partners and
Cablevision of Newark. The Company's unrestricted subsidiaries and investments
are collectively referred to herein as the "Unrestricted Group". See "Recent
Developments" in the Form 10-K and the May Form 8-K for a discussion of certain
transactions involving members of the Unrestricted Group, including Cablevision
of Ohio, A-R Cable, CFHI, A-R Cable Partners and Cablevision of Newark. The
Restricted Group and each member of the Unrestricted Group that operates cable
television systems are individually and separately financed. The indebtedness
of V Cable and A-R Cable is non-recourse to the Company, other than with
respect to the capital stock of such entities owned by the Company. Rainbow
Programming's cash requirements have been financed to date by the Restricted
Group, by sales of equity interests in the programming businesses and, as set
forth below under "--Programming Services", through separate external debt
financing. Rainbow Programming's future cash requirements may be financed with
separate external debt financing, which, as to the assets of Rainbow
Programming, would be structurally senior to any of the Company's indebtedness.
See "Management's Discussion and Analysis--Liquidity and Capital Resources" for
a discussion of the restrictions on investments by the Restricted Group and
certain other matters.
STRATEGY
The Company's strategy has been to concentrate its cable television systems
in and around three major metropolitan areas, New York City, Boston and
Cleveland, with a view to being the largest cable provider in each of these
markets; to maximize its revenue per subscriber through the use of "tiered"
packaging strategies for marketing premium services; to develop and promote
niche programming services; and to remain an industry leader in upgrading the
technological capabilities of its systems.
The Company believes that its cable television systems on Long Island, New
York comprise the largest contiguous group of cable television systems under
common ownership in the United States (measured by number of subscribers). By
developing systems in and around major metropolitan areas, including expansion
through acquisitions in areas in which the Company has existing systems, the
Company has been able to
22
<PAGE>
realize economies of scale in the operation and management of its systems, and
capitalize on opportunities to create and market programming of regional
interest.
Through the current and planned upgrade of its cable plant, including the
utilization of fiber optic cable and associated electronics, the Company is
seeking to significantly increase its analog channel capacity and add new
digital channel capacity that will facilitate the development of such adjunct
new businesses as information services, interactive services (including
Internet access), video on demand, near video on demand, residential telephony
and commercial 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.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable televisions systems") served approximately
2,085,000 subscribers as of March 31, 1996 in New York, Ohio, Connecticut, New
Jersey, Michigan and Massachusetts. In addition, the Company has non-majority
investments in and manages cable television systems which served approximately
667,000 subscribers as of March 31, 1996 in Alabama, Arkansas, Florida,
Illinois, Kansas, Kentucky, Maine, Massachusetts, Mississippi, Missouri, New
Jersey, New York, North Carolina, Oklahoma, Pennsylvania and Tennessee. The
Company's cable television systems have generally been characterized by
relatively high revenues per subscriber ($37.28 for March 1996) and ratios of
premium service units to basic subscribers (1.8:1 for March 1996). In
calculating revenue per subscriber, the Company includes only recurring service
revenues and excludes installation charges and certain other revenues such as
advertising, pay-per-view and home shopping revenues.
The cable television operations in the Restricted Group served approximately
1,534,000 subscribers as of March 31, 1996, primarily on Long Island, New York,
in New York City, in Connecticut (principally Fairfield County), in northern
New Jersey, in Westchester County, New York and in Cleveland, Ohio. See "Recent
Developments--V Cable Transactions" in the Form 10-K and the May Form 8-K for a
discussion of the transactions pursuant to which the Company's cable television
systems in Cleveland, Ohio were contributed to Cablevision of Ohio (a part of
Unrestricted Cable) on April 17, 1996. The revenue per subscriber and ratio of
premium service units to basic subscribers for cable television systems in the
Restricted Group for March 1996 were $38.92 and 2.1:1, respectively.
The cable television operations in Unrestricted Cable served approximately
551,000 subscribers as of March 31, 1996 and are conducted through the
Company's unrestricted subsidiaries, Cablevision of Ohio and Cablevision MFR,
and through its unrestricted investments, consisting of A-R Cable, U.S. Cable,
CFHI, A-R Cable Partners and Cablevision of Newark. The revenue per subscriber
and ratio of premium service units to basic subscribers for the Company's
unrestricted subsidiaries for March 1996 were $32.74 and 1.0:1, respectively.
See "Recent Developments--Pending Warburg Transactions" in the May Form 8-K for
a discussion of the Company's agreement to acquire the remaining interests in
A-R Cable, A-R Cable Partners, Cablevision of Newark and CFHI (collectively,
the "Warburg Companies") and "Recent Developments--V Cable Transactions" in the
May Form 8-K for a discussion of the transactions pursuant to which U.S. Cable
will become part of Unrestricted Cable.
In August 1994, Cablevision MFR, a wholly-owned subsidiary of the Company,
acquired substantially all of the assets of Monmouth Cablevision Associates
("Monmouth Cable") and Riverview Cablevision Associates, L.P. ("Riverview
Cable"), consisting of cable television systems in New Jersey. Also in August
1994, CFHI, a corporation jointly owned by the Company and E.M. Warburg Pincus
Investors, L.P., acquired substantially all of the assets of Framingham
Cablevision Associates Limited Partnership ("Framingham Cable"), consisting of
a cable television system in Massachusetts. Additionally, in June 1994, a
partnership comprised of subsidiaries of the Company and E.M. Warburg, Pincus &
Co. Inc. completed
23
<PAGE>
the purchase of certain assets of Nashoba Communications, a group of three
limited partnerships that operate three cable television systems in
Massachusetts.
See "Recent Developments--V Cable Transactions" in the May Form 8-K and
"Business--Recent Developments--V Cable Transactions" in the Form 10-K for a
description of the reorganization and recapitalization of V Cable. This
transaction resulted in the inclusion within the Restricted Group of V Cable's
Long Island cable television systems (which served approximately 161,000
subscribers as of March 31, 1996) and the transfer of the North Coast Cable
cable television systems (which served approximately 87,000 subscribers as of
March 31, 1996) from the Restricted Group to Unrestricted Cable and will
result in the acquisition of the 80% of U.S. Cable (which served approximately
245,000 subscribers as of March 31, 1996) not owned by the Company. U.S. Cable
will be part of the Unrestricted Cable.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow Programming,
its wholly-owned subsidiary and member of the Unrestricted Group, and through
subsidiaries of Rainbow Programming in partnership with certain unaffiliated
entities, including National Broadcasting Company, Inc. ("NBC") and Liberty
Media Corporation ("Liberty"). Rainbow Programming's businesses include eight
regional SportsChannel services, four national entertainment services
(American Movie Classics, Bravo, MuchMusic ("MM") and the Independent Film
Channel ("IFC")), Rainbow News 12 (regional news services serving 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 MSG Holdings. Rainbow Programming's SportsChannel services
provide regional sports programming to the New York, Philadelphia, New
England, Chicago, Cincinnati, Cleveland, San Francisco and Florida areas.
American Movie Classics is a national program service featuring classic,
unedited and non-colorized films from the 1930s through the 1970s. Bravo is a
national program service offering international films and performing arts
programs, including jazz, dance, classical music, opera and theatrical
programs. See "Business--Programming Operations--General" in the Form 10-K. MM
is a Canadian music service featuring music primarily from Canadian artists.
IFC is a national program service that airs independent films made outside the
traditional Hollywood system.
In March 1995, MSG Holdings, a partnership among subsidiaries of Rainbow
Programming and subsidiaries of ITT, acquired the business and assets of
Madison Square Garden ("MSG") in a transaction in which MSG merged with and
into MSG Holdings. MSG Holdings owns the Madison Square Garden Arena and the
adjoining Theater at MSG, 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.
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
24
<PAGE>
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 Credit
Agreement. Accordingly, the Company funded an approximately $29 million
interest payment on March 11, 1996 and the $2.2 million and $1.8 million
monthly interest payments on April 15, 1996 and May 15, 1996, respectively,
from funds available under the 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 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 the interests 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 (the "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 matters, to conduct themselves in
accordance with the relevant rules of each league.
ADVERTISING SERVICES
Rainbow Advertising sells advertising time to national, regional and local
advertisers on behalf of the Company's cable television systems and the
SportsChannel and Rainbow News 12 Company programming services, as well as on
behalf of unaffiliated cable television systems.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Depositary Shares offered hereby. In consideration for issuing the New
Depositary Shares as contemplated in this Prospectus, the Company will receive
in exchange a like number of shares of Old Depositary Shares with a like
aggregate liquidation preference, the terms of which are identical in all
material respects to the New Depositary Shares. The Old Depositary Shares
surrendered in exchange for the New Depositary Shares will be retired and
cancelled and cannot be reissued. Accordingly, issuance of the New Depositary
Shares will not result in any change in capitalization of the Company.
The net proceeds received by the Company from the offering of the Old
Depositary Shares were $625.0 million. The Company applied approximately $570.0
million to make a capital contribution to V Cable. Such proceeds were used to
repay approximately $500.0 million of indebtedness of V Cable and VC Holding,
Inc. and to make a capital contribution of approximately $70.0 million to U.S.
Cable. The Company applied the balance of approximately $55.0 million to repay
borrowings under the Credit Agreement. The Company expects to reborrow the
amount repaid under the Credit Agreement in the future for general corporate
purposes. See "Management's Discussion and Analysis--Liquidity and Capital
Resources" for information concerning the Company's significant expected
expenditures.
25
<PAGE>
THE EXCHANGE OFFER
GENERAL
In connection with the sale of the Old Depositary Shares, the purchasers
thereof became entitled to the benefits of certain registration rights (the
"Registration Rights"). Pursuant to the agreement governing the Registration
Rights (the "Registration Rights Agreement"), the Company agreed (x) within 60
days after February 15, 1996 to file a registration statement (the "Exchange
Offer Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to a registered offer to exchange the Old Depositary
Shares for the New Depositary Shares, which will have terms identical to the
Old Depositary Shares (except that the New Depositary Shares will not contain
terms with respect to transfer restrictions) and (y) to use its best efforts to
cause the Exchange Offer Registration Statement to become effective within 180
days after February 15, 1996. Upon the Exchange Offer Registration Statement
being declared effective, the Company will offer the New Depositary Shares in
exchange for surrender of the Old Depositary Shares. The Company will keep the
Exchange Offer open for not less than 30 days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
holders of the Old Depositary Shares. For each Old Depositary Share surrendered
to the Company pursuant to the Exchange Offer, the holder of such Old
Depositary Share will receive a New Depositary Share representing Series M
Preferred Stock having a liquidation preference equal to that of the Series L
Preferred Stock represented by the surrendered Old Depositary Share.
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Depositary Shares would in general
be freely transferable after the Exchange Offer without further registration
under the Securities Act by holders thereof (other than a "Restricted Holder",
being (i) a broker-dealer who purchases such New Depositary Shares directly
from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person that is an affiliate of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Depositary Shares are acquired in the
ordinary course of such holders' business and such holders have no arrangements
with any person to participate in the distribution of such New Depositary
Shares. Eligible holders wishing to accept the Exchange Offer must represent to
the Company that such conditions have been met. Each broker-dealer that
receives New Depositary Shares for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any
resale of such New Depositary Shares.
In the event that applicable interpretations of the staff of the Commission
would not permit the Company to effect the Exchange Offer or, if for any other
reason the Exchange Offer was not consummated within 240 days of the issuance
of the Old Depositary Shares, the Company agreed to use its best efforts to
cause to become effective a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Old Depositary
Shares and to keep the Shelf Registration Statement effective until three years
after the date of issuance of the Old Depositary Shares or such shorter period
to terminate once all the Old Depositary Shares covered by the Shelf
Registration Settlement have been sold pursuant to such Shelf Registration
Statement.
Each holder of Old Depositary Shares who wishes to exchange Old Depositary
Shares for New Depositary Shares in the Exchange Offer will be required to make
certain representations, including that (i) it is neither an affiliate of the
Company nor a broker-dealer tendering Old Depositary Shares acquired directly
from the Company for its own account, (ii) any New Depositary Shares to be
received by it were acquired in the ordinary course of its business and (iii)
at the time of commencement of the Exchange Offer, it has no arrangement with
any person to participate in the distribution (within the meaning of the
Securities Act) of the New Depositary Shares. In addition, in connection with
any resales of New Depositary Shares, any broker-dealer (a "Participating
Broker-Dealer") who acquired Old Depositary Shares for its own account as a
result of market-making activities or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The Commission has
taken the position in no-action letters issued to third parties that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the New Depositary Shares (other than a resale of an unsold
allotment from the original sale of Old
26
<PAGE>
Depositary Shares) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Registration Rights Agreement, the Company is
required to allow Participating Broker-Dealers and other persons, if any,
subject to similar prospectus delivery requirements to use the prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of such New Depositary Shares. The Company also agreed that in the event
that either (i) the Exchange Offer Registration Statement was not filed with
the Commission on or prior to the 60th calendar day following the date of
original issue of the Old Depositary Shares, or (ii) the Exchange Offer was not
consummated or a Shelf Registration Statement was not declared effective on or
prior to the 240th calendar day following the date of original issue of the Old
Depositary Shares, the dividend rate borne by the Series L Preferred Stock
would 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
would increase by an additional one-quarter of one percent per annum at the
beginning of each subsequent 30-day period in the case (i) above, or 90-day
period in the case of (ii) above, up to a maximum aggregate increase of one
percent per annum. The Company agreed that upon (x) the filing of the Exchange
Offer Registration Statement or (y) the consummation of the Exchange Offer or
the effectiveness of the Shelf Registration Statement, as the case may be, the
dividend rate borne by the Series L Preferred Stock would be reduced to the
original dividend rate. The Exchange Offer Registration Statement was filed
within 60 days of the date of original issue of the Old Depositary Shares, and
thus no increase in the dividend rate borne by the Series L Preferred Stock has
been made under (i) above.
In the event an exchange offer is consummated, the Company will not be
required under the Registration Rights Agreement to file a Shelf Registration
Statement to register any outstanding Old Depositary Shares, and the dividend
rate on the Series L Preferred Stock will remain at its initial level of 11
1/8%. The Exchange Offer shall be deemed to have been consummated upon the
earlier to occur of (i) the Company having exchanged New Depositary Shares for
all outstanding Old Depositary Shares (other than Old Depositary Shares held by
a Restricted Holder) pursuant to the Exchange Offer and (ii) the Company having
exchanged, pursuant to the Exchange Offer, New Depositary Shares for all Old
Depositary Shares that have been tendered and not withdrawn on the date that is
30 days following the commencement of such Exchange Offer. In such event,
holders of Old Depositary Shares seeking liquidity in their investment would
have to rely on exemptions to registration requirements under the securities
laws, including the Securities Act.
Upon the terms and subject to the conditions set forth in this Prospectus and
in the accompanying Letter of Transmittal, the Company will accept all Old
Depositary Shares properly tendered prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue one New Depositary Share
representing Series M Preferred Stock with a liquidation preference of $100 in
exchange for each issued and outstanding Old Depositary Share representing
Series L Preferred Stock with a liquidation preference of $100 accepted in the
Exchange Offer.
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Depositary Shares issued pursuant to
the Exchange Offer in exchange for Old Depositary Shares may be offered for
resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act provided that such New
Depositary Shares are acquired in the ordinary course of such holders' business
and such holders have no arrangement with any person to participate in the
distribution of such New Depositary Shares. Any holder of Old Depositary Shares
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Depositary Shares could not rely on such interpretation
by the staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives New Depositary Shares for
its own account in exchange for Old Depositary Shares, where such Old
Depositary Shares were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such New Depositary
Shares. See "Plan of Distribution".
27
<PAGE>
As of the date of this Prospectus, 6,592,379 Old Depositary Shares
representing Series L Preferred Stock with an aggregate liquidation preference
of $659,237,900 are issued and outstanding. In connection with the issuance of
the Old Depositary Shares, the Company arranged for the Old Depositary Shares
to be eligible for trading in the Private Offering, Resale and Trading through
Automated Linkages (PORTAL) Market, the National Association of Securities
Dealers' screen based, automated market trading of securities eligible for
resale under Rule 144A.
This Prospectus, together with the accompanying letter of transmittal (the
"Letter of Transmittal"), is being sent to all registered holders as of June 5,
1996 (the "Record Date").
The Company shall be deemed to have accepted validly tendered Old Depositary
Shares when, as and if the Company has given oral or written notice thereof to
The First National Bank of Boston (the "Exchange Agent"). See "Exchange Agent".
The Exchange Agent will act as agent for the tendering holders of Old
Depositary Shares for the purpose of receiving New Depositary Shares from the
Company and delivering Depositary Receipts evidencing New Depositary Shares to
such holders.
If any tendered Old Depositary Shares are not accepted for exchange because
of an invalid tender or the occurrence of certain other events set forth
herein, Depositary Receipts evidencing any such unaccepted Old Depositary
Shares will be returned, without expense, to the tendering holder thereof as
promptly as practicable after the Expiration Date.
Holders of Old Depositary Shares who tender in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Old Depositary Shares pursuant to the Exchange Offer. The Company will pay all
such charges and expenses, other than certain applicable taxes, in connection
with the Exchange Offer. See "Fees and Expenses".
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean July , 1996 unless the Company, in
its sole discretion, extends the Exchange Offer to a date not later than August
, 1996, in which case the term "Expiration Date" shall mean the latest date
to which the Exchange Offer is extended. The maximum period that the Exchange
Offer will remain in effect shall be from the date of this Prospectus until the
Expiration Date.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
holders of Old Depositary Shares an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old Depositary
Shares, to extend the Exchange Offer or to terminate the Exchange Offer and to
refuse to accept Old Depositary Shares not previously accepted, if any of the
conditions set forth herein under "Termination" shall have occurred and shall
not have been waived by the Company (if permitted to be waived by the Company),
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, and (ii) to amend the terms of the Exchange Offer in any manner
deemed by it to be advantageous to the holders of the Old Depositary Shares.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of the Old Depositary Shares of
such amendment.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the Exchange Offer, the Company shall have no obligation to publish,
advertise, or otherwise communicate any such public announcement, other than by
making a timely release to the Dow Jones News Service.
28
<PAGE>
DIVIDENDS ON THE SERIES M PREFERRED STOCK
Dividends on the Series M Preferred Stock will accumulate from the most
recent dividend payment date to which dividends on the Series L Preferred Stock
were paid (the "Accrual Date") and are payable quarterly in arrears on January
1, April 1, July 1 and October 1, of each year commencing on October 1, 1996,
at the rate of 11 1/8% per annum out of legally available funds. Holders of Old
Depositary Shares whose Old Depositary Shares are accepted for exchange will be
deemed to have waived the right to receive any payment in respect of dividends
on the Series L Preferred Stock accumulated from the Accrual Date until the
date of the issuance of the New Depositary Shares. Consequently, holders who
exchange their Old Depositary Shares for New Depositary Shares will receive the
same dividend payment on the next dividend payment date after the consummation
of the Exchange Offer (expected to be October 1, 1996) that they would have
received had they not accepted the Exchange Offer, except that if such dividend
is not paid in cash, it will be paid in shares of New Depositary Shares instead
of Old Depositary Shares.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the
Depositary Receipts evidencing Old Depositary Shares and any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
The tender by a holder of Old Depositary Shares will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth herein. Holders may also request that their respective brokers,
dealers, commercial banks, trust companies or nominees effect such tender for
such holders.
The method of delivery of Depositary Receipts evidencing Old Depositary
Shares and the Letter of Transmittal and all other required documents to the
Exchange Agent is at the election and risk of the holders. Instead of delivery
by mail, it is recommended that holders use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Depositary Receipts evidencing Old
Depositary Shares should be sent to the Company.
Only a holder of Old Depositary Shares may tender such Old Depositary Shares
in the Exchange Offer. The term "holder" with respect to the Exchange Offer
means any person in whose name the Old Depositary Shares are registered on the
books of the Company or any other person who has obtained a properly completed
stock power from the registered holder.
Holders of Old Depositary Shares who wish to tender additional Old Depositary
Shares received on April 1, 1996 and to be received on July 1, 1996 as a
dividend payment with respect to the Series L Preferred Stock may do so.
Any beneficial holder whose Old Depositary Shares are registered in the name
of his broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If such beneficial holder
wishes to tender on his own behalf, such beneficial holder must, prior to
completing and executing the Letter of Transmittal and delivering his
Depositary Receipts evidencing Old Depositary Shares, either make appropriate
arrangements to register ownership of the Old Depositary Shares in such
holder's name or obtain a properly completed stock power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution") unless the Old
Depositary Shares tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
29
<PAGE>
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Depositary Shares listed therein, the Depositary Receipts
evidencing such Old Depositary Shares must be endorsed or accompanied by
appropriate stock powers which authorize such person to tender the Old
Depositary Shares on behalf of the registered holder, in either case signed as
the name of the registered holder or holders appears on the Depositary Receipts
evidencing Old Depositary Shares.
If the Letter of Transmittal or any Depositary Receipts evidencing Old
Depositary Shares or stock powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and unless waived by the Company, evidence satisfactory
to the Company of their authority to so act must be submitted with the Letter
of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Depositary Shares will
be determined by the Company in its sole discretion, which determination will
be final and binding. The Company reserves the absolute right to reject any and
all Old Depositary Shares not properly tendered or any Old Depositary Shares
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the absolute right to waive any
irregularities or conditions of tender as to particular Old Depositary Shares.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Depositary Shares must be cured within such time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Depositary Shares nor shall any
of them incur any liability for failure to give such notification. Tenders of
Old Depositary Shares will not be deemed to have been made until such
irregularities have been cured or waived. Any Depositary Receipts evidencing
Old Depositary Shares received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned without cost by the Exchange Agent to the tendering
holder of such Old Depositary Shares unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to (a)
purchase or make offers for any Old Depositary Shares that remain outstanding
subsequent to the Expiration Date, or, as set forth under "Termination", to
terminate the Exchange Offer and (b) to the extent permitted by applicable law,
purchase Old Depositary Shares in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers may differ
from the terms of the Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Depositary Shares and (i) whose Old
Depositary Shares are not immediately available, or (ii) who cannot deliver
their Depositary Receipts evidencing Old Depositary Shares, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or (iii) who cannot complete the procedure for book-entry
transfer on a timely basis, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Depositary
Shares, the number or numbers of Depositary Receipts evidencing such Old
Depositary Shares and the number of Old Depositary Shares tendered, stating
that the tender is being made thereby, and guaranteeing that, within five
business days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof), together with the Depositary Receipts evidencing the
Old Depositary Shares to be tendered in proper form for transfer and any
other documents required by the Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and
30
<PAGE>
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with Depositary Receipts evidencing all
tendered Old Depositary Shares in proper form for transfer and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Depositary Shares may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the business
day prior to the Expiration Date, unless previously accepted for exchange.
To withdraw a tender of Old Depositary Shares in the Exchange Offer, a
written or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the business day prior to the Expiration Date and prior to
acceptance for exchange thereof by the Company. Any such notice of withdrawal
must (i) specify the name of the person having deposited the Old Depositary
Shares to be withdrawn (the "Depositor"), (ii) identify the Old Depositary
Shares to be withdrawn (including the Depositary Receipt number or numbers and
number of Old Depositary Shares), (iii) be signed by the Depositor in the same
manner as the original signature on the Letter of Transmittal by which such Old
Depositary Shares were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to permit the Trustee
with respect to the Old Depositary Shares to register the transfer of such Old
Depositary Shares into the name of the Depositor withdrawing the tender, and
(iv) specify the name in which any such Old Depositary Shares are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such withdrawal
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Depositary Shares so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Depositary Shares will be issued with respect thereto unless the Old
Depositary Shares so withdrawn are validly retendered. Any Old Depositary
Shares which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Depositary Shares may be retendered by
following one of the procedures described above under "Procedures for
Tendering" at any time prior to the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Company will not be
required to accept for exchange, or exchange New Depositary Shares for, any Old
Depositary Shares not theretofore accepted for exchange, and may terminate or
amend the Exchange Offer as provided herein before the acceptance of such Old
Depositary Shares if: (i) any action or proceeding is instituted or threatened
in any court or by or before any governmental agency with respect to the
Exchange Offer, which, in the Company's judgment, might materially impair the
Company's ability to proceed with the Exchange Offer, (ii) any law, statute,
rule or regulation is proposed, adopted or enacted, or any existing law,
statute, rule or regulation is interpreted by the staff of the Commission in a
manner, which, in the Company's judgment, might materially impair the Company's
ability to proceed with the Exchange Offer, or (iii) the Company reasonably
deems it advisable to terminate the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Old Depositary Shares and
return any Depositary Receipts evidencing Old Depositary Shares that have been
tendered to the holders thereof, (ii) extend the Exchange Offer and retain all
Old Depositary Shares tendered prior to the Expiration of the Exchange Offer,
subject to the rights of such holders of tendered Old Depositary Shares to
withdraw their tendered Old Depositary Shares, (iii) waive such termination
event with respect to the Exchange Offer and accept all properly tendered Old
Depositary Shares that have not been withdrawn. If such waiver constitutes a
material change in the Exchange Offer, the Company will disclose such change by
means of a supplement to this Prospectus that will be distributed to each
registered holder of Old Depositary Shares, and the Company will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure
31
<PAGE>
to the registered holders of the Old Depositary Shares, if the Exchange Offer
would otherwise expire during such period. See "Description of New Depositary
Shares, Series M Preferred Stock and Exchange Debentures--Registration Rights
Agreement".
EXCHANGE AGENT
The First National Bank of Boston has been appointed as Exchange Agent for
the Exchange Offer.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telegraph or telephone.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of
Transmittal and related documents to the beneficial owners of the Old
Depositary Shares and in handling or forwarding tenders for exchange.
The expenses to be incurred by the Company and the Exchange Agent in
connection with the Exchange Offer, including the fees of the Exchange Agent
and accounting and legal fees, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Depositary Shares pursuant to the Exchange Offer. If, however,
Depositary Receipts evidencing New Depositary Shares or Old Depositary Shares
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered
holder of the Old Depositary Shares tendered, or if tendered Old Depositary
Shares are registered in the name of any person other than the person signing
the Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Depositary Shares pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the Company
upon the consummation of the Exchange Offer as the expenses of the Exchange
Offer will be charged to paid-in capital.
32
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
and its consolidated subsidiaries at March 31, 1996 and as adjusted to reflect
the pro forma consolidated capitalization of the Company and its consolidated
subsidiaries at March 31, 1996, adjusted to give effect to (i) the transactions
described under "Recent Developments--V Cable Transactions" in the Form 10-K
and the May Form 8-K (the "V Cable Transactions"), (ii) the Pending Warburg
Transactions described in the May Form 8-K, (iii) the cancellation of treasury
shares and (iv) the issuance of $150,000,000 of the Company's 9 7/8% Senior
Subordinated Notes due 2006 and $250,000,000 of the Company's 10 1/2% Senior
Subordinated Debentures due 2016 on May 21, 1996, and the application of the
estimated net proceeds to the Company from such offerings. See "Recent
Developments" in the Form 10-K and the May Form 8-K, "Use of Proceeds" and
"Condensed Pro Forma Consolidated Financial Information" in the May Form 8-K.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------
HISTORICAL PRO FORMA
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Restricted Group:
Bank indebtedness(1)............................ $ 591,743 $ 560,101
10 3/4% Senior Subordinated Debentures due
2004........................................... 275,000 275,000
9 1/4% Senior Subordinated Notes due 2005....... 300,000 300,000
9 7/8% Senior Subordinated Notes due 2006....... -- 149,385
9 7/8% Senior Subordinated Debentures due 2013.. 198,946 198,946
10 1/2% Senior Subordinated Debentures due
2016........................................... -- 250,000
9 7/8% Senior Subordinated Debentures due 2023.. 149,681 149,681
Subordinated notes(2)........................... 141,268 151,000
Obligation to related party(3).................. 188,713 188,713
Capitalized lease obligations................... 9,286 9,286
---------- ----------
Total......................................... 1,854,637 2,232,112
---------- ----------
V Cable:
Senior debt..................................... 414,660 --
---------- ----------
Cablevision of Ohio:
Bank debt....................................... -- 288,600
---------- ----------
MFR:
Senior bank debt................................ 193,500 193,500
---------- ----------
Other Unrestricted Subsidiaries:
Bank debt....................................... 233,783 450,453
Senior Indebtedness............................. -- 413,200
---------- ----------
Total......................................... 233,783 863,653
---------- ----------
Total long-term debt........................ 2,696,580 3,577,865
---------- ----------
Series G Redeemable Exchangeable Preferred Stock... 265,336 265,336
---------- ----------
Series L Redeemable Exchangeable Preferred Stock... 659,238 659,238
---------- ----------
STOCKHOLDERS' DEFICIENCY:
Series C/D Cumulative Preferred Stock:
Authorized--225,000 shares
Outstanding--110,622 shares..................... 1 1
Series I Cumulative Convertible Exchangeable
Preferred Stock................................. 14 14
Class A Common Stock:
Authorized--50,000,000 shares
Outstanding--14,341,169 shares historical and
13,249,616 pro forma........................... 143 132
Class B Common Stock:
Authorized--20,000,000 shares
Outstanding--11,572,709 shares.................. 116 116
Paid-in capital.................................. 225,354 272,712
Accumulated deficit.............................. (2,180,129) (2,206,005)
---------- ----------
(1,954,501) (1,933,030)
Treasury stock (1,091,553 shares historical and 0
shares pro forma)............................... (60,392) --
---------- ----------
Total stockholders' deficiency................ (2,014,893) (1,933,030)
---------- ----------
Total capitalization........................ $1,606,261 $2,569,409
========== ==========
</TABLE>
(footnotes on following page)
33
<PAGE>
FOOTNOTES:
(1) See "Management's Discussion and Analysis--Liquidity and Capital Resources"
and the Consolidated Financial Statements for a description of the bank
indebtedness. These amounts do not include approximately $17.2 million
reserved under the Company's bank credit agreements for certain letters of
credit issued on behalf of the Company. The Company and its New Jersey
subsidiary are jointly and severally liable under the New Jersey subsidiary
credit agreement.
(2) Represents Cablevision MFR, Inc. seller notes in the amount of $141.3
million for Monmouth Cable and Riverview Cable and $9.7 million for
Framingham Cable (after giving effect to the Pending Warburg Transactions).
These amounts are guaranteed by the Restricted Group.
(3) Obligation of NYC LP Corp., a wholly-owned Unrestricted Group subsidiary,
relating to the acquisition of Cablevision of NYC, which obligation has
been guaranteed by the Company. NYC LP Corp.'s obligation under such
guarantee may be paid in cash or, at the Company's option, shares of the
Company's Common Stock. Under the Credit Agreement, the Company is
currently prohibited from paying all but $40.0 million of this obligation
in cash and, accordingly, without the consent of the Company's bank
lenders, would be required to pay it in shares of the Company's Common
Stock.
(4) Represents the cancellation of 1,091,553 shares of treasury stock of which
1,041,553 shares were issued to a wholly-owned subsidiary of the Company in
connection with the Company's acquisition of Cablevision of Boston.
34
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 80,000,000 shares of capital stock, of
which 50,000,000 shares are Class A Common Stock, par value $.01 per share,
20,000,000 shares are Class B Common Stock, par value $.01 per share, and
10,000,000 shares are preferred stock, par value $.01 per share, of which the
Series M Preferred Stock offered hereby will be a series.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Voting. Holders of Class A Common Stock are entitled to one vote per share.
Holders of Class B Common Stock are entitled to ten votes per share. All
actions submitted to a vote of stockholders are voted on by holders of Class A
Common Stock and Class B Common Stock voting together as a single class, except
for the election of directors and as otherwise set forth below. With respect to
the election of directors, holders of Class A Common Stock vote as a separate
class and are entitled to elect 25% of the total number of directors
constituting the whole Board of Directors (the "Class A Directors") and, if
such 25% is not a whole number, then the holders of Class A Common Stock are
entitled to elect the nearest higher whole number of directors that is at least
25% of the total number of directors. Holders of Class B Common Stock, voting
as a separate class, are entitled to elect the remaining directors. If,
however, on the record date for any stockholder meeting at which directors are
to be elected, the number of outstanding shares of Class A Common Stock is less
than 10% of the total number of outstanding shares of both classes of Common
Stock, the holders of Class A Common Stock and Class B Common Stock will vote
together as a single class with respect to the election of directors and the
holders of Class A Common Stock will not have the right to elect 25% of the
total number of directors but will have one vote per share for all directors
and holders of Class B Common Stock will have ten votes per share for all
directors. If, on the record date for any stockholder meeting at which
directors are to be elected, the number of outstanding shares of Class B Common
Stock is less than 12 1/2% of the total number of outstanding shares of both
classes of Common Stock, then the holders of Class A Common Stock, voting as a
separate class, would continue to elect a number of Class A Directors equal to
25% of the total number of directors constituting the whole Board of Directors
and, in addition, would vote together with the holders of Class B Common Stock
to elect the remaining directors to be elected at such meeting, with the
holders of Class A Common Stock entitled to one vote per share and the holders
of Class B Common Stock entitled to ten votes per share.
In addition, the affirmative vote or consent of the holders of at least 66
2/3% of the outstanding shares of Class B Common Stock, voting separately as a
class, is required for the authorization or issuance of any additional shares
of Class B Common Stock and for any amendment, alteration or repeal of any
provisions of the Company's Certificate of Incorporation which would affect
adversely the powers, preferences or rights of the Class B Common Stock. The
Company's Certificate of Incorporation does not provide for cumulative voting.
Conversion. The Class A Common Stock has no conversion rights. The Class B
Common Stock is convertible into Class A Common Stock in whole or in part at
any time and from time to time on the basis of one share of Class A Common
Stock for each share of Class B Common Stock.
Dividends. Holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends equally on a per share basis if and when such
dividends are declared by the Board of Directors from funds legally available
therefor. No dividend may be declared or paid in cash or property on shares of
either Class A Common Stock or Class B Common Stock unless the same dividend is
paid simultaneously on each share of the other class of common stock. In the
case of any stock dividend, holders of Class A Common Stock are entitled to
receive the same percentage dividend (payable in shares of Class A Common
Stock) as holders of Class B Common Stock receive (payable in shares of Class B
Common Stock). The Company's Certificate of Incorporation provides that the
distribution of shares of capital stock of any subsidiary to common
stockholders may differ to the extent that the common stock differs as to
voting rights and rights in connection with certain dividends.
35
<PAGE>
Liquidation. Holders of Class A Common Stock and Class B Common Stock share
with each other on a ratable basis as a single class in the net assets
available for distribution in respect of Class A Common Stock and Class B
Common Stock in the event of liquidation.
Other Terms. Neither the Class A Common Stock nor the Class B Common Stock
may be subdivided, consolidated, reclassified or otherwise changed unless
contemporaneously therewith the other class of shares is subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner. In any merger, consolidation or business combination the
consideration to be received per share by holders of either Class A Common
Stock or Class B Common Stock must be identical to that received by holders of
the other class of Common Stock, except that in any such transaction in which
shares of capital stock are distributed, such shares may differ as to voting
rights only to the extent that voting rights now differ between Class A Common
Stock and Class B Common Stock.
Restrictions on Ownership. Transfer of shares of Class A Common Stock or
Class B Common Stock which could result in a change of control of the Company
may require the approval of state agencies or local franchising authorities in
certain states in which the Company operates.
Transfer Agent. The Company's transfer agent and registrar for the Class A
Common Stock is Chemical Mellon Shareholder Services, L.L.C.
No Preemptive Rights. The shares of common stock have no preemptive or other
rights to subscribe for or purchase any proportionate part of any new or
additional issues of stock of any class or of securities convertible into stock
of any class.
PREFERRED STOCK
The following description of the terms of the Company's preferred stock sets
forth certain general terms and provisions of the preferred stock. The
description set forth below is subject to and qualified in its entirety by
reference to the certificate of designations establishing a particular series
of preferred stock.
General. Under the Certificate of Incorporation, the Board of Directors of
the Company is authorized, without further stockholder action, to provide for
the issuance of up to 10,000,000 shares of preferred stock in one or more
series. Subject to limitations imposed by law or the Company's Certificate of
Incorporation, the Board of Directors is empowered to determine (a) the maximum
number of shares to constitute the series and the distinctive designation
thereof; (b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights; (c) the dividend rate, if any, on the shares of such series, the
conditions and dates upon which such dividends shall be payable, the preference
or relation which such dividends shall bear to the dividends payable on any
other class or classes or on any other series of capital stock, and whether
such dividends shall be cumulative or non-cumulative; (d) whether the shares of
such series shall be subject to redemption by the Company, and, if made subject
to redemption, the times, prices and other terms and conditions of such
redemption; (e) the rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the Company; (f) whether or not the
shares of such series shall be subject to the operation of a retirement or
sinking fund, and, if so, the extent to and manner in which any such retirement
or sinking fund shall be applied to the purchase or redemption of the shares of
such series for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof; (g) whether or not the shares of
such series shall be convertible into, or exchangeable for, shares of stock of
any other class or classes, or of any other series of the same class, and if so
convertible or exchangeable, the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting the same; (h) the
limitations and restrictions, if any, to be effective while any shares of such
series are outstanding upon the payment of dividends or making of other
distributions on, and upon the purchase, redemption or other acquisition by the
Company of, the Class A Common Stock, the Class B Common Stock or any other
class or classes of stock of the Company ranking junior to the shares of such
series either as to dividends or upon liquidation; (i) the conditions or
restrictions,
36
<PAGE>
if any, upon the creation or indebtedness of the Company or upon the issue or
any additional stock (including additional shares of such series or of any
other series or of any other class) ranking on a parity with or prior to the
shares of such series as to dividends or distribution of assets on liquidation,
dissolution or winding up; (j) whether fractional interests in shares of the
series will be offered in the form of depositary shares; and (k) any other
preference and relative, participating, optional or other special rights or
qualifications, limitations or restrictions thereof.
Designated Preferred Stock.
General. The authorized preferred stock of the Company consists of (i)
200,000 shares of Series B Cumulative Preferred Stock, $.01 par value and $100
liquidation value per share (the "Series B Preferred Stock"), none of which are
outstanding, (ii) 112,500 shares of 8% Series C Cumulative Preferred Stock,
$.01 par value and $100 liquidation value per share (the "Series C Preferred
Stock"), of which 110,622 shares were outstanding at December 31, 1995, (iii)
112,500 shares of 8% Series D Cumulative Preferred Stock, $.01 par value and
$100 liquidation value per share, none of which are outstanding (the "Series D
Preferred Stock"), (iv) 1,750,000 shares of 11 3/4% Series G Redeemable
Exchangeable Preferred Stock, $.01 par value and $100 liquidation preference
per share, none of which are outstanding, (v) 4,500,000 shares of Series H
Preferred Stock, 2,653,354 shares of which were issued on May 21, 1996 and are
outstanding, (vi) 1,380,000 shares of 8 1/2% Series I Cumulative Convertible
Exchangeable Preferred Stock, $.01 par value and $250 liquidation value per
share (the "Series I Preferred Stock"), 1,380,000 shares of which are
outstanding and represented by 13,800,000 depositary shares, and (vii) 115,000
shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, $.01 par
value and $10,000 liquidation value per share (the "Series L Preferred Stock"),
65,000 shares of which were issued on February 15, 1996 and are outstanding and
are represented by 6,500,000 depositary shares and 923.79 shares of which were
issued on April 1, 1996 and are outstanding and are represented by 92,379
depositary shares (the Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series G Preferred Stock, Series H Preferred Stock,
Series I Preferred Stock and Series L Preferred Stock are hereinafter sometimes
collectively referred to as the "Authorized Preferred Stock"). The Series A
Preferred Stock, $.01 par value, was cancelled by the Board of Directors on
February 2, 1988. The Company does not expect to issue any Series B Preferred
Stock. The Series D Preferred Stock is issuable upon conversion of the Series C
Preferred Stock. On May 21, 1996, the Board of Directors cancelled 100,000
shares of Series E Redeemable Exchangeable Convertible Preferred Stock, 100,000
shares of Series F Redeemable Preferred Stock and 2,750,000 shares of 11 3/4%
Series G Redeemable Exchangeable Preferred Stock (not included in the
authorized Series G Preferred Stock referred to above). The Company anticipates
that it will, prior to the consummation of the Exchange Offer, file a
certificate of cancellation with respect to all of the authorized shares of
Series G Preferred Stock with the Delaware Secretary of State. The right to
dividends on shares of the Authorized Preferred Stock are cumulative.
Series B, Series C and Series D Preferred Stock. The holders of such Series B
Preferred Stock are entitled, when declared by the Board of Directors, to
dividends at the time legally available at the annual rate of $12.00 per share
prior and in preference to any declaration of payment of any dividend on the
common stock of the Company. The holders of Series C Preferred Stock and Series
D Preferred Stock are entitled, when declared by the Board of Directors, to
dividends out of legally available funds at the annual rate of $8.00 per share
prior and in preference to any declaration of payment of any dividend on the
common stock of the Company.
At any time and from time to time commencing on December 31, 1997, the
holders of Series C Preferred Stock and Series D Preferred Stock may require
the Company to redeem, upon 30 days' notice to the Company, any or all of the
shares of Series C Preferred Stock and Series D Preferred Stock then
outstanding at a price equal to the lesser of (i) $100 per share or (ii) the
present value of $100, discounted from December 31, 2007 to the date of such
redemption, plus, in each case, all dividends (whether or not earned or
declared) accrued and unpaid on the shares of Series C Preferred Stock and
Series D Preferred Stock to the date fixed for redemption (the "Series C
Preferred Stock and Series D Preferred Stock Redemption
37
<PAGE>
Price"). The Company may, at its option, upon notice to the holders requesting
redemption within 20 days of such holders' notice to the Company, convert all
or part of such shares of Series C Preferred Stock into Class B Common Stock
and all or part of such shares of Series D Preferred Stock into Class A Common
Stock. The Company at its option may, but shall not be required to, redeem, at
any time and from time to time after December 31, 1997 on not less than 30
days' nor more than 60 days' prior notice, any or all of the shares of Series C
Preferred Stock and Series D Preferred Stock then outstanding at the Series C
Preferred Stock and Series D Preferred Stock Redemption Price.
If the Company elects to convert any shares of Series C Preferred Stock or
Series D Preferred Stock after a demand for redemption by such holders, the
number of shares to be issued by the Company shall be calculated by dividing
the applicable Series C Preferred Stock and Series D Preferred Stock Redemption
Price by the average of the market price of a share of Class A Common Stock for
the 30 trading days preceding the date on which a holder gives notice of its
election to convert such shares. Holders of Series C Preferred Stock and Series
D Preferred Stock have no voting rights except as to which they may be entitled
under the laws of the State of Delaware.
In the event of any liquidation, dissolution or winding up the Company, the
holders of Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are entitled to receive a preferential amount equal to $100 for
each share of Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock held plus all dividends (whether or not earned or declared)
accumulated and unpaid on such shares of Authorized Preferred Stock to the date
of final distribution in preference to any such distribution to the holders of
the common stock of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are not paid in full , the holders of the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and any other
preferred stock on parity therewith will share equally and ratably in any
distribution of the assets of the Company in proportion to the full liquidation
preference to which each is entitled. Neither the sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all the property or assets of the Company nor the
consolidation or merger of the Company with one or more corporations shall be
deemed a liquidation, dissolution or winding up of the Company.
Series H Preferred Stock. The Series H Preferred Stock, with respect to
dividends and distributions upon the liquidation, winding-up and dissolution of
the Company, ranks (i) senior to all classes of Common Stock and each other
class of capital stock or series of preferred stock established by the Board of
Directors (except as set forth below) which does not expressly provide that it
ranks senior to the Series H Preferred Stock as to dividends and distributions
upon the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Series H Junior Stock"); (ii) on a parity with the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series G
Preferred Stock, Series I Preferred Stock, Series L Preferred Stock, Series M
Preferred Stock and any other class of capital stock or series of preferred
stock issued by the Company established after the initial issuance of the
Series H Preferred Stock by the Board of Directors, the terms of which
expressly provide that such class or series will rank on a parity with the
Series H Preferred Stock as to dividends and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred
to as "Series H Parity Securities"); and (iii) junior to each class of capital
stock or series of preferred stock issued by the Company established after the
initial issuance of the Series H Preferred Stock by the Board of Directors,
the terms of which specifically provide that such class or series will rank
senior to the Series H Preferred Stock as to dividends and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Series H Senior Securities").
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Series H Parity Securities for any period unless full
cumulative dividends shall have been paid or set apart for such payment on the
Series H Preferred Stock. If full dividends are not so paid, the Series H
Preferred Stock shall
38
<PAGE>
share dividends pro rata with the Series H Parity Securities. Subject to
certain exceptions set forth in the certificate of designations for the Series
H Preferred Stock, no dividends may be paid or set apart for such payment on
Series H Junior Stock (except dividends on Series H Junior Stock in additional
shares of Series H Junior Stock), and no Series H Junior Stock may be
repurchased, redeemed or otherwise retired nor may funds be set apart for
payment with respect thereto, if full dividends have not been paid on the
Series H Preferred Stock.
The Company may redeem the Series H Preferred Stock at any time after October
1, 2002, in whole or in part, at certain redemption prices. In addition, the
Company may redeem shares of Series H Preferred Stock at any time before
October 1, 1998 at a redemption price per share equal to the liquidation
preference of $100, plus accumulated and unpaid dividends plus a premium of $10
per share, out of the net proceeds of the sale of Series H Junior Stock to a
Strategic Equity Investor (as defined in the certificate of designations for
the Series H Preferred Stock) or a public offering of Class A Common Stock.
Furthermore, the Company may, at its option, prior to October 1, 2002, redeem
the Series H Preferred Stock at any time within 180 days, at certain redemption
prices, after a Change in Control (as defined in the certificate of
designations for the Series H Preferred Stock). On October 1, 2007, the Company
will be required to redeem all outstanding shares of Series H Preferred Stock
out of funds legally available.
The Company may, at its option, on any scheduled dividend payment date,
exchange the Series H Preferred Stock for the Company's 11 3/4% Senior
Subordinated Debentures due 2007.
In the event of any liquidation, winding-up or dissolution of the Company,
holders of Series H Preferred Stock will be entitled to receive a preferential
amount equal to $100 per share, plus all accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up of the
Company (including an amount equal to a prorated dividend from the last
dividend payment date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on the Series H Junior Stock. If
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Series H Preferred Stock and
all other Series H Parity Securities are not paid in full, the holders of the
Series H Preferred Stock and the Series H Parity Securities will share equally
and ratably in any distribution of assets of the Company in proportion to the
full liquidation preference to which each is entitled. After payment of the
full amount of the liquidation preferences to which they are entitled, the
holders of shares of Series H Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Company. Neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Company nor the consolidation or merger of the Company with one or more
corporations shall be deemed a liquidation, dissolution or winding up of the
Company.
Holders of the Series H Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set forth
in the certificate of designations therefor. The certificate of designations
for the Series H Preferred Stock provides that if (a) dividends on the Series H
Preferred Stock are in arrears and unpaid (and if after October 1, 2000, such
dividends are not paid in cash) for six quarterly periods (whether or not
consecutive), or (b) the Company fails to discharge its redemption obligation
to redeem the Series H Preferred Stock on October 1, 2007, the number of
directors constituting the Board of Directors will be adjusted to permit the
holders of the majority of the then outstanding Series H Preferred Stock,
voting as a class, to elect a director. Such voting rights will continue until
such time as all dividends in arrears on the Series H Preferred Stock are paid
in full (and in the case of dividends payable after October 1, 2000, paid in
cash) and any failure, breach or default referred to in clause (b) is remedied,
at which time the term of the directors elected pursuant to the provisions of
this paragraph shall terminate. Each such event described in clauses (a) and
(b) above is referred to herein as a "Series H Voting Rights Triggering Event".
The certificate of designations for the Series H Preferred Stock also
provides that the Company will not authorize any class of Series H Senior
Securities without the affirmative vote or consent of holders of at least a
majority of the shares of Series H Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class. The Company may not
amend the certificate of designations for the Series H
39
<PAGE>
Preferred Stock so as to affect adversely the specified rights, preferences,
privileges or voting rights of holders of shares of the Series H Preferred
Stock, or authorize the issuance of any additional shares of Series H Preferred
Stock, without the affirmative vote or consent of the holders of at least a
majority of the outstanding shares of Series H Preferred Stock, voting or
consenting, as the case may be, as one class.
Without the affirmative vote or consent of a majority of the issued and
outstanding shares of Series H Preferred Stock, the Company may not consolidate
or merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, any person unless: (a)
the entity formed by such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made shall be a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia; (b) the Series H Preferred Stock shall be converted into or exchanged
for and shall become shares of such successor, transferee or resulting
corporation, having in respect of such successor, transferee or resulting
corporation the same powers, preferences and relative participating, optional
or special rights, and the qualifications, limitations or restrictions thereon,
that the Series H Preferred Stock had immediately prior to such transactions;
and (c) immediately after giving effect to such transaction, no Series H Voting
Rights Triggering Event shall have occurred and be continuing. Notwithstanding
the foregoing, the Company may consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its assets to, any person if the Company makes adequate provision (i)
prior to October 1, 2002, to redeem the Series H Preferred Stock after a Change
in Control (as defined in the certificate of designations for the Series H
Preferred Stock) or (ii) on or after October 1, 2002, to redeem the Series H
Preferred Stock at the applicable redemption price set forth in the certificate
of designations therefor.
Series I Preferred Stock. The Series I Preferred Stock, with respect to
dividends and distributions upon the liquidation, winding-up and dissolution of
the Company, ranks (i) senior to all classes of Common Stock and each other
class of capital stock or series of preferred stock established by the Board of
Directors after the issuance of the Series I Preferred Stock which does not
expressly provide that it ranks senior to or on a parity with the Series I
Preferred Stock as to dividends and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to as "Series
I Junior Stock"); (ii) on a parity with the Company's Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock (which may be issued in
exchange for shares of the Series C Preferred Stock), Series G Preferred Stock,
Series H Preferred Stock, Series L Preferred Stock, Series M Preferred Stock
and any other class of capital stock or series of preferred stock established
by the Board of Directors after the initial issuance of the Series I Preferred
Stock, the terms of which expressly provide that such class or series will rank
on a parity with the Series I Preferred Stock as to dividends and distributions
upon the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Series I Parity Stock"); and (iii) junior to each class of
capital stock or series of preferred stock established by the Board of
Directors after the initial issuance of the Series I Preferred Stock, the terms
of which specifically provide that such class or series will rank senior to the
Series I Preferred Stock as to dividends and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred
to as "Series I Senior Stock").
Holders of the Series I Preferred Stock are entitled, when declared by the
Board of Directors, out of funds legally available therefor, to receive
cumulative cash dividends on each outstanding share of the Series I Preferred
Stock, at the annual rate of 8 1/2% or $21.25 per share of Series I Preferred
Stock (equivalent to $2.125 per annum per depositary share). Dividends on the
Series I Preferred Stock are payable quarterly in arrears on January 1, April
1, July 1 and October 1 of each year. Dividends will be payable to the holder
of record on the respective record date as may be fixed by the Board of
Directors in advance of each dividend. The right to dividends on the Series I
Preferred Stock will be cumulative (whether or not earned or declared) from the
date of issuance of the Series I Preferred Stock. If any dividend (or portion
thereof) payable on any dividend payment date is not paid in full on the
dividend payment date therefor, the amount of such dividend that is payable and
that is not paid on such date will increase at the rate of 8 1/2% per annum per
share of Series I Preferred Stock from such dividend payment date until paid in
full.
40
<PAGE>
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Series I Parity Stock for any period unless full cumulative
dividends shall have been paid or set apart for such payment on the Series I
Preferred Stock. If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
Series I Preferred Stock and any series of Series I Parity Stock, the total
available funds to be paid in partial dividends shall be divided among the
Series I Preferred Stock and such other series pro rata in proportion to the
aggregate amount of dividends accrued and unpaid with respect to such Series I
Preferred Stock and such other series. Subject to various exceptions set forth
in the certificate of designations for the Series I Preferred Stock, no
dividends may be paid or set apart for such payment on Series I Junior Stock
(except dividends on Series I Junior Stock in additional shares of Series I
Junior Stock), and no Series I Junior Stock, or any warrants, rights, calls or
options exercisable for or convertible into any Series I Junior Stock, may be
repurchased, redeemed or otherwise retired nor may funds be set apart for
payment with respect thereto, if full dividends have not been paid on the
Series I Preferred Stock. After dividends on the Series I Preferred Stock for
all past and current quarterly dividend periods have been paid in full, the
Series I Preferred Stock will not be entitled to participate in any further
distributions by the Company.
On or after January 1, 1998, the Company may, at its option, on any scheduled
dividend payment date, exchange the Series I Preferred Stock, in whole but not
in part, for the Company's 8 1/2% Convertible Subordinated Debentures due 2007
(the "Series I Exchange Debentures").
The Company at its option may redeem the Series I Preferred Stock (subject to
contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) at any time after November 1, 1999, in whole or
in part, at certain redemption prices.
Each share of Series I Preferred Stock is convertible into shares of Class A
Common Stock at the option of the holder at a conversion rate equal to $250.00
(the original liquidation preference of the shares of Series I Preferred
Stock), divided by the conversion price, except that, if shares of Series I
Preferred Stock are called for redemption or the Company elects to issue Series
I Exchange Debentures in exchange for the Series I Preferred Stock, the
conversion right will terminate at the close of business five business days
prior to the date fixed for redemption or exchange. The initial conversion
price is $67.44 per share. The conversion price is subject to adjustment (under
formulas set forth in the certificate of designations for the Series I
Preferred Stock) in certain events, including (a) the issuance of Class A
Common Stock as a dividend or distribution on any class of the capital stock of
the Company; (b) subdivisions, reclassifications and combinations of the Class
A Common Stock; (c) the issuance to all holders of Class A Common Stock of
certain rights or warrants entitling them to subscribe for or purchase Class A
Common Stock at less than the current market price (as defined in the
certificate of designations for the Series I Preferred Stock); and (d) certain
distributions to all holders of Class A Common Stock of capital stock or
evidences of indebtedness of the Company or cash or other assets of the
Company.
In case of (i) any consolidation of the Company with, or merger of the
Company into, any other entity, (ii) any merger of another entity into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Class A Common
Stock of the Company), or (iii) any sale or transfer of all or substantially
all of the assets of the Company, subject to certain exceptions set forth in
the certificate of designations for the Series I Preferred Stock, each holder
of a share of Series I Preferred Stock then outstanding shall have the right
thereafter to convert their shares of Series I Preferred Stock only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Class A Common Stock of the Company into which such share of Series I Preferred
Stock might have been converted immediately prior to such consolidation,
merger, sale or transfer.
The Series I Preferred Stock has a special conversion right that becomes
effective upon the occurrence of certain types of significant transactions
affecting ownership or control of the Company or the market for the Class A
Common Stock. In the event of any liquidation, dissolution or winding-up of the
Company, after
41
<PAGE>
payment or processing for payment of the debts and other liabilities of the
Company and of liquidation preferences in respect of any Series I Senior Stock,
holders of Series I Preferred Stock will be entitled to receive out of the
remaining net assets of the Company, if any, a preferential amount equal to
$250.00 per share (equivalent to $25.00 per depositary share), plus all
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up of the Company (including an amount equal to a
prorated dividend from the last dividend payment date to the date fixed for
liquidation, dissolution or winding-up), before any distribution is made on any
Series I Junior Stock, including, without limitation, on any Common Stock. If,
upon any voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the amounts payable with respect to the Series I Preferred Stock and
all other Series I Parity Stock are not paid in full, the holders of the Series
I Preferred Stock and the Series I Parity Stock will share equally and ratably
in any distribution of assets of the Company in proportion to the full
liquidation preference to which each is entitled. After payment of the full
amount of the liquidation preferences to which they are entitled, the holders
of shares of Series I Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. Neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with one or more
corporations shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
Holders of the Series I Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set forth
in the certificate of designations. The certificate of designations provides
that if dividends on the Series I Preferred Stock are in arrears and unpaid for
six quarterly periods (whether or not consecutive), then the number of
directors constituting the Board of Directors will be adjusted to permit the
holders of the majority of the then outstanding Series I Preferred Stock,
voting as a class, to elect one director and a second director if the right to
elect a second director is required by the American Stock Exchange or any other
national securities exchange on which the Company elects to list the Class A
Common Stock or by the requirements of the Nasdaq National Market System if the
Company elects to have the Class A Common Stock traded thereon. Such voting
rights will continue until such time as all dividends in arrears on the Series
I Preferred Stock are paid in full, at which time the term of the directors
elected pursuant to the provisions of this paragraph shall terminate. Such
event described above is referred to herein as a "Series I Voting Rights
Triggering Event".
Any vacancy occurring in the office of the director elected by holders of the
Series I Preferred Stock may be filled by the remaining director, if any, or
otherwise by the departing director unless and until such vacancy shall be
filled by such holders.
The certificate of designations also provides that the Company will not
authorize any class of Series I Senior Stock without the affirmative vote or
consent of holders of at least 66 2/3% of the shares of Series I Preferred
Stock then outstanding, voting or consenting, as the case may be, separately as
one class. The certificate of designations also provides that the Company may
not amend the certificate of designations so as to affect adversely the
specified rights, preferences, privileges or voting rights of holders of shares
of the Series I Preferred Stock, or authorize the issuance of any additional
shares of Series I Preferred Stock, without the affirmative vote or consent of
the holders of at least 66 2/3% of the outstanding shares of Series I Preferred
Stock, voting or consenting, as the case may be, as one class. The holders of
at least 66 2/3% of the outstanding shares of Series I Preferred Stock, voting
or consenting, as the case may be, as one class, may also waive compliance with
any provision of the certificate of designations. The certificate of
designations also provides that (a) the creation, authorization, existence or
issuance of any shares of Series I Parity Stock or Series I Junior Stock or (b)
the increase or decrease in the amount of authorized capital stock of any
class, including any preferred stock, shall not require the consent of the
holders of Series I Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of holders of shares of
Series I Preferred Stock.
Without the affirmative vote or consent of the holders of a majority of the
issued and outstanding shares of Series I Preferred Stock, the Company may not
consolidate or merge with or into, or sell, assign, transfer,
42
<PAGE>
lease, convey or otherwise dispose of all or substantially all of its assets
to, any person unless: (a) the entity formed by such consolidation or merger
(if other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (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) the Series I
Preferred Stock shall remain unchanged 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 Series
I Preferred Stock had immediately prior to such transaction (provided that (i)
if, in accordance with the certificate of designations for the Series I
Preferred Stock, the Series I Preferred Stock shall become convertible into a
different amount or type of securities, cash or other property, such change
shall not be deemed to be a change in the powers, preferences and relative
participating, optional or other special rights of the Series I Preferred Stock
and (ii) the fact that the resulting entity has authorized or outstanding any
securities other than Series I Senior Stock, shall not be deemed to be a change
in the powers, preferences and relative participating, optional or other
special rights of the Series I Preferred Stock); and (c) immediately after
giving effect to such transaction, no Series I Voting Rights Triggering Event
shall have occurred or be continuing; provided, however, that the foregoing
shall not be applicable to a transaction or event that constitutes a Change of
Control (as defined in the certificate of designations for the Series I
Preferred Stock).
Series L Preferred Stock and Series M Preferred Stock. The Series L Preferred
Stock, with respect to dividends and distributions upon the liquidation,
winding-up and dissolution of the Company, ranks (i) senior to all classes of
Common Stock and each other class of capital stock or series of preferred stock
established by the Board of Directors (except as set forth below) which does
not expressly provide that it ranks senior to the Series L Preferred Stock as
to dividends and distributions upon the liquidation, winding-up and dissolution
of the Company (collectively referred to as "Series L Junior Stock"); (ii) on a
parity with the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I
Preferred Stock, Series M Preferred Stock and any other class of capital stock
or series of preferred stock issued by the Company established after the
initial issuance of the Series L Preferred Stock by the Board of Directors, the
terms of which expressly provide that such class or series will rank on a
parity with the Series L Preferred Stock as to dividends and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Series L Parity Securities"); and (iii) junior to each class of
capital stock or series of preferred stock issued by the Company established
after the initial issuance of Series L Preferred Stock by the Board of
Directors, the terms of which specifically provide that such class or series
will rank senior to the Series L Preferred Stock as to dividends and
distributions upon the liquidation, winding-up or dissolution of the Company
(collectively referred to as "Series L Senior Securities").
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Series L Parity Securities for any period unless full
cumulative dividends shall have been paid or set apart for such payment on the
Series L Preferred Stock. If full dividends are not so paid, the Series L
Preferred Stock shall share dividends pro rata with the Series L Parity
Securities. Subject to certain exceptions set forth in the certificate of
designations for the Series L Preferred Stock, no dividends may be paid or set
apart for such payment on Series L Junior Stock (except dividends on Series L
Junior Stock in additional shares of Series L Junior Stock), and no Series L
Junior Stock may be repurchased, redeemed or otherwise retired nor may funds by
set apart for payment with respect thereto, if full dividends have not been
paid on the Series L Preferred Stock.
The Company may redeem the Series L Preferred Stock at any time after April
1, 2003, in whole or in part, at certain redemption prices. In addition, the
Company may redeem shares of Series L Preferred Stock at any time before April
1, 1999 at a redemption price per share equal to the liquidation preference of
$10,000, plus accumulated and unpaid dividends plus a premium of $1,000 per
share, out of the net proceeds of the sale of Series L Junior Stock to a
Strategic Equity Investor (as defined in the certificate of designations for
the Series L Preferred Stock) or a public offering of Class A Common Stock.
Furthermore, the Company may, at its option, prior to April 1, 2003, redeem the
Series L Preferred Stock at any time within 180 days, at
43
<PAGE>
certain redemption prices, after a Change of Control (as defined in the
certificate of designations for the Series L Preferred Stock). On April 1,
2008, the Company will be required to redeem all outstanding shares of Series L
Preferred Stock out of funds legally available therefrom.
The Company may, at its option, on any scheduled dividend payment date,
exchange the Series L Preferred Stock for the Company's 11 1/8% Senior
Subordinated Debentures due 2008.
In the event of any liquidation, winding-up or dissolution of the Company,
holders of Series L Preferred Stock will be entitled to receive a preferential
amount equal to $10,000 per share, plus all accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up of the
Company (including an amount equal to a prorated dividend from the last
dividend payment date to the date fixed for liquidation, dissolution or winding
up), before any distribution is made on the Series L Junior Stock. If upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Series L Preferred Stock and all other
Series L Parity Securities are not paid in full, the holders of the Series L
Preferred Stock and the Series L Parity Securities will share equally and
ratably in any distribution of assets of the Company in proportion to the full
liquidation preference to which each is entitled. After payment of the full
amount of the liquidation preferences to which they are entitled, the holders
of shares of Series L Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. Neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all the property or assets of the
Company nor the consolidation or merger of the Company with one or more
corporations shall be deemed a liquidation, dissolution or winding-up of the
Company.
Holders of the Series L Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth in the
certificate of designations therefor. The certificate of designations for the
Series L Preferred Stock provides that (a) dividends on the Series L Preferred
Stock are in arrears and unpaid (and if after April 1, 2001, such dividends are
not paid in cash) for six quarterly periods (whether or not consecutive), or
(b) the Company fails to discharge its redemption obligation to redeem the
Series L Preferred Stock on April 1, 2008, the number of directors constituting
the Board of Directors will be adjusted to permit the holders of a majority of
the then outstanding Series L Preferred Stock and the Series M Preferred Stock,
voting or consenting, as the case may be, separately as a single class, to
elect a director. Such voting rights will continue until such time as all
dividends in arrears on the Series L Preferred Stock are paid in full (and in
the case of dividends payable after April 1, 2001, paid in cash) and any
failure, breach or default referred to in clause (b) is remedied, at which time
the term of the directors elected pursuant to the provisions of this paragraph
shall terminate. Each such event described in clauses (a) and (b) above is
referred to herein as a "Series L Voting Rights Triggering Event".
The certificate of designations for the Series L Preferred Stock also
provides that the Company will not authorize any class of Series L Senior
Securities without the affirmative vote or consent of holders of at least a
majority of the shares of Series L Preferred Stock and Series M Preferred Stock
then outstanding, voting or consenting, as the case may be, separately as a
single class. The Company may not amend the certificate of designations for the
Series L Preferred Stock so as to affect adversely the specified rights,
preferences, privileges or voting rights of holders of shares of the Series L
Preferred Stock, or authorize the issuance of any additional shares of Series L
Preferred Stock, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of Series L Preferred Stock and
Series M Preferred Stock, voting or consenting, as the case may be, separately
as a single class.
Without the affirmative vote or consent of a majority of the issued and
outstanding shares of Series L Preferred Stock and Series M Preferred Stock,
voting or consenting, as the case may be, separately as a single class, the
Company may not consolidate or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets
to, any person unless: (a) the entity formed by such consolidation or merger
(if other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made shall be a corporation
organized and existing under
44
<PAGE>
the laws of the United States or any State thereof or the District of Columbia;
(b) the Series L Preferred Stock shall be converted into or exchanged for and
shall become shares of such successor, transferee or resulting corporation,
having in respect of such successor, transferee or resulting corporation the
same powers, preferences and relative participating, optional or special
rights, and the qualifications, limitations or restrictions thereon, that the
Series L Preferred Stock had immediately prior to such transactions; and (c)
immediately after giving effect to such transaction, no Series L Voting Rights
Triggering Event shall have occurred and be continuing. Notwithstanding the
foregoing, the Company may consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any person if the Company makes adequate provision (i) prior to
April 1, 2003, to redeem the Series L Preferred Stock after a Change of Control
(as defined in the certificate of designations for the Series L Preferred
Stock) or (ii) on or after April 1, 2003, to redeem the Series L Preferred
Stock at the applicable redemption price set forth in the certificate of
designations therefor.
The Series M Preferred Stock will be on a parity with the Series L Preferred
Stock and will have the same terms in all material respects as the Series L
Preferred Stock, except that the Series M Preferred Stock will not contain
terms restricting the transfer thereof.
DESCRIPTION OF NEW DEPOSITARY SHARES,
SERIES M PREFERRED STOCK AND EXCHANGE DEBENTURES
NEW DEPOSITARY SHARES
The following summary description of the New Depositary Shares offered hereby
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Deposit Agreement referred to below.
GENERAL
Each New Depositary Share represents a one one-hundredth interest in a share
of Series M Preferred Stock. The shares of Series M Preferred Stock underlying
the New Depositary Shares will be deposited with The First National Bank of
Boston, as Depositary (the "Depositary"), under a Deposit Agreement (the
"Deposit Agreement"), among the Company, the Depositary and all holders from
time to time of depositary receipts issued by the Depositary thereunder (the
"Depositary Receipts"). The Company does not plan to apply to list the Old
Depositary Shares, the New Depositary Shares, the Series L Preferred Stock or
the Series M Preferred Stock on any national securities exchange or any similar
system of automated dissemination of quotations of securities. Accordingly, the
Company does not expect that there will be any public trading market for the
Old Depositary Shares, the New Depositary Shares, the Series L Preferred Stock
or the Series M Preferred Stock. The New Depositary Shares will be evidenced by
Depositary Receipts.
Subject to the terms of the Deposit Agreement, each owner of a New Depositary
Share will be entitled through the Depositary, in proportion to the one one-
hundredth interest in a share of Series M Preferred Stock underlying such New
Depositary Share, to all the rights, preferences and privileges of a share of
Series M Preferred Stock (including dividend, voting, redemption, conversion
and liquidation rights), and will be subject to all of the limitations of the
fractional share of Series M Preferred Stock represented thereby, which are
summarized below under "Series M Preferred Stock". Since each share of Series M
Preferred Stock entitles the holder thereof to one vote on matters on which the
Series M Preferred Stock is entitled to vote, each New Depositary Share will,
in effect, entitle the holder thereof to one one-hundredth of a vote thereon,
rather than one full vote. See "Series M Preferred Stock--Voting Rights" below.
The Depositary will act as transfer agent and registrar and paying agent with
respect to the Depositary Shares.
45
<PAGE>
ISSUANCE OF DEPOSITARY RECEIPTS AND WITHDRAWAL OF SERIES M PREFERRED STOCK
FROM DEPOSIT
Immediately following the issuance by the Company of the shares of Series M
Preferred Stock to be represented by the New Depositary Shares, the Company
will deposit such shares of Series M Preferred Stock with the Depositary, which
will then issue and deliver the Depositary Receipts evidencing New Depositary
Shares in exchange for Depositary Receipts evidencing Old Depositary Shares.
Depositary Receipts will be issued evidencing only whole New Depositary Shares.
Upon surrender of the Depositary Receipts evidencing Old Depositary Shares at
the Corporate Office (as defined in the Deposit Agreement) of the Depositary
(or such other office as the Depositary may designate), the owner of the
Depositary Receipts evidencing New Depositary Shares is entitled at such office
to certificates evidencing the number of shares of Series M Preferred Stock
(but only in whole shares of Series M Preferred Stock) represented by such
Depositary Receipts. If the Depositary Receipts delivered by the holder
evidence a number of New Depositary Shares in excess of the number of whole
shares of Series M Preferred Stock to be withdrawn, the Depositary will deliver
to such holder at the same time a new Depositary Receipt evidencing such excess
number of New Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends, dividends paid in New
Depositary Shares representing fully paid and nonassessable shares of Series M
Preferred Stock or other cash distributions received in respect of the Series M
Preferred Stock to the record holders of New Depositary Shares representing such
Series M Preferred Stock in proportion to the numbers of such New Depositary
Shares owned by such holders on the relevant record date. In the event of a
distribution other than in cash, the Depositary will distribute property
received by it to the record holders of New Depositary Shares entitled thereto,
unless the Depositary determines that it is not feasible to make such
distribution, in which case the Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
REDEMPTION OF NEW DEPOSITARY SHARES
If the Series M Preferred Stock underlying the New Depositary Shares is
subject to redemption, the New Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such Series M Preferred Stock held by the Depositary. The
redemption price per New Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such Series
M Preferred Stock. If less than all the New Depositary Shares are to be
redeemed, the New Depositary Shares to be redeemed will be selected by lot or
pro rata.
After the date fixed for redemption (which will be the same date as the
redemption date for the Series M Preferred Stock), the New Depositary Shares so
called for redemption will no longer be deemed to be outstanding and all rights
of the holders of the New Depositary Shares will cease, except the right to
receive the moneys payable upon such redemption and any money or other property
to which the holders of such New Depositary Shares were entitled upon such
redemption upon surrender to the Depositary of the Depositary Receipts
evidencing such New Depositary Shares.
VOTING
Upon receipt of notice of any meeting at which the holders of the Series M
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the New Depositary
Shares relating to such Series M Preferred Stock. Each record holder of such
New Depositary Shares on the record date (which will be the same date as the
record date for the Series M Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of Series M Preferred Stock underlying such holder's New Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the
number of shares of Series M Preferred Stock underlying such New Depositary
Shares in accordance with such instructions, and the Company will agree to take
all action which may be deemed necessary by the Depositary in order to enable
the Depositary to do
46
<PAGE>
so. The Depositary will abstain from voting shares of Series M Preferred Stock
to the extent the Depositary does not receive specific instructions from the
holders of New Depositary Shares relating to such shares.
AMENDMENT OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the New Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of New Depositary Shares will
not be effective unless such amendment has been approved by the holders of at
least 66 2/3% of the New Depositary Shares then outstanding. Every holder of an
outstanding Depositary Receipt at the time any amendment becomes effective will
be deemed, by continuing to hold such Depositary Receipt, to consent and agree
to such amendment and to be bound by the Deposit Agreement as amended thereby.
In no event will any amendment impair the right, subject to the provisions of
the Deposit Agreement, of any owner of any New Depositary Shares to surrender
any Depositary Receipt evidencing such New Depositary Shares to the Depositary
with instructions to deliver to the holder the Series M Preferred Stock and all
money, and other property, if any, represented thereby, except in order to
comply with mandatory provisions of applicable law or the rules and regulations
of any governmental body, agency or commission, the National Association of
Securities Dealers, Inc. or any applicable stock exchange.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
that arise solely from the existence of the depositary arrangements. The
Company will pay the charges of the Depositary in connection with the initial
deposit of the Series M Preferred Stock and any redemption of the Series M
Preferred Stock. Holders of New Depositary Shares will pay all other transfer
and other taxes and governmental charges and, in addition, such other charges
as are expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of New Depositary Shares all
reports and communications from the Company which the Company is required to
furnish to the holders of the Series M Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder, and they will not be obligated to prosecute
or defend any legal proceedings in respect of any New Depositary Shares or
Series M Preferred Stock unless satisfactory indemnity is furnished. They may
rely upon written advice of counsel or accountants, or information provided by
persons presenting Series M Preferred Stock for deposit, holders of New
Depositary Shares or other persons believed to be competent and on documents
believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY; TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary will be appointed by the Company within 45 days after delivery of
the notice of resignation or removal. The Deposit Agreement may be terminated
at the direction of the Company or by the Depositary if a period of 45 days
shall have expired after the Depositary has delivered to the Company written
notice of its election to resign and a successor depositary shall not have been
appointed. Upon termination of the Deposit Agreement, the Depositary will
discontinue the transfer of Depositary Receipts, will suspend the distribution
of dividends to the holders thereof and will not give any further notices
(other than notice of such termination) or perform any further acts under the
Deposit Agreement, except that the Depositary will
47
<PAGE>
continue to collect dividends and other distributions pertaining to the Series
M Preferred Stock, will sell rights, preferences or privileges as provided in
the Deposit Agreement and will continue to deliver Series M Preferred Stock
certificates together with such dividends and distributions and the net
proceeds of any sales of rights, preferences, privileges or other property in
exchange for Depositary Receipts surrendered. At any time after the expiration
of two years from the date of termination, the Depositary may sell the Series M
Preferred Stock and hold the proceeds of such sale, without interest, for the
benefit of the holders of Depositary Receipts who have not then surrendered
their Depositary Receipts. After making such sale, the Depositary will be
discharged from all obligations under the Deposit Agreement except to account
for such proceeds.
SERIES M PREFERRED STOCK
The Series M Preferred Stock will be issued pursuant to a certificate of
designations (the "Certificate of Designations"). The summary contained herein
of certain provisions of the Series M Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Certificate of Designations. The definitions of certain terms used in the
Certificate of Designations and in the following summary are set forth below
under "--Definitions".
GENERAL
The Company will (assuming the exchange of all outstanding Old Depositary
Shares for New Depositary Shares) authorize the issuance of up to 115,000
shares of Series M Preferred Stock, which will consist of 67,757.3 shares of
Series M Preferred Stock represented by New Depositary Shares exchanged for Old
Depositary Shares plus 47,242.7 additional shares of Series M Preferred Stock
which may be used to pay dividends on the Series M Preferred Stock if the
Company elects to pay dividends in additional shares of Series M Preferred
Stock, and will file a Certificate of Designations with respect thereto with
the Secretary of State of the State of Delaware as required by Delaware law.
The Series L Preferred Stock surrendered will be retired and cancelled and
cannot be reissued. Accordingly, issuance of the Series M Preferred Stock will
not result in any change in capitalization of the Company. The Series M
Preferred Stock when issued in accordance with the terms of the Exchange Offer,
will be fully paid and non-assessable, and the holders thereof will have no
subscription or preemptive rights related thereto.
RANKING
The Series M Preferred Stock represented by the New Depositary Shares, with
respect to dividends and distributions upon the liquidation, winding-up and
dissolution of the Company, will rank (i) senior to all classes of Common Stock
and each other class of capital stock or series of preferred stock established
by the Board of Directors which does not expressly provide that it ranks senior
to or on a parity with the Series M Preferred Stock as to dividends and
distributions upon the liquidation, winding-up and dissolution of the Company
(collectively referred to as "Junior Stock"); (ii) on a parity with the Series
L Preferred Stock and the Company's Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock (which may be issued in exchange for
shares of the Series C Preferred Stock), Series G Preferred Stock, Series H
Preferred Stock, Series I Preferred Stock and any other class of capital stock
or series of preferred stock issued by the Company established after the
initial issuance of the Series M Preferred Stock by the Board of Directors, the
terms of which expressly provide that such class or series will rank on a
parity with the Series M Preferred Stock as to dividends and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) junior to each class of capital
stock or series of preferred stock issued by the Company established after the
initial issuance of the Series M Preferred Stock by the Board of Directors, the
terms of which specifically provide that such class or series will rank senior
to the Series M Preferred Stock as to dividends and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred
to as "Senior Securities").
The Company may not issue any new class of Senior Securities without the
approval of the holders of at least a majority of the shares of Series L
Preferred Stock and Series M Preferred Stock then outstanding, voting or
consenting, as the case may be, as a single class.
48
<PAGE>
DIVIDENDS
Holders of Series M Preferred Stock are entitled, when declared by the Board
of Directors, out of funds legally available therefor, to receive dividends on
each outstanding share of the Series M Preferred Stock, at the annual rate of
11 1/8% per share of Series M Preferred Stock. Dividends on the Series M
Preferred Stock will accumulate from the Accrual Date and are payable quarterly
in arrears on January 1, April 1, July 1 and October 1 of each year. Holders of
Series L Preferred Stock whose shares of Series L Preferred Stock are accepted
for exchange will be deemed to have waived the right to receive any payment in
respect of dividends on the Series L Preferred Stock accumulated from the
Accrual Date until the date of the issuance of the Series M Preferred Stock.
Consequently, holders who exchange their Series L Preferred Stock for Series M
Preferred Stock will receive the same dividend payment on the next dividend
payment date after the consummation of the Exchange Offer (expected to be
October 1, 1996) that they would have received had they not accepted the
Exchange Offer, except that if such dividend is not paid in cash, it will be
paid in shares of Series M Preferred Stock instead of Series L Preferred Stock.
Before April 1, 2001, dividends may, at the option of the Company, be paid
either in cash or fully paid and non-assessable shares of Series M Preferred
Stock with an aggregate liquidation preference equal to the amount of such
dividend. On and after April 1, 2001, dividends may only be paid in cash. If
any dividend (or portion thereof) payable on any dividend payment date on or
after April 1, 2001 is not paid in full in cash on the dividend payment date
therefor, the amount of such dividend that is payable and that is not paid in
cash on such date will increase at the rate of 11 1/8% per annum from such
dividend payment date until paid in full.
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Parity Securities for any period unless full cumulative
dividends shall have been paid or set apart for such payment on the Series M
Preferred Stock. If full dividends are not so paid, the Series M Preferred
Stock shall share dividends pro rata with the Parity Securities. No dividends
may be paid or set apart for such payment on Junior Stock (except dividends on
Junior Stock in additional shares of Junior Stock), and no Junior Stock may be
repurchased, redeemed or otherwise retired nor may funds be set apart for
payment with respect thereto, if full dividends have not been paid on the
Series M Preferred Stock, except for (i) any conversion of Class B Common Stock
of the Company into Class A Common Stock of the Company, (ii) prior to April 1,
2001, the occurrence of the Rainbow Spin-Off, (iii) repurchases of Common Stock
issued under the Company's stock incentive programs from employees of the
Company, and (iv) dividends or distributions payable-in-kind in additional
shares of, or warrants, rights, calls or options exercisable for or convertible
into additional shares of Junior Stock. See "Risk Factors--Risks Related to the
Securities--Restrictions on Company's Ability to Pay Dividends on the Series L
Preferred Stock and Series M Preferred Stock".
OPTIONAL REDEMPTION
The Company at its option may, but shall not be required to, redeem the
Series M Preferred Stock (subject to contractual and other restrictions with
respect thereto and to the legal availability of funds therefor) at any time
after April 1, 2003, in whole or in part, at the redemption prices (expressed
in percentage of liquidation preference) set forth below together with all
accumulated and unpaid dividends from the last payment date to the redemption
date, if redeemed during the 12-month period beginning April 1 of the years
indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................... 105.563%
2004........................................................... 103.708
2005........................................................... 101.854
2006 and thereafter............................................ 100.000
</TABLE>
In addition, the Company may redeem shares of Series M Preferred Stock having
an aggregate liquidation preference of up to 50% of the shares of Series M
Preferred Stock then outstanding at any time before April 1, 1999 at a
redemption price per share equal to the liquidation preference of $10,000 per
share
49
<PAGE>
(equivalent to $100 per New Depositary Share), plus accumulated and unpaid
dividends plus a premium of $1,000 per share (equivalent to $10 per New
Depositary Share) out of the net proceeds of the sale of Junior Stock to a
Strategic Equity Investor (as defined herein) or a public offering of Class A
Common Stock; provided that following such redemption, at least 3,250,000
Depositary Shares (representing at least 50% of the amount of Depositary Shares
initially issued) shall remain outstanding.
Furthermore, the Company may, at its option, prior to April 1, 2003, redeem
the Series M Preferred Stock, in whole but not in part, at any time within 180
days after a Change of Control (as defined herein), at a redemption price per
share equal to the sum of (i) the liquidation preference of $10,000 per share
(equivalent to $100 per New Depositary Share) plus (ii) accumulated and unpaid
dividends to the date of redemption plus (iii) the Make-Whole Premium (as
defined herein), which is based on a discount rate equal to the Treasury Rate
(as defined herein) plus 50 basis points.
In the event of partial redemptions of Series M Preferred Stock, the shares
to be redeemed will be determined pro rata or by lot, as determined by the
Company, except that the Company may redeem such shares held by any holders of
fewer than 100 shares (or shares held by holders who would hold less than 100
shares as a result of such redemption), as may be determined by the Company.
MANDATORY REDEMPTION
On April 1, 2008 (the "Mandatory Redemption Date"), the Company will be
required to redeem (subject to contractual and other restrictions with respect
thereto and to the legal availability of funds therefor) all outstanding shares
of Series M Preferred Stock at a price equal to the liquidation preference of
$10,000 per share (equivalent to $100 per New Depositary Share) plus all
accumulated and unpaid dividends from the last payment date to the date of
redemption. Future agreements of the Company may restrict or prohibit the
Company from redeeming the Series M Preferred Stock. See "Risk Factors--Risks
Related to the Securities--Restrictions on the Company's Ability to Pay
Dividends on Series L Preferred Stock and Series M Preferred Stock".
PROCEDURE FOR REDEMPTION
On and after a redemption date, unless the Company defaults in the payment of
the applicable redemption price, dividends will cease to accumulate on shares
of Series M Preferred Stock called for redemption and all rights of holders of
such shares will terminate except for the right to receive the redemption
price, without interest. The Company will send a written notice of redemption
by first class mail to each holder of record of shares of Series M Preferred
Stock, not fewer than 30 days nor more than 60 days prior to the date fixed for
such redemption. Shares of Series M Preferred Stock issued and reacquired will,
upon compliance with the applicable requirements of Delaware law, have the
status of authorized but unissued shares of preferred stock of the Company
undesignated as to series and may with any and all other authorized but
unissued shares of preferred stock of the Company be designated or redesignated
and issued or reissued, as the case may be, as part of any series of preferred
stock of the Company, except that any issuance or reissuance of shares of
Series M Preferred Stock must be in compliance with the Certificate of
Designations.
EXCHANGE
The Company may, at its option, on any scheduled dividend payment date,
exchange the New Depositary Shares representing the Series M Preferred Stock,
in whole but not in part, for the Exchange Debentures. See "--The Exchange
Debentures" below for the terms of the Exchange Debentures. Holders of Series M
Preferred Stock so exchanged will be entitled to receive a principal amount of
Exchange Debentures equal to $100 for each $100 of liquidation preference of
New Depositary Shares representing the Series M Preferred Stock held by such
holders at the time of exchange plus an amount per share in cash (or prior to
April 1, 2001, in principal amount of Exchange Debentures) equal to all
accumulated but unpaid dividends
50
<PAGE>
thereon from the last dividend payment date to the exchange date. The Exchange
Debentures will be issuable only in denominations of $1,000 and integral
multiples thereof. An amount in cash will be paid to holders for any principal
amount otherwise issuable which is less than $1,000. Following such exchange,
all dividends on the Series M Preferred Stock will cease to accrue, the rights
of the holders of Series M Preferred Stock as stockholders of the Company shall
cease and the person or persons entitled to receive the Exchange Debentures
issuable upon exchange shall be treated as the registered holder or holders of
such Exchange Debentures. Notice of exchange will be mailed at least 30 days
but not more than 60 days prior to the date of exchange to each holder of New
Depositary Shares representing the Series M Preferred Stock. See "--The
Exchange Debentures" below.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding-up of the Company,
holders of Series M Preferred Stock will be entitled to receive a preferential
amount equal to $10,000 per share (equivalent to $100 per New Depositary
Share), plus all accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up of the Company (including an amount
equal to a prorated dividend from the last dividend payment date to the date
fixed for liquidation, dissolution or winding-up), before any distribution is
made on any Junior Stock, including, without limitation, on any Common Stock.
If upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the amounts payable with respect to the Series M Preferred Stock
and all other Parity Securities are not paid in full, the holders of the Series
M Preferred Stock and the Parity Securities will share equally and ratably in
any distribution of assets of the Company in proportion to the full liquidation
preference to which each is entitled. After payment of the full amount of the
liquidation preferences to which they are entitled, the holders of shares of
Series M Preferred Stock will not be entitled to any further participation in
any distribution of assets of the Company. However, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with one or more
corporations shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
The Certificate of Designations does not contain any provision requiring
funds to be set aside to protect the liquidation preference of the Series M
Preferred Stock, although such liquidation preference will be substantially in
excess of the par value of such shares of Series M Preferred Stock. In
addition, the Company is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of the Company) that requires a restriction upon any surplus of
the Company solely because the liquidation preference of the Series M Preferred
Stock will exceed its par value. Consequently, there will be no restriction
upon any surplus of the Company solely because the liquidation preference of
the Series M Preferred Stock will exceed the par value and there will be no
remedies available to holders of the Series M Preferred Stock before or after
the payment of any dividend, other than in connection with the liquidation of
the Company, solely by reason of the fact that such dividend would reduce any
surplus of the Company to an amount less than the difference between the
liquidation preference of the Series M Preferred Stock and its par value. See
"Risk Factors--Risks Related to the Securities--Restrictions on the Company's
Ability to Pay Dividends on the Series L Preferred Stock and Series M Preferred
Stock".
VOTING RIGHTS
Holders of the Series M Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set forth
in the Certificate of Designations. The Certificate of Designations provides
that if (a) dividends on the Series L Preferred Stock or Series M Preferred
Stock are in arrears and unpaid (and if after April 1, 2001, such dividends are
not paid in cash) for six quarterly periods (whether or not consecutive), or
(b) the Company fails to discharge its redemption obligation to redeem the
Series L Preferred Stock or Series M Preferred Stock on the Mandatory
Redemption Date, then the number of directors constituting the Board of
Directors will be adjusted to permit the holders of the majority of the
51
<PAGE>
then outstanding Series L Preferred Stock and Series M Preferred Stock, voting
or consenting, as the case may be, as a single class, to elect a director. Such
voting rights will continue until such time as all dividends in arrears on the
Series L Preferred Stock and Series M Preferred Stock are paid in full (and in
the case of dividends payable after April 1, 2001, paid in cash) and any
failure, breach or default referred to in clause (b) is remedied, at which time
the term of the directors elected pursuant to the provisions of this paragraph
shall terminate. Each such event described in clauses (a) and (b) above is
referred to herein as a "Voting Rights Triggering Event".
Any vacancy occurring in the office of the director elected by holders of the
Series L Preferred Stock and Series M Preferred Stock may be filled by the
departing director unless and until such vacancy shall be filled by such
holders.
The Certificate of Designations also provides that, except as stated above
under "--Ranking", the Company will not authorize any class of Senior
Securities without the affirmative vote or consent of holders of at least a
majority of the shares of Series L Preferred Stock and Series M Preferred Stock
then outstanding, voting or consenting, as the case may be, separately as a
single class. The Certificate of Designations also provides that the Company
may not amend the Certificate of Designations so as to affect adversely the
specified rights, preferences, privileges or voting rights of holders of shares
of the Series L Preferred Stock or Series M Preferred Stock, or authorize the
issuance of any additional shares of Series L Preferred Stock or Series M
Preferred Stock, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of Series L Preferred Stock and
Series M Preferred Stock, voting or consenting, as the case may be, as a single
class. The holders of at least a majority of the outstanding shares of Series L
Preferred Stock and Series M Preferred Stock, voting or consenting, as the case
may be, as a single class, may also waive compliance with any provision of the
Certificate of Designations. The Certificate of Designations also provides
that, except as set forth above, (a) the creation, authorization or issuance of
any shares of Parity Securities or Junior Stock or (b) the increase or decrease
in the amount of authorized capital stock of any class, including any preferred
stock, shall not require the consent of the holders of Series L 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 shares of Series
L Preferred Stock or Series M Preferred Stock.
Under Delaware law, holders of a class of preferred stock will be entitled to
vote as a class upon a proposed amendment to the certificate of incorporation,
whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of the shares of such
class, or alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely. The Certificate of
Designations will expressly provide that any such vote will be taken with
respect to the Series L Preferred Stock and Series M Preferred Stock, voting or
consenting, as the case may be, as a single class.
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 Series L Preferred Stock and Series M
Preferred Stock, the Company may not consolidate or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any Person unless: (a) the entity formed by
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made shall be a corporation organized or existing under the laws of the United
States or any State thereof or the District of Columbia; (b) any and all
outstanding shares of Series L Preferred Stock and Series M Preferred Stock
shall be converted into or exchanged for and shall become shares of such
successor, transferee or resulting corporation, having in respect of such
successor, transferee or resulting corporation the same powers, preferences and
relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereon, that the Series L
Preferred Stock or 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 or
be continuing. Notwithstanding the foregoing, the Company
52
<PAGE>
may consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any Person
if the Company makes adequate provision (i) prior to April 1, 2003, to redeem
the Series L Preferred Stock and Series M Preferred Stock after a Change of
Control or (ii) on or after April 1, 2003, to redeem the Series L Preferred
Stock and Series M Preferred Stock at the applicable redemption price set forth
herein.
COVENANT TO REPORT
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, the Company
will file with the Commission and provide the Transfer Agent and the holders of
the Series M Preferred Stock with all information, documents and reports
specified in Section 13 and Section 15(d) of the Exchange Act.
TRANSFER AGENT AND REGISTRAR
The First National Bank of Boston is the transfer agent and registrar for the
Series M Preferred Stock.
THE EXCHANGE DEBENTURES
The Exchange Debentures will be issued under an Indenture dated as of
February 15, 1996 (the "Exchange Indenture"), between the Company and The Bank
of New York, as trustee (the "Trustee"). The Exchange Indenture is subject to
and is governed by the Trust Indenture Act of 1939, as amended. The following
summaries of certain provisions of the Exchange Indenture do not purport to be
complete, and where reference is made to particular provisions of the Exchange
Indenture, such provisions, including the definitions of certain terms, are
incorporated by reference as a part of such summaries or terms, which are
qualified in their entirety by such reference. The definitions of certain
capitalized terms used in the Exchange Indenture and in the following summary
are set forth below under "Definitions".
The Exchange Debentures will be unsecured obligations of the Company and will
be limited in aggregate principal amount to the aggregate liquidation
preference of the Series L Preferred Stock and Series M Preferred Stock, plus
accumulated and unpaid dividends on the date of exchange of the Series L
Preferred Stock or Series M Preferred Stock, as the case may be, into Exchange
Debentures (plus any additional Exchange Debentures issued in lieu of cash
interest as described herein). The Exchange Debentures will be issued only in
fully registered form without coupons, in denominations of $1,000 or any
integral multiple thereof (other than with respect to additional Exchange
Debentures issued in lieu of cash interest as described herein). The Exchange
Debentures will be subordinated to all existing and future Senior Indebtedness
of the Company.
The Exchange Debentures will mature on April 1, 2008. Each Exchange Debenture
will accrue interest at the dividend rate of the Series L Preferred Stock or
Series M Preferred Stock, as the case may be, from the Exchange Debenture Issue
Date or from the most recent interest payment date to which interest has been
paid or provided for.
Interest will be payable semi-annually in cash (or, on or prior to April 1,
2001, in additional Exchange Debentures having a principal amount equal to the
cash interest otherwise payable, or in a combination of cash and Exchange
Debentures, at the option of the Company) in arrears on January 1 and July 1 of
each year, commencing with the first such date after the Exchange Debenture
Issue Date. Interest on the Exchange Debentures will be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days
elapsed.
Principal of and premium, if any, and interest on the Exchange Debentures
will be payable, and the Exchange Debentures will be exchangeable and
transferable, at the office or agency of the Company in The City of New York
(which initially will be the Corporate Trust Office of the Trustee); provided,
however, that payment of interest, to the extent paid in cash, may be made at
the option of the Company by check mailed
53
<PAGE>
to the person entitled thereto as shown on the Register of the Exchange
Debentures. No service charge will be made for any registration of transfer or
exchange of Exchange Debentures, except for any tax or other governmental
charge that may be imposed in connection therewith.
The Exchange Indenture will not contain any provisions that limit the ability
of the Company to incur indebtedness or that afford Holders of the Exchange
Debentures protection in the event of a highly leveraged or similar transaction
involving the Company, other than as described under "--Certain Covenants of
the Company--Limitation on Indebtedness".
SINKING FUND
The Exchange Debentures will not be entitled to the benefits of a sinking
fund.
SUBORDINATION
The indebtedness represented by the Exchange Debentures will be subordinated
in right of payment to the prior payment in full of all Senior Indebtedness.
(Section 1201) Upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration or otherwise, or upon any payment default (with or without the
giving of notice or lapse of time or both, in accordance with the terms of the
instrument governing such Senior Indebtedness, and without any waiver or
forgiveness) with respect to any Senior Indebtedness, all obligations with
respect to such Senior Indebtedness must first be paid in full, or such payment
duly provided for, before any payment is made with respect to the Exchange
Debentures or before any acquisition of Exchange Debentures by the Company.
(Section 1202)
Upon (i) a default with respect to any Senior Indebtedness (other than under
circumstances when the terms of the previous paragraph are applicable), as such
default is defined therein or in the instrument under which it is outstanding,
permitting the holders of Senior Indebtedness to accelerate the maturity
thereof, and (ii) written notice thereof ("Default Notice") given to the
Company and the Trustee by the agent or agents under the Credit Agreement,
then, unless and until such default shall have been cured or waived by the
holders of such Senior Indebtedness or shall have ceased to exist, no direct or
indirect payment may be made by the Company with respect to the principal of or
interest on the Exchange Debentures (other than payments made in Junior
Securities) or to acquire any of the Exchange Debentures or on account of the
redemption provisions of the Exchange Debentures; provided, however, that such
provision shall not prevent the making of any payment (which is not otherwise
prohibited by the previous paragraph) for more than 120 days after the Default
Notice shall have been given unless the Senior Indebtedness in respect of which
such event of default exists has been declared due and payable in its entirety,
in which case no such payment may be made until such acceleration has been
rescinded or annulled or such Senior Indebtedness has been paid in full.
Notwithstanding the foregoing, not more than one Default Notice may be given
with respect to Senior Indebtedness within a period of 240 consecutive days.
The Exchange Indenture will provide that, upon any payment by or distribution
of the assets of the Company to creditors upon any dissolution, winding up,
liquidation, bankruptcy, reorganization, assignment for the benefit of
creditors, or any insolvency, receivership or similar proceeding relating to
the Company, all Senior Indebtedness must be paid in full, or such payment duly
provided for, before any payment or distribution (other than in Junior
Securities) is made on account of the principal of or interest on the Exchange
Debentures. (Section 1203)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than other creditors of the Company and creditors of the Company
who are not holders of Senior Indebtedness or of the Exchange Debentures (or
the Company's 10 3/4% Senior Subordinated Debentures due 2004, the 9 1/4%
Senior Subordinated Notes due 2005, the 9 7/8% Senior Subordinated Notes due
2006, the 9 7/8% Senior Subordinated Debentures due 2013, the 10 1/2% Senior
Subordinated Debentures due 2016 and the 9 7/8% Senior Subordinated Debentures
due
54
<PAGE>
2023 (collectively, the "Debentures")) may recover more, ratably, than the
Holders of the Exchange Debentures.
A Holder of Exchange Debentures by such holder's acceptance of the Exchange
Debentures agrees to be bound by such provisions and authorizes and expressly
directs the Trustee, on his behalf, to take such action as may be necessary or
appropriate to effectuate the subordination provided for in the Exchange
Indenture and appoints the Trustee his attorney-in-fact for such purpose.
(Section 1209)
The amount of Senior Indebtedness outstanding at March 31, 1996, adjusted to
give pro forma effect to the transactions described under "Capitalization" and
the application of the net proceeds to the Company from the offering of the
Company's Series L Preferred Stock, would have been approximately $569.4
million.
OPTIONAL REDEMPTION.
The Exchange Debentures will be subject to redemption at any time on or after
April 1, 2003, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice at the following redemption prices
(expressed as percentages of the principal amount), if redeemed during the
12-month period beginning April 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2003........................................................... 105.563%
2004........................................................... 103.708
2005........................................................... 101.854
2006 and thereafter............................................ 100.000
</TABLE>
in each case together with accrued interest to the redemption date (subject to
the right of Holders of record on relevant record dates to receive interest due
on an interest payment date). If less than all of the Exchange Debentures are
to be redeemed, the Trustee shall select the Exchange Debentures or portions
thereof to be redeemed either pro rata or by lot.
In addition, up to 50% in aggregate principal amount of the Exchange
Debentures may be redeemed before April 1, 1999 at a price of 110% of the
principal amount thereof, plus accrued and unpaid interest thereon, out of the
net proceeds of a sale of Junior Stock to a Strategic Equity Investor or a
public offering of Class A Common Stock, provided that following such
redemption at least $325,000,000 principal amount of Exchange Debentures
remains outstanding.
The Credit Agreement currently prohibits the Company from making optional
redemptions of the Exchange Debentures other than through the issuance of
subordinated indebtedness, preferred stock or common stock.
CERTAIN COVENANTS OF THE COMPANY
Upon issuance of the Exchange Debentures, the following covenants shall be
applicable:
Limitation on Indebtedness. The Exchange Indenture provides that the Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly incur, create, issue, assume, guarantee or otherwise become liable
for, contingently or otherwise, or become responsible for the payment of,
contingently or otherwise, any Indebtedness (other than Indebtedness between or
among any of the Company and Restricted Subsidiaries) unless, after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
(Section 1007)
At March 31, 1996, such Cash Flow Ratio was approximately 5.7 to 1.
55
<PAGE>
Limitation on Senior Subordinated Indebtedness. The Exchange Indenture
provides that the Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become liable for, contingently or otherwise, or become
responsible for the payment of, contingently or otherwise, any Indebtedness
which is both (i) senior in right of payment to the Exchange Debentures and
(ii) expressly subordinate in right of payment to any other Indebtedness of the
Company. For purposes of this covenant, Indebtedness is deemed to be senior in
right of payment to the Exchange Debentures if it is not subordinate in right
of payment to Senior Indebtedness at least to the same extent as the Exchange
Debentures are subordinate to Senior Indebtedness. (Section 1008)
Limitation on Restricted Payments. The Exchange Indenture provides that, so
long as any of the Exchange Debentures remains outstanding, the Company will
not, and will not permit any Restricted Subsidiary to, make any Restricted
Payment if (a) at the time of such proposed Restricted Payment, a Default or
Event of Default shall have occurred and be continuing or shall occur as a
consequence of such Restricted Payment or (b) immediately after giving effect
to such Restricted Payment, the aggregate of all Restricted Payments that shall
have been made on or after July 1, 1988 would exceed the sum of:
(i) $25,000,000, plus
(ii) an amount equal to the difference between (A) the Cumulative Cash
Flow Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
Notwithstanding the foregoing, so long as no Default or Event of Default
shall have occurred and be continuing, the Company may make any Permitted
Restricted Payment; provided, however, that such Permitted Restricted Payment
shall thereafter be counted as a Restricted Payment solely for purposes of
calculating whether any future Restricted Payments are permitted under clause
(b) of the preceding sentence.
For purposes of the "Limitation on Restricted Payments" covenant, the amount
of any Restricted Payment or Permitted Restricted Payment, if other than cash,
shall be based upon fair market value as determined by the Board of Directors
of the Company, whose good faith determination shall be conclusive. (Section
1009)
The foregoing provisions do not prevent: (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at such date of
declaration such payment complied with the above provisions; (ii) the
retirement or redemption of any shares of the Company's capital stock or
warrants, rights or options to acquire capital stock of the Company, in
exchange for, or out of the proceeds of a substantially concurrent sale of,
other shares of the Company's capital stock or warrants, rights or options to
acquire capital stock of the Company (other than Disqualified Stock); and (iii)
the redemption of or payments of cash dividends on the Series C Preferred Stock
outstanding on January 1, 1995, which redemptions or dividends are provided for
by the terms of the Series C Preferred Stock in effect on such date (or the
redemption of or payment of cash dividends on any security of the Company
issued in exchange for or upon the conversion of such Series C Preferred Stock;
provided that the aggregate amount payable pursuant to the terms of such
security is no greater than the aggregate amount payable pursuant to the terms
of the Series C Preferred Stock). For purposes of determining the aggregate
permissible amount of Restricted Payments in accordance with clause (b) of the
first paragraph of this covenant, all amounts expended pursuant to clauses (i)
and (iii) of this paragraph shall be included and all amounts expended or
received pursuant to clause (ii) of this paragraph shall be excluded; provided,
however, that amounts paid pursuant to clause (i) of this paragraph shall be
included only to the extent that such amounts were not previously included in
calculating Restricted Payments. (Section 1009)
For the purposes of the foregoing provisions, the net proceeds from the
issuance of shares of capital stock of the Company upon conversion of
Indebtedness shall be deemed to be an amount equal to (i) the accreted value of
such Indebtedness so converted on the date of such conversion and (ii) the
additional consideration, if any, received by the Company upon such conversion
thereof, less any cash payment on account of fractional shares (such
consideration, if in property other than cash, to be determined by the Board
56
<PAGE>
of Directors of the Company, whose good faith determination shall be
conclusive). If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of this covenant, such
Restricted Payment shall be deemed to have been made in compliance with this
covenant notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Cumulative Cash Flow Credit or
Cumulative Interest Expense for any period. (Section 1009)
As of March 31, 1996, this covenant would have permitted the Company to make
Restricted Payments of $613.1 million.
Limitation on Investments in Unrestricted Subsidiaries and Affiliates. The
Company will not, and will not permit any Restricted Subsidiary to, directly or
indirectly (i) make any Investment or (ii) allow any Restricted Subsidiary to
become an Unrestricted Subsidiary (a "redesignation of a Restricted
Subsidiary"), in each case unless (a) no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence of such Investment
or such redesignation of a Restricted Subsidiary and (b) after giving effect
thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
The foregoing provisions of this covenant shall not prohibit (i) any renewal
or reclassification of any Investment existing on the date hereof or (ii) trade
credit extended on usual and customary terms in the ordinary course of
business. (Section 1010)
Transactions with Affiliates. The Exchange Indenture provides that the
Company shall not, and shall not permit any of its subsidiaries to, sell,
lease, transfer or otherwise dispose of any of its properties or assets to or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, an
Affiliate of the Company that is not a subsidiary of the Company, having a
value, or for consideration having a value, in excess of $10,000,000
individually or in the aggregate unless the Board of Directors of the Company
shall make a good faith determination that the terms of such transaction are,
taken as a whole, no less favorable to the Company or such subsidiary, as the
case may be, than those which might be available in a comparable transaction
with an unrelated Person. For purposes of clarification, this provision shall
not apply to Restricted Payments or Permitted Restricted Payments permitted
under "Limitation on Restricted Payments". (Section 1011)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any Person, unless: (i) the entity formed by such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or disposition shall have been made shall be a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and shall assume by a supplemental indenture all
the obligations of the Company under the Exchange Debentures and the Exchange
Indenture; (ii) immediately before and immediately after such transaction, and
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing; and (iii) immediately after such transaction, and after
giving effect thereto, the Person formed by or surviving any such consolidation
or merger, or to which such sale, assignment, transfer, lease or conveyance or
disposition shall have been made, shall have a Cash Flow Ratio not in excess of
9 to 1. (Section 801)
EVENTS OF DEFAULT
The following are Events of Default under the Exchange Indenture: (1) default
for 30 days in payment of interest on the Exchange Debentures; (2) default in
payment of principal or premium, if any, on the Exchange Debentures at
Maturity, upon acceleration, redemption or otherwise; (3) failure to comply
with any other covenant or agreement of the Company, continued for 60 days (or,
with respect to certain covenants or agreements, 30 days) after written notice
as provided in the Exchange Indenture; (4) a default or defaults
57
<PAGE>
under any mortgage, indenture or instrument which secures or evidences any
Indebtedness for money borrowed or guaranteed by the Company or a Restricted
Subsidiary in an aggregate amount of $10,000,000 or more (but excluding any
Indebtedness for the deferred purchase price of property or services owed to
the Person providing such property or services as to which the Company or such
Restricted Subsidiary is contesting its obligation to pay the same in good
faith and by proper proceedings and for which the Company or such Restricted
Subsidiary has established appropriate reserves) which result from the failure
to pay such Indebtedness at final maturity or which have resulted in the
acceleration of such Indebtedness; (5) the entry of a final judgment or final
judgments for the payment of money by a court or courts of competent
jurisdiction against the Company or any Restricted Subsidiary in an aggregate
amount exceeding $10,000,000 which remain undischarged and unbonded for a
period (during which execution shall not be effectively stayed) of 60 days or
as to which an enforcement proceeding has been commenced by any creditor, and
(6) certain events of bankruptcy, insolvency or reorganization. (Section 501)
If an Event of Default (other than as specified in clause (6) above) shall
occur and be continuing under the Exchange Indenture, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the outstanding
Exchange Debentures, by written notice to the Company and the agents, if any,
under the Credit Agreement (and to the Trustee if such notice is given by the
Holders), may declare all the unpaid principal of, premium, if any, and
interest on the Exchange Debentures to be due and payable as provided in the
Exchange Indenture. Upon a declaration of acceleration, such principal,
premium, if any, and accrued interest shall be due and payable upon the first
to occur of an acceleration under the Credit Agreement or ten days after
receipt by the Company and the agents, if any, under the Credit Agreement of
such written notice. No action on the part of the Trustee or any Holder of the
Exchange Debentures is required for such acceleration if an Event of Default
specified in clause (6) above shall occur and be continuing. The Holders of at
least a majority in principal amount of the Exchange Debentures then
outstanding may rescind an acceleration and its consequences if (i) all
existing Events of Default, other than the nonpayment of principal of, premium,
if any, or interest on the Exchange Debentures which have become due solely
because of the acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. A declaration of acceleration because of an Event of Default
specified in clause (4) of the preceding paragraph would be automatically
annulled if the Indebtedness referred to therein were discharged, or the
Holders thereof rescinded their declaration of acceleration referred to
therein, within 30 days after the acceleration of the Exchange Debentures and
no other Event of Default had occurred and not been cured or waived during such
period. (Section 502) The Holders of a majority in principal amount of the
Exchange Debentures outstanding also have the right to waive certain past
defaults under the Exchange Indenture. (Section 513)
No Holder of any Exchange Debentures issued under the Exchange Indenture has
any right to institute any proceeding with respect to such Exchange Indenture
or for any remedy thereunder, unless (i) such Holder has previously given to
the Trustee written notice of a continuing Event of Default under the Exchange
Indenture, (ii) the Holders of at least 25% in principal amount of the
outstanding Exchange Debentures issued under the Exchange Indenture have made
written request and offered reasonable indemnity to the Trustee to institute
such proceeding as Trustee under the Exchange Indenture, and (iii) the Trustee
has not received from the Holders of a majority in principal amount of the
outstanding Exchange Debentures a direction inconsistent with such request and
the Trustee has failed to institute such proceeding within 60 days after
receipt of such notice. (Section 507) Such limitations do not apply, however,
to a suit instituted by a Holder of an Exchange Debenture for the enforcement
of payment of the principal of or premium, if any, or interest on such Exchange
Debenture on or after the respective due dates expressed in such Exchange
Debenture. (Section 508)
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Exchange Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. Subject to the provisions of the Exchange Indenture relating to
the duties of the Trustee, in case an Event of Default
58
<PAGE>
shall occur and be continuing, the Trustee is not under any obligation to
exercise any of its rights or powers under the Exchange Indenture at the
request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity. (Section 602) Subject
to such provisions for the indemnification of the Trustee, the Holders of a
majority in principal amount of the outstanding Exchange Debentures have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee under the Exchange Indenture. (Section 512)
The Company is required to furnish to the Trustee an annual statement as to
the performance by the Company of its obligations under the Exchange Indenture
and as to any default in such performance. (Section 1013)
DEFEASANCE
The Company may at any time terminate all of its obligations with respect to
the Exchange Debentures ("defeasance"), except for certain obligations,
including those regarding the Defeasance Trust (as defined below) and
obligations to register the transfer or exchange of Exchange Debentures, to
replace mutilated, destroyed, lost or stolen Exchange Debentures and to
maintain agencies in respect of the Exchange Debentures. The Company may also
at any time terminate its obligations under the covenants set forth in the
Exchange Indenture, which are described under "--Certain Covenants of the
Company" above, and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Exchange
Debentures ("covenant defeasance"). (Sections 1402, 1403 and 1404)
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit in trust, for the benefit of the Holders, with
the Trustee money or U.S. Government Obligations, or a combination thereof, in
such amounts as will be sufficient to pay the principal of and premium, if any,
and interest on the Exchange Debentures to redemption or maturity (the
"Defeasance Trust"), (ii) the Company must deliver opinions of counsel to the
effect that such Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred (in the case of defeasance, such opinion
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable federal income tax laws), (iii) no event or condition
shall exist that, pursuant to certain provisions described under
"Subordination" above, would prevent the Company from making payments of
principal of and premium, if any, and interest on the Exchange Debentures at
the date of the irrevocable deposit referred to above or at any time during the
period ending on the 91st day after such deposit date and (iv) the Company must
comply with certain other conditions. (Section 1404)
SATISFACTION AND DISCHARGE OF THE EXCHANGE INDENTURE AND THE EXCHANGE
DEBENTURES
The Exchange Indenture will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of Exchange
Debentures, as expressly provided for in the Exchange Indenture) when either
(i) all such Exchange Debentures theretofore authenticated and delivered
(except lost, stolen or destroyed Exchange Debentures which have been replaced
or paid) have been delivered to the Trustee for cancellation and the Company
has paid all sums payable by it under the Exchange Indenture or (ii) all such
Exchange Debentures not theretofore delivered to the Trustee for cancellation
(a) have become due and payable, or (b) will become due and payable within one
year, or (c) are to be called for redemption within one year, and the Company
has irrevocably deposited or caused to be deposited with the Trustee funds in
an amount sufficient to pay the entire indebtedness on such Exchange Debentures
not theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest to the date of deposit (if such Exchange
Debentures are then due and payable) or to the applicable maturity or
redemption date (as the case may be), and the Company has paid all sums payable
by it under the Exchange Indenture. (Section 401)
59
<PAGE>
MODIFICATION AND WAIVER
Modifications and amendments of the Exchange Indenture or the Exchange
Debentures may be made by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
outstanding Exchange Debentures; provided, however, that no such modification
or amendment may, without the consent of the Holder of each outstanding
Exchange Debenture, (i) change the Stated Maturity of the principal of, or the
premium, if any, or any installment of interest on, the Exchange Debentures,
(ii) reduce the principal amount of, or the premium, if any, or interest on,
the Exchange Debentures, (iii) change the Currency in which any Exchange
Debenture or any premium or the interest thereon is payable, (iv) impair the
right to institute suit for the enforcement of any payment on or with respect
to the Exchange Debentures, (v) reduce the percentage in principal amount of
outstanding Exchange Debentures necessary to waive compliance with certain
provisions of the Exchange Indenture or to waive certain defaults, (vi) modify
any of the provisions relating to supplemental indentures requiring the consent
of Holders or relating to the waiver of past defaults, except to increase the
percentage of outstanding Exchange Debentures required for such actions or to
provide that certain other provisions of the Exchange Indenture cannot be
modified or waived without the consent of the Holder of each Exchange Debenture
affected thereby, or (vii) modify any of the provisions of the Exchange
Indenture relating to the subordination of the Exchange Debentures in a manner
adverse to the Holders thereof. (Sections 901 and 902)
The Holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding may waive compliance with certain restrictive
covenants and provisions of the Exchange Indenture. (Section 1014)
REGARDING THE TRUSTEE
The Bank of New York ("BONY") is the Trustee under the Exchange Indenture and
the indentures relating to the Company's 10 3/4% Senior Subordinated Debentures
due 2004, the 9 7/8% Senior Subordinated Debentures due 2013, the 9 7/8% Senior
Subordinated Debentures due 2023, the 9 1/4% Senior Subordinated Notes due
2005, the 9 7/8% Senior Subordinated Notes due 2006, the 10 1/2% Senior
Subordinated Debentures due 2016, the 11 3/4% Senior Subordinated Debentures
due 2007 and 8 1/2% Convertible Subordinated Debentures due 2007. BONY is a
party to certain credit agreements with the Company and its subsidiaries,
including the Credit Agreement, borrowings under which constitute Senior
Indebtedness under the Exchange Indenture. BONY may also maintain other banking
arrangements with the Company in the ordinary course of business.
DEFINITIONS
Set forth below is a summary of certain defined terms used in the Certificate
of Designations and in the Exchange Indenture. Reference is made to the
Certificate of Designations and the Exchange Indenture for the full definition
of all such terms, as well as any other capitalized terms used herein for which
no definition is provided.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
control when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Annualized Operating Cash Flow" means, for any period of three complete
consecutive calendar months, an amount equal to Operating Cash Flow for such
period multiplied by four.
"Banks" means the lenders from time to time under the Credit Agreement.
60
<PAGE>
"Capitalized Lease Obligation" means any obligation of a person to pay rent
or other amounts under a lease with respect to any property (whether real,
personal or mixed) acquired or leased by such Person and used in its business
that is required to be accounted for as a liability on the balance sheet of
such Person in accordance with generally accepted accounting principles, and
the amount of such Capitalized Lease Obligation shall be the amount so required
to be accounted for as a liability.
"Cash Flow Ratio" means, as at any date, the ratio of (i) the sum of the
aggregate outstanding principal amount of all Indebtedness of the Company and
the Restricted Subsidiaries determined on a consolidated basis but excluding
all Interest Swap Obligations entered into by the Company or any Restricted
Subsidiary and one of the Banks outstanding on such date plus (but without
duplication of Indebtedness supported by Letters of Credit) the aggregate
undrawn face amount of all Letters of Credit outstanding on such date to(ii)
Annualized Operating Cash Flow determined as at the last day of the most recent
month for which financial information is available.
"Change of Control" means any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation) the
result of which is that Dolan ceases (i) to elect a majority of the Board of
Directors of the Company or (ii) to be the "beneficial owner" (as defined in
Rule 13(d)(3) under the Exchange Act) of at least 50% of the aggregate voting
power of the voting stock of the Company.
"Cumulative Cash Flow Credit" means the sum of:
(a) cumulative Operating Cash Flow during the period commencing on July
1, 1988 and ending on the last day of the most recent month preceding the
date of the proposed Restricted Payment for which financial information is
available or, if cumulative Operating Cash Flow for such period is
negative, minus the amount by which cumulative Operating Cash Flow is less
than zero, plus
(b) the aggregate net proceeds received by the Company from the issue or
sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, plus
(c) the aggregate net proceeds received by the Company from the issuance
or sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, upon the conversion
of, or exchange for, Indebtedness of the Company or any Restricted
Subsidiary or from the exercise of any options, warrants or other rights to
acquire capital stock of the Company.
For purposes of this definition, the net proceeds in property other than cash
received by the Company as contemplated by clauses (b) and (c) above shall be
valued at the fair market value of such property (as determined by the Board of
Directors of the Company, whose good faith determination shall be conclusive)
at the date of receipt by the Company.
"Cumulative Interest Expense" means, for the period commencing on July 1,
1988 and ending on the last day of the most recent month preceding the proposed
Restricted Payment for which financial information is available, the aggregate
of the interest expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with generally
accepted accounting principles, including interest expense attributable to
Capitalized Lease Obligations.
"Debt" with respect to any Person means, without duplication, any liability,
whether or not contingent, (i) in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereto), but excluding reimbursement
obligations under any surety bond, (ii) representing the balance deferred and
unpaid of the purchase price of any property (including pursuant to Capitalized
Lease Obligations), except any such balance that constitutes a trade payable,
(iii) under Interest Swap Agreements (as defined in the Credit Agreement)
entered into pursuant to the Credit Agreement, (iv) under any other agreement
related to the fixing of interest rates on any Indebtedness, such as an
interest swap, cap or collar agreement (if and to the extent any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with generally
61
<PAGE>
accepted accounting principles), or (v) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not the guarantee would appear on such balance sheet).
"Disqualified Stock" means any capital stock of the Company or any Restricted
Subsidiary which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Exchange
Debentures.
"Dolan" shall mean Mr. Charles Dolan, his spouse, his descendants or any
spouse of any such descendants and trusts for the benefit of, inter alia, him,
his spouse, his descendants or any spouse of any such descendants, and any
estate, testamentary trust, or executor, administrator, conservator or legal or
personal representative of any of the foregoing.
"Exchange Debenture Issue Date" means the date on which the Exchange
Debentures are originally issued under the Exchange Indenture.
"Indebtedness" with respect to any Person, means the Debt of such Person;
provided, however, that, with respect to the Company, the Minimum Payment or
the Preferred Payment (each a "Cablevision of NYC Payment") payable by a
subsidiary of the Company and guaranteed by the Company as a result of the
Cablevision of NYC Acquisition shall not be deemed to be "Indebtedness" so long
as the Company and such subsidiary are permitted to make such Cablevision of
NYC Payment in one or more classes of the Company's capital stock (other than
Disqualified Stock) pursuant to the terms of the Cablevision of NYC Acquisition
agreement and the Company and the Restricted Subsidiaries are prohibited from
making such Cablevision of NYC Payment in cash, debt securities, Disqualified
Stock or any combination thereof, pursuant to the terms of any mortgage,
indenture, credit agreement or other instrument that secures or evidences
Indebtedness for money borrowed or guaranteed by the Company or a Restricted
Subsidiary in an aggregate amount of $10,000,000 or more; provided that, for
purposes of the definition of "Indebtedness" (including the term "Debt" to the
extent incorporated in such definition) and for purposes of the definition of
"Event of Default", the term "guarantee" shall not be interpreted to extend to
a guarantee under which recourse is limited to the capital stock of an entity
that is not a Restricted Subsidiary.
"Interest Swap Obligations" means, with respect to any Person, the
obligations of such Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive from time
to time periodic payments calculated by applying either a floating or a fixed
rate of interest on a stated notional amount in exchange for periodic payments
made by such Person calculated by applying a fixed or a floating rate of
interest on the same notional amount.
"Investment" means any advance, loan, account receivable (other than an
account receivable arising in the ordinary course of business), or other
extension of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or any capital contribution
to (by means of transfers of property to others, payments for property or
services for the account or use of others, or otherwise), any purchase or
ownership of any stocks, bonds, notes, debentures or other securities
(including, without limitation, any interests in any partnership, joint venture
or joint adventure) of, or any bank accounts with or guarantee of any
Indebtedness or other obligations of, any Unrestricted Subsidiary or Affiliate
that is not a subsidiary of the Company, provided that (i) the term
"Investment" shall not include any transaction that would otherwise constitute
an Investment of the Company or a subsidiary of the Company to the extent that
the consideration provided by the Company or such subsidiary in connection
therewith shall consist of capital stock of the Company (other than
Disqualified Stock) and (ii) the term "guarantee" shall not be interpreted to
extend to a guarantee under which recourse is limited to the capital stock of
an entity that is not a Restricted Subsidiary.
62
<PAGE>
"Junior Securities" means securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment, junior or
the payment of which is otherwise subordinate, at least to the extent provided
in the Exchange Indenture, to the payment of all Senior Indebtedness at the
time outstanding, and to the payment of all securities issued in exchange
therefor, to the holders of the Senior Indebtedness at the time outstanding.
"Make-Whole Premium" means, with respect to a share of Preferred Stock, (a)
the present value of (i) dividends accruing until and including April 1, 2003
(assuming payment thereof in cash on the applicable dividend payment date) 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 liquidation preference of $10,000 per
share (equivalent to $100 per New Depositary Share).
"Operating Cash Flow" means, for any period, the sum of the following for the
Company and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with generally accepted accounting principles
(except for the amortization of deferred installation income which shall
be excluded from the calculation of Operating Cash Flow for all purposes of the
Exchange Indenture): (i) aggregate operating revenues minus (ii) aggregate
operating expenses (including technical, programming, sales, selling, general
and administrative expenses and salaries and other compensation, net of amounts
allocated to Affiliates, paid to any general partner, director, officer or
employee of the Company or any Restricted Subsidiary, but excluding interest,
depreciation and amortization and the amount of non-cash compensation in
respect of the Company's employee incentive stock programs for such period (not
to exceed in the aggregate for any calendar year 7% of Operating Cash Flow for
the previous calendar year) and, to the extent otherwise included in operating
expenses, any losses resulting from a writeoff or writedown of Investments by
the Company or any Restricted Subsidiary in Affiliates). For purposes of
determining Operating Cash Flow, there shall be excluded all management fees
until actually paid to the Company or any Restricted Subsidiary in cash.
"Permitted Restricted Payment" means the payment or declaration of any
dividend by the Company or the making by the Company of any other distribution
or the consummation of an exchange offer, or any combination of the foregoing,
which results in all or a portion of the Capital Stock of Rainbow Programming
Holdings, Inc. or of another entity holding only assets that were held by
Rainbow Programming Holdings, Inc. immediately prior to the acquisition thereof
by such entity (in either case, "RPH") being held by all or any portion of the
shareholders of the Company (an "RPH Transaction"), it being understood that
(i) if the Company and its Subsidiaries, after the date of the Exchange
Indenture and prior to the date of an RPH Transaction, make Investments in RPH
(in cash or assets) aggregating not more than $15,000,000, then such RPH
Transaction shall continue to constitute a "Permitted Restricted Payment" and
(ii) if the Company or any Subsidiary makes any Investment in RPH, after the
date of the Exchange Indenture and prior to the date of such RPH Transaction,
that is not permitted by the foregoing clause (i), then such RPH Transaction
shall not constitute a "Permitted Restricted Payment". For purposes of the
foregoing, the value of any assets invested in RPH shall be based upon the fair
market value thereof as determined by the Board of Directors of the Company,
whose good faith determination shall be conclusive.
"Principals" means Charles F. Dolan and trusts established for the benefit of
family members of Charles F. Dolan.
"Rainbow Spin-Off" means the payment of any dividend by the Company or the
making by the Company of any other distribution or the consummation of an
exchange offer, or any combination of the foregoing, which results in all or a
portion of the capital stock of Rainbow Programming Holdings, Inc. or any
successor to the assets or equity interests thereof, or of another entity,
holding only assets that were held by Rainbow Programming Holdings, Inc.
immediately prior to the acquisition thereof by such entity, being held by all
or any portion of the shareholders of the Company.
63
<PAGE>
"Restricted Payment" means,
(a) any Stock Payment by the Company or a Restricted Subsidiary; or
(b) any direct or indirect payment to redeem, repurchase, defease or
otherwise acquire or retire for value, or permit any Restricted Subsidiary to
redeem, repurchase, defease or otherwise acquire or retire for value, prior to
any scheduled maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate in right of payment to the
Exchange Debentures.
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary or (y) any Investment or designation of a Restricted Subsidiary as
an Unrestricted Subsidiary permitted under the "Limitation on Investments in
Unrestricted Subsidiaries and Affiliates" covenant.
"Restricted Subsidiary" means any subsidiary of the Company, whether existing
on the date of the Exchange Indenture or created subsequent thereto, designated
from time to time by the Company as a "Restricted Subsidiary"; provided,
however, that no subsidiary can be or remain so designated unless (i) at least
67% of each of the total equity interest and the voting control of such
subsidiary is owned, directly or indirectly, by the Company or another
Restricted Subsidiary and (ii) such subsidiary is not restricted, pursuant to
the terms of any loan agreement, note, indenture or other evidence of
indebtedness, from (a) paying dividends or making any distribution on such
subsidiary's capital stock or other equity securities or paying any
Indebtedness owed to the Company or to any Restricted Subsidiary, (b) making
any loans or advances to the Company or any Restricted Subsidiary or (c)
transferring any of its properties or assets to the Company or any Restricted
Subsidiary (it being understood that a financial covenant any of the components
of which are directly impacted by the taking of the action (e.g., the payment
of a dividend) itself (such as a minimum net worth test) would be deemed to be
a restriction on the foregoing actions, while a financial covenant none of the
components of which is directly impacted by the taking of the action (e.g., the
payment of a dividend) itself (such as a debt to cash flow test) would not be
deemed to be a restriction on the foregoing actions); and provided further,
that the Company may, from time to time, redesignate any Restricted Subsidiary
as an Unrestricted Subsidiary in accordance with the provisions of the
"Limitation on Investments in Unrestricted Subsidiaries and Affiliates"
covenant.
"Senior Indebtedness" means the principal, premium, if any, interest
(including post-petition interest in any proceeding under any Bankruptcy Law,
whether or not such interest is an allowed claim enforceable against the debtor
in a proceeding under such Bankruptcy Law), penalties, fees and other
liabilities payable with respect to (i) all Debt of the Company, other than the
Exchange Debentures and the Company's 10 3/4% Senior Subordinated Debentures
due 2004, the 9 7/8% Senior Subordinated Debentures due 2013, the 9 7/8% Senior
Subordinated Debentures due 2023, the 9 1/4% Senior Subordinated Notes due
2005, the 11 3/4% Senior Subordinated Debentures due 2007 (if issued in
exchange for the Series H Preferred Stock), the 9 7/8% Senior Subordinated
Notes due 2006, the 10 1/2% Senior Subordinated Debentures due 2016 and the 8
1/2% Convertible Debentures due 2007 (if issued in exchange for the Series I
Preferred Stock) (with which the Exchange Debentures are intended to rank on a
parity), whether outstanding on the date of the Exchange Indenture or
thereafter created, incurred or assumed, which is (x) for money borrowed, (y)
evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind or (z) in
respect of any Capitalized Lease Obligations and (ii) all renewals, extensions,
refundings, increases or refinancings thereof, unless, in the case of (i) or
(ii) above, the instrument under which the Debt is created, incurred, assumed
or guaranteed expressly provides that such Debt is not senior in right of
payment to the Exchange Debentures. For purposes of clarification, Senior
Indebtedness includes any liability under Interest Swap Agreements entered into
pursuant to the Credit Agreement. Notwithstanding anything to the contrary
contained in the Exchange Indenture, Senior Indebtedness shall mean and include
all amounts of Senior Indebtedness that is such by virtue of clause (i) or (ii)
of the foregoing definition that are repaid by the Company and subsequently
recovered from the holder of such Senior Indebtedness under any applicable
64
<PAGE>
Bankruptcy Laws or otherwise (other than by reason of some wrongful conduct on
the part of the holders of such Debt).
"Stock Payment" means, with respect to any Person, the payment or declaration
of any dividend, either in cash or in property (except dividends payable in
common stock or common shares of capital stock of such Person), or the making
by such Person of any other distribution, on account of any shares of any class
of its capital stock, now or hereafter outstanding, or the redemption,
purchase, retirement or other acquisition for value by such Person, directly or
indirectly, of any shares of any class of its capital stock, now or hereafter
outstanding.
"Strategic Equity Investor" means a corporation or entity with an equity
market capitalization, a net asset value or annual revenues of at least $1.0
billion that owns and operates businesses in the telecommunications,
information systems, entertainment, cable or similar or related industries.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities (as compiled and published in the most recent
Federal Reserve Statistical Release H.15(519) which has become publicly
available at least two business days prior to the date fixed for redemption of
the Preferred Stock or, if such Statistical Release is no longer published, any
publicly available source of similar market data with a constant maturity most
nearly equal to the then remaining period to the date scheduled for the
mandatory redemption of the Preferred Stock; provided, however, that if such
period is not equal to the constant maturity of a United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given.
"Unrestricted Subsidiary" means any subsidiary of the Company which is not a
Restricted Subsidiary.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material anticipated federal income tax
consequences of an exchange of the Old Depositary Shares for New Depositary
Shares. This summary is based upon the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the final, temporary and proposed regulations
promulgated thereunder, and administrative rulings and judicial decisions now
in effect, all of which are subject to change (possibly with retroactive
effect) or different interpretations. This summary does not purport to deal
with all aspects of federal income taxation that may be relevant to an
investor's decision to hold the New Depositary Shares and it is not intended to
be applicable to all categories of investors, some of which, such as dealers in
securities, banks, insurance companies, tax-exempt organizations, foreign
persons, persons that hold New Depositary Shares or Exchange Debentures as part
of a straddle or conversion transaction or holders subject to the alternative
minimum tax, may be subject to special rules. In addition, the summary is
limited to persons that will hold the New Depositary Shares and any Exchange
Debentures received in exchange therefor as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the Code.
Holders should note that Counsel's opinion is not binding on the Service and
there can be no assurance that the Internal Revenue Service (the "Service")
will take a similar view with respect to the tax consequences described below.
No ruling has been or will be requested by the Company from the Service on any
tax matters relating to the New Depositary Shares or Exchange Debentures. ALL
PROSPECTIVE HOLDERS OF SHARES OF NEW DEPOSITARY SHARES ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF NEW DEPOSITARY SHARES OR
EXCHANGE DEBENTURES.
In general, for U.S. federal income tax purposes, holders of New Depositary
Shares will be treated as the owners of the shares of Series M Preferred Stock
represented by those New Depositary Shares.
65
<PAGE>
TAXATION OF HOLDERS ON EXCHANGE
No gain or loss will be recognized by a holder that exchanges Old Depositary
Shares for New Depositary Shares pursuant to the Exchange Offer. The basis of
New Depositary Shares received by such holder in the exchange will be the same
as the Old Depositary Shares exchanged therefor. The holder's holding period
for such New Depositary Shares will include the holder's holding period for the
Old Depositary Shares so exchanged, provided that the Old Depositary Shares
were held as a capital asset.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Depositary Shares for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Depositary Shares. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Depositary Shares received
in exchange for Old Depositary Shares where such Old Depositary Shares were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale for a period of 90 days from the date of this Prospectus, or such
shorter period as will terminate when all Old Depositary Shares acquired by
broker-dealers for their own accounts as a result of market-making activities
or other trading activities have been exchanged for New Depositary Shares and
resold by such broker-dealers.
The Company will not receive any proceeds from any sale of New Depositary
Shares by broker-dealers. New Depositary Shares received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Depositary Shares or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Depositary Shares. Any broker-dealer that resells New Depositary Shares that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such New Depositary
Shares may be deemed to be a "underwriter" within the meaning of the Securities
Act and any profit on any such resale of New Depositary Shares and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days from the date of this Prospectus, or such shorter
period as will terminate when all Old Depositary Shares acquired by broker-
dealers for their own accounts as a result of market-making activities or other
trading activities have been exchanged for New Depositary Shares and resold by
such broker-dealers, the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any broker-
dealer that requests such documents in the Letter of Transmittal. The Company
has agreed to indemnify such broker-dealers against certain liabilities,
including liabilities under the Securities Act.
VALIDITY OF THE NEW DEPOSITARY SHARES
The validity of the New Depositary Shares will be passed upon for the Company
by Sullivan & Cromwell, New York, New York.
66
<PAGE>
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries as of December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995 that are incorporated in this
Prospectus by reference have been incorporated herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of A-R Cable and its subsidiaries as of
December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995 that are incorporated in this Prospectus by reference
have been incorporated herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
67
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "derivative action"),
if they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. A similar standard is applicable in the case of
derivative actions, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement
of such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
rights to which those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The first paragraph of Article Ninth of the Corporation's Certificate of
Incorporation provides:
The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, or by any successor thereto, indemnify
any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or
other matters referred to in or covered by said section. Such right to
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person. The
indemnification provided for herein shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled
under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
Article VIII of the By-Laws of the Corporation provides:
A. The corporation shall indemnify each person who was or is made a
party or is threatened to be made a party to or is involved in any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or alleged action in
any other capacity while serving as a director, officer, employee or
agent, to the maximum extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorney's fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred by such
person in connection with such proceeding. Such indemnification shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators. The right to indemnification conferred in
this Article shall be a contract right and shall include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided that, if the
Delaware General Corporation Law so requires, the payment of such
expenses incurred by a director or officer in advance of the final
disposition of a proceeding
II-1
<PAGE>
shall be made only upon receipt by the corporation of an undertaking by
or on behalf of such person to repay all amounts so advanced if it
shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article or
otherwise.
B. The right to indemnification and advancement of expenses conferred
on any person by this Article shall not limit the corporation from
providing any other indemnification permitted by law nor shall it be
deemed exclusive of any other right which any such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
C. The corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture,
or other enterprise against any expense, liability or loss, whether or
not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
The Corporation has entered into indemnification agreements with certain of
its officers and directors indemnifying such officers and directors from and
against certain expenses, liabilities or other matters referred to in or
covered by Section 145 of the Delaware General Corporation Law. The Corporation
has also entered into an agreement with Charles F. Dolan ("Mr. Dolan"), the
Chairman of the Corporation, pursuant to which Mr. Dolan has agreed to
guarantee the Corporation's obligation to indemnify its officers and directors
to the fullest extent permitted by Delaware law. In addition, subject to
certain limitations, Mr. Dolan has agreed to indemnify such officers and
directors against any loss or expense such person may incur in connection with
any transaction involving Mr. Dolan or entities affiliated with Mr. Dolan to
the extent indemnification is not provided by the Corporation. Any payment
required to be made by Mr. Dolan pursuant to such agreement will be reduced by
any proceeds of insurance or reimbursement under any other form of
indemnification reimbursement available to such officer or director. The
Corporation maintains directors' and officers' liability insurance.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. The second paragraph of Article Ninth of the
Corporation's Certificate of Incorporation provides for such limitation of
liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
4.1 --Certificate of Incorporation of the Registrant (incorporated herein by
reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-1 dated January 17, 1986, File No. 33-1936 (the "S-1")).
4.1A --Amendment to Certificate of Incorporation and complete copy of amended
and restated Certificate of Incorporation (incorporated herein by
reference to Exhibits 3.1A(i) and 3.1A(ii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989 (the
"1989 10-K")).
4.1B --Certificate of Designations for the Series 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)
4.1C --Certificate of Designations for the Series H Redeemable Exchangeable
Preferred Stock (incorporated herein by reference to Exhibit 4.1C to
the Company's Registration Statement on Form S-4, File No. 33-63691).
4.1D --Certificate of Designations for the Series I Cumulative Convertible
Exchangeable Preferred Stock (incorporated herein by reference to
Exhibit 99.3 to the Company's Current Report on
Form 8-K filed November 7, 1995)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
4.1E --Certificate of Designations for the Series L Redeemable Exchangeable
Preferred Stock (incorporated herein by reference from Exhibit 3.1G to
the Company's Form 10-K for the year ended December 31, 1995 (the
"1995 10-K")).
4.1F --Certificate of Designation for the Series M Redeemable Exchangeable
Preferred Stock.
4.2 --By-laws of the Registrant (incorporated herein by reference to
Exhibit 3.2 to the S-1).
4.2A --Amendment to By-laws of the Registrant and complete copy of amended
and restated By-laws (incorporated herein by reference to Exhibit 3.2
to the 1989 10-K).
4.2B --Amendment to By-laws of the Registrant and complete copy of amended
and restated By-laws (incorporated herein by reference to Exhibit 3.2B
to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992).
4.2C --Amendment to By-laws of the Registrant and complete copy of amended
and restated By-laws (incorporated herein by reference to Exhibit 3.2C
to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994).
4.2D --Amendment to By-laws of the Registrant and complete copy of amended
and restated By-laws (incorporated herein by reference to Exhibit 3.2D
to the Company's Registration Statement on Form S-4, File No. 33-62717
).
4.3 --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 (incorporated by reference from Exhibit 4.6 to the 1995
10-K).
4.4 --Indenture dated as of February 15, 1996 between the Registrant and
The Bank of New York, Trustee.
4.5 --Form of 11 1/8% Exchange Debenture due 2008 (included in Exhibit
4.4).
5 --Opinion of Sullivan & Cromwell.
12 --Computation of ratio of deficiency of earnings to fixed charges
(incorporated herein by reference to Exhibit 12 to the Company's
Current Report on Form 8-K filed May 17, 1996).
23.1 --Consent of KPMG Peat Marwick LLP.
23.2 --Consent of Sullivan & Cromwell (included in Exhibit 5).
*24 --Powers of Attorney.
25 --Statement of Eligibility of The Bank of New York, Trustee.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore,
II-3
<PAGE>
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by any such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether or not such indemnification is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this registration statement as of the time it
was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE TOWN OF OYSTER BAY AND THE STATE OF NEW YORK, ON THE DAY
OF JUNE, 1996.
Cablevision Systems Corporation
*
By __________________________________
JAMES L. DOLANCHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE DAY OF JUNE, 1996.
SIGNATURE TITLE
Chief Executive Officer (Principal
* Executive Officer) and Director
- -------------------------------------
(JAMES L. DOLAN)
Chairman of the Board
*
- -------------------------------------
(CHARLES F. DOLAN)
Senior Vice President--Finance and
* Treasurer (Principal Financial Officer)
- -------------------------------------
(BARRY J. O'LEARY)
Vice Chairman (Principal Accounting
* Officer)
- ------------------------------------- and Director
(WILLIAM J. BELL)
Vice Chairman and Director
*
- -------------------------------------
(MARC A. LUSTGARTEN)
Executive Vice President, General
/s/ ROBERT S. LEMLE Counsel, Secretary and Director
- -------------------------------------
(ROBERT S. LEMLE)
II-5
<PAGE>
SIGNATURE TITLE
Senior Vice President and Director
*
- ------------------------------------
(SHEILA A. MAHONY)
Director and Chairman of the
* Executive Committee
- ------------------------------------
(JOHN TATTA)
Director
*
- ------------------------------------
(PATRICK F. DOLAN)
Director
*
- ------------------------------------
(FRANCIS F. RANDOLPH, JR.)
Director
*
- ------------------------------------
(DANIEL T. SWEENEY)
Director
*
- ------------------------------------
(CHARLES D. FERRIS)
Director
*
- ------------------------------------
(RICHARD H. HOCHMAN)
Director
*
- ------------------------------------
(VICTOR ORISTANO)
/s/ Robert S. Lemle
*By:___________________________ , as Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
------- ----------------------- -------------------
<C> <S> <C>
4.1 --Certificate of Incorporation of the Registrant
(incorporated herein by reference to Exhibit
3.1 to the Company's Registration Statement on
Form S-1 dated January 17, 1986, File No. 33-
1936 (the "S-1")).
4.1A --Amendment to Certificate of Incorporation and
complete copy of amended and restated
Certificate of Incorporation (incorporated
herein by reference to Exhibits 3.1A(i) and
3.1A(ii) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
1989 (the "1989 10-K")).
4.1B --Certificate of Designations for the Series 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).
4.1C --Certificate of Designations for the Series H
Redeemable Exchangeable Preferred Stock
(incorporated herein by reference to Exhibit
4.1C to the Company's Registration Statement on
Form S-4, File No. 33-63691).
4.1D --Certificate of Designations for the Series I
Cumulative Convertible Exchangeable Preferred
Stock (incorporated herein by reference to
Exhibit 99.3 to the Company's Current Report on
Form 8-K filed November 7, 1995)
4.1E --Certificate of Designation for the Series L
Redeemable Exchangeable Preferred Stock
(incorporated herein by reference to Exhibit
3.1G to the Company's Form 10-K for the year
ended December 31, 1995 (the "1995 10-K")).
4.1F --Certificate of Designation for the Series M
Redeemable Exchangeable Preferred Stock.
4.2 --By-laws of the Registrant (incorporated herein
by reference to Exhibit 3.2 to the S-1).
4.2A --Amendment to By-laws of the Registrant and
complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit
3.2 to the 1989 10-K).
4.2B --Amendment to By-laws of the Registrant and
complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit
3.2B to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1992).
4.2C --Amendment to By-laws of the Registrant and
complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit
3.2C to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994).
4.2D --Amendment to By-laws of the Registrant and
complete copy of amended and restated By-laws
(incorporated herein by reference to Exhibit
3.2D to the Company's Registration Statement to
Form S-4, File No. 33-62717).
4.3 --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 (incorporated by reference from
Exhibit 4.6 to the 1995 10-K).
4.4 --Indenture dated as of February 15, 1996
between the Registrant and The Bank of New
York, Trustee.
4.5 --Form of 11 1/8% Exchange Debenture due 2008
(included in Exhibit 4.4).
5 --Opinion of Sullivan & Cromwell.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
------- ----------------------- -------------------
<C> <S> <C>
12 --Computation of ratio of deficiency of earnings
to fixed charges (incorporated herein by
reference to Exhibit 12 to the Company's
Current Report on Form 8-K filed May 17, 1996).
23.1 --Consent of KPMG Peat Marwick LLP.
23.2 --Consent of Sullivan & Cromwell (included in
Exhibit 5).
*24 --Powers of Attorney.
25 --Statement of Eligibility of The Bank of New
York, Trustee.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 4.1(f)
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 M
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 July __, 1996, adopted a
resolution providing for the issuance of One Hundred Fifteen Thousand (115,000)
authorized shares of 11 1/8% Series M 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 M
Redeemable Exchangeable Preferred Stock are exchangeable at the option of
the corporation.
"Exchange Indenture" has the meaning specified in Section VII(D)
hereof.
<PAGE>
4
"Exchange Notice" has the meaning specified in Section VIII(A) hereof.
"Holder" means a registered holder of shares of 11 1/8% Series M
Redeemable Exchangeable Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on and
including July 1, 1996 and ending on and including September 30, 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 M 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
M 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.
<PAGE>
5
"Original Liquidation Preference" means $10,000 per share of 11 1/8%
Series M 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.
"Series I Preferred Stock" means the 8 1/2% Series I Cumulative
Convertible Exchangeable Preferred Stock of the corporation.
"Series L Preferred Stock" means the 11 1/8% Series L Redeemable
Exchangeable Preferred Stock of the corporation.
"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 M 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 M Redeemable Exchangeable Preferred Stock; provided,
however, that if such period of the 11 1/8% Series M 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 the weekly average yields of United
States Treasury securities for which such yields are given.
<PAGE>
7
"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 M Redeemable Exchangeable Preferred Stock". The number of
shares constituting such series shall be 115,000. The par value of the 11 1/8%
Series M Redeemable Exchangeable Preferred Stock shall be $.01 per share of
11 1/8% Series M Redeemable Exchangeable Preferred Stock, and the initial
liquidation preference of the 11 1/8% Series M Redeemable Exchangeable Preferred
Stock shall be $10,000 per share.
III. Ranking.
-------
(A) The 11 1/8% Series M 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 M 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 B Preferred Stock, 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, the
Series L 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 M Redeemable Exchangeable Preferred Stock as to dividends
<PAGE>
8
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 M
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 July 1, 1996, 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 M 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 M
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 October 1,
1996. Dividends with respect to a share of 11 1/8% Series M Redeemable
Exchangeable Preferred Stock shall only cumulate from July 1, 1996, or, if
later, the last Dividend Payment Date in respect of which dividends on such
share of 11 1/8% Series M 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 M 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 M 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 M 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
<PAGE>
9
11 1/8% Series M Redeemable Exchangeable Preferred Stock on the Exchange Date or
shall have failed to pay the relevant redemption price on the date fixed for
redemption.
(D) All dividends paid with respect to shares of the 11 1/8% Series M
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 M 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 M
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 M 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
M 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 M Redeemable Exchangeable Preferred Stock and any Parity Securities, all
dividends declared upon shares of the 11 1/8% Series M 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 M
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 M 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 M 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 M 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
<PAGE>
10
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 case may
be, all accumulated and unpaid dividends on shares of the 11 1/8% Series M
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 M Redeemable Exchangeable
Preferred Stock) shall have been or are concurrently being paid.
(G) Dividends payable on shares of the 11 1/8% Series M 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 M
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 M 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:
<TABLE>
<CAPTION>
Year Percentage
---- -----------
<S> <C>
2003................................. 105.563%
2004................................. 103.708%
2005................................. 101.854%
2006 and thereafter.................. 100.000%
</TABLE>
(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 M Redeemable Exchangeable Preferred Stock having an aggregate Liquidation
Preference of up to 50% of the aggregate Liquidation Preference of all 11 1/8%
Series M 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 M 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 M 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.
<PAGE>
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 M 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 M 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 M 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 M 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 M 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 M 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 M Redeemable Exchangeable Preferred Stock are to be redeemed and the
total number of shares of such 11 1/8% Series M Redeemable Exchangeable
Preferred Stock being redeemed;
<PAGE>
13
(d) the number of shares of 11 1/8% Series M Redeemable Exchangeable
Preferred Stock held by the Holder that the corporation intends to redeem;
(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 M Redeemable
Exchangeable Preferred Stock to be redeemed;
(g) that dividends on the shares of the 11 1/8% Series M 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 M
Redeemable Exchangeable Preferred Stock to be redeemed shall surrender the
certificate or certificates representing such shares of 11 1/8% Series M
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 M 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
<PAGE>
14
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 M 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 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 M 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 M Redeemable Exchangeable Preferred Stock and Series L
Preferred Stock then
<PAGE>
15
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 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 M Redeemable Exchangeable Preferred Stock and Series L
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% Series M Redeemable Exchangeable
Preferred Stock or Series L Preferred Stock. The authorization or consummation
of a transaction that results in the 11 1/8% Series M 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 M 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 M Redeemable Exchangeable Preferred Stock and Series L 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
M Redeemable Exchangeable Preferred Stock and Series L Preferred Stock then
outstanding, voting or consenting, as the case may be, separately as a single
class, whether voting in
<PAGE>
16
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 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 M Redeemable Exchangeable Preferred Stock or
Series L Preferred Stock and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of Holders of 11 1/8% Series M
Redeemable Exchangeable Preferred Stock or Series L Preferred Stock.
(G) (i) In the event that (a) dividends on the 11 1/8% Series M
Redeemable Exchangeable Preferred Stock or Series L 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 M Redeemable Exchangeable
Preferred Stock or Series L 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 M Redeemable Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock and Series L
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 M
Redeemable Exchangeable Preferred Stock and Series L Preferred Stock called as
hereinafter provided.
(ii) The right of the holders of 11 1/8% Series M Redeemable
Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock
and Series L 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 M Redeemable
Exchangeable Preferred Stock and Series L Preferred Stock shall terminate, and
the number of directors constituting the Board of
<PAGE>
17
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 M Redeemable Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable
Preferred Stock and Series L 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 M Redeemable
Exchangeable Preferred Stock and Series L Preferred Stock then outstanding
addressed to the Secretary of the corporation shall, call a special meeting of
the holders of 11 1/8% Series M Redeemable Exchangeable Preferred Stock and
Series L 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 M Redeemable Exchangeable Preferred Stock
and Series L 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
M Redeemable Exchangeable Preferred Stock or Series L Preferred Stock so
designated shall have access to the list of holders of 11 1/8% Series M
Redeemable Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock
and Series L 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 M Redeemable Exchangeable
Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock and
Series L 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 M Redeemable
Exchangeable Preferred Stock and Series L Preferred Stock.
<PAGE>
18
(ii) In any case in which the holders of 11 1/8% Series M Redeemable
Exchangeable Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock or Series L
Preferred Stock, as the case may be, shall be entitled to one vote for each
share of 11 1/8% Series M Redeemable Exchangeable Preferred Stock or Series L
Preferred Stock held.
VIII. Exchange.
--------
(A) The corporation may, at its option, on any Dividend Payment Date,
exchange the shares of 11 1/8% Series M 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 M
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 M 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 M Redeemable Exchangeable Preferred Stock; (d) that dividends on the
shares of 11 1/8% Series M 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 M
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 M
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 M Redeemable Exchangeable Preferred Stock as provided in
the next paragraph, provided that on the
<PAGE>
19
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 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 M
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 M 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 M
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 M
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.
<PAGE>
20
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 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 M 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 M Redeemable Exchangeable
Preferred Stock and Series L 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 M Redeemable Exchangeable Preferred Stock and Series L 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
<PAGE>
21
thereon, that the 11 1/8% Series M Redeemable Exchangeable Preferred Stock or
the Series L 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 M Redeemable
Exchangeable Preferred Stock and Series L Preferred Stock after a Change of
Control or (ii) on or after April 1, 2003, to redeem the 11 1/8% Series M
Redeemable Exchangeable Preferred Stock and Series L Preferred Stock at the
applicable redemption price set forth herein.
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 M 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 M Redeemable Exchangeable Preferred
-----------------------------------------------------------------------
Stock Certificates.
- ------------------
If any of the 11 1/8% Series M 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 M Redeemable Exchangeable Preferred Stock certificate,
or in lieu of and substitution for the 11 1/8% Series M Redeemable Exchangeable
Preferred Stock certificate lost, stolen or destroyed, a new 11 1/8% Series M
Redeemable Exchangeable Preferred Stock certificate of like tenor and
representing an equivalent amount of shares of 11 1/8% Series M Redeemable
Exchangeable Preferred Stock, but only upon receipt of evidence of such loss,
theft or destruction of such 11 1/8% Series M Redeemable Exchangeable Preferred
Stock certificate and indemnity, if requested, satisfactory to the corporation
and the Transfer Agent (if other than the corporation).
<PAGE>
22
XII. Reissuance; Conversion; Preemptive Rights
-----------------------------------------
(i) Shares of 11 1/8% Series M 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 M Redeemable Exchangeable Preferred Stock.
(ii) The Holders of 11 1/8% Series M 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 M Redeemable Exchangeable Preferred
Stock shall have any rights of preemption whatsoever as to any securities of the
corporation, or any 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 M
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
<PAGE>
23
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.
XVII. Limitations.
-----------
Except as may otherwise be required by law, the shares of 11 1/8%
Series M 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>
24
IN WITNESS WHEREOF, this Certificate has been signed on this __ day of
July, 1996.
CABLEVISION SYSTEMS CORPORATION
By:
----------------------------
Name:
Title:
Attested by:
- ------------------------
<PAGE>
EXHIBIT 4.4
================================================================================
CABLEVISION SYSTEMS CORPORATION,
Issuer,
TO
THE BANK OF NEW YORK,
Trustee
---------------
Indenture
Dated as of February 15, 1996
---------------
11 1/8% Senior Subordinated Debentures Due 2008
================================================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of February 15, 1996
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
ss. 310(a)(1) ........................................................... 607(a)
(a)(2) ........................................................... 607(a)
(b) ........................................................... 607(b), 608
ss. 312(c) ........................................................... 701
ss. 314(a) ........................................................... 703
(a)(4) ........................................................... 1004
(c)(1) ........................................................... 102
(c)(2) ........................................................... 102
(e) ........................................................... 102
ss. 315(b) ........................................................... 601
ss. 316(a)(last
sentence) ........................................................... 101 ("Outstanding")
(a)(1)(A) ........................................................... 502, 512
(a)(1)(B) ........................................................... 513
(b) ........................................................... 508
(c) ........................................................... 104(e)
ss. 317(a)(1) ........................................................... 503
(a)(2) ........................................................... 504
(b) ........................................................... 1003
ss. 318(a) ........................................................... 111
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C>
Section 101. Definitions.......................................................................... 1
Additional Preferred Stock........................................................... 2
Affiliate............................................................................ 2
Annualized Operating Cash Flow....................................................... 2
Bank Credit Agreement................................................................ 2
Banks................................................................................ 2
Board of Directors................................................................... 2
Board Resolution..................................................................... 2
Book-Entry Security.................................................................. 3
Business Day......................................................................... 3
Capital Stock........................................................................ 3
Capitalized Lease Obligation......................................................... 3
Cash Flow Ratio...................................................................... 3
Class A Common Stock................................................................. 3
Commission........................................................................... 3
Common Stock......................................................................... 3
Company.............................................................................. 4
Company Request or Company Order..................................................... 4
Corporate Trust Office............................................................... 4
corporation.......................................................................... 4
Cumulative Cash Flow Credit.......................................................... 4
Cumulative Interest Expense.......................................................... 5
Debt................................................................................. 5
Default.............................................................................. 5
Depository........................................................................... 5
Disqualified Stock................................................................... 5
Event of Default..................................................................... 6
Exchange Act......................................................................... 6
Exchange Debenture Issue Date........................................................ 6
Generally Accepted Accounting Principles or GAAP..................................... 6
Global Security...................................................................... 6
guarantee............................................................................ 6
</TABLE>
- --------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
ii
<TABLE>
<CAPTION>
Page
<S> <C>
Holder............................................................................... 6
Indebtedness......................................................................... 6
Indenture............................................................................ 7
Initial Purchasers................................................................... 7
Initial Securities................................................................... 7
Interest Payment Date................................................................ 7
Interest Swap Obligations............................................................ 7
Investment........................................................................... 7
Junior Securities.................................................................... 8
Junior Stock......................................................................... 8
Lien................................................................................. 8
Maturity............................................................................. 8
Officers' Certificate................................................................ 8
Operating Cash Flow.................................................................. 8
Opinion of Counsel................................................................... 9
Outstanding.......................................................................... 9
Paying Agent......................................................................... 10
Permitted Restricted Payment......................................................... 10
Person............................................................................... 10
Predecessor Security................................................................. 10
Preferred Stock...................................................................... 10
Qualified Institutional Buyer or QIB................................................. 10
Redemption Date...................................................................... 11
Redemption Price..................................................................... 11
Registered Securities................................................................ 11
Registration Rights Agreement........................................................ 11
Regular Record Date.................................................................. 11
Representative....................................................................... 11
Responsible Officer.................................................................. 11
Restricted Payment................................................................... 11
Restricted Security.................................................................. 12
Restricted Subsidiary................................................................ 12
RPH.................................................................................. 12
Securities Act....................................................................... 12
Security and Securities.............................................................. 12
Senior Indebtedness.................................................................. 12
Series L Redeemable Exchangeable Preferred Stock..................................... 13
Special Record Date.................................................................. 13
Stated Maturity...................................................................... 13
Stock Payment........................................................................ 13
Strategic Equity Investor............................................................ 14
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
Page
<S> <C>
subsidiary........................................................................... 14
Subsidiary........................................................................... 14
Trust Indenture Act.................................................................. 14
Trustee.............................................................................. 14
Unrestricted Subsidiary.............................................................. 14
Voting Stock......................................................................... 14
Section 102. Other Definitions.................................................................... 14
Section 103. Compliance Certificates and Opinions................................................. 15
Section 104. Form of Documents Delivered to Trustee............................................... 16
Section 105. Acts of Holders...................................................................... 16
Section 106. Notices, Etc. to Trustee and Company................................................. 17
Section 107. Notice to Holders; Waiver............................................................ 18
Section 108. Conflict of Any Provision of Indenture with Trust Indenture Act...................... 18
Section 109. Effect of Headings and Table of Contents............................................. 19
Section 110. Successors and Assigns............................................................... 19
Section 111. Separability Clause.................................................................. 19
Section 112. Benefits of Indenture................................................................ 19
Section 113. Governing Law........................................................................ 19
Section 114. Legal Holidays....................................................................... 19
Section 115. No Recourse Against Others........................................................... 20
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally; Incorporation of Form in Indenture.................................. 20
Section 202. Form of Face of Registered Security.................................................. 20
Section 203. Form of Reverse of Registered Security............................................... 22
Section 204. Form of Trustee's Certificate of Authentication...................................... 25
Section 205. Form of Legend on Restricted Securities.............................................. 25
Section 206. Form of Legend for Book-Entry Securities............................................. 26
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms...................................................................... 26
Section 302. Denominations........................................................................ 27
Section 303. Execution, Authentication, Delivery and Dating....................................... 27
Section 304. Temporary Securities................................................................. 29
Section 305. Registration, Registration of Transfer and Exchange.................................. 29
</TABLE>
<PAGE>
iv
<TABLE>
<CAPTION>
Page
<S> <C>
Section 306. Mutilated, Destroyed, Lost and Stolen Securities..................................... 34
Section 307. Payment of Interest; Interest Rights Preserved....................................... 34
Section 308. Persons Deemed Owners................................................................ 36
Section 309. Cancellation......................................................................... 36
Section 310. Computation of Interest.............................................................. 36
Section 311. Registration Rights of Holders of Initial Securities................................. 37
Section 312. Applicability of Provisions.......................................................... 37
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.............................................. 37
Section 402. Application of Trust Money........................................................... 38
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.................................................................... 39
Section 502. Acceleration of Maturity; Rescission................................................. 41
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee...................... 42
Section 504. Trustee May File Proofs of Claim..................................................... 43
Section 505. Trustee May Enforce Claims Without Possession of Securities.......................... 43
Section 506. Application of Money Collected....................................................... 44
Section 507. Limitation on Suits.................................................................. 44
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest......................................................................... 45
Section 509. Restoration of Rights and Remedies................................................... 45
Section 510. Rights and Remedies Cumulative....................................................... 45
Section 511. Delay or Omission Not Waiver......................................................... 46
Section 512. Control by Holders................................................................... 46
Section 513. Waiver of Past Defaults.............................................................. 46
Section 514. Undertaking for Costs................................................................ 47
Section 515. Waiver of Stay, Extension or Usury Laws.............................................. 47
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults................................................................... 47
</TABLE>
<PAGE>
v
<TABLE>
<CAPTION>
Page
<S> <C>
Section 602. Certain Rights of Trustee............................................................ 48
Section 603. Not Responsible for Recitals or Issuance of Securities............................... 49
Section 604. May Hold Securities.................................................................. 49
Section 605. Money Held in Trust.................................................................. 50
Section 606. Compensation and Reimbursement....................................................... 50
Section 607. Conflicting Interests................................................................ 51
Section 608. Corporate Trustee Required; Eligibility.............................................. 51
Section 609. Resignation and Removal; Appointment of Successor.................................... 51
Section 610. Acceptance of Appointment by Successor............................................... 53
Section 611. Merger, Conversion, Consolidation or Succession to Business.......................... 53
Section 612. Preferential Collection of Claims Against Company.................................... 54
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of Holders......................................... 54
Section 702. Reports by Trustee................................................................... 54
Section 703. Reports by Company................................................................... 54
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms................................. 55
Section 802. Successor Substituted................................................................ 56
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders................................... 56
Section 902. Supplemental Indentures with Consent of Holders...................................... 57
Section 903. Execution of Supplemental Indentures................................................. 58
Section 904. Effect of Supplemental Indentures.................................................... 58
Section 905. Conformity with Trust Indenture Act.................................................. 58
Section 906. Reference in Securities to Supplemental Indentures................................... 59
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
Page
ARTICLE TEN
COVENANTS
<S> <C>
Section 1001. Payment of Principal, Premium and Interest........................................... 59
Section 1002. Maintenance of Office or Agency...................................................... 59
Section 1003. Money for Security Payments to Be Held in Trust...................................... 60
Section 1004. Corporate Existence.................................................................. 61
Section 1005. Payment of Taxes and Other Claims.................................................... 61
Section 1006. Maintenance of Properties............................................................ 62
Section 1007. Limitation on Indebtedness........................................................... 62
Section 1008. Limitation on Senior Subordinated Indebtedness....................................... 62
Section 1009. Limitation on Restricted Payments.................................................... 63
Section 1010. Limitation on Investments in Unrestricted Subsidiaries and
Affiliates........................................................................... 64
Section 1011. Transactions with Affiliates......................................................... 65
Section 1012. Provision of Financial Statements.................................................... 65
Section 1013. Statement as to Compliance........................................................... 66
Section 1014. Waiver of Certain Covenants.......................................................... 66
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.................................................................. 66
Section 1102. Applicability of Article............................................................. 66
Section 1103. Election to Redeem; Notice to Trustee................................................ 67
Section 1104. Selection by Trustee of Securities to Be Redeemed.................................... 67
Section 1105. Notice of Redemption................................................................. 67
Section 1106. Deposit of Redemption Price.......................................................... 68
Section 1107. Securities Payable on Redemption Date................................................ 68
Section 1108. Securities Redeemed in Part.......................................................... 69
ARTICLE TWELVE
SUBORDINATION
Section 1201. Securities Subordinated to Senior Indebtedness....................................... 69
Section 1202. No Payment on Securities in Certain Circumstances.................................... 69
</TABLE>
<PAGE>
vii
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1203. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Winding-Up, Liquidation or
Reorganization of the Company........................................................ 71
Section 1204. Securityholders to Be Subrogated to Rights of Holders of Senior
Indebtedness......................................................................... 73
Section 1205. Obligations of the Company Unconditional............................................. 73
Section 1206. Knowledge of Trustee................................................................. 74
Section 1207. Application by Trustee or Paying Agent of Assets Deposited
with It.............................................................................. 74
Section 1208. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness............................................ 74
Section 1209. Securityholders Authorize Trustee to Effectuate Subordination of
Securities........................................................................... 75
Section 1210. Trustee Not Fiduciary for Holders of Senior Indebtedness............................. 75
Section 1211. Right of Trustee to Hold Senior Indebtedness......................................... 75
Section 1212. Article Twelve Not to Prevent Events of Default...................................... 76
Section 1213. Trustee's Compensation Not Prejudiced................................................ 76
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Option to Effect Defeasance or Covenant Defeasance................................... 76
Section 1302. Defeasance and Discharge............................................................. 76
Section 1303. Covenant Defeasance.................................................................. 77
Section 1304. Conditions to Defeasance or Covenant Defeasance...................................... 77
Section 1305. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions............................................. 80
Section 1306. Reinstatement........................................................................ 80
TESTIMONIUM............................................................................................ 81
SIGNATURES AND SEALS................................................................................... 81
ACKNOWLEDGMENTS........................................................................................ 82
EXHIBIT A List of Restricted Subsidiaries
EXHIBIT B Form of Initial Security
EXHIBIT C Form of Certificate of Transfer
EXHIBIT D Form of Transferee Letter of Representation
EXHIBIT E Form of Registration Rights Agreement
</TABLE>
<PAGE>
INDENTURE dated as of February 15, 1996 between Cablevision Systems
Corporation, a Delaware corporation (hereinafter called the "Company"), and The
Bank of New York, a state banking corporation duly incorporated and existing
under the laws of the State of New York, as trustee (hereinafter called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 11 1/8%
Senior Subordinated Debentures due 2008 (hereinafter called the "Securities"),
of substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture;
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted
<PAGE>
2
hereunder shall mean such accounting principles as are generally
accepted in the United States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Additional Preferred Stock" has the meaning set forth in Article Fourth of
the Company's Certificate of Incorporation.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Annualized Operating Cash Flow" means, for any period of three complete
consecutive calendar months, an amount equal to Operating Cash Flow for such
period multiplied by four.
"Bank Credit Agreement" means the Fourth Amended and Restated Credit
Agreement, dated as of October 14, 1994, among the Company, the Restricted
Subsidiaries party thereto, the banks party thereto, Toronto Dominion (Texas),
Inc. as agent for the Banks, and Bank of Montreal, Chicago Branch, The Bank of
New York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce and
NationsBank of Texas, N.A., as co-agents for the Banks, as amended to the date
hereof, as in effect on the date hereof and as such agreement may be amended
from time to time.
"Banks" means the lenders from time to time who are parties to the Bank
Credit Agreement.
"Board of Directors" means the board of directors of the Company or any
duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
<PAGE>
3
"Book-Entry Security" means a Security represented by a Global Security and
registered in the name of the nominee of the Depository.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock whether now outstanding or issued after the date of this
Indenture, including, without limitation, all Common Stock and Preferred Stock.
"Capitalized Lease Obligation" means any obligation of a Person to pay rent
or other amounts under a lease with respect to any property (whether real,
personal or mixed) acquired or leased by such Person and used in its business
that is required to be accounted for as a liability on the balance sheet of such
Person in accordance with generally accepted accounting principles and the
amount of such Capitalized Lease Obligation shall be the amount so required to
be accounted for as a liability.
"Cash Flow Ratio" means, as at any date, the ratio of (i) the sum of the
aggregate outstanding principal amount of all Indebtedness of the Company and
the Restricted Subsidiaries determined on a consolidated basis but excluding all
Interest Swap Obligations entered into by the Company or any Restricted
Subsidiary and one of the Banks outstanding on such date plus (but without
duplication of indebtedness supported by Letters of Credit) the aggregate
undrawn face amount of all Letters of Credit outstanding on such date to (ii)
Annualized Operating Cash Flow determined as at the last day of the most recent
month for which financial information is available.
"Class A Common Stock" means the Class A Common Stock, par value $.01 per
share, of the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934 or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests and participations (however designated and whether voting or
non-voting) in such Person's common equity, whether now outstanding or issued
after the date of this Indenture, and includes, without limitation, all series
and classes of such common stock.
<PAGE>
4
"Company" means the Person named as the "Company" in the first paragraph of
this instrument, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person. To the extent necessary to comply with the requirements
of the provisions of Trust Indenture Act Sections 310 through 317 as they are
applicable to the Company, the term "Company" shall include any other obligor
with respect to the Securities for the purposes of complying with such
provisions.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice Chairman, its
President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary and delivered to the Trustee; provided,
--------
however, that such written request or order may be signed by any two of the
- -------
officers or directors listed in clause (i) above in lieu of being signed by one
of such officers or directors listed in such clause (i) and one of the officers
listed in clause (ii) above.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 101
Barclay Street, 21st Floor, New York, New York 10286.
"corporation" includes corporations, associations, partnerships, companies
and business trusts.
"Cumulative Cash Flow Credit" means the sum of
(a) cumulative Operating Cash Flow during the period commencing on
July 1, 1988 and ending on the last day of the most recent month preceding
the date of the proposed Restricted Payment for which financial information
is available or, if cumulative Operating Cash Flow for such period is
negative, minus the amount by which cumulative Operating Cash Flow is less
than zero, plus
(b) the aggregate net proceeds received by the Company from the issue
or sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, plus
(c) the aggregate net proceeds received by the Company from the
issuance or sale (other than to a Restricted Subsidiary) of its capital
stock (other than Disqualified Stock) on or after January 1, 1992, upon the
conversion of, or exchange for, Indebtedness of the Company or any
Restricted Subsidiary or from the exercise of any options, warrants or
other rights to acquire capital stock of the Company.
<PAGE>
5
For purposes of this definition, the net proceeds in property other than cash
received by the Company as contemplated by clauses (b) and (c) above shall be
valued at the fair market value of such property (as determined by the Board of
Directors of the Company, whose good faith determination shall be conclusive) at
the date of receipt by the Company.
"Cumulative Interest Expense" means, for the period commencing on July 1,
1988 and ending on the last day of the most recent month preceding the proposed
Restricted Payment for which financial information is available, the aggregate
of the interest expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles, including interest expense attributable to Capitalized
Lease Obligations.
"Debt" with respect to any Person means, without duplication, any
liability, whether or not contingent, (i) in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereto), but excluding
reimbursement obligations under any surety bond, (ii) representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
Capitalized Lease Obligations), except any such balance that constitutes a trade
payable, (iii) under Interest Swap Agreements (as defined in the Bank Credit
Agreement) entered into pursuant to the Bank Credit Agreement, (iv) under any
other agreement related to the fixing of interest rates on any Indebtedness,
such as an interest swap, cap or collar agreement (if and to the extent any of
the foregoing liabilities would appear as a liability upon a balance sheet of
such Person prepared on a consolidated basis in accordance with generally
accepted accounting principles) or (v) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not the guarantee would appear on such balance sheet).
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depository" means, with respect to the Securities issued in the form of
one or more Book-Entry Securities, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Stock" means any Capital Stock of the Company or any
Restricted Subsidiary of the Company which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity date of the
Securities.
<PAGE>
6
"Event of Default" has the meaning specified in Article Five.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debenture Issue Date" means the date on which the Securities are
originally issued hereunder.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect as of the date hereof.
"Global Security" means a Security evidencing all or a part of the
Securities to be issued as Book-Entry Securities, issued to the Depository in
accordance with Section 303 and bearing the legend prescribed in Section 206.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation or (ii) an agreement, direct or indirect, contingent or
otherwise, providing assurance of the payment or performance (or payment of
damages in the event of non-performance) of any part or all of such obligation,
including, without limiting the foregoing, the payment of amounts drawn down by
letters of credit. Notwithstanding anything herein to the contrary, a guarantee
shall not include any agreement solely because such agreement creates a Lien on
the assets of any Person. The amount of a guarantee shall be deemed to be the
maximum amount of the obligation guaranteed for which the guarantor could be
held liable under such guarantee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" with respect to any Person, means the Debt of such Person;
provided, however, that, with respect to the Company, the "Preferential Payment"
- -----------------
payable by a Subsidiary and guaranteed by the Company, as defined in and
pursuant to the Purchase and Reorganization Agreement (the "CNYC Agreement"),
dated as of December 20, 1991, between the Company and Charles F. Dolan, as
amended as of March 28, 1992 and as further amended from time to time, shall not
be deemed to be "Indebtedness" so long as the Company and such Subsidiary are
permitted to make such payment in one or more classes of the Company's capital
stock (other than Disqualified Stock) pursuant to such CNYC Agreement and the
Company and the Restricted Subsidiaries are prohibited from making such payment
in cash, debt securities, Disqualified Stock or any combination thereof pursuant
to the terms of any mortgage, indenture, credit agreement or other instrument
that secures or evidences Indebtedness for money borrowed or guaranteed by the
Company or a Restricted Subsidiary in an aggregate amount of $10,000,000 or
more; provided that, for
--------
<PAGE>
7
purposes of the definition of "Indebtedness" (including the term "Debt" to the
extent incorporated in such definition) and for purposes of the definition of
Event of Default, the term "guarantee" shall not be interpreted to extend to a
guarantee under which recourse is limited to the capital stock of an entity that
is not a Restricted Subsidiary.
"Indenture" means this instrument as originally executed (including all
exhibits and schedules hereto) and as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated.
"Initial Securities" means Securities other than Registered Securities.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Swap Obligations" means, with respect to any Person, the
obligations of such Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a fixed rate
of interest on a stated notional amount in exchange for periodic payments made
by such Person calculated by applying a fixed or a floating rate of interest on
the same notional amount.
"Investment" means any advance, loan, account receivable (other than an
account receivable arising in the ordinary course of business) or other
extension of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or any capital contribution
to (by means of transfers of property to others, or payments for property or
services for the account or use of others, or otherwise), any purchase or
ownership of any stocks, bonds, notes, debentures or other securities
(including, without limitation, any interests in any partnership, joint venture
or joint adventure) of, or any bank accounts with or guarantee of any
Indebtedness or other obligations of, any Unrestricted Subsidiary or Affiliate
that is not a subsidiary of the Company; provided that (i) Investment shall not
--------
include any transaction that would otherwise constitute an Investment of the
Company or a subsidiary of the Company to the extent that the consideration
provided by the Company or such subsidiary in connection therewith shall consist
of capital stock of the Company (other than Disqualified Stock) and (ii) the
term "guarantee" shall not be interpreted to extend to a guarantee under which
recourse is limited to the Capital Stock of an entity that is not a Restricted
Subsidiary.
<PAGE>
8
"Junior Securities" means securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment, junior or
the payment of which is otherwise subordinate, at least to the extent provided
in Article Twelve hereof, to the payment of all Senior Indebtedness at the time
outstanding, and to the payment of all securities issued in exchange therefor,
to the holders of the Senior Indebtedness at the time outstanding.
"Junior Stock" means any Capital Stock of the Company, 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 Series L Redeemable
Exchangeable Preferred Stock as to dividends and distributions upon liquidation,
dissolution or winding-up of the Company.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature of a security interest and any agreement to give any security
interest).
"Maturity" when used with respect to any Security means the date on which
the principal of (and premium, if any) and interest on such Security becomes due
and payable as therein or herein provided, whether at the Stated Maturity or
Redemption Date and whether by declaration of acceleration, call for redemption
or otherwise.
"Officers' Certificate" means a certificate signed by (i) the Chairman, a
Vice Chairman, the President, a Vice President or the Treasurer of the Company
and (ii) the Secretary or an Assistant Secretary of the Company and delivered to
the Trustee; provided, however, that such certificate may be signed by two of
------------------
the officers or directors listed in clause (i) above in lieu of being signed by
one of such officers or directors listed in such clause (i) and one of the
officers listed in clause (ii) above.
"Operating Cash Flow" means, for any period, the sum of the following for
the Company and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles
(except for the amortization of deferred installation income which shall be
excluded from the calculation of Operating Cash Flow for all purposes of this
Indenture): (i) aggregate operating revenues minus (ii) aggregate operating
-----
expenses (including technical, programming, sales, selling, general
administrative expenses and salaries and other compensation, net of amounts
allocated to Affiliates, paid to any general partner, director, officer or
employee of the Company or any Restricted Subsidiary, but excluding interest,
depreciation and amortization and the amount of non-cash compensation in respect
of the Company's employee incentive stock programs for such period (not to
exceed in the aggregate for any calendar year 7% of the Operating Cash Flow for
the previous calendar year) and, to the extent otherwise included in operating
expenses, any losses resulting from a writeoff or writedown of
<PAGE>
9
Investments by the Company or any Restricted Subsidiary in Affiliates). For
purposes of determining Operating Cash Flow, there shall be excluded all
management fees until actually paid to the Company or any Restricted Subsidiary
in cash.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee. Each such opinion
shall include the statements provided for in Trust Indenture Act Section 314(e)
to the extent applicable.
"Outstanding" when used with respect to Securities means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment, redemption or
purchase money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities and the Trustee or
such Paying Agent is not prohibited from paying such money to the Holders
on that date pursuant to the terms of Article Twelve of this Indenture;
provided that, if such Securities are to be redeemed, notice of such
--------
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 1302 and
1303, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Thirteen; and
(d) Securities paid pursuant to Section 306, Securities in exchange
for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands the Securities are valid obligations of the Company;
provided, however, that, in determining whether the Holders of the requisite
- ------------------
principal amount of Outstanding Securities have given any request, demand,
direction, consent or waiver hereunder, Securities owned by the Company, or any
other obligor upon the Securities or any Affiliate of the Company, or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, direction, consent or waiver, only
<PAGE>
10
Securities which the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (or premium, if any) or interest on any Securities on
behalf of the Company.
"Permitted Restricted Payment" means the payment or declaration of any
dividend by the Company or the making by the Company of any other distribution
or the consummation of an exchange offer, or any combination of the foregoing,
which results in all or a portion of the Capital Stock of RPH being held by all
or any portion of the shareholders of the Company (an "RPH Transaction"), it
being understood that (i) if the Company and its Subsidiaries, after the date of
this Indenture and prior to the date of an RPH Transaction, make Investments in
RPH (in cash or assets) aggregating not more than $15,000,000, then such RPH
Transaction shall continue to constitute a "Permitted Restricted Payment" and
(ii) if the Company or any Subsidiary makes any Investment in RPH, after the
date of this Indenture and prior to the date of such RPH Transaction, that is
not permitted by the foregoing clause (i), then such RPH Transaction shall not
constitute a "Permitted Restricted Payment". For purposes of the foregoing, the
value of any Investment of assets in RPH shall be based upon the fair market
value thereof as determined by the Board of Directors of the Company, whose good
faith determination shall be conclusive.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of this Indenture, and includes, without limitation, all classes and
series of preferred or preference stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
<PAGE>
11
"Redemption Date", when used with respect to any Securities to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Securities" means Securities issued or sold in a transaction
pursuant to an effective registration statement under the Securities Act of
1933, as amended, as contemplated in the Registration Rights Agreement, and any
Security subsequently issued in exchange for or upon transfer of any such
Security.
"Registration Rights Agreement" means the Registration Rights Agreement
dated February 15, 1996 among the Company and the Initial Purchasers, a form of
which Registration Rights Agreement is attached hereto as Exhibit C.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the June 15 or December 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Representative" means the indenture trustee or other trustee, agent or
representative for an issue of Senior Indebtedness.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers or assigned
by the Trustee to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payment" means
(a) any Stock Payment by the Company or a Restricted Subsidiary; or
(b) any direct or indirect payment to redeem, repurchase, defease or
otherwise acquire or retire for value, or permit any Restricted Subsidiary
to redeem, repurchase, defease or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Indebtedness of the Company that is subordinate in right
of payment to the Securities.
<PAGE>
12
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary or (y) any Investment or designation of a Restricted Subsidiary as an
Unrestricted Subsidiary permitted under Section 1010.
"Restricted Security" shall have the meaning set forth in Section 205.
"Restricted Subsidiary" means any Subsidiary, whether existing on the date
hereof or created subsequent hereto, designated from time to time by the Company
as a "Restricted Subsidiary" and the initial Restricted Subsidiaries designated
by the Company are set forth on Exhibit A; provided, however, that no subsidiary
------------------
can be or remain so designated unless (i) at least 67% of each of the total
equity interest and the voting control of such subsidiary is owned, directly or
indirectly, by the Company or another Restricted Subsidiary and (ii) such
subsidiary is not restricted, pursuant to the terms of any loan agreement, note,
indenture or other evidence of indebtedness, from (a) paying dividends or making
any distribution on such subsidiary's capital stock or other equity securities
or paying any Indebtedness owed to the Company or to any Restricted Subsidiary
of the Company, (b) making any loans or advances to the Company or any
Restricted Subsidiary of the Company or (c) transferring any of its properties
or assets to the Company or any Restricted Subsidiary (it being understood that
a financial covenant any of the components of which are directly impacted by the
taking of the action (e.g., the payment of a dividend) itself (such as a minimum
----
net worth test) would be deemed to be a restriction on the foregoing actions,
while a financial covenant none of the components of which are directly impacted
by the taking of the action (e.g., the payment of a dividend) itself (such as a
----
debt to cash flow test) would not be deemed to be a restriction on the foregoing
actions); and provided further that the Company may, from time to time,
----------------
redesignate any Restricted Subsidiary as an Unrestricted Subsidiary in
accordance with Section 1010 of this Indenture.
"RPH" means Rainbow Programming Holdings, Inc., a New York corporation, or
such other entity holding only (i) assets that were held by Rainbow Programming
Holdings, Inc. immediately prior to their acquisition by such entity and (ii)
such other assets that are immaterial in amount in relation to the assets
acquired by such entity from Rainbow Programming Holdings, Inc.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" and "Securities" have the meaning set forth in the second
paragraph of this Indenture, such terms to include both the Initial Securities
and the Registered Securities.
"Senior Indebtedness" means the principal, premium, if any, interest
(including post-petition interest in any proceeding under any Bankruptcy Law,
whether or not
<PAGE>
13
such interest is an allowed claim enforceable against the debtor in a proceeding
under such Bankruptcy Law), penalties, fees and other liabilities payable with
respect to (i) all Debt of the Company, other than the Securities and the
Company's 9-7/8% Senior Subordinated Debentures due 2013, 10-3/4% Senior
Subordinated Debentures due 2004, 9-7/8% Senior Subordinated Debentures due
2023, 11-3/4% Senior Subordinated Debentures due 2007, 9-1/4% Senior
Subordinated Notes due 2005 and 8-1/2 Convertible Subordinated Debentures due
2007 (with which the Securities are intended to rank on a parity), whether
outstanding on the date of this Indenture or thereafter created, incurred or
assumed, which is (x) for money borrowed, (y) evidenced by a note or similar
instrument given in connection with the acquisition of any businesses,
properties or assets of any kind or (z) in respect of any Capitalized Lease
Obligations and (ii) all renewals, extensions, refundings, increases or
refinancings thereof, unless, in the case of (i) or (ii) above, the instrument
under which the Debt is created, incurred, assumed or guaranteed expressly
provides that such Debt is not senior in right of payment to the Securities.
Notwithstanding anything to the contrary contained herein, "Senior Indebtedness"
shall mean and include all amounts of Senior Indebtedness that is such by virtue
of clause (i) or (ii) of the foregoing definition that are repaid by the Company
and subsequently recovered from the holder of such Senior Indebtedness under any
applicable Bankruptcy Laws or otherwise (other than by reason of some wrongful
conduct on the part of the holders of such Debt). For purposes of clarification,
Senior Indebtedness includes any liability under Interest Swap Agreements
entered into pursuant to the Bank Credit Agreement.
"Series L Redeemable Exchangeable Preferred Stock" means the 11 1/8% Series
L Redeemable Exchangeable Preferred Stock of the Company containing the rights,
powers and privileges set forth in the Certificate of Designations dated
February 15, 1996 relating thereto.
"Special Record Date" means a date fixed by the Trustee for the payment of
any Defaulted Interest pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Stock Payment" means, with respect to any Person, the payment or
declaration of any dividend, either in cash or in property (except dividends
payable in common stock or common shares of capital stock of such Person), or
the making by such Person of any other distribution, on account of any shares of
any class of its capital stock, now or hereafter outstanding, or the redemption,
purchase, retirement or other acquisition for value by such Person, directly or
indirectly, of any shares of any class of its capital stock, now or hereafter
outstanding.
<PAGE>
14
"Strategic Equity Investor" means a corporation or entity with an equity
market capitalization, a net asset value or annual revenues of at least $1.0
billion that owns and operates businesses in the telecommunications, information
systems, entertainment, cable or similar or related industries.
"subsidiary" means, as to a particular parent entity at any time, any
entity of which more than 50% of the outstanding Voting Stock or other equity
interest entitled ordinarily to vote in the election of the directors or other
governing body (however designated) of such entity is at the time beneficially
owned or controlled directly or indirectly by such parent corporation, by one or
more such entities or by such parent corporation and one or more such entities.
"Subsidiary" means any subsidiary of the Company.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and as in force at the date as of which this instrument was executed, except as
provided in Section 905; provided, however, that, in the event that the Trust
------------------
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument, until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means any Subsidiary which is not a Restricted
Subsidiary.
"Voting Stock" means any Capital Stock having voting power under ordinary
circumstances to vote in the election of a majority of the directors of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
Section 102. Other Definitions.
Defined
Term in Section
"Act"...................................................... 105
"Bankruptcy Law"........................................... 501
"covenant defeasance"...................................... 1303
"Custodian"................................................ 501
"defeasance"............................................... 1302
<PAGE>
15
"Default Notice"........................................... 1202
"Defaulted Interest"....................................... 307
"incorporated provision"................................... 108
"redesignation of a Restricted Subsidiary"................. 1010
"Security Register"........................................ 305
"Security Registrar"....................................... 305
"successor"................................................ 801
"U.S. Government Obligations".............................. 1304
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 1013) with respect to compliance with a condition or covenant provided
for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
<PAGE>
16
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any reasonable manner which the Trustee deems
sufficient.
<PAGE>
17
(c) The ownership of Securities shall be proved by the Security Register.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding Trust Indenture Act
Section 316(c), any such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not more than 30 days
prior to the first solicitation of Holders generally in connection therewith and
no later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then Outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the
Securities then Outstanding shall be computed as of such record date; provided
--------
that no such request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holder of any Security shall bind every future Holder of the
same Security or the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company in reliance thereon, whether or not notation of such action is
made upon such Security.
Section 106. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, the agents of the Banks or the Company
shall be sufficient for every purpose hereunder if made, given, furnished
or delivered, in writing, to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Trustee Administration; or
<PAGE>
18
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or delivered in writing to the Company addressed to
it c/o Cablevision Systems Corporation, One Media Crossways, Woodbury, New
York 11797, Attention: Secretary, or at any other address previously
furnished in writing to the Trustee by the Company.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder whether
or not actually received by such Holder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause, it shall be impracticable to mail notice of any event as
required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 108. Conflict of Any Provision of Indenture with Trust Indenture
Act.
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 318, inclusive, of the
Trust Indenture Act, or conflicts with any provision (an "incorporated
provision") required by or deemed to be included in this Indenture by operation
of such Trust Indenture Act Sections, such imposed duties or incorporated
provision shall control. If any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or excluded, as the case may be.
<PAGE>
19
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its respective successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent, the Holders and the holders of Senior Indebtedness)
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 307, or any Maturity with
respect to any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, or date established for payment of Defaulted Interest
pursuant to Section 307, or Maturity, and no interest shall accrue with respect
to such payment for the period from and after such Interest Payment Date, or
date established for payment of Defaulted Interest pursuant to Section 307, or
Maturity, as the case may be, to the next succeeding Business Day.
<PAGE>
20
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Securities
or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally; Incorporation of Form in Indenture.
The Registered Securities and the Trustee's certificate of authentication
with respect thereto shall be in substantially the forms set forth in this
Article, and the Initial Securities and the Trustee's certificate of
authentication with respect thereto shall be substantially in the form of
Exhibit B, which is incorporated in and made part of this Indenture, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Registered Security.
CABLEVISION SYSTEMS CORPORATION
11 1/8% Senior Subordinated Debenture due 2008
No. ___________________ $________________
CUSIP No.______________
<PAGE>
21
Cablevision Systems Corporation, a Delaware corporation (herein called the
"Company", which term includes any successor entity under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________________ or registered assigns the principal sum of ______ Dollars on
April 1, 2008, at the office or agency of the Company referred to below, and to
pay interest thereon on January 1 and July 1 in each year from the Exchange
Debenture Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for at the rate of 11 1/8% per annum
until the principal hereof is paid or duly provided for, and (to the extent
lawful) to pay on demand interest on any overdue interest at the rate borne by
the Securities from the date of the Interest Payment Date on which such overdue
interest becomes payable to the date payment of such interest has been made or
duly provided for. On any Interest Payment Date for this Security on or prior to
April 1, 2001, the Company may, in lieu of payment of interest in cash, pay such
interest (i) in additional Securities having a principal amount equal to the
cash interest otherwise payable or (ii) in a combination of cash and additional
Securities. The Company will pay interest on any such Security from the date of
issuance (the "Additional Security Issue Date") of such Security or from the
most recent Interest Payment Date to which interest has been paid. The initial
Interest Payment Date for this Security shall be the first January 1 or July 1
occurring after the Exchange Debenture Issue Date or after the Additional
Security Issue Date, whichever is later. If any interest has accrued on this
Security in respect of any period prior to the issuance of this Security, such
interest will be payable in respect of such period at the rate or rates borne by
the Predecessor Security surrendered in exchange for this Security from time to
time during such period. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid (in cash or additional Securities, as provided above) to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the June 15 or December 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for, and interest on such defaulted interest at
the interest rate borne by the Securities, to the extent lawful, shall forthwith
cease to be payable to the Holder on such Regular Record Date, and may be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Payment of the principal
of (and premium, if any) and interest on this Security will be made at the
office or agency of the Company maintained for that purpose in The City of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, in additional Securities or such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of
------------------
<PAGE>
22
cash interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CABLEVISION SYSTEMS CORPORATION
By _______________________________
Attest:
By _____________________________
Section 203. Form of Reverse of Registered Security.
This Security is one of a duly authorized issue of securities of the
Company designated as its 11 1/8% Senior Subordinated Debentures due 2008
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $1,150,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of February 15, 1996, between the Company and The Bank of New York, trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee, the holders of the Senior Indebtedness and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor more
than 60 days' notice by first-class mail, at any time on or after April 1, 2003,
in whole or in part, at the election of the Company, at a Redemption Price equal
to the percentage of the
<PAGE>
23
principal amount set forth below if redeemed during the 12-month period
beginning April 1, of the years indicated:
Year Redemption Price
2003.............................. 105.563%
2004.............................. 103.708%
2005.............................. 101.854%
2006 and thereafter............... 100.000%
together in the case of any such redemption with accrued interest, if any, to
the Redemption Date, all as provided in the Indenture.
Up to 50% in aggregate principal amount of the Securities is also subject
to redemption upon not less than 30 nor more than 60 days' notice by first-class
mail, at any time before April 1, 1999, at the election of the Company, at a
Redemption Price equal to 110% of the aggregate principal amount thereof, plus
accrued and unpaid interest, out of the net proceeds of the sale of Junior Stock
to a Strategic Equity Investor or a public offering of Class A Common Stock;
provided that following such redemption, at least $325,000,000 aggregate
- --------
principal amount of the Securities shall remain outstanding.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date.
In the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of all
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security and (b) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security.
<PAGE>
24
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Security.
The Securities are subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each
Securityholder by his acceptance hereof agrees to be bound by such provisions
and authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
provided for in the Indenture and appoints the Trustee his attorney-in-fact for
such purpose.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a
<PAGE>
25
like aggregate principal amount of Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay all documentary, stamp or similar issue or transfer taxes
or other governmental charges payable in connection with any registration of
transfer or exchange.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Section 204. Form of Trustee's Certificate of Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: THE BANK OF NEW YORK, as Trustee
By______________________________
Authorized Signatory
Section 205. Form of Legend on Restricted Securities.
During the period beginning on February 15, 1996 and ending on the later of
February 15, 1999 and the date three years after the last date on which the
Company or any Affiliate of the Company was the Owner of an Initial Security (or
any Predecessor Security), any such Initial Security issued or owned during the
period set forth above, as the case may be, and any Initial Security issued upon
registration of transfer of, or in exchange for, or in lieu of, such Initial
Security shall be deemed a "Restricted Security" and shall be subject to the
restrictions on transfer provided in the legend set forth on the face of the
form of Initial Security in Exhibit B hereto; provided, however, that the term
------------------
"Restricted Security" shall not include (a) any Initial Security which is issued
upon transfer of, or in exchange for, any Initial Security which is not a
Restricted Security or (b) any Initial Security as to which such restrictions on
transfer have been terminated in
<PAGE>
26
accordance with Section 305 or (c) any Registered Security issued pursuant to an
Exchange Offer (as defined in the Registration Rights Agreement). Any Restricted
Security shall bear the legend set forth on the face of the Security in Exhibit
B hereto.
Section 206. Form of Legend for Book-Entry Securities.
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ([INSERT DTC ADDRESS AT
ISSUE DATE]) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT AND SUCH CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to $1,150,000,000, except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu
<PAGE>
27
of, other Securities pursuant to Section 303, 304, 305, 306, 906 or 1108 or
pursuant to the Exchange Offer.
The Securities shall be known and designated as the "11 1/8% Senior
Subordinated Debentures due 2008" of the Company. Their Stated Maturity shall be
April 1, 2008, and they shall bear interest at the rate of 11 1/8% per annum
(except as otherwise provided for in the form of Initial Security and form of
Registered Security, as the case may be) from the Exchange Debenture Issue Date,
or the most recent Interest Payment Date to which interest has been paid or duly
provided for on a given Security or a Security surrendered in exchange for such
Security, as the case may be, payable on the initial Interest Payment Date and
semiannually thereafter on January 1 and July 1 in each year and at said Stated
Maturity, until the principal thereof is paid or duly provided for. On any
Interest Payment Date for any Security on or prior to April 1, 2001, the Company
may, in lieu of payment of interest in cash, pay such interest (i) in additional
Securities having a principal amount equal to the cash interest otherwise
payable or (ii) in a combination of cash and additional Securities. The Company
will pay interest on any such Security from the date of issuance (the
"Additional Security Issue Date") of such Security or from the most recent
Interest Payment Date to which interest has been paid. The initial Interest
Payment Date for any Security shall be the first January 1 or July 1 occurring
after the Exchange Debenture Issue Date or after the Additional Security Issue
Date, whichever is later.
The principal of (and premium, if any) and interest on the Securities shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the option of the
------------------
Company, cash interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
Section 302. Denominations.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by any one of the
following: its Chairman, one of its Vice Chairmen, its President or one of its
Vice Presidents, under its corporate seal reproduced thereon and attested by one
of its Vice
<PAGE>
28
Presidents or its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall (upon Company Order) authenticate and deliver Securities
for original issue in an aggregate principal amount of up to $1,150,000,000.
Each Security shall be dated the date of its authentication.
No Security endorsed thereon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of one of its duly
authorized signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of substantially all of its properties and assets to any
Person, and the successor Person resulting from such consolidation, or surviving
such merger, or into which the Company shall have been merged, or the successor
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities authenticated
or delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any time
be authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of any Holder but without
expense to such Holder, shall provide for the exchange of all Securities at the
time Outstanding held by such Holder for Securities authenticated and delivered
in such new name.
<PAGE>
29
If all or a portion of the Securities are to be issued in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall
authenticate and deliver one or more Global Securities that (i) shall represent
such Securities and shall be in minimum denominations of $1,000, (ii) shall be
registered in the name of the Depository for such Global Security or Securities
or the nominee of such Depository, (iii) shall be delivered by the Trustee to
such Depository or pursuant to such Depository's instructions and (iv) shall
bear the legend set forth in Section 206.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee is hereby initially
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Except as otherwise described in this Section 305, upon surrender for
registration of transfer of any Security at the office or agency of the Company
designated pursuant to Section 1002 for such purpose, the Company shall execute,
and the Trustee
<PAGE>
30
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations and of a like
aggregate principal amount upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
If an Initial Security is a Restricted Security in certificated form, then
as provided in this Indenture and subject to the limitations herein set forth,
the Holder shall, upon transfer of such Security to a Qualified Institutional
Buyer, instruct the Trustee to arrange for such Initial Security to be
represented by a beneficial interest in a Global Security in accordance with the
customary procedures of the Depository. Upon the exchange of a definitive
Security or Securities for a beneficial interest in a Global Security, the
aggregate principal amount of such Global Security shall be increased by an
adjustment made on the records of the Trustee as custodian for the Depository.
The Trustee shall require delivery of an executed Certificate of Transfer
substantially in the form of Exhibit C hereto, indicating that such transfer is
pursuant to or in compliance with Rule 144A under the Securities Act, as a
condition of such transfer.
If an Initial Security is a Restricted Security in the form of a Global
Security, then as provided in this Indenture and subject to the limitations
herein set forth, the Depository for such Global Security may, upon transfer of
such Initial Security, instruct the Trustee to arrange for a portion of the
beneficial interest in such Global Security to be represented by a Security in
certificated form; provided, however, that, if such Initial Security is
------------------
transferred to a Qualified Institutional Buyer and immediately thereafter shall
continue to be a Restricted Security, such Initial Security shall remain in the
form of a Global Security and the Trustee shall not so arrange for a Security in
certificated form. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge, to the Person specified by the
Depository a new Security or Securities, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security.
Interests in a Restricted Security in the form of a Global Security shall
be held only by Qualified Institutional Buyers.
Upon the exchange of a beneficial interest in a Global Security for
Securities in certificated form, the aggregate principal amount of such Global
Security
<PAGE>
31
shall be decreased by an adjustment made on the records of the Trustee as
custodian for the Depository. Securities in certificated form issued in exchange
for a Global Security pursuant to this Section 305 shall be registered in such
names and shall be in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Company or the Trustee. The Trustee or
such agent shall deliver such Securities to or as directed by the Persons in
whose names such Securities are so registered.
In the case of any transfer of any Restricted Security to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act (an "Institutional Accredited Investor"), the Trustee
shall require the delivery of a signed Transferee Letter of Representation
substantially in the form of Exhibit D hereto as a condition to such transfer.
In the case of any transfer of any Restricted Security, the Trustee shall
require delivery of an executed Certificate of Transfer substantially in the
form of Exhibit C hereto, as a condition to such transfer and in the case of any
transfer of any Restricted Security to an Institutional Accredited Investor, to
non-U.S. persons outside the United States within the meaning of Regulation S
under the Securities Act or to any other Person in a transaction referred to in
Clause (F) of the legend on the face of the Form of Initial Security set forth
in Exhibit B hereto, the Trustee may require, and if so directed by the Company,
shall require, delivery of such certifications, opinions and other information
as is contemplated in such Certificate of Transfer, as a condition to such
transfer.
Except as otherwise provided in this Section 305, a Global Security is
exchangeable for Securities in certificated form only if (x) the Depository is
at any time unwilling or unable to continue as depository and a successor
depository is not appointed by the Company within 30 days or (y) there shall be
occurred and be continuing an Event of Default or (z) the Company at any time
determines not to have Securities represented by a Global Security. In addition,
in accordance with the provisions of this Indenture and subject to certain
limitations herein set forth, an owner of a beneficial interest in a Global
Security which is an Initial Security may request a Security in certificated
form, in exchange in whole or in part, as the case may be, for such beneficial
owner's interest in the Global Security.
Upon any exchange provided for in the preceding paragraph, the Company
shall execute and the Trustee shall authenticate and deliver to the Person
specified by the Depository a new Security or Securities registered in such
names and in such authorized denominations as the Depository, pursuant to the
instructions of the beneficial owner of the Securities requesting the exchange,
shall instruct the Trustee. Thereupon, the beneficial ownership of such Global
Security shown on the records maintained by the Depository or its nominee shall
be reduced by the amounts so exchanged and an
<PAGE>
32
appropriate endorsement shall be made by or on behalf of the Trustee on the
Global Security.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer, or
for exchange or redemption, shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
Every Restricted Security shall be subject to, and no transfer shall be
made other than in accordance with, the restrictions on transfer provided in the
legend set forth on the form of the face of each Restricted Security and the
restrictions set forth in this Section 305, and the Holder of each Restricted
Security, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer.
The Trustee shall notify the Company of any proposed transfer of a
Restricted Security to any Person.
The restrictions imposed by this Section 305 upon the transferability of
any particular Restricted Security shall cease and terminate (a) on the later of
February 15, 1999 and three years after the last date on which the Company or
any Affiliate of the Company was the owner of such Restricted Security (or any
predecessor of such Restricted Security) or (b) (if earlier) if and when such
Restricted Security has been sold pursuant to an effective registration
statement under the Securities Act. Any Restricted Security as to which such
restrictions on transfer shall have expired in accordance with their terms or
shall have terminated may, upon surrender of such Restricted Security for
exchange to the Trustee or any transfer agent in accordance with the provisions
of this Section 305, be exchanged for a new Initial Security, of like tenor and
aggregate principal amount, which shall not bear the restrictive legend required
by Section 205. The Company shall inform the Trustee in writing of (a) the
effective date of any Registration Statement registering the Initial Securities
under the Securities Act and (b) at the request of the Trustee, the date which
is three years after the last date on which the Company or any Affiliate of the
Company was the owner of a Restricted Security in the event that an Exchange
Offer has not been consummated.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to
<PAGE>
33
pay all documentary, stamp or similar issue or transfer taxes or other
governmental charges that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
303, 304, 906 or 1108 not involving any transfer.
Notwithstanding any other provision of this Section 305, unless and until
it is exchanged in whole or in part for Securities in certificated registered
form, a Global Security representing Book-Entry Securities may not be
transferred, except as a whole by the Depository to a nominee of the Depository
or by another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
Notwithstanding the foregoing, no Global Security shall be registered for
transfer or exchange, or authenticated and delivered, whether pursuant to this
Section, Section 304, 306, 906 or 1108 or otherwise, in the name of a Person
other than the Depository for such Global Security or its nominee until (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security or if at any time the Depository ceases to
be a clearing agency registered under the Exchange Act, and a successor
Depository is not appointed by the Company within 30 days, (ii) the Company
executes and delivers to the Trustee a Company Order that all such Global
Securities shall be exchangeable or (iii) there shall have occurred and be
continuing an Event of Default; provided that the foregoing restriction shall
--------
not prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. Upon the occurrence in respect of
any Global Security representing the Securities of any one or more of the
conditions specified in clauses (i), (ii) and (iii) of the preceding sentence,
such Global Security may be registered for transfer or exchange for Initial
Securities registered in the names of, authenticated and delivered to, such
Persons as the Trustee or the Depository, as the case may be, shall direct.
Except as provided above, any Security authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, any Global
Security, whether pursuant to this Section, Section 304, 306, 906 or 1108 or
otherwise, shall also be a Global Security and bear the legend specified in
Section 206.
The Company shall not be required (a) to issue, register the transfer of or
exchange any Security during a period beginning at the opening of business (i)
15 days before the mailing of a notice of redemption of the Securities selected
for redemption under Section 1104 and ending at the close of business on the day
of such mailing or (ii) 15 days before an Interest Payment Date and ending on
the close of business on the Interest Payment Date, or (b) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of Securities being redeemed in part.
<PAGE>
34
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them and any agent of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute and upon Company Order the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a replacement Security
of like tenor and principal amount, and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this Section, the
Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute a contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security shall be at
any time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest. On any Interest
Payment Date for any Security on or prior to April 1, 2001, the Company may, in
lieu of payment of interest in cash, pay such interest (i) in additional
Securities having a principal amount equal to the cash interest otherwise
payable or (ii) in a combination of cash and additional Securities.
<PAGE>
35
The Company will pay interest on any such Security from the Additional Security
Issue Date of such Security or from the most recent Interest Payment Date to
which interest has been paid. The initial Interest Payment Date for any Security
shall be the first January 1 or July 1 occurring after the Exchange Debenture
Issue Date or after the Additional Security Issue Date, whichever is later.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the interest rate borne by the Securities, to the extent
lawful (such defaulted interest and interest thereon herein collectively called
"Defaulted Interest"), shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Subsection provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date. In the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Subsection (b).
<PAGE>
36
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Subsection,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name any Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of as directed by the Company pursuant to a
Company Order, provided, however, that the Trustee shall not be required to
------------------
destroy such cancelled Securities.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day year
of twelve 30-day months.
<PAGE>
37
Section 311. Registration Rights of Holders of Initial Securities.
Pursuant to the terms of the Registration Rights Agreement, holders of
Initial Securities, if any, shall be entitled to the benefits of the
Registration Rights Agreement.
Section 312. Applicability of Provisions.
Notwithstanding anything herein to the contrary, the Company shall have no
obligations hereunder prior to the Exchange Debenture Issue Date and the
provisions hereof, other than the provisions of Section 901, shall not be
applicable prior to the Exchange Debenture Issue Date.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of
Securities herein expressly provided for) and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(1) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
<PAGE>
38
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (2) of Subsection (a)
of this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal (and premium, if any) and
interest for whose payment such money has been deposited with the Trustee. Money
so held in trust shall not be subject to the provisions of Article Twelve of
this Indenture.
<PAGE>
39
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on any Security
when the same becomes due and payable and such default continues for a
period of 30 days, whether or not such payment shall be prohibited by the
provisions of Article Twelve hereof;
(b) the Company defaults in the payment of the principal or premium,
if any, of any Security when the same becomes due and payable at maturity,
upon acceleration, redemption or otherwise, whether or not such payment
shall be prohibited by the provisions of Article Twelve hereof;
(c) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture, and the
Default continues for the period and after the notice, if any, specified
below;
(d) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or one of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or one
of its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists or shall be created hereafter (but excluding any Indebtedness for
the deferred purchase price of property or services owed to the Person
providing such property or services as to which the Company or such
Restricted Subsidiary is contesting its obligation to pay the same in good
faith and by proper proceedings and for which the Company or such
Restricted Subsidiary has established appropriate reserves), and (i) either
(A) such event of default results from the failure to pay any such
Indebtedness at final maturity or (B) as a result of such event of default
the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and (ii) the principal amount of such Indebtedness
equals $10,000,000 or more or, together with the principal amount of any
such Indebtedness in default for failure to pay principal at maturity or
the maturity of which has been so accelerated, aggregates $10,000,000 or
more;
(e) a final judgment or final judgments for the payment of money are
entered by a court of competent jurisdiction against the Company or any
Restricted
<PAGE>
40
Subsidiary of the Company and either (i) an enforcement proceeding
shall have been commenced by any creditor upon such judgment or (ii) such
judgment remains undischarged and unbonded for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
--------
aggregate of all such judgments exceeds $10,000,000;
(f) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) admits in writing that it generally is unable to pay its
debts as the same become due; or
(g) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case or
proceeding,
(ii) appoints a Custodian of the Company or for all or
substantially all of its property, or
(iii) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator, sequestrator or similar official under any
Bankruptcy Law.
A Default under Section 501(c) is not an Event of Default until the Trustee
notifies the Company in writing, or the Holders of at least 25% in principal
amount of the Securities then Outstanding notify the Company and the Trustee in
writing, of the Default,
<PAGE>
41
and the Company does not cure the Default within 60 days (30 days in the case of
a Default under Section 801 or 1004) after receipt of the notice. The notice
must specify the Default, demand that it be remedied and state that the notice
is a "Notice of Default." Such notice to the Company shall be given by the
Trustee if so requested in writing by the Holders of 25% of the principal amount
of the Securities then Outstanding.
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than an Event of Default specified in Section
501(f) or 501(g)) occurs and is continuing, the Trustee or the Holders of at
least 25% of the principal amount of the Securities then Outstanding, by written
notice to the Company and the agents, if any, under the Bank Credit Agreement
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare all unpaid principal of,
premium, if any, and accrued interest on all the Securities to be due and
payable, as specified below. Upon a declaration of acceleration, such principal
and accrued interest shall be due and payable upon the first to occur of an
acceleration under the Bank Credit Agreement or 10 days after receipt by the
Company and the agents, if any, under the Bank Credit Agreement of such written
notice given hereunder. If an Event of Default specified in Section 501(f) or
501(g) with respect to the Company occurs, the amounts described above shall
ipso facto become and be immediately due and payable without any declaration or
- ---- -----
other act on the part of the Trustee or any Holder. Upon payment of such
principal and interest all of the Company's obligations under the Securities and
this Indenture, other than obligations under Section 606, shall terminate.
The Holders of at least a majority in principal amount of the Securities
then Outstanding, by written notice to the Trustee, may rescind an acceleration
and its consequences if (i) all existing Events of Default, other than the
non-payment of principal of, premium, if any, or interest on the Securities
which have become due solely because of the acceleration, have been cured or
waived and (ii) the rescission would not conflict with any judgment or decree of
a court of competent jurisdiction.
Notwithstanding the preceding paragraph, in the event of a declaration of
acceleration in respect of the Securities because an Event of Default specified
in Section 501(d) shall have occurred and be continuing, such declaration of
acceleration shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or the holders thereof have
rescinded their declaration of acceleration in respect of such Indebtedness, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Indebtedness or a trustee, fiduciary or agent for such holders, within 30
days after such declaration of acceleration in respect of the Securities,
<PAGE>
42
and no other Event of Default has occurred during such 30-day period which has
not been cured or waived during such period.
Notices by the Trustee to the agents under the Bank Credit Agreement
provided for herein shall be delivered or mailed to Toronto Dominion (Texas),
Inc., 909 Fannin Street, Suite 1700, Houston, Texas 77010, Attention: Agency
Department; and to any other person who hereafter becomes an agent under the
Bank Credit Agreement, provided the Trustee has been notified by the Company or
the Banks of the names and mailing addresses of such persons.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, with interest upon
the overdue principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders under this
<PAGE>
43
Indenture by such appropriate private or judicial proceedings as the Trustee
shall deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or similar
official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any proposal,
plan of reorganization, arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or
<PAGE>
44
the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 506. Application of Money Collected.
Subject to Article Twelve any money collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal (and premium, if any) and interest, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal (and premium, if any) and
interest; and
THIRD: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
<PAGE>
45
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture except in the manner provided in
this Indenture and for the equal and ratable benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the respective due dates expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Company, the Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any
<PAGE>
46
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, provided that
--------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability, and
(b) subject to the provisions of Trust Indenture Act Section 315, the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of a majority in principal amount of the Outstanding Securities
may on behalf of the Holders of all the Securities waive any past Default or
Event of Default hereunder and its consequences, except a Default or Event of
Default
(a) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this
<PAGE>
47
Indenture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date); provided that neither this Section
--------
514 nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company.
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 90 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security
<PAGE>
48
Register, notice of such Default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in the
------------------
case of a default in the payment of the principal of (or premium, if any) or
interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders; and provided further that, in the case of any default or breach of the
----------------
character specified in Section 501(d), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof.
Section 602. Certain Rights of Trustee.
Subject to the provisions of Trust Indenture Act Sections 315(a) through
315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
<PAGE>
49
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 603. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof, except that
the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its obligations hereunder and
that the statements made by it in a Statement of Eligibility on Form T-1
supplied to the Company are true and accurate, subject to the qualifications set
forth therein.
Section 604. May Hold Securities.
The Trustee, any Paying Agent, Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Trust Indenture Act Sections 310(b) and
311, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Security Registrar or such other agent.
<PAGE>
50
Section 605. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
Section 606. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time such compensation as shall
be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(f) or 501(g), the expenses (including
the reasonable charges and expenses of its counsel) and the compensation for the
services will be intended to constitute expenses of administration under any
Bankruptcy Law.
<PAGE>
51
The provisions of this Section shall survive the termination of this
Indenture.
Section 607. Conflicting Interests.
(a) The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act.
(b) The indenture, dated as of February 15, 1993, for the Company's 9-7/8%
Senior Subordinated Debentures due 2013, the indenture, dated as of April 1,
1992, for the Company's 10-3/4% Senior Subordinated Debentures due 2004, the
indenture, dated as of April 1, 1993, for the Company's 9-7/8% Debentures due
2023, the indenture, dated as of September 26, 1995, for the Company's 11-3/4%
Senior Subordinated Debentures due 2007, the indenture, dated as of November 1,
1995, for the Company's 8-1/2% Convertible Subordinated Debentures due 2007 and
the indenture, dated as of November 1, 1995, for the Company's 9-1/4% Senior
Subordinated Notes due 2005 shall be deemed to be specifically described herein
for the purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under Trust Indenture Act Section 310(a)(1) and which shall have
a combined capital and surplus of at least $25,000,000 to the extent there is
such an institution eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of Federal, State, Territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 609. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 610.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation,
<PAGE>
52
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Trust
Indenture Act Section 310(b) after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall cease to be eligible under Section 608 and shall
fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with Section
610, become the successor Trustee and supersede the successor Trustee appointed
by the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders of the Securities and so accepted appointment, the Holder
of any Security who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
<PAGE>
53
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee, provided, however, that the retiring Trustee
------------------
shall continue to be entitled to the benefit of Section 606(c); but, on request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee, and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 611. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
<PAGE>
54
Section 612. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312.
Section 702. Reports by Trustee.
Within 60 days after September 1 of each year commencing with the first
September 1 after the Exchange Debenture Issue Date, the Trustee shall transmit
by mail to all Holders, as their names and addresses appear in the Security
Register, as provided in Trust Indenture Act Section 313(c), a brief report
dated as of such September 1 if required by Trust Indenture Act Section 313(a).
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of such Sections, then
it shall file with the Trustee and the
<PAGE>
55
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, in the manner and to the extent provided in Trust
Indenture Act Section 313(c), such summaries of any information, documents
and reports required to be filed by the Company pursuant to Subsections (a)
and (b) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate or merge with or into, or sell, assign,
transfer, lease, convey, or otherwise dispose of all or substantially all of its
assets to, any Person, unless:
(a) the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or disposition shall have been made, is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia and shall assume by supplemental
indenture hereto all the obligations of the Company under the Securities
and this Indenture;
(b) immediately before and immediately after such transaction, and
after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing;
<PAGE>
56
(c) immediately after such transaction, and after giving effect
thereto, the Person formed by or surviving any such consolidation or
merger, or to which such sale assignment, transfer, lease or conveyance or
disposition shall have been made (the "successor"), shall have a Cash Flow
Ratio not in excess of 9 to 1; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, or
transfer and such supplemental indenture, if one is required by this
Section 801, comply with this Section 801 and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Cash Flow Ratio for purposes of this Section 801 shall be computed as if
any such successor were the Company.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease
or conveyance or other disposition of all or substantially all of the assets, of
the Company in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein. When a successor assumes all the
obligations of its predecessor under this Indenture and the Securities, the
predecessor will be released from those obligations, provided that in the case
--------
of a transfer by lease, the predecessor corporation shall not be released from
the payment of principal and interest on the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
At any time prior to the Exchange Debenture Issue Date, the Company may
terminate this Indenture by written notice to the Trustee after which time, the
Company may not elect to issue any Securities hereunder.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one
<PAGE>
57
or more indentures supplemental hereto in form satisfactory to the Trustee, for
any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein or in the Securities
conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that, in each case, such
--------
provisions shall not adversely affect the interests of the Holders in any
material respect;
(d) to secure the Securities, if the Company so elects;
(e) to make any changes necessary to qualify the Indenture under the
Trust Indenture Act in connection with the Exchange Offer or Shelf
Registration (in each case, as defined in the Registration Rights
Agreement); or
(f) to make any other change that does not adversely affect the rights
of any Holder.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of such Holders delivered to the
Company and the Trustee and the Company, each when authorized by a Board
Resolution, and the Trustee may enter into one or more indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving or modifying
in any manner the rights of the Holders under this Indenture; provided, however,
------------------
that no such supplemental indenture, amendment or waiver shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption
thereof, or change the coin or currency in which the principal of any
Security or any premium or the
<PAGE>
58
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof (or,
in the case of redemption, on or after the Redemption Date); or
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture;
or
(c) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Trust Indenture Act Section 315(a) through 315(d) and Section
602 hereof) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
<PAGE>
59
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and premium, if
any) and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company, unless the Company
shall designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices or
agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; provided, however, that no such designation or
------------------
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City
<PAGE>
60
of New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.
Section 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on any Securities, deposit with a Paying Agent a
sum in same day funds (or New York Clearing House funds if such deposit is made
prior to the date on which such deposit is required to be made) sufficient to
pay the principal (and premium, if any) or interest so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium or interest and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order
<PAGE>
61
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary of the Company and the
corporate rights (charter and statutory), corporate licenses and corporate
franchises of the Company and its Restricted Subsidiaries, except where a
failure to do so, singly or in the aggregate, is not likely to have a materially
adverse effect upon the business, assets, financial condition or results of
operations of the Company and the Restricted Subsidiaries taken as a whole
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be required to
--------
preserve any such existence (except of the Company), right, license or franchise
if the Board of Directors of the Company, or of the Restricted Subsidiary
concerned, shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or such Restricted Subsidiary and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a lien upon the property of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
------------------
discharge or cause to be paid or discharged
<PAGE>
62
any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by or leased to it or
any Restricted Subsidiary of the Company and necessary in the conduct of its
business or the business of such Restricted Subsidiary to be maintained and kept
in normal condition, repair and working order, ordinary wear and tear excepted;
provided that nothing in this Section shall prevent the Company or any
- --------
Restricted Subsidiary of the Company from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or the Restricted Subsidiary concerned, or of any officer (or other
agent employed by the Company or any Restricted Subsidiary of the Company) of
the Company or such Restricted Subsidiary having managerial responsibility for
any such property, desirable in the conduct of the business of the Company or
any Restricted Subsidiary of the Company and if such discontinuance or disposal
is not adverse in any material respect to the Securityholders.
The Company shall provide or cause to be provided, for itself and any
Restricted Subsidiaries of the Company, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties in the same
general areas in which the Company or such Restricted Subsidiaries operate.
Section 1007. Limitation on Indebtedness.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, incur, create, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise, or become responsible for the
payment of, contingently or otherwise, any Indebtedness unless, after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
Section 1008. Limitation on Senior Subordinated Indebtedness.
The Company shall not, and shall not permit any Restricted Subsidiary of
the Company to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become liable for, contingently or otherwise, or become responsible
for the payment of, contingently or otherwise, any Indebtedness which is senior
in right of payment to the Securities and expressly subordinate in right of
payment to any other Indebtedness of the Company. For purposes of this Section
1008, Indebtedness is deemed to be "senior" in right of payment to the
Securities if it is not subordinate in right of
<PAGE>
63
payment to Senior Indebtedness at least to the same extent as the Securities are
subordinate to Senior Indebtedness.
Section 1009. Limitation on Restricted Payments.
Except as otherwise provided in this Section 1009, the Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, make
any Restricted Payment if (a) at the time of such proposed Restricted Payment, a
Default or Event of Default shall have occurred and be continuing or shall occur
as a consequence of such Restricted Payment or (b) immediately after giving
effect to such Restricted Payment, the aggregate of all Restricted Payments that
shall have been made on or after July 1, 1988 would exceed the sum of:
(i) $25,000,000, plus
(ii) an amount equal to the difference between (A) the Cumulative Cash
Flow Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
For purposes of this Section 1009, the amount of any Restricted Payment or
Permitted Restricted Payment, if other than cash, shall be based upon fair
market value as determined by the Board of Directors of the Company, whose good
faith determination shall be conclusive.
The provisions of this Section 1009 shall not prevent (i) the payment of
any dividend within 60 days after the date of declaration thereof, if at such
date of declaration such payment complied with the provisions hereof; (ii) the
retirement or redemption of any shares of the Company's capital stock or
warrants, rights or options to acquire capital stock of the Company in exchange
for, or out of the proceeds of a substantially concurrent sale of, other shares
of its capital stock or warrants, rights or options to acquire capital stock of
the Company (other than Disqualified Stock); and (iii) the redemption of or
payments of cash dividends on the Company's 8% Series C Cumulative Preferred
Stock (the "Series C Preferred Stock") outstanding on January 1, 1995, which
redemptions or dividends are provided for by the terms of the Series C Preferred
Stock in effect on the date hereof (or the redemption of or payment of cash
dividends on any security of the Company issued in exchange for or upon the
conversion of such Series C Preferred Stock); provided that the aggregate amount
--------
payable pursuant to the terms of such security is no greater than the aggregate
amount payable pursuant to the terms of the Series C Preferred Stock). For
purposes of determining the aggregate permissible amount of Restricted Payments
in accordance with clause (b) of the first paragraph of this Section 1009, all
amounts expended pursuant to clauses (i) and (iii) of this paragraph shall be
included and all amounts expended or received pursuant to clause (ii) of this
paragraph shall be excluded; provided, however, that amounts paid pursuant to
------------------
clause (i) of this
<PAGE>
64
paragraph shall be included only to the extent that such amounts were not
previously included in calculating Restricted Payments.
Notwithstanding the foregoing, so long as no Default or Event of Default
shall have occurred and be continuing, the Company may make any Permitted
Restricted Payment; provided, however, that such Permitted Restricted Payment
------------------
shall thereafter be counted as a Restricted Payment for purposes of calculating
whether any future Restricted Payments are permitted under this Section 1009.
For the purpose of this Section 1009, the net proceeds from the issuance of
shares of capital stock of the Company upon conversion of Indebtedness shall be
deemed to be an amount equal to (i) the accreted value of such Indebtedness on
the date of such conversion and (ii) the additional consideration, if any,
received by the Company upon such conversion thereof, less any cash payment on
account of fractional shares (such consideration, if in property other than
cash, to be determined by the Board of Directors of the Company and evidenced by
a resolution of such Board, whose good faith determination shall be conclusive).
If the Company makes a Restricted Payment which, at the time of the making of
such Restricted Payment, would in the good faith determination of the Company be
permitted under the requirements of this Section 1009, such Restricted Payment
shall be deemed to have been made in compliance with this Section 1009
notwithstanding any subsequent adjustments made in good faith to the Company's
financial statements affecting Cumulative Cash Flow Credit or Cumulative
Interest Expense for any period.
Section 1010. Limitation on Investments in Unrestricted Subsidiaries and
Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, (i) make any Investment or (ii) allow any Restricted
Subsidiary to become an Unrestricted Subsidiary (a "redesignation of a
Restricted Subsidiary"), in each case unless (a) no Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence of such
Investment or such redesignation of a Restricted Subsidiary and (b) after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
The foregoing provisions of this Section 1010 shall not prohibit (i) any
renewal or reclassification of any Investment existing on the date hereof or
(ii) trade credit extended on usual and customary terms in the ordinary course
of business.
<PAGE>
65
Section 1011. Transactions with Affiliates.
The Company shall not, and shall not permit any of its subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets to
or purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, an
Affiliate of the Company that is not a subsidiary of the Company, having a
value, or for consideration having a value, in excess of $10,000,000
individually or in the aggregate unless the Board of Directors of the Company
shall make a good faith determination that the terms of such transaction are,
taken as a whole, no less favorable to the Company or such subsidiary, as the
case may be, than those which might be available in a comparable transaction
with an unrelated Person. For purposes of clarification, this Section 1011 shall
not apply to any Restricted Payment or Permitted Restricted Payment permitted by
Section 1009.
Section 1012. Provision of Financial Statements.
(a) The Company shall supply without cost to each Holder of the Securities,
and file with the Trustee (if not otherwise filed with the Trustee pursuant to
Section 703) within 30 days after the Company is required to file the same with
the Commission, copies of the annual reports and quarterly reports and of the
information, documents and other reports which the Company may be required to
file with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the
Securities Exchange Act of 1934.
(b) If the Company is not required to file with the Commission such reports
and other information referred to in Section 1012(a), the Company shall furnish
without cost to each Holder of the Securities and file with the Trustee (i)
within 140 days after the end of each fiscal year after the Exchange Debenture
Issue Date, annual reports containing the information required to be contained
in Items 1, 2, 3, 6, 7, 8 and 9 of Form 10-K promulgated under the Securities
Exchange Act of 1934, or substantially the same information required to be
contained in comparable items of any successor form, and (ii) within 75 days
after the end of each of the first three fiscal quarters of each fiscal year,
quarterly reports containing the information required to be contained in Form
10-Q promulgated under the Securities Exchange Act of 1934, or substantially the
same information required to be contained in any successor form.
(c) At any time when the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, upon the request of a holder of a
Restricted Security, the Company will promptly furnish or cause to be furnished
such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) to such holder or to a
prospective purchaser of such Security designated
<PAGE>
66
by such holder, as the case may be, in order to permit compliance by such holder
with Rule 144A under the Securities Act.
Section 1013. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year ending after the Exchange Debenture Issue Date, a brief
certificate of its principal executive officer, principal financial officer or
principal accounting officer stating whether, to such officer's knowledge, the
Company is in compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1013, such compliance
shall be determined without regard to any period of grace or requirement of
notice under this Indenture.
Section 1014. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition set forth in Sections 1007 through 1012 if, before or after the
time for such compliance, the Holders of a majority in aggregate principal
amount of the Securities at the time outstanding shall, by Act of such Holders,
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed, at the election of the Company, as a whole
or from time to time in part, subject to the conditions and at the Redemption
Prices specified in the form of Security, together with accrued interest to the
Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
<PAGE>
67
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 60
days and not less than 30 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities not previously called for redemption, either pro rata
or by lot, and the amounts to be redeemed may be equal to $1,000 or any integral
multiple thereof.
The Trustee shall promptly notify the Company and the Security Registrar in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall identify the Securities (including CUSIP
number, if any) to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a Security to be redeemed in part, the
principal amount) of the particular Securities to be redeemed;
<PAGE>
68
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon shall cease to accrue on and after said date; and
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at its request, by the Trustee in the
name and at the expense of the Company.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities or portions thereof which are to be
redeemed on that date.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price together with accrued interest to
the Redemption Date; provided, however, that installments of interest whose
------------------
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such on the relevant Regular Record Dates according to the terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Security.
<PAGE>
69
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
the office or agency of the Company designated for such purpose pursuant to
Section 1002 (with, if the Company, the Security Registrar or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SUBORDINATION
Section 1201. Securities Subordinated to Senior Indebtedness.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees, that the payment of all amounts due in respect
of the Securities, including any liquidated damages payable in respect of the
Securities, are subordinated, to the extent and in the manner provided in this
Article Twelve, to the prior payment in full of all Senior Indebtedness. For
purposes of this Article Twelve, "liquidated damages" shall mean liquidated
damages payable pursuant to the first paragraph of text of the Form of Initial
Security and pursuant to Section Three of the Registration Rights Agreement.
This Article Twelve shall constitute a continuing offer to all persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.
Section 1202. No Payment on Securities in Certain Circumstances.
(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration (unless waived, rescinded or annulled) or otherwise, or upon any
payment default (with or without the giving of notice or lapse of time or both,
in accordance with the terms of the instrument governing such Senior
Indebtedness, and without any waiver or forgiveness) with respect to any Senior
Indebtedness, all amounts payable thereon shall
<PAGE>
70
first be paid in full, or such payment duly provided for in cash or in a manner
satisfactory to the holders of such Senior Indebtedness, before any payment is
made, directly or indirectly by set off or otherwise, on account of principal
of, or interest on, or liquidated damages, if any, with respect to, the
Securities or on account of the Registration Rights Agreement or to acquire any
of the Securities or on account of the redemption provisions of the Securities.
(b) Upon a default with respect to any Senior Indebtedness (other than
under circumstances when the terms of paragraph (a) of this Section are
applicable), as such default is defined therein or in the instrument under which
it is outstanding, permitting the holders to accelerate the maturity thereof,
upon written notice thereof given to the Company and the Trustee by the agent or
agents under the Bank Credit Agreement ("Default Notice"), then, unless and
until such default shall have been cured or waived by the holders of such Senior
Indebtedness or shall have ceased to exist, no direct or indirect payment shall
be made by the Company with respect to the principal of, interest on, or
liquidated damages, if any, with respect to the Securities (other than payments
made in Junior Securities) or on account of the Registration Rights Agreement or
to acquire any of the Securities or on account of the redemption provisions of
the Securities; provided, however, that this paragraph (b) shall not prevent the
-------- -------
making of any payment (which is not otherwise prohibited by paragraph (a)) for
more than 120 days after the Default Notice shall have been given unless the
Senior Indebtedness in respect of which such event of default exists has been
declared due and payable in its entirety, in which case no such payment may be
made until such acceleration has been rescinded or annulled or such Senior
Indebtedness has been paid in full. Notwithstanding the foregoing, not more than
one Default Notice shall be given with respect to Senior Indebtedness within a
period of 240 consecutive days.
(c) If, notwithstanding the foregoing provisions of this Section, any
payment on account of principal of, interest on or liquidated damages, if any,
with respect to the Securities or on account of the Registration Rights
Agreement shall be received by the Trustee, by any Holder or by any Paying Agent
(or, if the Company is acting as its own Paying Agent, money for any such
payment is segregated and held in trust), then, unless and until such payment is
no longer prohibited by this Section, such payment (subject to the provisions of
Sections 1206 and 1207) shall be held in trust for the benefit of the holders of
Senior Indebtedness and, upon notice to the Trustee or such Paying Agent from
the representative of the holders of the Senior Indebtedness and pursuant to the
directions of such representative, shall be paid over or delivered to the
holders of Senior Indebtedness or their representative(s), ratably according to
the aggregate amount remaining unpaid on account of the principal of and
interest on the Senior Indebtedness held or represented by each, for application
to the payment or prepayment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in accordance with its
terms, after giving effect to any concurrent payment or
<PAGE>
71
distribution or provision therefor to or for the holders of Senior Indebtedness.
Promptly after becoming aware thereof, the Company shall give written notice to
the Trustee of any event prohibiting payments on account of principal of,
interest on or liquidated damages, if any, with respect to the Securities or on
account of the Registration Rights Agreement and, in such event, shall provide
to the Trustee, in the form of an Officers' Certificate, the names and addresses
of the holders of such Senior Indebtedness and their representative(s), if any,
the amount of the Senior Indebtedness held by each such holder, any information
necessary to calculate the daily or other increase in Senior Indebtedness held
by such holders and any other information which the Trustee may reasonably
request to comply with this Article. Subject to the provisions of Section 1203
hereof, in the event that the Trustee or the Paying Agent reasonably determines
that additional evidence is required with respect to any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee or the Paying Agent, as the case may be, may request
that such person furnish evidence to its reasonable satisfaction as to the
amount of Senior Indebtedness held by each such person, as to the extent such
person is entitled to participate in such payment or distribution and as to
other facts pertinent to the rights of such persons under this Article and if
such evidence is not furnished, the Trustee or the Paying Agent, as the case may
be, may defer any payment to such person pending judicial determination as to
the right of such person to receive such payment.
Section 1203. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Winding-Up, Liquidation or Reorganization of the
Company.
Upon any payment by or distribution of the assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company (whether in a bankruptcy or reorganization case, insolvency or
receivership proceedings, voluntary liquidation or upon any assignment for the
benefit of creditors or otherwise):
(1) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all amounts payable thereon, or provision shall
be made for such payment, before the Holders are entitled to receive any
payment on account of the principal of, interest on or liquidated damages,
if any, with respect to the Securities or on account of the Registration
Rights Agreement;
(2) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities (other than
Junior Securities) to which the Holders or the Trustee on behalf of the
Holders would be entitled except for the provisions of this Article Twelve,
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the
<PAGE>
72
payment of the Securities, shall be paid by the liquidating trustee or
agent or other Person making such a payment or distribution, directly to
the holders of Senior Indebtedness or their representative(s), ratably
according to the aggregate amounts remaining unpaid on account of the
principal of and interest on the Senior Indebtedness held or represented by
each, for application to payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full
after giving effect to any concurrent payment or distribution, or provision
therefor, to the holders of such Senior Indebtedness; and
(3) if, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property
or securities (other than Junior Securities) shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company is acting as
its own Paying Agent, money for any such payment or distribution is
segregated or held in trust) on account of principal of, interest on or
liquidated damages, if any, with respect to the Securities or on account of
the Registration Rights Agreement before all Senior Indebtedness is paid in
full, or effective provision made for its payment, such payment or
distribution (subject to the provisions of Sections 1206 and 1207) shall be
received and held in trust for and shall be paid over to the holders of the
Senior Indebtedness remaining unpaid or unprovided for or their
representative(s), ratably according to the aggregate amounts remaining
unpaid on account of the principal of and interest on the Senior
Indebtedness held or represented by each, for application to payment or
prepayment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness.
If the Company effects a transaction permitted by Article Eight, such
transaction shall not be deemed to be a dissolution, winding-up, liquidation or
reorganization of the Company for purposes of this Section.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
Upon any distribution of assets of the Company referred to in this Article,
the Trustee, subject to the provisions of Sections 601 and 602, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up or liquidation
proceeding, or bankruptcy or reorganization case, is pending, or a certificate
of the liquidating trustee or agent or other Person making any distribution to
the Trustee or to the Holders, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the
<PAGE>
73
Senior Indebtedness of the Company and other Indebtedness of the Company, the
amount thereof payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
Section 1204. Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness.
Upon payment in full of all Senior Indebtedness, the Holders of Securities
shall be subrogated (equally and ratably with the holders of all Indebtedness of
the Company which by its terms is not superior in right of payment to the
Securities and which ranks on a parity with the Securities) to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness until all amounts owing on the
Securities shall be paid in full, and for the purposes of such subrogation no
payments or distributions to the holders of Senior Indebtedness by the Company
to which the Holders would be entitled except for the provisions of this
Article, and no payment pursuant to the provisions of this Article to the
holders of Senior Indebtedness shall, as between the Company, its creditors
(other than the holders of Senior Indebtedness) and the Holders, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Article are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article shall have been applied,
pursuant to the provisions of this Article, to the payment of all amounts
payable under the Senior Indebtedness, then and in such case, the Company
specifically agrees that the Holders shall be entitled to receive from the
holders of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full.
Section 1205. Obligations of the Company Unconditional.
Nothing contained in this Article Twelve or elsewhere in this Indenture or
in any Security is intended to or shall impair, as between the Company, its
creditors (other than the holders of Senior Indebtedness) and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on or liquidated damages, if any, with
respect to the Securities or on account of the Registration Rights Agreement as
and when the same shall become due and payable in accordance with their terms,
or to affect the relative rights of the Holders and creditors of the Company
(other than the holders of Senior Indebtedness), nor shall anything herein or
<PAGE>
74
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Section 1206. Knowledge of Trustee.
Notwithstanding the provisions of this Article or any other provision of
this Indenture, the Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee, or the taking of any other action under this Indenture by the
Trustee, unless and until two Business Days after the Trustee shall have
received written notice thereof from the Company, any Securityholder, any Paying
Agent or any holder of Senior Indebtedness or its representative.
Section 1207. Application by Trustee or Paying Agent of Assets Deposited
with It.
If on a date not less than two Business Days prior to the date on which by
the terms of this Indenture any monies deposited with the Trustee or any Paying
Agent (other than the Company, if it acts as Paying Agent) may become payable
for any purpose (including, without limitation, the payment of either principal
of, interest on or liquidated damages, if any, with respect to any Security) the
Trustee or such Paying Agent shall not have received with respect to such
payment the written notice provided for in Section 1206, then the Trustee or
such Paying Agent shall have full power and authority to receive such monies and
to apply them to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior
Indebtedness may have to recover any such payments from the Holders in
accordance with the provisions of this Article.
Section 1208. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of Senior Indebtedness may extend, renew, modify, or increase Senior
Indebtedness or amend the terms of the Senior Indebtedness or any security or
guarantee therefor and release, sell or exchange such security or guarantee
<PAGE>
75
and otherwise deal freely with the Company, all without affecting the
liabilities and obligations of the parties to this Indenture or the Holders.
Section 1209. Securityholders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder by his acceptance of the Securities authorizes and expressly
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for such purpose, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in a bankruptcy or reorganization case, insolvency or
receivership proceedings, voluntary liquidation or upon an assignment for the
benefit of creditors or otherwise) tending towards liquidation of the business
and assets of the Company, the immediate filing of a claim for the unpaid
balance of its or his Securities in the form required in such proceeding and
cause such claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding on or prior to 30 days
before the expiration of the time to file such claim or claims, then the holders
of the Senior Indebtedness or their representative(s) are hereby authorized to
have the right to file and are hereby authorized to file an appropriate claim
for and on behalf of the Holders.
Section 1210. Trustee Not Fiduciary for Holders of Senior Indebtedness.
Neither the Trustee nor any Paying Agent (including the Company if the
Company acts as Paying Agent) shall be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness. Neither the Trustee nor any Paying Agent shall
be liable to any such holder (subject to Section 1206 hereof, except for its own
gross negligence or willful misconduct) if any of them shall mistakenly pay over
or distribute to Securityholders, the Company or any other person monies or
assets to which any holders of Senior Indebtedness shall be entitled by virtue
of this Article or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee or the Paying Agent undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee or the Paying Agent.
Section 1211. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
<PAGE>
76
Section 1212. Article Twelve Not to Prevent Events of Default.
The failure to make a payment on account of principal of or interest on the
Securities by reason of any provision of this Article shall not be construed as
preventing the occurrence of an Event of Default under Section 501. Nothing
contained in this Article Twelve shall limit the right of the Trustee or the
Holders of Securities to take any action to accelerate the maturity of the
Securities pursuant to Section 502 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness then or thereafter due or
--------
declared to be due shall first be paid in full before the Holders or the Trustee
are entitled to receive any payment from the Company of principal of, interest
on or liquidated damages, if any, with respect to the Securities.
Section 1213. Trustee's Compensation Not Prejudiced.
Nothing in this Article shall apply to amounts due to the Trustee pursuant
to Section 606.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 1302 or Section 1303 be
applied to all Outstanding Securities upon compliance with the conditions set
forth below in this Article Thirteen.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1302, the Company shall be deemed to have been discharged from its
obligations with respect to all Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 1305 and the other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
<PAGE>
77
hereunder: (A) the rights of Holders of Outstanding Securities to receive solely
from the trust fund described in Section 1304 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any) and
interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (D) this
Article Thirteen. Subject to compliance with this Article Thirteen, the Company
may exercise its option under this Section 1302 notwithstanding the prior
exercise of its option under Section 1303 with respect to the Securities.
Section 1303. Covenant Defeasance.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1303, the Company shall be released from its obligations under any
covenant contained in Article Eight and in Sections 1004 through 1012 with
respect to the Outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities shall thereafter be deemed to be not "Outstanding" for the purposes
of any direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder (it being
understood that such Securities shall not be deemed Outstanding for financial
accounting purposes). For this purpose, such covenant defeasance means that,
with respect to the Outstanding Securities, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a default or an Event of Default
under Section 501(c), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon the
Company's exercise under Section 1301 of the option applicable to Section 1303,
Sections 501(c) through 501(e) shall not constitute Events of Default.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 1302
or Section 1303 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 608 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit
<PAGE>
78
of the Holders of such Securities, (A) cash in U.S. Dollars in an
amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the due date of any
payment, cash in U.S. Dollars in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any) and interest on the Outstanding
Securities on the Stated Maturity of such principal or installment of
principal (and premium, if any) or interest and (ii) any mandatory sinking
fund payments or analogous payments applicable to the Outstanding
Securities on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities;
provided that the Trustee shall have been irrevocably instructed to apply
--------
such money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the timely payment of which its full faith and credit
is pledged or (y) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian
with respect to any such U.S. Government Obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized
--------
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository
receipt.
(2) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or,
insofar as Subsection 501(f) or 501(g) is concerned, at any time during the
period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) No event or condition shall exist that, pursuant to the provisions
of Section 1202 or 1203, would prevent the Company from making payments of
the principal of (and premium, if any) or interest on the Securities on the
date of such
<PAGE>
79
deposit or at any time during the period ending on the 91st day after
the date of such deposit (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound.
(5) In the case of an election under Section 1302, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
stating that (x) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (y) since February 15, 1996,
there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that,
the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred.
(6) In the case of an election under Section 1303, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States to
the effect that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(7) In the case of an election under either Section 1302 or 1303, the
Company shall represent to the Trustee that the deposit made by the Company
pursuant to its election under Section 1302 or 1303 was not made by the
Company with the intent of preferring the Holders over other creditors of
the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating
that all conditions precedent provided for relating to either the
defeasance under Section 1302 or the covenant defeasance under Section 1303
(as the case may be) have been complied with.
<PAGE>
80
Section 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law. Money and U.S.
Government Obligations so held in trust are not subject to Article Twelve.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
1304(1)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
Section 1306. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money in accordance
with Section 1302 or 1303, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1302 or 1303, as the case may be; provided, however,
-------- -------
that, if the Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or Paying Agent.
* * * * *
<PAGE>
This Indenture may be signed in any number of counterparts with the same
effect as if the signatures to each counterpart were upon a single instrument,
and all such counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CABLEVISION SYSTEMS CORPORATION
By _____________________________________
Title: Vice Chairman
Attest:
- ------------------------------------------------
Title: Executive Vice President, General Counsel
and Secretary
THE BANK OF NEW YORK
By _____________________________________
Title: Assistant Vice President
Attest:
- -------------------------------------------------
Title: Assistant Treasurer
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the _____ day of ___________, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that s/he resides at ____________________________________; that s/he is
________________________ of ____________________, one of the corporations
described in and which executed the above instrument; that s/he knows the
corporate seal of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority of the Board
of Directors of such corporation; and that s/he signed her/his name thereto
pursuant to like authority.
[Notarial Seal]
-------------------------------
<PAGE>
June 11, 1996
Cablevision Systems Corporation,
One Media Crossways,
Woodbury, New York 11797.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of (i) 67,757.3 shares of 11 1/8% Series M Redeemable Exchangeable
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
Cablevision Systems Corporation, a Delaware corporation (the "Company"), (ii)
6,775,730 of the Company's depositary shares (the "Depositary Shares") evidenced
by depositary receipts (the "Depositary Receipts") to be issued against deposit
of the Preferred Stock pursuant to the Deposit Agreement, dated as of February
15, 1996 (the "Deposit Agreement"), among the Company, The First National Bank
of Boston, as Depositary (the "Depositary"), and the holders from time to time
of Depositary Receipts issued thereunder, each such Depositary Share
representing a one one-hundredth interest in a share of the Preferred Stock, and
(iii) the Company's 11 1/8% Senior Subordinated Debentures due 2008 (the
"Exchange Debentures" and, together with the Preferred
<PAGE>
Cablevision Systems Corporation -2-
Stock and the Depositary Shares, the "Securities") exchangeable for the
Preferred Stock, at the Company's option, and issuable pursuant to an indenture,
dated as of February 15, 1996 (the "Exchange Indenture"), between the Company
and The Bank of New York, as trustee, we, as your counsel, have examined such
corporate records, certificates and other documents, and such questions of law,
as we have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion:
(1) When the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, a certificate
of designations with respect to the Preferred Stock substantially in the
form filed as an exhibit to the Registration Statement has been duly filed
with the Secretary of State of the State of Delaware, the terms of the
Preferred Stock have been duly established in conformity with the Company's
certificate of incorporation, and the Preferred Stock have been duly issued
and exchanged for shares of the Company's 11 1/8% Series L Redeemable
Exchangeable Preferred Stock, par value $.01 per share (the "Series L
Preferred Stock"), as contemplated by the Registration Statement, the
<PAGE>
Cablevision Systems Corporation -3-
Preferred Stock will be validly issued, fully paid and nonassessable.
(2) When the Registration Statement has become effective under the Act
and when the Depositary Receipts have been duly executed and delivered by
the Depositary against the deposit by the Company of the Preferred Stock
pursuant to the Deposit Agreement and exchanged for the depositary shares
evidencing the Series L Preferred Stock as contemplated in the Registration
Statement, the Depositary Shares will be validly issued.
(3) When the Registration Statement has become effective under the
Act and when the Exchange Debentures have been duly authorized by the
Company and duly executed, authenticated, issued and delivered in
conformity with the Exchange Indenture so as not to violate any applicable
law or result in a default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any requirement or
restriction imposed by any court or governmental body having jurisdiction
over the Company, the Exchange Debentures will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency,
<PAGE>
Cablevision Systems Corporation -4-
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of the
State of Delaware, and we are expressing no opinion as to the effect of the laws
of any other jurisdiction nor with respect to any Federal or state laws relating
to communications or individuals, companies or businesses engaged in the
communications business, including the provision of cable television services.
We have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the Deposit Agreement has been duly
authorized, executed and delivered by the Depositary thereunder and that the
Exchange Indenture has been duly authorized, executed and delivered by the
Trustee thereunder, assumptions which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the
<PAGE>
Cablevision Systems Corporation -5-
reference to us under the heading "Validity of the New Depositary Shares" in the
Prospectus. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
SULLIVAN & CROMWELL
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
-------------------------------
The Board of Directors
Cablevision Systems Corporation
and A-R Cable Services, Inc.:
We consent to the use of our reports, incorporated herein by reference, and to
the reference to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus and the Registration Statement of Cablevision
Systems Corporation on Form S-4.
KPMG Peat Marwick LLP
Jericho, New York
June 4, 1996
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CABLEVISION SYSTEMS CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 11-2776686
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Media Crossways
Woodbury, New York 11797
(Address of principal executive offices) (Zip code)
______________________
11 1/8% Senior Subordinated Debentures due 2008
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No.33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No.33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 31st day of May, 1996.
THE BANK OF NEW YORK
By: /s/ NANCY B. GILL
-----------------------
Name: NANCY B. GILL
Title: ASSISTANT TREASURER
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1995, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 4,500,312
Interest-bearing balances............. 643,938
Securities:
Held-to-maturity securities........... 806,221
Available-for-sale securities......... 2,036,768
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank:
Federal funds sold...................... 4,166,720
Securities purchased under agreements
to resell............................. 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,068,535
LESS: Allowance for loan and
lease losses ..............520,024
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income and allowance, and reserve 26,547,511
Assets held in trading accounts......... 758,462
Premises and fixed assets (including
capitalized leases)................... 615,330
Other real estate owned................. 63,769
Investments in unconsolidated
subsidiaries and associated
companies............................. 223,174
Customers' liability to this bank on
acceptances outstanding............... 900,795
Intangible assets....................... 212,220
Other assets............................ 1,186,274
-----------
Total assets............................ $42,711,907
===========
LIABILITIES
Deposits:
In domestic offices................... $21,248,127
Noninterest-bearing .......9,172,079
Interest-bearing .........12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 9,535,088
Noninterest-bearing ..........64,417
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Interest-bearing ......... 9,470,671
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased............... 2,095,668
Securities sold under agreements
to repurchase....................... 69,212
Demand notes issued to the U.S.
Treasury.............................. 107,340
Trading liabilities..................... 615,718
Other borrowed money:
With original maturity of one year
or less............................. 1,638,744
With original maturity of more than
one year............................ 120,863
Bank's liability on acceptances exe-
cuted and outstanding................. 909,527
Subordinated notes and debentures....... 1,047,860
Other liabilities....................... 1,836,573
-----------
Total liabilities....................... 39,224,720
-----------
EQUITY CAPITAL
Common stock............................ 942,284
Surplus................................. 525,666
Undivided profits and capital
reserves.............................. 1,995,316
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 29,668
Cumulative foreign currency transla-
tion adjustments...................... ( 5,747)
-----------
Total equity capital.................... 3,487,187
-----------
Total liabilities and equity
capital ........................... $ 42,711,907
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
for
Depositary Shares
Each Representing a One One-Hundredth Interest in a Share of
11 1/8% Series L Redeemable Exchangeable Preferred Stock
of
Cablevision Systems Corporation
Pursuant to the
Exchange Offer
in Respect of All of its Outstanding
Depositary Shares
Each Representing a One One-Hundredth Interest in a Share of
11 1/8% Series L Redeemable Exchangeable Preferred Stock
for
Depositary Shares
Each Representing a One One-Hundredth Interest in a Share of
11 1/8% Series M Redeemable Exchangeable Preferred Stock
_______________
Pursuant to the Prospectus Dated June , 1996
- ------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
JULY , 1996, UNLESS THE EXCHANGE OFFER IS EXTENDED TO A DATE NOT
LATER THAN AUGUST , 1996 (THE "EXPIRATION DATE"). TENDERS OF OLD
DEPOSITARY SHARES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON
THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
- ------------------------------------------------------------------------
To: The First National Bank of Boston, Exchange Agent
The First National Bank of Boston
By Mail: By Hand:
The First National Bank of Boston BancBoston Trust Company
Shareholder Services Division of New York
P.O. Box 1889 55 Broadway, Third Floor
Mail Stop: 45-02-53 New York, New York
Boston, Massachusetts 02105
By Overnight Courier: By Facsimile Transmission:
The First National Bank of Boston (617) 575-2232
Shareholder Services Division (617) 575-2233
150 Royall Street (For Eligible Institutions Only)
Mail Stop: 45-02-53
Canton, Massachusetts 02021
<PAGE>
Delivery of this Letter of Transmittal to an address, or transmission
via facsimile, other than as set forth above will not constitute a valid
delivery. The instructions contained herein should be read carefully before
this Letter of Transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW DEPOSITARY SHARES FOR
THEIR OLD DEPOSITARY SHARES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER
(AND NOT WITHDRAW) THEIR OLD DEPOSITARY SHARES TO THE EXCHANGE AGENT PRIOR TO
THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the
Prospectus (the "Prospectus"), dated June , 1996, of Cablevision Systems
Corporation, a Delaware corporation (the "Company"), which, together with this
Letter of Transmittal and the instructions hereto (the "Letter of Transmittal"),
constitute the Company's offer (the "Exchange Offer") to exchange its depositary
shares (the "New Depositary Shares"), each representing a one one-hundredth
interest in a share of its 11 1/8% Series M Redeemable Exchangeable Preferred
Stock (the "New Preferred Stock") that have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement of which the Prospectus constitutes a part, for its outstanding
depositary shares (the "Old Depositary Shares"), each representing a one one-
hundredth interest in a share of its 11 1/8% Series L Redeemable Exchangeable
Preferred Stock (the "Old Preferred Stock"), upon the terms and subject to the
conditions set forth in the Prospectus. Holders who wish to tender the
additional Depositary Shares representing Old Preferred Stock received by such
holder in respect of the April 1, 1996 dividend payment and to be received by
such holder in respect of the July 1, 1996 dividend payment with respect to the
Old Depositary Shares may do so.
This Letter of Transmittal is to be used by Holders if: (i) depositary
receipts evidencing Old Depositary Shares are to be physically delivered to the
Exchange Agent herewith by Holders; (ii) tender of Old Depositary Shares is to
be made by book-entry transfer to the Exchange Agent's account at The Depository
Trust Company ("DTC") pursuant to the procedures set forth in the Prospectus
under "The Exchange Offer--Procedures for Tendering" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Old Depositary Shares (such participants,
acting on behalf of Holders, are referred to herein, together with such Holders,
as "Acting Holders"); or (iii) tender of Old Depositary Shares is to be made
according to the guaranteed delivery procedures set forth in the Prospectus
under "The Exchange Offer--Procedures for Tendering". Delivery of documents to
DTC does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person:
(i) in whose name Old Depositary Shares are registered on the books of the
Company or any other person who has obtained a properly completed stock power
from the registered Holder; or (ii) in whose name Old Depositary Shares are held
of record by DTC who desires to deliver such Old Depositary Shares by book-entry
transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Depositary Shares
must complete this letter in its entirety.
All capitalized terms used herein and not defined herein shall have
the meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
-2-
<PAGE>
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD
DEPOSITARY SHARES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
-3-
<PAGE>
List below the Old Depositary Shares to which this Letter of
Transmittal relates. If the space provided below is inadequate, list the
depositary receipt numbers and liquidation preferences on a separately executed
schedule and affix the schedule to this Letter of Transmittal.
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD DEPOSITARY SHARES
- --------------------------------------------------------------------------------
Depositary Aggregate
Receipt Liquidation
Number(s)* Preference
(Attach signed Tendered (if less
Name(s) and Address(es) of Holder(s) list if than all)**
(Please fill in, if blank) necessary)
- --------------------------------------------------------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
- --------------------------------------------------------------------------------
TOTAL LIQUIDATION PREFERENCE OF OLD DEPOSITARARY SHARES
TENDERED
===============================================================================
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all
Old Depositary Shares listed. See Instruction 2.
- -------------------------------------------------------------------------------
-4-
<PAGE>
[_] CHECK HERE IF TENDERED OLD DEPOSITARY SHARES ARE BEING DELIVERED BY DTC TO
THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:____________________________________________
DTC Book-Entry Account No.:_______________________________________________
Transaction Code No.:_____________________________________________________
If Holders desire to tender Old Depositary Shares pursuant to the Exchange Offer
and (i) depositary receipts evidencing such Old Depositary Shares are not lost
but are not immediately available, (ii) time will not permit this Letter of
Transmittal, depositary receipts evidencing such Old Depositary Shares or other
required documents to reach the Exchange Agent prior to the Expiration Date or
(iii) the procedures for book-entry transfer cannot be completed prior to the
Expiration Date, such Holders may effect a tender of such Old Depositary Shares
in accordance with the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering".
[_] CHECK HERE IF TENDERED OLD DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Old Depositary Shares:_____________________________
Window Ticket No. (if any):________________________________________________
Date of Execution of
Notice of Guaranteed Delivery:_____________________________________________
Name of Eligible Institution that Guaranteed Delivery:
---------------------------------------------------------------------------
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:_____________________________________________
DTC Book-Entry Account No.: _______________________________________________
Transaction Code No.:______________________________________________________
-5-
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER TENDERING OLD DEPOSITARY SHARES
ACQUIRED AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WISH
TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________
-6-
<PAGE>
Ladies/Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to the Company the aggregate liquidation preference of Old Depositary Shares
indicated above. Subject to and effective upon the acceptance for exchange of
the aggregate liquidation preference of Old Depositary Shares tendered in
accordance with this Letter of Transmittal, the undersigned sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to the Old Depositary Shares tendered hereby. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent its agent and attorney-
in-fact (with full knowledge that the Exchange Agent also acts as the agent of
the Company) with respect to the tendered Old Depositary Shares with full power
of substitution to (i) deliver depositary receipts evidencing such Old
Depositary Shares to the Company, or transfer ownership of such Old Depositary
Shares on the account books maintained by DTC, together in either such case,
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Company and (ii) present such Old Depositary Shares for transfer
on the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Depositary Shares, all in accordance
with the terms of the Exchange Offer. The power of attorney granted in this
paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Depositary
Shares tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are acquired by
the Company. The undersigned also acknowledges that this Exchange Offer is being
made in reliance upon an interpretation by the staff of the Securities and
Exchange Commission that the New Depositary Shares issued in exchange for the
Old Depositary Shares pursuant to the Exchange Offer may be offered for sale,
resold and otherwise transferred by holders thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Depositary Shares are
acquired in the ordinary course of such holders business and such holders have
no arrangement with any person to participate in the distribution of such New
Depositary Shares. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of the New Depositary Shares.
The undersigned represents that (i) the New Depositary Shares acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of such
holder's business, (ii) such holder has no arrangements with any person to
participate in the distribution (within the meaning of the Securities Act) of
such New Depositary Shares and (iii) such holder is not an "affiliate," as
defined under Rule 405 of the Securities Act of the Company or, if such holder
is an affiliate, that such holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New
Depositary Shares. If the undersigned is a broker-dealer that will receive New
Depositary Shares for its own account in exchange for Old Depositary Shares that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such New Depositary Shares; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned will upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the Old Depositary Shares
tendered hereby.
-7-
<PAGE>
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Depositary Shares when, and as if the Company has
given oral or written notice thereof to the Exchange Agent. If any tendered Old
Depositary Shares are not accepted for exchange pursuant to the Exchange Offer
for any reason, depositary receipts evidencing any such unaccepted Old
Depositary Shares will be returned (except as noted below with respect to
tenders through DTC), without expense, to the undersigned at the address shown
below or at a different address shown below or at a different address as may be
indicated under "Special Issuance Instructions" as promptly as practicable after
the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Old Depositary Shares pursuant
to the procedures described under the caption "The Exchange Offer--Procedures
for Tendering" in the Prospectus and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions", please
issue the depositary receipts evidencing the New Depositary Shares issued in
exchange for the Old Depositary Shares accepted for exchange and return any Old
Depositary Shares not tendered or not exchanged, in the name(s) of the
undersigned (or in either such event in the case of Old Depositary Shares
tendered by DTC, by credit to the account at DTC). Similarly, unless otherwise
indicated under "Special Delivery Instructions", please send the depositary
receipts evidencing the New Depositary Shares issued in exchange for the Old
Depositary Shares accepted for exchange and any depositary receipts evidencing
Old Depositary Shares not tendered or not exchanged (and accompanying documents,
as appropriate) to the undersigned at the address shown below the undersigned's
signatures, unless, in either event, tender is being made through DTC. In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the depositary receipts evidencing the
New Depositary Shares issued in exchange for the Old Depositary Shares accepted
for exchange and return any depositary receipts evidencing Old Depositary Shares
not tendered or not exchanged in the name(s) of, and send said depositary
receipts to, the person(s) so indicated. The undersigned recognizes that the
Company has no obligation pursuant to the "Special Issuance Instructions" and
"Special Delivery Instructions" to transfer any Old Depositary Shares from the
name of the registered holder(s) thereof if the Company does not accept for
exchange any of the Old Depositary Shares so tendered.
-8-
<PAGE>
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
(To Be Completed by All Tendering Holders
of Old Depositary Shares Regardless of Whether Depositary Receipts Evidencing
Old Depositary Shares Are Being Physically Delivered Herewith)
This Letter of Transmittal must be signed by the Holder(s) of Old
Depositary Shares exactly as their name(s) appear(s) on the depositary
receipt(s) evidencing the Old Depositary Shares or, if tendered by a participant
in DTC, exactly as such participant's name appears on a security position
listing as the owner of Old Depositary Shares, or by person(s) authorized to
become registered Holder(s) by endorsements and documents transmitted with this
Letter of Transmittal. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of such
person's authority to so act. See Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the
Old Depositary Shares, then the registered Holder(s) must sign a valid proxy.
X.................................. Date:.....................
X.................................. Date:.....................
Signature(s) of Holder(s) or Authorized Signatory
Name(s): .......................... Address:............................
.......................... ............................
(Please Print) (Including Zip Code)
Capacity:.......................... Area Code and Telephone No.:........
Social Security No.:...............
SIGNATURE GUARANTEE (See Instruction 3 herein)
Certain Signatures Must Be Guaranteed by an Eligible Institution
..............................................................................
(Name of Eligible Institution Guaranteeing Signatures)
..............................................................................
(Address (including zip code) and Telephone Number
(including area code) of Firm)
..............................................................................
(Authorized Signature)
..............................................................................
(Printed Name)
...............................................................................
(Title)
Date:......................
- -------------------------------------------------------------------------------
-9-
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if depositary receipts evidencing the Old Depositary Shares
in the aggregate liquidation preference not tendered are to be issued in the
name of, or the New Depositary Shares issued pursuant to the Exchange Offer are
to be issued to the order of, someone other than the person or persons whose
signature(s) appear(s) within this Letter of Transmittal or issued to an address
different from that shown in the box entitled "Description of Old Depositary
Shares" within this Letter of Transmittal, or if Old Depositary Shares tendered
by book-entry transfer that are not accepted for purchase are to be credited to
an account maintained at DTC.
Name:.................................................
(Please Print)
Address:..............................................
(Please Print)
......................................................
Zip Code
......................................................
Taxpayer Identification or Social Security Number
- -------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if depositary receipts evidencing Old Depositary Shares in
the aggregate liquidation preference not tendered or not accepted for purchase
or the New Depositary Shares issued pursuant to the Exchange Offer are to be
sent to someone other than the person or persons whose signature(s) appear(s)
within this Letter of Transmittal or to an address different from that shown in
the box entitled "Description of Old Depositary Shares" within this Letter of
Transmittal.
Name:.................................................
(Please Print)
Address:..............................................
(Please Print)
......................................................
Zip Code
......................................................
Taxpayer Identification or Social Security Number
-------------------------------------------------------
-10-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer and the Solicitation
1. Delivery of this Letter of Transmittal and Old Depositary Shares. The
depositary receipts evidencing the tendered Old Depositary Shares (or a
confirmation of a book-entry transfer into the Exchange Agent's account at DTC
of all Old Depositary Shares delivered electronically), as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
hereof and any other documents required by this Letter of Transmittal must be
received by the Exchange Agent at its address set forth herein prior to 5:00
P.M., New York City time, on the Expiration Date. The method of delivery of the
tendered depositary receipts evidencing Old Depositary Shares, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or depositary receipts
evidencing Old Depositary Shares should be sent to the Company.
Holders who wish to tender their Old Depositary Shares and (i) whose Old
Depositary Shares are not immediately available or (ii) who cannot deliver their
Old Depositary Shares, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the Expiration Date must tender
their Old Depositary Shares and follow the guaranteed delivery procedures set
forth in the Prospectus. Pursuant to such procedures: (i) such tender must be
made by or through an Eligible Institution; (ii) prior to the Expiration Date,
the Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
Holder of the Old Depositary Shares, the number or numbers of the depositary
receipts evidencing such Old Depositary Shares and the aggregate liquidation
preference of Old Depositary Shares tendered, stating that the tender is being
made thereby and guaranteeing that, within five business days after the
Expiration Date, this Letter of Transmittal (or facsimile thereof) together with
the depositary receipts evidencing the Old Depositary Shares (or a confirmation
of electronic delivery of book-entry delivery into the Exchange Agent's account
at DTC) and any of the required documents will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile hereof), as well as all other
documents required by this Letter of Transmittal and the depositary receipt(s)
evidencing all tendered Old Depositary Shares in proper form for transfer (or a
confirmation of electronic mail delivery of book-entry delivery into the
Exchange Agent's account at DTC), must be received by the Exchange Agent within
five business days after the Expiration Date, all as provided in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures". Any
Holder of Old Depositary Shares who wishes to tender his Old Depositary Shares
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00
P.M., New York City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Depositary Shares will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Old Depositary Shares not properly tendered or any Old Depositary Shares the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Depositary Shares. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or
-11-
<PAGE>
irregularities in connection with tenders of Old Depositary Shares must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Old Depositary Shares,
nor shall any of them incur any liability for failure to give such notification.
Tenders of Old Depositary Shares will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any depositary receipts
evidencing Old Depositary Shares received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost by the Exchange Agent to the
tendering Holders of Old Depositary Shares, unless otherwise provided in this
Letter of Transmittal, as soon as practicable following the Expiration Date.
2. Partial Tenders. If a tendering Holder is tendering less than the
entire aggregate liquidation preference of such Holder's Old Depositary Shares,
such Holder should fill in the aggregate liquidation preference tendered in the
third column of the chart entitled "Description of Old Depositary Shares". The
entire aggregate liquidation preference of Old Depositary Shares delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire aggregate liquidation preference of all Old Depositary
Shares is not tendered, Old Depositary Shares for the aggregate liquidation
preference of depositary receipts evidencing Old Depositary Shares delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire aggregate liquidation preference of all Old Depositary
Shares is not tendered, Old Depositary Shares for the aggregate liquidation
preference of Old Depositary Shares not tendered and a depositary receipt or
receipts evidencing the New Depositary Shares issued in exchange of any Old
Depositary Shares accepted will be sent to the Holder at his or her registered
address, unless a different address is provided in the appropriate box on this
Letter of Transmittal or unless tender is made through DTC, promptly after the
Old Depositary Shares are accepted for exchange.
3. Signatures on the Letter of Transmittal; Stock Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or
facsimile hereof) is signed by the registered Holder(s) of the Old Depositary
Shares tendered hereby, the signature must correspond with the name(s) as
written on the face of the depositary receipt or receipts evidencing the Old
Depositary Shares without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Depositary Shares tendered and the depositary
receipt(s) for New Depositary Shares issued in exchange therefor is to be issued
(or any untendered Old Depositary Shares are to be reissued) to the registered
Holder, such Holder need not and should not endorse any tendered depositary
receipts evidencing Old Depositary Shares, nor provide a separate stock power.
In any other case, such holder must either properly endorse the depositary
receipts evidencing Old Depositary Shares tendered or transmit a properly
completed separate stock power with this Letter of Transmittal, with the
signatures on the endorsement or stock power guaranteed by an Eligible
Institution that is a member of the Stock Transfer Association's approved
medallion program (such as STAMP, SEMP or MSP).
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Old Depositary Shares listed, the
depositary receipts evidencing such Old Depositary Shares must be endorsed or
accompanied by appropriate stock powers signed as the name of the registered
Holder(s) appears on the Old Depositary Shares.
If this Letter of Transmittal (or facsimile hereof) or any depositary
receipts evidencing Old Depositary Shares or stock powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, or officers
of corporations or others acting in a fiduciary or representative capacity, such
persons
-12-
<PAGE>
should so indicate when signing, and unless waived by the Company, evidence
satisfactory to the Company of their authority so to act must be submitted with
this Letter of Transmittal.
Endorsements on depositary receipts evidencing Old Depositary Shares or
signatures on stock powers required by this Instruction 3 must be guaranteed by
an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Old Depositary Shares tendered
pursuant thereto are tendered (i) by a registered Holder (including any
participant in DTC whose name appears on a security position listing as the
owner of Old Depositary Shares) who has not completed the box set forth herein
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" or (ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable spaces, the name and address to which depositary
receipts evidencing New Depositary Shares or depositary receipts evidencing
substitute Old Depositary Shares for the aggregate liquidation preference not
tendered or not accepted for exchange are to be issued or sent, if different
from the name and/or address of the person indicated in the box entitled
"Description of Old Depositary Shares" (or in the case of tender of the Old
Depositary Shares through DTC, if different from DTC). In the case of issuance
in a different name, the taxpayer identification or social security number of
the person named must also be indicated.
5. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Depositary Shares pursuant to the Exchange
Offer. If, however, depositary receipts evidencing New Depositary Shares or Old
Depositary Shares for the aggregate liquidation preference not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered Holder of the Old
Depositary Shares tendered hereby, or if tendered Old Depositary Shares are
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Depositary Shares pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other person) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to depositary receipts evidencing the Old
Depositary Shares listed in this Letter of Transmittal.
6. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any Old Depositary Shares tendered.
7. Mutilated, Lost, Stolen or Destroyed Depositary Receipts Evidencing
Old Depositary Shares. Any tendering Holder whose depositary receipts evidencing
Old Depositary Shares have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated herein for further
instruction.
8. Requests for Additional Copies. Requests for additional copies of the
Prospectus or this Letter of Transmittal may be directed to the Exchange Agent
at the address specified in this Letter of Transmittal. Holders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer.
-13-
<PAGE>
(DO NOT WRITE IN SPACE BELOW)
==============================================================================
Depositary Receipt Old Depositary Shares Old Depositary Shares
Surrendered Tendered Accepted
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Delivery Prepared by _________ Checked by _____________ Date _____________
===============================================================================
-14-
<PAGE>
The Exchange Agent for the Exchange Offer is:
The First National Bank of Boston
By Mail: By Hand:
The First National Bank of Boston BancBoston Trust Company
Shareholder Services Division of New York
P.O. Box 1889 55 Broadway, Third Floor
Mail Stop: 45-02-53 New York, New York
Boston, Massachusetts 02105
By Overnight Courier: By Facsimile Transmission:
The First National Bank of Boston (617) 575-2232
Shareholder Services Division (617) 575-2233
150 Royall Street (For Eligible Institutions Only)
Mail Stop: 45-02-53
Canton, Massachusetts 02021
-15-
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
Depositary Shares
Each Representing a One One-Hundredth Interest in a Share of
11 1/8% Series L Redeemable Exchangeable Preferred Stock
of
Cablevision Systems Corporation
As set forth in the Prospectus, dated June , 1996 (the "Prospectus"), of
Cablevision Systems Corporation (the "Company"), in the accompanying Letter of
Transmittal and instructions thereto (the "Letter of Transmittal"), this form or
one substantially equivalent hereto must be used to accept the Company's
exchange offer (the "Exchange Offer") to purchase all of its outstanding
depositary shares (the "Old Depositary Shares"), each representing a one one-
hundredth interest in a share of 11 1/8% Series L Redeemable Exchangeable
Preferred Stock (the "Old Preferred Stock"), if (i) depositary receipts
evidencing the Old Depositary Shares to be tendered for purchase and payment are
not lost but are not immediately available, (ii) time will not permit the Letter
of Transmittal, depositary receipts evidencing such Old Depositary Shares or
other required documents to reach the Exchange Agent prior to the Expiration
Date or (iii) the procedures for book-entry transfer cannot be completed prior
to the Expiration Date. This form may be delivered by an Eligible Institution
by mail or hand delivery or transmitted via facsimile to the Exchange Agent as
set forth below. All capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Prospectus.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY ,
1996, UNLESS THE OFFER IS EXTENDED TO A DATE NOT LATER THAN AUGUST , 1996
(THE "EXPIRATION DATE"). TENDERS OF OLD DEPOSITARY SHARES MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M. ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent:
The First National Bank of Boston
By Mail: By Hand:
The First National Bank of Boston BancBoston Trust Company
Shareholder Services Division of New York
P.O. Box 1889 55 Broadway, Third Floor
Mail Stop: 45-02-53 New York, New York
Boston, Massachusetts 02105
By Overnight Courier: By Facsimile Transmission:
The First National Bank of Boston (617) 575-2232
Shareholder Services Division (617) 575-2233
150 Royall Street (For Eligible Institutions Only)
Mail Stop: 45-02-53
Canton, Massachusetts 02021
Delivery of this instrument to an address, or transmission via facsimile,
other than as set forth above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies/Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Exchange Offer and the Letter of Transmittal,
receipt of which is hereby acknowledged, the aggregate liquidation preference of
Old Preferred Stock represented by the Old Depositary Shares set forth below
pursuant to the guaranteed delivery procedures set forth in the Prospectus.
<PAGE>
The undersigned understands that tenders of Old Depositary Shares pursuant
to the Exchange Offer may not be withdrawn after 5:00 p.m., New York City time
on the Business Day prior to the Expiration Date. Tenders of Old Depositary
Shares may also be withdrawn if the Exchange Offer is terminated without any
such Old Depositary Shares being purchased thereunder or as otherwise provided
in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
-2-
<PAGE>
PLEASE SIGN AND COMPLETE
<TABLE>
<CAPTION>
<S> <C>
Signature(s) of Registered Owner(s) or Authorized Name(s) of Registered Holder(s):
Signatory:
---------------------------------------------- ---------------------------------------------------
- --------------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------------- ---------------------------------------------------
Aggregate Liquidation Preference of Old Preferred Stock Address:
Represented by the Old Depositary Shares Tendered: ------------------------------------------
------
---------------------------------------------------
- ---------------------------------------------------------
Area Code and Telephone No.:
No(s). of depositary receipts evidencing Old Depositary ----------------------
Shares (if available):
----------------------------------- If Old Depositary Shares will be delivered by
book-entry transfer at The Depository Trust
- --------------------------------------------------------- Company, insert, Depository Account No.:
- --------------------------------------------------------- ---------------------------------------------------
Date:
----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered holder(s) of
Old Depositary Shares exactly as its (their) name(s) appear on the depositary
receipts evidencing Old Depositary Shares or on a security position listing as
the owner of Old Depositary Shares, or by person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s):
---------------------------------------------------------------------
Capacity:
---------------------------------------------------------------------
Address(es):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Do not send depositary receipts evidencing Old Depositary Shares with this form.
Depositary receipts evidencing Old Depositary Shares should be sent to the
Exchange Agent together with a properly completed and duly executed Letter of
Transmittal.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Old Depositary Shares on whose behalf
this tender is being made "own(s)" the Old Depositary Shares covered hereby
within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, (b) represents that such tender of Old Depositary Shares complies with
such Rule 14e-4, and (c) guarantees that, within five New York Stock Exchange
trading days from the date of this Notice of Guaranteed Delivery, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
together with depositary receipts evidencing Old Depositary Shares covered
hereby in proper form for transfer (or confirmation of the book-entry transfer
of such Old Depositary Shares into the Exchange Agent's account at The
Depository Trust Company, pursuant to the procedure for book-entry transfer set
forth in the Prospectus) and required documents will be deposited by the
undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and depositary receipts evidencing Old Depositary Shares tendered hereby to the
Exchange Agent within the time period set forth above and that failure to do so
could result in financial loss to the undersigned.
<TABLE>
<CAPTION>
<S> <C>
Name of Firm:
------------------------------------------------ -----------------------------------------------------
Authorized Signature
Address: Name:
----------------------------------------------------- ------------------------------------------------
Title:
- ------------------------------------------------------------- -----------------------------------------------
Area Code and Telephone No.: Date:
--------------------------------- ------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
