AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 1998
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CSC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2776686
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
(516) 364-8450
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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ROBERT S. LEMLE
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 JONATHAN JEWETT
SULLIVAN & CROMWELL SHEARMAN & STERLING
125 BROAD STREET 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10022
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AS
DETERMINED IN LIGHT OF MARKET CONDITIONS.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------ ------------------ ------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Debt Securities.................................. $1,000,000,000 100% $1,000,000,000(3) $236,000(4)
================================================= ================== =================== ===================== ==================
<FN>
(1) In United States dollars or the equivalent thereof in any other currency, currency unit or units, or composite currency or
currencies.
(2) Estimated for the sole purpose of computing the registration fee in accordance with Rule 457(o).
(3) Such amount represents the principal amount of any Debt Securities issued at their principal amount or the issue price rather
than the principal amount of any Debt Securities issued at an original issue discount.
(4) Of the $1,000,000,000 of Debt Securities registered hereby, $200,000,000 aggregate principal amount of such Debt Securities were
registered pursuant to Registration Statement No. 333-35263 and are unissued as of the date hereof. A registration fee of
$60,606 was previously paid with respect to such Debt Securities.
</FN>
</TABLE>
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PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED HEREIN IS A COMBINED PROSPECTUS WHICH ALSO RELATES TO REGISTRATION
STATEMENT NO. 333-35263 ON FORM S-3 DECLARED EFFECTIVE ON OCTOBER 1, 1997.
$200,000,000 OF DEBT SECURITIES OF CSC HOLDINGS, INC. (AT SUCH TIME NAMED
CABLEVISION SYSTEMS CORPORATION) ARE BEING CARRIED FORWARD FROM SUCH EARLIER
REGISTRATION STATEMENT AND AN AGGREGATE FILING FEE OF $60,606 ASSOCIATED WITH
SUCH DEBT SECURITIES WAS PREVIOUSLY PAID WITH THE EARLIER REGISTRATION
STATEMENT.
<PAGE>
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>
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 22, 1998
PROSPECTUS
[LOGO]
CSC HOLDINGS, INC.
DEBT SECURITIES
CSC Holdings, Inc. ("CSC Holdings") may from time to time offer,
together or separately, its debt securities (the "Debt Securities"), which may
be either senior debt securities (the "Senior Debt Securities") or subordinated
debt securities (the "Subordinated Debt Securities"), in amounts, at prices and
terms to be determined at the time of offering.
The Debt Securities offered pursuant to this Prospectus may be issued
in one or more series or issuances and will be limited to $1,000,000,000
aggregate principal amount (or its equivalent (based on the applicable exchange
rate at the time of sale) in one or more foreign currencies, currency units or
composite currencies as shall be designated by the Company). Certain specific
terms of the particular Debt Securities in respect of which this Prospectus is
being delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), including, where applicable, the specific title,
aggregate principal amount, the denomination, whether such Debt Securities are
secured or unsecured obligations, maturity, premium, if any, the interest rate
(which may be fixed, floating or adjustable), the time and method of calculating
payment of interest, if any, the place or places where principal of (and
premium, if any) and interest, if any, on such Debt Securities will be payable,
the currency in which principal of (and premium, if any) and interest, if any,
on such Debt Securities will be payable, any terms of redemption at the option
of the Company or the holder, any sinking fund provisions, the initial public
offering price and other special terms. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of CSC Holdings. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Indebtedness of CSC Holdings.
The Prospectus Supplement will contain information concerning U.S.
federal income tax considerations, if applicable to the Debt Securities offered.
INVESTMENT IN THE DEBT SECURITIES INVOLVES SIGNIFICANT RISKS, INCLUDING
THOSE DISCUSSED UNDER RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS, WHICH
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS.
------------------------------------
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 Debt Securities will be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved in
the sale of the Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents, dealers or underwriters and any applicable
commissions or discounts will be set forth in or may be calculated from the
Prospectus Supplement with respect to such Debt Securities.
The date of this Prospectus is June __, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices: Seven World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and are also available on the Commission's worldwide web site at
http://www.sec.gov. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information also may be inspected at the offices of the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, as amended by the Company's Form 10-K/A for
the fiscal year ended December 31, 1997 (collectively, the "Form
10-K");
(b) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998 (the "Form 10-Q");
(c) the Company's Current Reports on Form 8-K filed February 6,
1998, March 6, 1998 and March 19, 1998; and
(d) all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act on or after the date of this
Prospectus and prior to the termination of the offering made hereby.
Any statement contained herein or in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a subsequent
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of any such person, a copy of any or all of the information incor-
porated herein by reference other than exhibits to such information (unless such
exhibits are specifically incorporated by reference into such information). The
Company's principal executive offices are located at One Media Crossways,
Woodbury, New York 11797, and its telephone number is (516) 364-8450. Requests
for such copies should be directed to the Secretary of the Company at its
executive offices.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DEBT
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT, STABILIZING, THE
PURCHASE OF DEBT SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF
DISTRIBUTION".
-2-
<PAGE>
As used herein, unless the context otherwise requires, the term
"Company" refers to CSC Holdings, Inc. and its subsidiaries. The term
"Consolidated Financial Statements" refers to the Company's Consolidated
Financial Statements and the notes thereto incorporated by reference from the
Form 10-K and the term "Management's Discussion and Analysis" refers to the
Management's Discussion and Analysis of Financial Condition and Results of
Operations incorporated by reference from the Form 10-K or the Form 10-Q, as
applicable.
---------------------------
This Prospectus contains or incorporates by reference statements that
constitute forward looking information within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward looking statements are not guarantees of future performance or results
and involve risks and uncertainties and that actual results or developments may
differ materially from the forward looking statements as a result of various
factors. Factors that may cause such differences to occur include but are not
limited to (i) the level of growth in the Company's revenues, (ii) subscriber
demand, competition, the cost of programming and industry conditions, (iii)
whether expenses of the Company continue to increase or increase at a rate
faster than expected, (iv) whether any unconsummated transactions are
consummated on the terms and at the times set forth (if at all), (v) new
competitors entering the Company's franchise areas and (vi) other risks and
uncertainties inherent in the cable television business. See "Risk Factors".
THE COMPANY
The Company, a subsidiary of Cablevision Systems Corporation, is one of
the largest operators of cable television systems in the United States, with
approximately 2,539,000 subscribers in eight states as of March 31, 1998, based
on the number of basic subscribers in systems which are currently majority owned
and managed by the Company. Through Rainbow Media Holdings, Inc. ("Rainbow
Media"), a company owned 75% by the Company and 25% by NBC Cable Holding, Inc.
("NBC Cable"), a subsidiary of National Broadcasting Company, Inc. ("NBC"), the
Company owns interest in and manages numerous national and regional programming
networks, the Madison Square Garden sports and entertainment business and cable
television advertising sales companies. The Company, through Cablevision
Lightpath, Inc. ("Lightpath"), a wholly-owned subsidiary of the Company,
provides switched telephone service. The Company also owns Cablevision
Electronics Investments, Inc., doing business as Nobody Beats The Wiz, an
electronics retailer operating approximately 40 retail locations in the New York
City metropolitan area.
CABLE TELEVISION
The cable television systems that are currently majority owned and
managed by the Company (the "Company's cable television systems") served
approximately 2,539,000 subscribers in eight states as of March 31, 1998. The
Company's cable television systems have generally been characterized by
relatively high revenues per subscriber ($42.19 as of March 31, 1998) and a high
ratio of premium service units to basic subscribers (1.6:1 as of March 31,
1998). 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 Company's Restricted Group of
subsidiaries (the "Restricted Group") served approximately 2,490,000 subscribers
as of March 31, 1998, primarily in and around metropolitan New York City
(including in the boroughs of Brooklyn and The Bronx, on Long Island, in
Fairfield County, Connecticut, in New Jersey and in Westchester County, New
York) and in and around Boston, Massachusetts, and in and around the greater
Cleveland, Ohio metropolitan area. The Restricted Group also includes the
commercial telephony operations of the Company's subsidiary, Lightpath, on Long
Island, New York. The revenue per subscriber and ratio of premium service units
to basic subscribers for cable television systems in the Restricted Group for
March 1998 were $42.42 and 1.6:1, respectively.
The Unrestricted Group includes (i) Rainbow Media, (ii) cable
television operations that served approximately 49,000 subscribers as of March
31, 1998, (iii) Cablevision Electronics Investments, Inc., and (iv) CSC
Technology, Inc. (the Company's subsidiary engaged in research and development
of new technology).
-3-
<PAGE>
PROGRAMMING AND ENTERTAINMENT SERVICES
The Company conducts its programming and entertainment activities
through Rainbow Media, its 75% owned subsidiary and a member of the Unrestricted
Group, and through subsidiaries of Rainbow Media in partnership with certain
unaffiliated entities, including Fox/Liberty Networks, L.L.C. ("Fox/Liberty").
The remaining 25% interest in Rainbow Media is owned by NBC Cable. Rainbow
Media's businesses include leading national and regional programming networks
and the Madison Square Garden sports and entertainment businesses. Rainbow Media
also owns cable television advertising businesses. Rainbow Media's national
entertainment networks include American Movie Classics (which features American
theatrically released classic films and original programming), Bravo (which
features films and performing arts programs, including jazz, dance, classical
music and theatrical and original programming), Romance Classics (which features
theatrically released films, mini-series, made for television movies and
original programming having a romantic theme), MuchMusic (which features a
diverse mix of new and established musical artists) and The Independent Film
Channel (which features independent films made outside the traditional Hollywood
system). National Sports Partners is a national sports network featuring Fox
Sports Net, which provides national sports programming to regional sports
networks. National Sports Partners is 50% owned by Rainbow Media and is managed
and 50% owned by Fox/Liberty. Rainbow Media owns a 60% interest in, and manages,
Regional Programming Partners, a partnership with Fox/Liberty. Regional
Programming Partners owns an approximate 96.3% interest in Madison Square
Garden, a sports and entertainment company that owns and operates the Madison
Square Garden Arena and the adjoining Theatre at Madison Square Garden, the New
York Knickerbockers professional basketball team, the New York Rangers
professional hockey team, the New York Liberty professional women's basketball
team, the New York City Hawks professional arena football team, the Madison
Square Garden Network, Fox Sports New York and Radio City Productions (which
operates Radio City Music Hall in New York City). Regional Programming Partners
also owns interests in regional sports networks that provide regional sports
programming to the New England, Chicago, Cincinnati, Cleveland, San Francisco
and Florida areas, in addition to Madison Square Garden Network and Fox Sports
New York which provide regional sports programming to the New York City
metropolitan area. Rainbow Media owns Rainbow News 12 which operates regional
news networks servicing suburban areas surrounding New York City. Rainbow Media
also owns and operates Rainbow Advertising Sales Corporation, a cable television
advertising company and owns a 50% interest in National Advertising Partners,
which sells national advertising for regional sports networks and is managed and
50% owned by Fox/Liberty. See "Business--Programming Operations--General" in the
Form 10-K.
RISK FACTORS
Purchase of the Debt Securities offered hereby involves various risks,
including the following principal factors, which, together with the other
matters set forth herein, in any Prospectus Supplement 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 and issued substantial amounts of mandatorily
redeemeable preferred stock, primarily to finance acquisitions and expansion of
its operations, to refinance outstanding indebtedness and, to a lesser extent,
for investments in and advances to affiliates. The Company's consolidated debt
plus the Company's 11 3/4% Series H Redeemable Exchange Preferred Stock and 11
1/8% Series M Redeemable Exchangeable Preferred Stock aggregated approximately
$5.7 billion at March 31, 1998. See Note 5 of Notes to the Consolidated
Financial Statements. As a result of the Company's high level of indebtedness
and the significant amount of redeemable preferred stock, the Company has
significant cash requirements to service indebtedness and to pay dividends and
redemption amounts on redeemable preferred stock, increasing the Company's
vulnerability to adverse developments in its business and adverse economic and
industry conditions.
Net Losses and Stockholders' Deficiency. The Company reported net
losses applicable to common shareholder for the three months ended March 31,
1998 and 1997 of $23.5 million and $111.9 million, respectively, and for the
years ended December 31, 1997, 1996 and 1995 of $12.1 million, $459.9 million
and $337.7 million, respectively. At March 31, 1998, the Company had a
stockholders' deficiency of $2.4 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 1995, 1996 and 1997 and will continue at
high levels throughout 1998 and future years as a result of
-4-
<PAGE>
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".
Possible Noncompletion of Certain Transactions. There can be no
assurances that the pending transactions referred to in the Company's 10-Q for
the fiscal quarter ended March 31, 1998, including the transactions contemplated
by the non-binding letter of intent for Cablevision Systems Corporation
("Cablevision Parent") to acquire the cable television systems owned by
Tele-Communications, Inc. ("TCI") in and around Hartford, Vernon, Branford and
Lakeville, Connecticut, will be consummated in a timely manner or at all.
Possible Separation of Rainbow Media from the Company. Following the
completion of the transaction with TCI described in the Company's Form 10-K, CSC
Holdings, the issuer of the Debt Securities, became a wholly-owned subsidiary of
Cablevision Parent. The indirect subsidiaries of TCI contributed in such
transactions (the "TCI Contributed Entities") are held as separate direct
subsidiaries of Cablevision Parent, and Rainbow Media continues to be a 75%-
owned subsidiary of CSC Holdings (with NBC owning the remaining 25% interest).
The Contribution and Merger Agreement with TCI permits the Company under certain
circumstances to restructure these holdings so that Rainbow Media becomes a
separate subsidiary of Cablevision Parent (and would no longer be a subsidiary
of CSC Holdings), and the TCI Contributed Entities become subsidiaries of CSC
Holdings. Following such transactions, the residual equity value of Rainbow
Media would no longer support the ability to pay interest and principal on the
Debt Securities and other debt.
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,
the offering of new services and the further participation in existing services,
the funding of costs of cable programming services prior to their becoming
cash-flow positive, and the servicing, repayment or refinancing of its
indebtedness and mandatorily redeemable preferred stock. The Company will
require significant additional financing, through debt and/or equity issuances,
to meet its capital expenditures plans and to pay the principal of and interest
on its debt and to pay dividends and make redemption payments on its preferred
stock. The Company also intends to incur additional costs to facilitate the
startup of such adjunct businesses as high speed data service, digital video
service and residential telephony. Depending upon the timing and scope of the
rollout of these businesses, the Company may require additional capital.
Depending on the scope of the Company's participation in the PCS and DBS
ventures, additional capital may also be required for these businesses. In
addition, the Company may require additional capital if it elects to pay cash to
acquire ITT Corporation's remaining interest in MSG following an exercise by ITT
Corporation of its put rights at approximately $94 million in cash or by the
Company of its call rights. 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 Commitments. The Company intends to
make substantial capital expenditures, including major system upgrades, with
respect to its cable television systems over the next several years. In
addition, the Company, through Rainbow Media and its subsidiaries, 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
12 of Notes to the Consolidated Financial Statements for a discussion of
commitments.
-5-
<PAGE>
Intangible Assets. The Company had total assets at March 31, 1998 of
$5.6 billion, of which $2.3 billion were intangible assets, consisting of
franchises, affiliation agreements, excess cost over fair value of net assets
required and deferred financing, acquisition and other costs. 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, 1998, Charles F. Dolan beneficially owned and possessed sole voting
power with respect to 767,616 shares or 1.5% of the Cablevision Parent's
outstanding Class A common stock (the "Class A Common Stock") and 9,931,550
shares or 44.8% of the Cablevision Parent'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, 1998, an aggregate of 2,267,102
shares or 3.0% of the outstanding Class B Common Stock were held by a Grantor
Retained Annuity Trust (the "GRA Trust") 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 Trust due to his right to
reacquire the Class B Common Stock held by the GRA Trust by substituting other
property of equivalent value, but, until such event, the GRA Trust, through its
co-trustees (who are Mr. Dolan and his spouse) has the power to vote and dispose
of the shares of Class B Common Stock held by it. As a result of his beneficial
ownership of the shares held by the GRA Trust, as of March 31, 1998, Mr. Dolan
beneficially owned 767,616 shares or 1.5% of the Cablevision Parent's
outstanding Class A Common Stock and 12,198,562 shares or 55.0% of the
Cablevision Parent's outstanding Class B Common Stock. On a combined basis,
these shares represented 17.3% of the total number of shares of both classes of
Common Stock and 44.7% of the total voting power of the Common Stock. 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
1998, an additional 999,500 shares of Class A Common Stock or 1.9% of the Class
A Common Stock and 9,993,856 shares of the Class B Common Stock or 45.0% of the
Class B Common Stock and 36.8% of the total voting power of all classes of the
Common Stock. As a result of this stock ownership, Dolan family members have the
power to elect all the directors of Cablevision Parent subject to election by
holders of the Class B Common Stock, which directors constitute 75% of the
entire Board of Directors of Cablevision Parent. 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 Cablevision Parent'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 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 the Dolan family members will not be modified as a
result of any transfer of legal or beneficial ownership thereof.
Restrictive Covenants. The Company's principal bank credit facility
(the "Credit Agreement") and certain of the Company's other debt instruments
contain various financial and operating covenants which, among other things,
require the maintenance of certain financial ratios and restrict the Company's
ability to borrow funds from other sources and to utilize funds for various
purposes, including investments in certain subsidiaries. Violation of the
covenants in the Credit Agreement or in the indentures governing the Company's
publicly-issued debentures and notes could result in a default under the Credit
Agreement which would permit the bank lenders thereunder (i) to restrict the
Company's ability to borrow undrawn funds under the Credit Agreement and (ii) 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 1993 and 1994, the Federal Communications
Commission ("FCC") ordered reductions in cable television rates. In 1995, a
Federal appeals court upheld the material aspects of the FCC's rate regulation
scheme. Congress subsequently enacted legislation (the "Telecommunications Act
of 1996") that relaxes the regulation of certain cable television rates;
however, the most significant rate regulation relaxation affecting the Company
will not occur until after March 31, 1999, and legislation has been introduced
in Congress to postpone this date indefinitely. See
"Business--Competition--Cable Television" and "Business--Regulation--Cable
Television" in the Form 10-K.
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<PAGE>
Risk of Competition. Cable operators compete with a variety of
distribution systems, including broadcast television stations, DBS, multichannel
multipoint distribution services ("MMDS"), satellite master antenna systems
("SMATV") and private home dish earth stations. For example, four DBS systems
are now operational in the United States, some with investment by companies with
substantial resources such as Hughes Electronics Corp. The 1992 Cable Act
prohibits a cable programmer that is owned by or affiliated with a cable
operator (such as Rainbow Media) 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
Telecommunications Act of 1996 gives telephone companies and other video
providers the option of providing video programming to subscribers through "open
video systems" ("OVS"), a wired video delivery system similar to a cable
television system that would not require a local cable franchise. Several OVS
operators have sought to enter New York City, Boston and Westchester County, New
York and one, RCN, is currently operating in Boston and New York City.
Additional video competition to cable systems is possible from new wireless
local multipoint distribution services ("LMDS") authorized by the FCC, for which
spectrum was recently auctioned by the FCC.
Competition from Telephone Companies. The 1984 Cable Act barred
co-ownership of telephone companies and cable television systems operating in
the same service areas. 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 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, and in
certain locations have commenced offering service in conpetition with the
Company. See "Business--Regulation--Cable Television" in the Form 10-K.
Risk of Non-Exclusive Franchises and Franchise Renewals. The Company's
cable television systems are operated primarily under non-exclusive 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 either temporary operating agreements or without
a license while negotiating renewal terms with the franchising authorities. See
"Business--Cable Television Operations--Franchises" in the Form 10-K.
-7-
<PAGE>
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Debt Securities will be added
to the Company's general funds and used for general corporate purposes,
including the repayment of indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES AND
DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES
As set forth below, the Company had a ratio of earnings to cover fixed
charges for the three months ended March 31, 1998 and for 1997, and a deficiency
of earnings available to cover fixed charges for each of 1996, 1995, 1994 and
1993, on an historical basis.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
----------------- --------- --------- ---------- ----------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges................... 1.16 1.36 -- -- -- --
Deficiency of earnings
available to cover fixed
charges................... -- -- $(332,079) $(317,458) $(315,151) $(246,782)
</TABLE>
-8-
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time in one or more
series. The particular terms of each series of Debt Securities offered by any
Prospectus Supplement or Prospectus Supplements will be described therein. The
Senior Debt Securities will be issued under an Indenture (the "Senior
Indenture"), between the Company and The Bank of New York (the "Senior Trustee")
prior to the issuance of the Senior Debt Securities. The Subordinated Debt
Securities will be issued under an Indenture (the "Subordinated Indenture"),
between the Company and The Bank of New York (the "Subordinated Trustee") prior
to the issuance of the Subordinated Debt Securities. The Senior Indenture and
the Subordinated Indenture are referred to herein individually as an "Indenture"
and collectively as the "Indentures", and the Senior Trustee and the
Subordinated Trustee are referred to herein individually as a "Trustee" and
collectively as the "Trustees". A copy of each Indenture is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The
Indentures are subject to and are governed by the Trust Indenture Act of 1939,
as amended.
The Debt Securities offered pursuant to this Prospectus will be limited
to $1,000,000,000 aggregate principal amount (or (i) its equivalent (based on
the applicable exchange rate at the time of sale), if Debt Securities are issued
with principal amounts denominated in one or more foreign currencies or currency
units as shall be designated by the Company, or (ii) such greater amount, if
Debt Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $1,000,000,000 to the Company). The statements herein
relating to the Debt Securities and the Indentures are summaries and are subject
to the detailed provisions of the Indentures. Where no distinction is made
between the Senior Debt Securities and the Subordinated Debt Securities or
between the Senior Indenture and the Subordinated Indenture, such summaries
refer to any Debt Securities and either Indenture. The following summaries of
certain provisions of the Indentures do not purport to be complete, and where
reference is made to particular provisions of the Indentures, such provisions,
including the definitions of certain terms, are incorporated by reference as a
part of such summaries or terms, which are qualified in their entirety by such
reference. The definitions of certain capitalized terms used in the following
summary are set forth below under "Certain Definitions".
GENERAL
The Debt Securities may be secured or general unsecured obligations of
the Company. The Indentures do not limit the aggregate amount of Debt Securities
which may be issued thereunder, and Debt Securities may be issued thereunder
from time to time in separate series up to the aggregate amount from time to
time authorized by the Company for each series. Unless otherwise specified in
the Prospectus Supplement, the Senior Debt Securities when issued will be
unsubordinated obligations of the Company and will rank equally and ratably with
all other unsubordinated indebtedness of the Company. The Subordinated Debt
Securities when issued will be subordinated in right of payment to the prior
payment in full of all Senior Indebtedness (as defined) of the Company as
described under "Subordination of Subordinated Debt Securities" and in the
Prospectus Supplement applicable to an offering of Subordinated Debt Securities.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Debt Securities in respect of
which this Prospectus is being delivered: (1) the title and ranking of such Debt
Securities and whether they will be Senior Debt Securities or Subordinated Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities; (3) the person to whom any interest on any Debt Security of the
series shall be payable if other than the person in whose name the Debt Security
is registered on the regular record date; (4) the date or dates on which such
Debt Securities will mature; (5) the rate or rates of interest, if any, or
the method of calculation thereof, which such Debt Securities will bear, the
date or dates from which any such interest will accrue, the interest payment
dates on which any such interest on such Debt Securities will be payable and the
regular record date for any interest payable on any interest payment date; (6)
the place or places where the principal of, premium, if any, and interest on
such Debt Securities will be payable; (7) the period or periods within which,
the events upon the occurrence of which, and the price or prices at which, such
Debt Securities may, pursuant to any optional or mandatory provisions, be
redeemed or purchased, in whole or in part, by the Company and any terms and
conditions relevant thereto; (8) the obligations of the Company, if any, to
redeem or repurchase such Debt Securities at the option of the Holders; (9) the
denominations in which any such Debt Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof; (10) any index or
formula used to determine the amount of payments of principal of and any premium
and interest on such Debt Securities; (11) the currency, currencies or currency
unit or units of payment of principal of and any premium and interest on such
Debt Securities if other than U.S. dollars; (12) if the principal of, or
premium, if any,
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<PAGE>
or interest on such Debt Securities is to be payable, at the election of the
Company or a holder thereof, in one or more currencies or currency units other
than that or those in which such Debt Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal of and
any premium and interest on Debt Securities of such series as to which such
election is made shall be payable, and the periods within which and the terms
and conditions upon which such election is to be made; (13) if other than the
principal amount thereof, the portion of the principal amount of such Debt
Securities of the series which will be payable upon acceleration of the maturity
thereof; (14) if the principal amount of any Debt Securities which will be
payable at the maturity thereof will not be determinable as of any date prior to
such maturity, the amount which will be deemed to be the outstanding principal
amount of such Debt Securities; (15) the applicability of any provisions
described under "Defeasance"; (16) whether any of such Debt Securities are to be
issuable in permanent global form ("Global Security") and, if so, the terms and
conditions, if any, upon which interests in such Securities in global form may
be exchanged, in whole or in part, for the individual Debt Securities
represented thereby; (17) the applicability of any provisions described under
"Event of Default" and any additional Event of Default applicable thereto; (18)
any deletions from, modifications of or additions to the covenants applicable to
such Debt Securities; (19) whether such Debt Securities are secured; and (20)
any other terms of such Debt Securities not inconsistent with the provisions of
the applicable Indenture.
Debt Securities may be issued at a discount from their principal
amount. United States Federal income tax considerations and other special
considerations applicable to any such original issue discount Debt Securities
will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities will be set
forth in the applicable Prospectus Supplement.
Since the Company is primarily a holding company, the rights of the
Company, and hence the right of creditors of the Company (including the Holders
of Debt Securities), to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of any such subsidiary, including trade
creditors, except to the extent that claims of the Company itself as a creditor
of the subsidiary may be recognized.
The Indentures do not contain any provisions that limit the ability of
the Company to incur indebtedness or that afford Holders of the Debt Securities
protection in the event of a highly leveraged or similar transaction involving
the Company, other than as described below under "Certain Covenants of the
Company--Covenants Applicable to all Debt Securities--Limitation on
Indebtedness".
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of principal, premium, if any, and
interest on the Debt Securities will be payable, and the exchange, conversion
and transfer of Debt Securities will be registerable, at the office or agency of
the Company maintained for such purposes and at any other office or agency
maintained for such purpose. No service charge will be made for any registration
of transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become due
and payable may be repaid to the Company and thereafter the Holder of such Debt
Security may look only to the Company for payment thereof.
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<PAGE>
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary ("Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such a case, one or more Global Securities
will be issued in a denomination or aggregate denomination equal to the portion
of the aggregate principal amount of Outstanding Debt Securities of the series
to be represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered form, a Global
Security may not be registered for transfer or exchange except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any nominee to a successor Depositary or a
nominee of such successor Depositary and except in the circumstances described
in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on behalf
of the Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interest in such Global Security will be limited to participants or Persons that
may hold interests through participants. Ownership of beneficial interests by
participants in such Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by Persons that hold through participants will
be shown on, and the transfer of such ownership interests within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. The
foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
Debt Securities will be issued in fully registered, certificated form
("Definitive Securities") to holders or their nominees, rather than to the
Depositary or its nominee, only if (i) the Depositary advised the applicable
Trustee in writing that the Depositary is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Debt Securities
and it is unable to locate a qualified successor, (ii) the Company, at its
option, elects to terminate the book-entry system or (iii) after the occurrence
of an Event of Default with respect to such Debt Securities, a holder of Debt
Securities advises the applicable Trustee in writing that it wishes to receive a
Definitive Security.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all applicable
holders through the Depositary and its Participants of the availability of
Definitive Securities. Upon surrender by the Depositary of the definitive
certificates representing the corresponding Debt Securities and receipt of
instructions for re-registration, the applicable Trustee will reissue such Debt
Securities as Definitive Securities to such holders.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Securities
represented by such Global Security for all purposes under the applicable
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the applicable Indenture.
Accordingly, each Person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such Person is not a
participant, on the procedures of the participant through which such Person owns
its interest, to exercise any rights of a Holder under the applicable
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<PAGE>
Indenture. The Company understands that under existing industry practices, if
the Company requests any action of Holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a Holder
is entitled to give or take under the applicable Indenture, the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN DEFINITIONS
Unless otherwise specified in the applicable Prospectus Supplement, the
following definitions are applicable to the Indenture relating to the Debt
Securities being offered pursuant to such Prospectus Supplement. Reference is
made to the applicable Indenture for the full definition of all such terms.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at
the time such Person is merged with or into the Company or a subsidiary of the
Company or becomes a subsidiary of the Company or (b) assumed in connection with
the acquisition of assets from such Person.
"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.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Banks" means the lenders from time to time under the Credit Agreement.
"Capitalized Lease Obligation" means any obligation of a person to pay
rent or other amounts under a lease with respect to any property (whether real,
personal or mixed) acquired or leased by such Person and used in its business
that is required to be accounted for as a liability on the balance sheet of such
Person in accordance with U.S. generally accepted accounting principles ("GAAP")
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.
"Consolidated Net Tangible Assets" of any Person means, as of any date,
(a) all amounts that would be shown as assets on a consolidated balance sheet of
such Person and its Restricted Subsidiaries prepared in accordance with GAAP,
less (b) the amount thereof constituting goodwill and other intangible assets as
calculated in accordance with GAAP.
"Cumulative Cash Flow Credit" means the sum of:
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<PAGE>
(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
issuance 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 GAAP,
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 with 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 GAAP) 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).
"Debt" does not include (i) Disqualified Stock, (ii) any liability for federal,
state, local or other taxes owed or owing by such Person or (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities).
"Disqualified Stock" means, with respect to any series of Debt
Securities, 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 such series of Debt Securities.
"Indebtedness" with respect to any Person, means the Debt of such
Person; 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
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<PAGE>
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 stock, 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.
"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). A Person shall be deemed to own subject to a Lien any
property which such Person has acquired or holds subject to the interest of a
vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement.
"Mandatorily Redeemable Preferred Stock" means the Company's Series H
Redeemable Exchangeable Preferred Stock, Series M Redeemable Exchangeable
Preferred Stock and any other series of capital stock of the Company that is
Disqualified Stock outstanding at the time of issuance of the applicable series
of Debt Securities and any series of preferred stock of the Company issued in
exchange for, or the proceeds of which are used to repurchase, redeem, defease
or otherwise acquire, all or any portion of the Series H Redeemable Exchangeable
Preferred Stock, Series M Redeemable Exchangeable Preferred Stock or any other
Mandatorily Redeemable Preferred Stock.
"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 GAAP (except for the amortization of
deferred installation income which shall be excluded from the calculation of
Operating Cash Flow for all purposes of the Indenture): (i) aggregate operating
revenues minus (ii) aggregate operating expenses (including technical,
programming, sales, selling, general and administrative expenses and salaries
and other compensation, net of amounts allocated to Affiliates, paid to any
general partner, director, officer or employee of the Company or any Restricted
Subsidiary, but excluding interest, depreciation and amortization and the amount
of non-cash compensation in respect of the Company's employee incentive stock
programs for such period (not to exceed in the aggregate for any calendar year
7% of the Operating Cash Flow for the previous calendar year) and, to the extent
otherwise included in operating expenses, any losses resulting from a write-off
or write-down 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 Liens" means the following types of Liens:
(a) Liens existing on the date of the applicable issuance date of
Debt Securities of a series;
(b) Liens on shares of the capital stock of an entity that is not
a Restricted Subsidiary, which Liens solely secure a guarantee by the
Company or a Restricted Subsidiary, or both, of Indebtedness of such
entity;
(c) Liens on Receivables and Related Assets (and proceeds
thereto) securing only Indebtedness otherwise permitted to be incurred
by a Securitization Subsidiary;
(d) Liens on shares of the capital stock of a subsidiary of the
Company securing Indebtedness under the Credit Agreement or any renewal
of or replacement of the Credit Agreement;
(e) Liens granted in favor of the Company or any Restricted
Subsidiary;
(f) Liens securing the Debt Securities;
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<PAGE>
(g) Liens securing Acquired Indebtedness created prior to (and
not in connection with or in contemplation of the incurrence of such
Indebtedness by the Company or a Restricted Subsidiary; provided that
such Lien does not extend to any property or assets of the Company or
any Restricted Subsidiary other than the assets acquired in connection
with the incurrence of such Acquired Indebtedness;
(h) Liens securing Interest Swap Obligations or "margin stock",
as defined in Regulations G and U of the Board of Governors of the
Federal Reserve System;
(i) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like liens
arising in the ordinary course of business of the Company or any
Restricted Subsidiary and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings;
(j) Liens for taxes, assessments, government charges or claims
not yet due or that are being contested in good faith by appropriate
proceedings;
(k) zoning restrictions, easements, rights-of-way, restrictions
and other similar charges or encumbrances or minor defects in title not
interfering in any material respect with the business of the Company or
any of its Restricted Subsidiaries;
(1) Liens arising by reason of any judgment, decree or order of
any court, arbitral tribunal or similar entity so long as any
appropriate legal proceedings that may have been initiated for the
review of such judgment, decree or order shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired;
(m) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security or similar legislation;
(n) Liens securing the performance of bids, tenders, leases,
contracts, franchises, public or statutory obligations, surety, stay or
appeal bonds, or other similar obligations arising in the ordinary
course of business;
(o) Leases under which the Company or any Restricted Subsidiary
is the lessee or the lessor;
(p) purchase money mortgages or other purchase money liens
(including without limitation any Capital Lease Obligations) upon any
fixed or capital assets acquired after the applicable issuance date of
Debt Securities of a series, or purchase money mortgages (including
without limitation Capitalized Lease Obligations) on any such assets
hereafter acquired or existing at the time of acquisition of such
assets, whether or not assumed, so long as (i) such mortgage or lien
does not extend to or cover any other asset of the Company or any
Restricted Subsidiary and (ii) such mortgage or lien secures the
obligation to pay the purchase price of such asset, interest thereon
and other charges incurred in connection therewith (or the obligation
under such Capitalized Lease Obligation) only;
(q) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(r) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of
the Company or any of its Restricted Subsidiaries, including rights of
offset and set-off;
(s) Liens to secure other Indebtedness; provided, however, that
the principal amount of any Indebtedness secured by such Liens,
together with the principal amount of any Indebtedness refinancing any
Indebtedness incurred under this clause (s) as permitted by clause (t)
below (and successive refinancings
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thereof), may not exceed 15% of the Company's Consolidated Net Tangible
Assets of the last day of the Company's most recently completed fiscal
year for which financial information is available; and
(t) any extension, renewal or replacement, in whole or in part,
of any Lien described in the foregoing clauses (a) through (s);
provided that any such extension, renewal or replacement shall be no
more restrictive in any material respect than the Lien so extended,
renewed or replaced and shall not extend to any additional property or
assets.
"Receivables and Related Assets" means (i) accounts receivable,
instruments, chattel paper, obligations, general intangibles, equipment and
other similar assets, including interests in merchandise or goods, the sale or
lease of which gives rise to the foregoing, related contractual rights,
guarantees, insurance proceeds, collections and other related assets, (ii)
equipment, (iii) inventory and (iv) proceeds of all of the foregoing.
"Refinancing Indebtedness" means, with respect to any series of Senior
Debt Securities, Indebtedness of the Company incurred to redeem, repurchase,
defease or otherwise acquire or retire for value other Indebtedness that is
subordinate in right of payment to such Senior Debt Securities, so long as any
such new Indebtedness (i) is made subordinate to such Senior Debt Securities at
least to the same extent as the Indebtedness being refinanced and (ii) does not
have (x) an Average Life less than the Average Life of the Indebtedness being
refinanced, (y) a final scheduled maturity earlier than the final scheduled
maturity of the Indebtedness being refinanced or (z) permit redemption at the
option of the holder earlier than the earlier of (A) the final scheduled
maturity of the Indebtedness being refinanced or (B) any date of redemption at
the option of the holder of the Indebtedness being refinanced.
"Restricted Payment" means, with respect to any series of Debt
Securities,
(a) any Stock Payment by the Company or a Restricted Subsidiary;
(b) any direct or indirect payment to redeem, purchase, defease
or otherwise acquire or retire for value, or permit any Restricted
Subsidiary to redeem, purchase, 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 such Debt Securities; provided,
however, that, with respect to any series of Senior Debt Securities,
any direct or indirect payment to redeem, purchase, 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 that is subordinate
in right of payment to such Senior Debt Securities shall not be a
Restricted Payment if either (i) after giving effect thereto, the ratio
of the Senior Debt of the Company and the Restricted Subsidiaries to
Annualized Operating Cash Flow determined as of the last day of the
most recent month for which financial information is available is less
than or equal to 5 to 1 or (ii) such subordinate Indebtedness is
redeemed, purchased, defeased or otherwise acquired or retired in
exchange for, or out of, (x) the proceeds of a sale (within one year
before or 180 days after such redemption, purchase, defeasance,
acquisition or retirement) of Refinancing Indebtedness or capital stock
of the Company or warrants, rights or options to acquire capital stock
of the Company or (y) any source of funds other than the incurrence of
Indebtedness; or
(c) any direct or indirect payment to redeem, purchase, defease
or otherwise acquire or retire for value any Disqualified Stock at its
mandatory redemption date or other maturity date if and to the extent
that Indebtedness is incurred to finance such redemption, purchase,
defeasance or other acquisition or retirement; provided, however, that
the redemption, purchase, defeasance or other acquisition or retirement
of Mandatorily Redeemable Preferred Stock at its mandatory redemption
or other maturity date shall not be a Restricted Payment if and to the
extent any Indebtedness incurred to finance all or a portion of the
purchase or redemption price does not have a final scheduled maturity
date, or permit redemption at the option of the holder thereof, earlier
than the final scheduled maturity of such series of Debt Securities.
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary or (y) any Investment or designation of a Restricted Subsidiary as an
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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 applicable Indenture or created subsequent thereto,
designated from time to time by the Company as a "Restricted Subsidiary",
provided, however, that no subsidiary that is not a Securitization 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.
"Securitization Subsidiary" means a Restricted Subsidiary that is
established for the limited purpose of acquiring and financing Receivables and
Related Assets and engaging in activities ancillary thereto; provided that (i)
no portion of the Indebtedness of a Securitization Subsidiary is guaranteed by
or is recourse to the Company or any other Restricted Subsidiary (other than
recourse for customary representations, warranties, covenants and indemnities,
none of which shall relate to the collectibility of the Receivables and Related
Assets) and (ii) none of the Company or any other Restricted Subsidiary has any
obligation to maintain or preserve such Securitization Subsidiary's financial
condition.
"Senior Debt" means, with respect to any Person, all principal of
(premium, if any) and interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to such
Person whether or not a claim for post filing interest is allowed in such
proceedings) with respect to all Indebtedness of such Person; provided that
Senior Debt shall not include (i) any Indebtedness of such Person that, by its
terms or the terms of the instrument creating or evidencing such Indebtedness,
is expressly subordinate in right of payment to the Senior Debt Securities of a
Series, (ii) any guarantee of Indebtedness of any subsidiary of such Person if
recourse against such guarantee is limited to the capital stock or other equity
interests of such subsidiary, (iii) any obligation of such Person to any
subsidiary of such Person or, in the case of a Restricted Subsidiary, to the
Company or any other subsidiary of the Company or (iv) any Indebtedness of such
Person (and any accrued and unpaid interest in respect thereof) which is
subordinate or junior in any respect to any other Indebtedness or other
obligation of such Person.
"Senior Indebtedness" means, with respect to the Subordinated Debt
Securities of any series except as otherwise provided in the applicable
Prospectus Supplement, the principal, premium, if any, interest (including
post-petition interest in any proceeding under any Bankruptcy Law, whether or
not such interest is an allowed claim enforceable against the debtor in a
proceeding under such Bankruptcy Law), penalties, fees and other liabilities
payable with respect to (i) all Debt of the Company, other than the Subordinated
Debt Securities and the Company's 9 1/4% Senior Subordinated Notes due 2005, 9
7/8% Senior Subordinated Notes due 2006, 9 7/8% Senior Subordinated Debentures
due 2013, 10 1/2% Senior Subordinated Debentures due 2016 and 9 7/8% Senior
Subordinated Debentures due 2023 (with which the Securities of such series are
intended to rank on a parity), whether outstanding on the date of the 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 business, 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 Subordinated Debt Securities of any series. Notwithstanding anything to
the contrary contained herein, "Senior Indebtedness" shall mean and include all
amounts of Senior Indebtedness that are such by virtue of clause (i) and (ii) of
the foregoing definition that are repaid by the
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Company and subsequently recovered from the holder of such Senior Indebtedness
under any applicable Bankruptcy Laws or otherwise (other than by reason of some
wrongful conduct on the part of the holders of such Debt).
"Stock Payment" means, with respect to any Person, the payment or
declaration of any dividend, either in cash or in property (except dividends
payable in common stock or common shares of capital stock of such Person), or
the making by such Person of any other distribution, on account of any shares of
any class of its capital stock, now or hereafter outstanding, or the redemption,
purchase, retirement or other acquisition for value by such Person, directly or
indirectly, of any shares of any class of its capital stock, now or hereafter
outstanding, other than the redemption, purchase, defeasance or other
acquisition or retirement for value of any Disqualified Stock at its mandatory
redemption date or other maturity date.
"Unrestricted Subsidiary" means any subsidiary of the Company which is
not a Restricted Subsidiary.
CERTAIN COVENANTS OF THE COMPANY
COVENANTS APPLICABLE TO ALL DEBT SECURITIES. Unless otherwise specified
in the applicable Prospectus Supplement, the following covenants contained in
the Indentures shall be applicable with respect to any series of Debt
Securities:
Limitation on Indebtedness. The Indentures provide 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.
Limitation on Restricted Payments. The Indentures provide that, so long
as any of the Debt Securities of such series remain outstanding, the Company
shall not, and shall 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.
For purposes of the "Limitation on Restricted Payments" covenant, the
amount of any Restricted Payment, if other than cash, shall be based upon fair
market value as determined by the Board of Directors of the Company, whose good
faith determination shall be conclusive.
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; and (ii) the
retirement, redemption, purchase, defeasance or other acquisition 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 sale (within
one year before or 180 days after such retirement, redemption, purchase,
defeasance or other acquisition) of, other shares of the Company's capital stock
or warrants, rights or options to acquire capital stock of the Company. 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.
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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 on the date of such conversion and (ii) the additional
consideration, if any, received by the Company upon such conversion thereof,
less any cash payment on account of fractional shares (such consideration, if in
property other than cash, to be determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive). If the Company
makes a Restricted Payment which, at the time of the making of such Restricted
Payment, would in the good faith determination of the Company be permitted under
the requirements of this covenant, such Restricted Payment shall be deemed to
have been made in compliance with this covenant notwithstanding any subsequent
adjustments made in good faith to the Company's financial statements affecting
Cumulative Cash Flow Credit or Cumulative Interest Expense for any period.
Limitation on Investments in Unrestricted Subsidiaries and Affiliates.
The Indentures provide that 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 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.
Transactions with Affiliates. The Indentures provide 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 permitted under "Limitation on Restricted Payments".
COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES. Unless otherwise
specified in the applicable Prospectus Supplement, the following covenant
contained in the Senior Indenture shall be applicable with respect to any series
of Senior Debt Securities:
Limitation on Liens. The Senior Indenture provides that the Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume or suffer to exist any Lien of any kind,
except for Permitted Liens, on or with respect to any of its property or assets,
whether owned at the date of the Senior Indenture or thereafter acquired, or any
income, profits or proceeds therefrom, or assign or otherwise convey any right
to receive income thereon, unless (x) in the case of any Lien securing
Indebtedness that is subordinated in right of payment to the Senior Debt
Securities of the series offered pursuant to such Prospectus Supplement, the
Senior Debt Securities of such series are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Lien and (y) in the case
of any other Lien, the Senior Debt Securities of such series are equally and
ratably secured.
COVENANTS APPLICABLE TO SUBORDINATED DEBT SECURITIES. Unless otherwise
specified in the applicable Prospectus Supplement, the following covenant
contained in the Subordinated Indenture shall be applicable with respect to any
series of Subordinated Debt Securities:
Limitation on Senior Subordinated Indebtedness. The Subordinated
Indenture provides that the Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become liable for, contingently or otherwise, or become
responsible for the payment of, contingently or otherwise, any Indebtedness
which is both (i) senior in right of payment to the Subordinated Debt Securities
of any series and (ii) expressly subordinate in right of payment to any other
Indebtedness of the Company. For purposes of this covenant, Indebtedness is
deemed to be senior in right of payment of the Subordinated Debt Securities of a
series if it
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is not subordinate in right of payment to Senior Indebtedness at least to the
same extent as such Subordinated Debt Securities are subordinate to Senior
Indebtedness.
If so indicated in the applicable Prospectus Supplement with respect to
a particular series of Debt Securities, the Company will be subject to the
covenants described therein.
EVENTS OF DEFAULT
The following are Events of Default under the Indentures with respect
to Debt Securities of any series (unless they are inapplicable to such series of
Debt Securities or they are specifically deleted in the supplemental indenture
or Board Resolution under which such series of Debt Securities is issued or has
been modified): (a) default for 30 days in payment of interest on any Debt
Security; (b) default in payment of principal or premium, if any, of any Debt
Security at maturity, upon acceleration, redemption or otherwise; (c) default in
the deposit of any sinking fund payment when and as due; (d) 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 Indentures; (e) a default or defaults under any mortgage,
indenture or instrument which secures or evidences any Indebtedness for money
borrowed or guaranteed by the Company or a Restricted Subsidiary in 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; (f) the entry of a final judgment or final judgments for the
payment of money by a court or courts of competent jurisdiction against the
Company or any Restricted Subsidiary in an aggregate amount exceeding
$10,000,000, which remain undischarged and unbonded for a period (during which
execution shall not be effectively stayed) of 60 days or as to which an
enforcement proceeding has been commenced by any creditor; (g) certain events of
bankruptcy, insolvency or reorganization; and (h) any other Event of Default as
may be specified for such series.
If an Event of Default (other than as specified in (g) above) shall
occur and be continuing under the Indenture applicable to any series of Debt
Securities, either the Trustee with respect to such series or the Holders of not
less than 25% in aggregate principal amount of the outstanding Debt Securities
of such series by written notice to the Company (and to the Trustee if such
notice is given by the Holders) and, in the case of Subordinated Debt
Securities, the agents, if any, under the Credit Agreement, may declare all the
unpaid principal of, premium, if any, and interest on the Debt Securities of
such series to be due and payable as provided in the applicable Indenture. Upon
a declaration of acceleration with respect to a series outstanding under the
applicable Indenture (or of all series, as the case may be), such principal,
premium, if any, and accrued interest shall be due and payable upon the first to
occur of an acceleration under the Credit Agreement or ten days after receipt by
the Company and, in the case of Subordinated Debt Securities, the agents, if
any, under the Credit Agreement, of such written notice. No action on the part
of the Trustee or any Holder of the Debt Securities of any series is required
for such acceleration if an Event of Default specified in (g) above shall occur
and be continuing. The Holders of at least a majority in principal amount of the
Debt Securities of any series then outstanding may rescind an acceleration and
its consequences if (i) all existing Events of Default, other than the
nonpayment of principal of, premium, if any, or interest on the Debt Securities
of such series which have become due solely because of the acceleration, have
been cured or waived and (ii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction. A declaration of
acceleration because of an Event of Default specified in clause (e) of the
preceding paragraph would be automatically annulled if the Indebtedness referred
to therein were discharged, or the Holders thereof rescinded their declaration
of acceleration referred to therein, within 30 days after the acceleration of
the Debt Securities of such series and no other Event of Default had occurred
and not been cured or waived during such period. The Holders of a majority in
principal amount of the Debt Securities of any series outstanding also have the
right to waive certain past defaults under the Indentures.
No Holder of Debt Securities of any series issued under either
Indenture has any right to institute any proceeding with respect to the Debt
Securities of such series, such Indenture or for any remedy thereunder, unless
(i) such Holder has previously given to the applicable Trustee written notice of
a continuing Event of Default under such Indenture, (ii) with respect to certain
Events of Default designated in the Prospectus Supplement related to a series of
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Debt Securities, the Holders of at least 25% in principal amount of the
outstanding Debt Securities of such series issued under such Indenture have made
written request and offered reasonable indemnity to the Trustee to institute
such proceeding as Trustee under such Indenture, and (iii) with respect to
certain Events of Default designated in the Prospectus Supplement related to a
series of Debt Securities, the Trustee with respect to that series has not
received from the Holders of a majority in principal amount of the outstanding
Debt Securities of such series a direction inconsistent with such request and
the Trustee has failed to institute such proceeding within 60 days after receipt
of such notice. Such limitations do not apply, however, to a suit instituted by
a Holder of a Debt Security of a series for the enforcement of payment of the
principal of or premium, if any, or interest on such Debt Security on or after
the respective due dates expressed in such Debt Security.
During the existence of an Event of Default, the applicable Trustee is
required to exercise such rights and powers vested in it under the related
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 applicable Indenture
relating to the duties of the Trustee thereunder, in case an Event of Default
shall occur and be continuing, the Trustee is not under any obligation to
exercise any of its rights or powers under such Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity. Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in principal amount of
the outstanding Debt Securities of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee under the
applicable Indenture.
The Company is required to furnish to each Trustee an annual statement
as to the performance by the Company of its obligations under the applicable
Indenture and as to any default in such performance.
SATISFACTION AND DISCHARGE OF THE INDENTURES AND THE DEBT SECURITIES
The Indentures will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of Debt Securities of
any series outstanding under the applicable Indenture, as expressly provided for
therein) as to such series when either (i) all Debt Securities of such series
outstanding thereunder theretofore authenticated and delivered (except for lost,
stolen or destroyed Debt Securities of such series which have been replaced or
paid) have been delivered to the applicable Trustee for cancellation and the
Company has paid all sums payable by it under the related Indenture or (ii) all
Debt Securities of such series not theretofore delivered to the related 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 such
Trustee funds in an amount sufficient to pay the entire indebtedness on the Debt
Securities of such series not theretofore delivered to such Trustee for
cancellation, for principal (and premium, if any) and interest to the date of
deposit (if the Debt Securities of such series are then due and payable) or to
the applicable maturity or redemption date (as the case may be), and the Company
has paid all other sums payable by it under the applicable Indenture.
MODIFICATION AND WAIVER
Modifications and amendments of the applicable Indenture or the Debt
Securities of any series may be made by the Company and the applicable Trustee
with the consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Debt Securities of such series; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each outstanding Debt Security of such series, (i) change the stated
maturity of the principal of, or premium, if any, or any installment of interest
on, any Debt Securities of such series, (ii) reduce the principal amount of, or
the premium, if any, or interest on, the Debt Securities of such series, (iii)
change the coin or currency in which any Debt Securities of such series or any
premium or the interest thereon is payable, (iv) impair the right to institute
suit for the enforcement of any payment on or with respect to the Debt
Securities of such series, (v) reduce the percentage in principal amount of
outstanding Debt Securities of such series necessary to waive compliance with
certain provisions of the applicable Indenture or to waive certain defaults,
(vi) modify any of the provisions relating to supplemental indentures requiring
the consent of Holders or relating to the waiver of past defaults, except to
increase the percentage of outstanding Debt Securities of such series required
for such actions or to provide that certain other provisions of the applicable
Indenture cannot be modified or waived without the
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consent of the Holder of each Debt Security of such series affected thereby, or
(vii) modify any of the provisions of the Indenture applicable to a series of
Subordinated Debt Securities relating to the subordination of the Subordinated
Debt Securities of such series in a manner adverse to the Holders thereof.
The Holders of a majority in aggregate principal amount of the Debt
Securities of any series then outstanding under any Indenture may waive
compliance with certain restrictive covenants and provisions of such Indenture.
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 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
shall be a corporation organized and existing under the laws of the United
States, any State thereof or the District of Columbia, and shall assume by a
supplemental indenture all the obligations of the Company under the Outstanding
Debt Securities and the Indentures; (ii) immediately before and immediately
after such transaction, after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing; and (iii) immediately after such
transaction, and after giving effect thereto, the Person formed by or surviving
any such consolidation or merger or to which such sale, assignment, transfer,
lease or conveyance or disposition shall have been made shall have a Cash Flow
Ratio not in excess of 9 to 1.
DEFEASANCE
Unless the Prospectus Supplement relating to the Offered Debt
Securities otherwise provides, the Company at its option at any time may
terminate all of its obligations with respect to the Debt Securities of any
series ("defeasance"), except for certain obligations, including those regarding
the Defeasance Trust (as defined below) and obligations to register the transfer
or exchange of the Debt Securities of such series, to replace mutilated,
destroyed, lost or stolen Debt Securities of such series and to maintain
agencies in respect of the Debt Securities of such series. The Company may also
at any time terminate its obligations under the covenants set forth in the
applicable Indenture, which are described under "Certain Covenants of the
Company", and any omission to comply with such obligations shall not constitute
a Default or an Event of Default with respect to the Debt Securities of such
series ("covenant defeasance").
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 applicable Trustee money or U.S. government obligations, or a combination
thereof, in such amounts as will be sufficient to pay the principal of and
premium, if any, and interest on the Debt Securities of such series to
redemption or maturity (the "Defeasance Trust"), (ii) the Company must deliver
opinions of counsel to the effect that such Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred (in the case of
defeasance, such opinion must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal income tax laws),
(iii) the Company must comply with certain other conditions, and (iv) in the
case of Subordinated Debt Securities, no event or condition shall exist that,
pursuant to certain provisions described under "Subordination of Subordinated
Debt Securities" below, would prevent the Company from making payments of
principal of and premium, if any, and interest on the Debt Securities of such
series at the date of the irrevocable deposit referred to above or at any time
during the period ending on the 91st day after such deposit date.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The indebtedness represented by the Subordinated Debt Securities is
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness.
-22-
<PAGE>
Upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration or otherwise, or upon any payment default (with or without the
giving of notice or lapse of time or both in accordance with the terms of the
instrument governing such Senior Indebtedness, and without any waiver or
forgiveness) with respect to any Senior Indebtedness, all obligations with
respect to such Senior Indebtedness must first be paid in full, or such payment
duly provided for, before any payment is made with respect to the Subordinated
Debt Securities of any series or before any acquisition of Subordinated Debt
Securities of any series by the Company. 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 Subordinated Trustee by the
agent or agents under the Credit Agreement, then, unless and until such default
shall have been cured or waived by the holders of such Senior Indebtedness or
shall have ceased to exist, no direct or indirect payment may be made by the
Company with respect to the principal of, premium, if any, or interest on the
Subordinated Debt Securities (other than payments made in Junior Securities) or
to acquire any of the Subordinated Debt Securities or on account of the
redemption provisions of the Subordinated Debt Securities (except mandatory
redemption payments made, in accordance with the terms of the Subordinated Debt
Securities, in Subordinated Debt Securities acquired by the Company before the
Default Notice): provided, however, that such provision shall not prevent the
making of any payment (which is not otherwise prohibited by the previous
paragraph) for more than 120 days after the Default Notice shall have been given
unless the Senior Indebtedness in respect of which such event of default exists
has been declared due and payable in its entirety, in which case no such payment
may be made until such acceleration has been rescinded or annulled or such
Senior Indebtedness has been paid in full. Notwithstanding the foregoing, not
more than one Default Notice may be given with respect to Senior Indebtedness
within a period of 240 consecutive days.
The Subordinated Indenture will provide that, upon any payment by or
distribution of the assets of the Company to creditors upon any dissolution,
winding up, liquidation, bankruptcy, reorganization, assignment for the benefit
of creditors, or any insolvency, receivership or similar proceeding relating to
the Company, all Senior Indebtedness must be paid in full, or such payment duly
provided for, before any payment or distribution (other than in Junior
Securities) is made on account of the principal of or premium, if any, or
interest on the Subordinated Debt Securities of any series.
By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company who are holders of Senior Indebtedness may
recover more, ratably, than other creditors of the Company and creditors of the
Company who are not holders of Senior Indebtedness or of the Subordinated Debt
Securities may recover more, ratably, than the Holders of the Subordinated Debt
Securities.
A Holder of Subordinated Debt Securities by his acceptance of
Subordinated Debt Securities agrees to be bound by such provisions and
authorizes and expressly directs the Subordinated Trustee, on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided for in the Subordinated Indenture and appoints the Subordinated Trustee
his attorney-in-fact for such purpose.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is senior to
the Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior
Indebtedness.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
-23-
<PAGE>
REGARDING THE TRUSTEES
The Indentures contain certain limitations on the right of the
respective Trustees, should they become a creditor of the Company, to obtain
payment of claims in certain cases, or to realize for their own accounts on
certain property received in respect of any such claim as security or otherwise.
The Trustees will be permitted to engage in certain other transactions; however,
if they acquire any conflicting interest and there is a default under the Debt
Securities, they must eliminate such conflict or resign.
Any Trustee may resign or be removed with respect to one or more series
of Debt Securities and a successor Trustee may be appointed to act with respect
to such series. In the event that two or more persons are acting as Trustee with
respect to different series of Debt Securities, each such Trustee shall be a
Trustee of a trust under the related Indenture separate and apart from the trust
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which it
is Trustee.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to one or more underwriters
for public offering and sale by them or may sell the Debt Securities to
investors directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Debt Securities will be named in the related
Prospectus Supplement. The Company has reserved the right to sell the Debt
Securities directly to investors on its own behalf in those jurisdictions where
it is authorized to do so.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Company also may, from time to time, authorize dealers, acting as the Company's
agents, to offer and sell the Debt Securities upon such terms and conditions as
set forth in the related Prospectus Supplement. In connection with the sale of
the Debt Securities, underwriters may receive compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of the Debt Securities for whom they may act as
agent. Underwriters may sell the Debt Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed from
time to time) from the purchasers for whom they may act as agents.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of the Debt Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in the related Prospectus Supplement. Dealers and
agents participating in the distribution of the Debt Securities may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Debt Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution towards certain civil
liabilities, including any liabilities under the Securities Act.
Until the distribution of the Debt Securities is completed, rules of
the Commission may limit the ability of the Underwriters to bid for and purchase
the Debt Securities. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the price of the Debt
Securities. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Debt Securities. If the
Underwriters create a short position in the Debt Securities in connection with
the offering, i.e., if they sell more Debt Securities than are set forth on the
cover page of the applicable Prospectus Supplement, the Underwriters may reduce
that short position by purchasing Debt Securities in the open market. The
Underwriters may also impose a penalty bid on certain Underwriters. This means
that if the Underwriters purchase the Debt Securities in the open market to
reduce the Underwriters' short position or to stabilize the price of the Debt
Securities, they may reclaim the amount of the selling concession from the
Underwriters who sold those shares as part of the offering. In general,
purchases of a security for the purpose of stabilization or to reduce a short
position could cause the price of the security to be higher than it might
-24-
<PAGE>
be in the absence of such purchases. The imposition of a penalty bid might also
have an effect on the price of a security to the extent that it were to
discourage resales of the security.
Any Debt Securities issued hereunder will be new issues of securities
with no established trading market. Any underwriters or agents to or through
whom such Debt Securities are sold by the Company for public offering and sale
may make a market in such Debt Securities, but such underwriters or agents will
not be obligated to do so and may discontinue any market at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any such Debt Securities.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with, and perform services for, the Company and certain
of its affiliates in the ordinary course of business.
VALIDITY OF THE DEBT SECURITIES
The validity of any Debt Securities issued hereunder will be passed
upon for the Company by Sullivan & Cromwell, New York, New York, counsel to the
Company. The validity of any Debt Securities issued hereunder will be passed
upon for any underwriters by Shearman & Sterling, New York, New York.
EXPERTS
The consolidated financial statements and schedule of the Company and
its subsidiaries as of December 31, 1997 and 1996 and for each of the years in
the three-year period ended December 31, 1997 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.
-25-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
It is expected that the following expenses (all of which will be paid
by the Company) will be incurred in connection with the registration and
distribution of the Securities:
Securities and Exchange Commission filing fee.................. $236,000
Blue Sky fees and expenses..................................... *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Printing and Engraving Expenses................................ *
Trustee's and Depositary's Fees and Expenses................... *
Rating Agency Fees............................................. *
Miscellaneous.................................................. *
---------
Total................................................ $ *
=========
- -------------------------
* To be completed by amendment.
All of these expenses except the Securities and Exchange Commission filing
fee represent estimates only.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
rights to which those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The first paragraph of Article Ninth of the Company's Certificate of
Incorporation provides:
The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, or by any successor thereto,
indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section.
Such right to indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and
II-1
<PAGE>
shall inure to the benefit of the heirs, executors and administrators
of such a person. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
Article VIII of the By-Laws of the Company provides:
A. The corporation shall indemnify each person who was or is made
a party or is threatened to be made a party to or is involved in any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect 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
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred by such
person in connection with such proceeding. Such indemnification shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators. The right to indemnification conferred in
this Article shall be a contract right and shall include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided that, if the
Delaware General Corporation Law so requires, the payment of such
expenses incurred by a director or officer in advance of the final
disposition of a proceeding shall be made only upon receipt by the
corporation of an undertaking by or on behalf of such person to repay
all amounts so advanced if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as
authorized in this Article or otherwise.
B. The right to indemnification and advancement of expenses
conferred on any person by this Article shall not limit the corporation
from providing any other indemnification permitted by law nor shall it
be deemed exclusive of any other right which any such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
C. The corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture,
or other enterprise against any expense, liability or loss, whether or
not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
The Company has entered into indemnification agreements with certain of
its officers and directors indemnifying such officers and directors from and
against certain expenses, liabilities or other matters referred to in or covered
by Section 145 of the Delaware General Corporation Law. The Company maintains
directors' and officers' liability insurance.
II-2
<PAGE>
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. The second paragraph of Article Ninth of the Company's Certificate of
Incorporation provides for such limitation of liability.
ITEM 16. EXHIBITS.
*1.1 --Form of Underwriting Agreement for Debt Securities
**4.1 --Form of Senior Indenture between the Company and The Bank of New
York as Senior Trustee
**4.2 --Form of Subordinated Indenture between the Company and The Bank of
New York as Subordinated Trustee
4.3 --Form of Debt Security (included in Senior Indenture and Subordinated
Indenture)
**5.1 --Opinion of Sullivan & Cromwell
12.1 --Computation of Ratio of Earnings to Fixed Charges
23.1 --Consent of Sullivan & Cromwell (contained in Exhibit 5.1)
23.2 --Consent of KPMG Peat Marwick LLP
24 --Powers of Attorney (included on pages II-5 to II-6)
**25.1 --Statement of Eligibility under the Trust Indenture Act of 1939 of
The Bank of New York, as Trustee under the Indentures
- ----------------------------
* To be filed as an exhibit to a Current Report on Form 8-K subsequent to
the effectiveness of this Registration Statement, in accordance with
Item 601(b)(1) of Regulation S-K.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement;
II-3
<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant, pursuant to the provisions
described in Item 15 or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by any such director, officer
or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such
indemnification is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
hereunto duly authorized, in the Town of Oyster Bay and the State of New York,
on the 19th day of June, 1998.
CSC HOLDINGS, INC.
By: /s/ William J. Bell
----------------------
Name: William J. Bell
Title: Vice Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William J. Bell, Robert S. Lemle and
Barry J. O'Leary, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the Registration Statement, and file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this report has been signed below by the following persons in the capacities and
on June 19, 1998.
Signature Title
/s/ James L. Dolan
- ------------------------------ President, Chief Executive Officer and Director
James L. Dolan (Principal Executive Officer)
/s/ William J.Bell
- ------------------------------ Vice Chairman and Director (Principal
William J.Bell Financial Officer)
/s/ Andrew B. Rosengard
- ------------------------------ Executive Vice President Financial Planning
Andrew B. Rosengard and Controller (Principal
Accounting Officer)
/s/ Charles F. Dolan
- ------------------------------ Chairman of the Board of Directors
Charles F. Dolan
- ------------------------------ Vice Chairman and Director
Marc A. Lustgarten
II-5
<PAGE>
/s/ Robert S. Lemle
- ------------------------------ Executive Vice President, General Counsel,
Robert S. Lemle Secretary and Director
/s/ Sheila A. Mahony
- ------------------------------ Senior Vice President and Director
Sheila A. Mahony
/s/ Thomas C. Dolan
- ------------------------------ Senior Vice President, Chief Information
Thomas C. Dolan Officer and Director
/s/ John Tatta
- ------------------------------ Director
John Tatta
- ------------------------------ Director
Patrick F. Dolan
/s/ Charles D. Ferris
- ------------------------------ Director
Charles D. Ferris
/s/ Richard H. Hochman
- ------------------------------ Director
Richard H. Hochman
/s/ Victor Oristano
- ------------------------------ Director
Victor Oristano
- ------------------------------ Director
Vincent Tese
- ------------------------------ Director
John C. Malone
/s/ Leo J. Hindery, Jr.
- ------------------------------ Director
Leo J. Hindery, Jr.
II-6
<PAGE>
EXHIBIT INDEX
EXHIBITS PAGE NO.
*1.1 -- Form of Underwriting Agreement for Debt Securities
**4.1 -- Form of Senior Indenture between the Company and The Bank of New York,
as Senior Trustee
**4.2 -- Form of Subordinated Indenture between the Company and The Bank of New
York, as Subordinated Trustee
4.3 -- Forms of Debt Security (included in Senior Indenture and Subordinated
Indenture)
**5.1 -- Opinion of Sullivan & Cromwell
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Sullivan & Cromwell (contained in Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick LLP
24 -- Powers of Attorney (included on pages II-5 to II-6)
**25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Trustee under the Indenture
- --------------------------
* To be filed as an exhibit to a Current Report on Form 8-K subsequent to the
effectiveness of this Registration Statement, in accordance with Item 601(b)
(1) of Regulation S-K.
** To be filed by amendment.
II-7
EXHIBIT 12.1
<TABLE>
<CAPTION>
CSC HOLDINGS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
-------------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income (loss) from
continuing operations $ 15,634 $136,663 $(332,079) $(317,458) $(315,151) $(246,782)
--------- -------- --------- --------- --------- ---------
ADD:
Fixed charges per (B)
below................ 98,651 381,202 278,437 322,054 269,627 238,109
Amortization of
previously capitalized
interest................ 0 0 0 0 0 0
DEDUCT:
Interest capitalized
during period........ 0 0 0 0 0 0
--------- -------- --------- --------- --------- ---------
Earnings for competition
purposes (A)............ $ 114,285 $517,865 $ (53,642) $ 4,596 $ (45,524) $ (8,673)
========== ======== ========= ========= ========= =========
FIXED CHARGES:
Interest on
indebtedness,
expensed or
capitalized,
including,
amortization of debt
expense........... 94,512 368,700 268,177 313,850 263,299 232,434
Portion of rents
representative of the
interest factor...... 4,139 12,502 10,260 8,204 6,328 5,675
---------- --------- --------- --------- --------- ---------
Fixed Charges for
computation purposes
(B).................. $ 98,651 $ 381,202 $ 278,437 $ 322,054 $ 269,627 $ 238,109
========== ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges (A)/(B)...... 1.16 1.36 - - - -
Deficiency of earnings
available to cover fixed
charges.............. - - $(332,079) $(317,458) $(315,151) $(246,782)
========== ========= ========= ========= ========= =========
</TABLE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
The Board of Directors
CSC Holdings, Inc.
We consent to the use of our report, dated March 20, 1998, which report
is included in the 1997 Annual Report on Form 10-K of CSC Holdings, Inc., which
Annual Report is incorporated herein by reference, and to the reference to our
firm under the heading "Experts" in the Prospectus and related Registration
Statement of CSC Holdings, Inc. on Form S-3.
KPMG Peat Marwick LLP
Jericho, New York
June 19, 1998
