SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] For the
fiscal year ended December 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Registrant; State of Incorporation; IRS Employer
Number Address and Telephone Number Identification No.
- - ------ ---------------------------- ------------------
1-14764 Cablevision Systems Corporation 11-3415180
(formerly CSC Parent Corporation)
Delaware
1111 Stewart Avenue
Bethpage, NY 11714
(516) 803-2300
1-9046 CSC Holdings, Inc. (formerly 11-2776686
Cablevision Systems Corporation)
Delaware
1111 Stewart Avenue
Bethpage, NY 11714
(516) 803-2300
Securities registered pursuant to
Section 12(b) of the Act: Name of each Exchange
Title of each class: on which Registered:
Cablevision Systems Corporation American Stock Exchange
- - -------------------------------
Class A Common Stock
CSC Holdings, Inc. American Stock Exchange
- - ------------------
8-1/2% Series I Cumulative
Convertible Exchangeable Preferred Stock
Securities registered pursuant to Section 12(g) of the Act:
Cablevision Systems Corporation None
CSC Holdings, Inc. None
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Cablevision Systems Corporation Yes |X| No |_|
CSC Holdings, Inc. Yes |X| No |_|
<PAGE>
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
Aggregate market value of voting stock held by nonaffiliates of Cablevision
Systems Corporation based on the closing price at which such stock was sold on
the American Stock Exchange on March 19, 1999: $7,673,577,320.
Number of shares of common stock outstanding as of March 19, 1999:
Cablevision Systems Corporation Class A Common Stock - 108,547,404
Cablevision Systems Corporation Class B Common Stock - 43,126,836
CSC Holdings, Inc. Common Stock - 1,000
Documents incorporated by reference - The Registrants intend to file with the
Securities and Exchange Commission, not later than 120 days after the close of
their fiscal year, a definitive proxy statement or an amendment to this report
containing the information required to be disclosed under Part III of Form 10-K
under cover of Form 10-K/A.
<PAGE>
TABLE OF CONTENTS
Page
Part I
Item 1. Business. 1
2. Properties. 26
3. Legal Proceedings. 27
4. Submission of Matters to a Vote of
Security Holders. 27
Part II
5. Market for the Registrants' Common Equity
and Related Stockholder Matters. 28
6. Selected Financial Data. 30
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 34
8. Consolidated Financial Statements. 69
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. 146
Part III*
10. Directors and Executive Officers of the
Registrant. *
11. Executive Compensation. *
12. Security Ownership of Certain Beneficial
Owners and Management. *
13. Certain Relationships and Related
Transactions. *
Part IV
14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 146
* These items are omitted because the registrant intends to file with the
Securities and Exchange Commission, not later than 120 days after the
close of its fiscal year, a definitive proxy statement or an amendment to
this report containing the information required to be disclosed under
Part III of Form 10-K under cover of Form 10-K/A.
<PAGE>
PART I
Item 1. Business
This combined Annual Report on Form 10-K is separately filed by CSC Holdings,
Inc. ("CSC Holdings") and Cablevision Systems Corporation ("Cablevision Parent"
or the "Company").
Cablevision Parent
Cablevision Parent is a Delaware corporation which was organized in 1997.
Cablevision Parent's only assets are all of the common stock of CSC Holdings,
all of the ownership interests in the entities that own certain cable television
systems acquired from Tele-Communications, Inc. in 1998 (the "TCI Systems") and
which served 843,000 subscribers at December 31, 1998, and a minority interest
in Cablevision Cinemas, LLC, which owns the Company's motion picture theater
assets. References herein to the "Systems" refer to the cable television systems
owned by CSC Holdings, and, from and after March 4, 1998, such systems and the
TCI Systems.
CSC Holdings
CSC Holdings is a Delaware corporation which was organized in 1985 and owns and
operates cable television systems in 6 states with approximately 2,569,000
subscribers at December 31, 1998. Through Rainbow Media Holdings, Inc. ("Rainbow
Media"), a company owned 75% by CSC Holdings and 25% by NBC Cable Holding, Inc.
("NBC Cable"), a subsidiary of National Broadcasting Company, Inc. ("NBC"), CSC
Holdings owns interests in and manages numerous national and regional
programming networks, the Madison Square Garden sports and entertainment
business and cable television advertising sales companies. CSC Holdings, through
Cablevision Lightpath, Inc. ("Lightpath"), a wholly-owned subsidiary of CSC
Holdings, provides switched telephone service. CSC Holdings also owns
Cablevision Electronics Investments, Inc., doing business as The Wiz, an
electronics retailer operating 40 retail locations in the New York Metropolitan
area and a majority interest in Cablevision Cinemas, LLC which owns motion
picture theaters containing a total of 283 screens in the New York Metropolitan
area.
The Holding Company Reorganization and TCI Transactions
Until March 4, 1998, CSC Holdings was known as Cablevision Systems Corporation.
On that date, CSC Holdings completed a reorganization whereby it formed a
holding company (now named Cablevision Systems Corporation) and CSC Holdings
became a subsidiary of Cablevision Systems Corporation. This transaction is
referred to herein as the "Reorganization".
Prior to the Reorganization, CSC Holdings had two outstanding classes of common
stock. Its Class A Common Stock was publicly traded on the American Stock
Exchange (the "ASE") and its Class B Common Stock was privately held. In the
Reorganization, the Class A Common Stock and Class B Common Stock of CSC
Holdings were converted into identical securities of Cablevision Parent
(1)
<PAGE>
and the Class A Common Stock of Cablevision Parent became listed on the ASE and
trades under the symbol "CVC". Cablevision Parent owns all of the common stock
of CSC Holdings.
CSC Holdings' outstanding preferred stock was unaffected by the Reorganization
except that CSC Holdings' 8-1/2% Series I Cumulative Convertible Exchangeable
Preferred Stock is now convertible into Cablevision Parent's Class A Common
Stock rather than CSC Holdings' Class A Common Stock. The Series I Preferred
Stock continues to be listed on the ASE and to trade under the symbol "CVCp".
The outstanding debt of CSC Holdings was not affected by the Reorganization.
In connection with the Reorganization, Tele-Communications, Inc. ("TCI") caused
to be contributed to Cablevision Parent, and Cablevision Parent acquired the TCI
Systems. These systems, which are located in New Jersey, on Long Island and in
New York's Rockland and Westchester counties, served approximately 833,000 cable
subscribers as of the contribution date. In consideration for those cable
television systems, Cablevision Parent issued to certain TCI entities shares of
Cablevision Parent Class A Common Stock representing approximately 32.3% of the
outstanding common stock of Cablevision Parent and assumed certain liabilities
related to such systems. See "Cable Television Operations - TCI Transactions"
below for a discussion of these transactions.
Stock Splits
On March 4, 1998, Cablevision Parent's Board of Directors declared a two-for-one
stock split in the form of a stock dividend on the outstanding Class A Common
Stock and Class B Common Stock of Cablevision Parent. The dividend was paid on
March 30, 1998 to stockholders of record on March 19, 1998. Additionally, on
July 22, 1998, Cablevision Parent's Board of Directors declared a two-for-one
stock split to be effected as a special stock distribution of one share of Class
A Common Stock for each share of Class A Common Stock issued and outstanding as
of August 10, 1998 and one share of Class B Common Stock for each share of Class
B Common Stock issued and outstanding as of August 10, 1998. The stock dividend
was paid on August 21, 1998 to stockholders of record on August 10, 1998. All
share and per share amounts of Cablevision Parent and CSC Holdings in this Form
10-K have been restated to reflect the stock splits.
Cable Television Operations
General
Cable television is a service that delivers multiple channels of television
programming to subscribers who pay a monthly fee for the services they receive.
Television and radio signals are received over-the-air or via satellite delivery
by antennas, microwave relay stations and satellite earth stations and are
modulated, amplified and distributed over a network of coaxial and fiber optic
cable to the subscribers' television sets. Cable television systems typically
are constructed and operated pursuant to non-exclusive franchises awarded by
local governmental authorities for specified periods of time.
(2)
<PAGE>
The Company's cable television systems offer varying levels of service which may
include, among other programming, local broadcast network affiliates and
independent television stations, satellite-delivered "superstations", certain
other news, information and entertainment channels such as CNN, CNBC, ESPN, and
MTV, and certain premium services such as HBO, Showtime, The Movie Channel,
Starz and Cinemax.
The Company's cable television revenues are derived principally from monthly
fees paid by subscribers. In addition to recurring subscriber revenues, the
Company derives revenues from installation charges, from the sales of
pay-per-view movies and events, and from the sale of advertising time on
advertiser supported programming. Certain services and equipment provided by
substantially all of the Company's cable television systems are subject to
regulation.
As of December 31, 1998, the Company's consolidated cable television systems
served approximately 3,412,000 subscribers, primarily in the greater New York,
Boston and Cleveland metropolitan areas.
The following table sets forth certain statistical data regarding the Company's
cable television operations.
<TABLE>
<CAPTION>
As of December 31,
-----------------------------------------------
1998 1997 1996
-----------------------------------------------
<S> <C> <C> <C>
Homes passed by cable (1) ...................... 5,115,000 4,398,000 3,858,000
Basic service subscribers ...................... 3,412,000 2,844,000 2,445,000
Basic service subscribers as a percentage of
homes passed ............................... 66.7% 64.7% 63.4%
Number of premium television units ............. 5,137,000 4,183,000 3,862,000
Average number of premium units per basic
subscriber at period end ................... 1.5 1.5 1.6
Average monthly revenue per basic subscriber (2) $ 42.56 $ 38.53 $ 36.71
</TABLE>
- - ----------
(1) Homes passed is based upon homes actually marketed and does not include
multiple dwelling units passed by the cable plant that are not connected
to it.
(2) Based on recurring service revenues for the last month of the period,
excluding installation charges and certain other non-recurring revenues
such as pay-per-view, advertising and home shopping revenues. See
"Subscriber Rates and Services; Marketing and Sales."
The Company's consolidated cable television systems are concentrated in the New
York City greater metropolitan area (79% of the Company's total subscribers as
of December 31, 1998), the Boston and suburban Massachusetts areas (10% of total
subscribers as of December 31, 1998) and the greater Cleveland metropolitan area
(9% of total subscribers as of December 31, 1998). The Company believes that its
cable systems on Long Island comprise the largest group of contiguous cable
television systems under common ownership in the United States (measured by
number of subscribers).
Cable Television System Sales
Since early 1997, the Company has aggressively pursued a plan to dispose of
certain nonstrategic cable television systems. The Company has completed the
sale or transfer of cable television
(3)
<PAGE>
systems in Alabama, Florida, Illinois, Kentucky, Maine, Missouri, New York,
North Carolina, Ohio and neighboring states, representing approximately 440,000
subscribers for an aggregate sales price of $514.7 million in cash.
In addition, in October 1998, the Company transferred its cable television
system in Rensselaer, New York (which served approximately 29,600 subscribers at
September 30, 1998), plus approximately $16 million in cash to Time Warner
Entertainment Company, L.P. in exchange for Time Warner's Litchfield,
Connecticut system (which served approximately 28,400 subscribers at date of
transfer).
TCI Transactions
On March 4, 1998, Cablevision Parent completed transactions with TCI ("TCI
Transactions") pursuant to which Cablevision Parent acquired certain cable
television systems owned and operated by TCI and located in New Jersey, on Long
Island and in New York's Rockland and Westchester counties. Cablevision Parent
issued to certain TCI entities (the "TCI Transferors") an aggregate of
48,942,172 shares (adjusted for the two-for-one stock splits) of Cablevision
Parent's Class A Common Stock (See "The Holding Company Reorganization and TCI
Transactions"). In addition, Cablevision Parent assumed certain related
liabilities, including an aggregate amount of indebtedness for borrowed money
equal to $669 million (the "Assumed Debt"). The Assumed Debt was refinanced
immediately following the closing of the transactions with borrowings under a
new $800 million bridge revolving credit facility (the "Bridge Credit
Agreement") entered into by wholly-owned subsidiaries of Cablevision Parent
acquired from TCI or that hold assets contributed by TCI (the "Contributed
Business Subsidiaries") with a group of banks led by Toronto Dominion (Texas),
Inc., as administrative and arranging agent. The Contributed Business
Subsidiaries are wholly-owned (directly or indirectly) by Cablevision Parent.
CSC Holdings has no ownership interest in the Contributed Business Subsidiaries
and has not guaranteed any of their debt or other obligations. See "Management
Discussion and Analysis - Liquidity and Capital Resources."
Contemporaneous with the Reorganization, CSC Holdings acquired the remaining 1%
interest in Cablevision of New York City, L.P. of Mr. Charles F. Dolan ("Mr.
Dolan") and satisfied certain payment obligations for a cash payment of
approximately $194 million. This transaction was effected pursuant to the
provisions of agreements entered into in 1992, as amended in 1997 to delay the
exercise date to coincide with the consummation of the Reorganization and
related transactions.
In connection with securing certain regulatory approvals for the transaction,
the Company agreed to divest certain cable television system assets of the
Contributed Business Subsidiaries that are located in Paramus and Hillsdale, New
Jersey. These systems (which served approximately 5,300 subscribers at November
30, 1998) were sold in December 1998.
On January 27, 1998, CSC Holdings, Cablevision Parent and a subsidiary of TCI
entered into a non-binding letter of intent for Cablevision Parent to acquire
TCI's cable television systems (the "TCI Connecticut Systems") in and around
Hartford, Vernon, Branford and Lakeville, Connecticut serving approximately
244,000 subscribers at December 31, 1998, based on information supplied by TCI.
In consideration for the TCI Connecticut Systems, which have been valued by the
parties at $380 million, Cablevision Parent would:
(4)
<PAGE>
(i) transfer to TCI cable television systems serving Kalamazoo, Michigan
(which served approximately 49,000 subscribers as of December 31, 1998 and
which have been valued by the parties at $75 million),
(ii) transfer to TCI other cable television systems to be identified by TCI and
purchased with approximately $25 million of funds provided by Cablevision
Parent,
(iii) issue shares of Cablevision Parent Class A Common Stock (based on a $28.90
per share valuation), and
(vi) assume certain indebtedness relating to the TCI Connecticut Systems, which
is anticipated to total approximately $110 million.
No definitive documentation has been executed with respect to these transactions
and there can be no assurance that such documentation will be executed or that
these transactions will be consummated on the above terms or at all.
The agreement effecting the TCI Transactions (the "Contribution Agreement")
permits Cablevision Parent to combine the cable operations of CSC Holdings and
the Contributed Business Subsidiaries. Following such a combination, Cablevision
Parent would be permitted to establish Rainbow Media as a separate subsidiary of
Cablevision Parent. The Company anticipates that the Contributed Business
Subsidiaries will be contributed to CSC Holdings by April 4, 1999. No final
decision has been made as to whether such combination of the Contributed
Business Subsidiaries and CSC Holdings' cable television systems and the Rainbow
Media separation would be effected without a favorable tax ruling from the
Internal Revenue Service, and there can be no assurances that such a ruling will
be obtained. If the Company effects these transactions, Rainbow Media and its
subsidiaries would be subsidiaries of Cablevision Parent and would no longer be
subsidiaries of CSC Holdings. Combination of the Contributed Business
Subsidiaries and CSC Holdings' cable television systems and any full or partial
separation of Rainbow Media from CSC Holdings is also dependent upon compliance
with the Company's debt covenants and upon the receipt of regulatory and other
approvals.
In connection with the TCI Transactions, Cablevision Parent, TCI and certain
holders of Cablevision Parent Class B Common Stock (the "Class B Stockholders')
entered into a Stockholders Agreement (the "Stockholders Agreement") providing,
among other things, for:
(i) limits on TCI's ability to buy more than an additional 10% of the
Cablevision Parent Class A Common Stock beyond that issued to TCI in the
TCI Transactions,
(ii) limitations on TCI's ability to transfer Cablevision Parent Class A Common
Stock to any person who after such transfer would beneficially own 10% or
more of the outstanding Cablevision Parent Class A Common Stock or 5% or
more of all outstanding Cablevision Parent Common Stock, except for
transfers of all of TCI's Cablevision Parent Class A Common Stock to a
single purchaser who agrees to become a party to the Stockholders
Agreement, transfers to certain TCI subsidiaries and transfers in
connection with a bona fide pledge to secure a borrowing,
(iii) consultation rights among Cablevision Parent, TCI and the Class B
Stockholders regarding sales of Cablevision Parent as a whole or
significant Cablevision Parent assets, sales of Cablevision Parent Class A
Common Stock owned by TCI and sales of Cablevision Parent Class B Common
Stock owned by the Class B Stockholders,
(5)
<PAGE>
(iv) certain tag-along and drag-along rights between TCI and the Class B
Stockholders,
(v) preemptive rights for TCI on new issuances of Cablevision Parent Common
Stock so that TCI may maintain ownership of 33% of the outstanding
Cablevision Parent Common Stock, with certain limited exceptions,
(vi) TCI's right to designate two Class B directors to Cablevision Parent's
Board of Directors,
(vii) the right of TCI director designees to membership on a Cablevision Parent
board committee to approve certain transactions with Class B Stockholders
and their family members that will give such designees a veto over such
transactions,
(viii)TCI's agreement to vote in proportion with the public Cablevision Parent
Class A Common Stockholders for the election of the 25% of Cablevision
Parent directors which the Cablevision Parent Class A Common Stock is
entitled to elect,
(ix) Cablevision Parent's agreement not to effect acquisition transactions that
would cause the debt to cash flow ratio of Cablevision Parent (calculated
as described in the Stockholders Agreement) to exceed a specified ratio
(initially 8.0 to 1, and declining to 7.5 to 1 after December 31, 1999),
and
(x) registration rights under the Securities Act for shares of Cablevision
Parent Class A Common Stock owned by TCI.
On March 9, 1999, TCI merged with a subsidiary of AT&T Corp. and became a
wholly-owned subsidiary of AT&T Corp.
The following charts summarize the corporate organization structure of
Cablevision Parent and CSC Holdings immediately following the TCI Transactions
and after giving effect to the combination of the Contributed Business
Subsidiaries with CSC Holdings and the Rainbow Media separation. No final
decision has been made as to whether a combination of the Contributed Business
subsidiaries and CSC Holdings' cable television systems and the Rainbow Media
separation will be effected.
(6)
<PAGE>
MANUAL INSERT
Chart depicting:
Company Structure Immediately following Completion of the TCI Transactions and
Prior to Other Possible Related Transactions
Chart depicting:
Company Structure Following Completion of Other Possible
Related Transactions
(7)
<PAGE>
Subscriber Rates and Services; Marketing and Sales.
The Company's cable television systems offer a package of services, generally
marketed as "Family Cable", which includes, among other programming, broadcast
network local affiliates and independent television stations,
satellite-delivered "superstations" and certain other news, information and
entertainment channels such as CNN, CNBC, ESPN and MTV. For additional charges,
the Company's cable television systems provide certain premium services such as
HBO, Showtime, The Movie Channel, Starz and Cinemax, which may be purchased
either individually (in conjunction with Family Cable) or in combinations or in
tiers.
In addition, the Company's cable television systems offer a basic package which
includes broadcast network local affiliates and public, educational or
governmental channels and certain leased access channels.
In certain areas with sufficient system capacity, the Company has a branded
product offering called "OptimumTV". OptimumTV, which includes a minimum of 77
analog channels, offers the basic and Family packages noted above, as well as
premium services, and a group of three packages containing premium networks and
ad-supported news, information and entertainment channels. Depending upon the
market, OptimumTV offers customers anywhere from 20 to 30 additional cable
channels, including additional pay-per-view channels that offer movies and
sporting events on a transactional basis.
In other areas, the Company offers premium services on an individual basis and
as components of different "tiers". Successive tiers include additional premium
services for additional charges that reflect discounts from the charges for such
services if purchased individually. For example, in most of the Company's cable
systems, subscribers may elect to purchase Family Cable plus one, two or three
premium services with declining incremental costs for each successive tier. In
addition, many systems offer a "Rainbow" package consisting of between five and
seven premium services, and a "Rainbow Gold" package consisting of between eight
and ten premium services.
Since its existing cable television systems are substantially fully built, the
Company's sales efforts are primarily directed toward increasing penetration and
revenues in its franchise areas. The Company sells its cable television services
through door-to-door selling, as well as telemarketing, direct mail advertising,
promotional campaigns and local media and newspaper advertising.
Certain services and equipment (converters which are leased to subscribers)
provided by substantially all of the Company's cable television systems are
subject to regulation. See "Cable Television Operations - Regulation - 1992
Cable Act."
System Capacity.
The Company is engaged in an ongoing effort to upgrade the technical
capabilities of its cable plant and to increase channel capacity for the
delivery of additional programming and new services. The Company's cable
television systems have a minimum capacity of 42 channels and 95% of its homes
passed are currently served by systems having a capacity of at least 62
channels. Currently 87% of its homes are served by at least 77 channels. As a
result of ongoing upgrades, the Company expects
(8)
<PAGE>
that by December 1999 approximately 94% of its subscribers will be served by
systems having a capacity of at least 77 channels. All of the system upgrades
either completed or underway will utilize fiber optic cable.
Programming.
Adequate programming is available to the Systems from a variety of sources
including that available from Rainbow Media and affiliates of TCI. Program
suppliers' compensation is typically a fixed, per subscriber monthly fee based,
in most cases, either on the total number of subscribers of the cable systems
and certain of its affiliates, or on the number of subscribers subscribing to
the particular service. The programming contracts are generally for a fixed
period of time and are subject to negotiated renewal. Cable programming costs
have increased in recent years and are expected to continue to increase due to
additional programming being provided to most subscribers, increased costs to
produce or purchase cable programming and other factors. Management believes
that the Systems will continue to have access to programming services at
reasonable price levels.
Franchises.
The Systems are operated primarily under nonexclusive franchise agreements with
local governmental franchising authorities, in some cases with the approval of
state cable television authorities. Franchising authorities generally charge a
fee of up to 5% based on a percentage of certain revenues of the franchisee.
The franchise agreements are generally for a term of ten to fifteen years from
the date of grant, although recently renewals have often been for five to ten
year terms. Some of the franchises grant the cable television system an option
to renew. Except for the franchise for the Town of Brookhaven, which has been
passed by the town and is pending state approval, the expiration dates for the
Company's ten largest franchises range from 2001 to 2007. In situations where
the Company's franchises have expired, the Company is operating under temporary
operating authority or short term extensions while negotiating renewal terms
with the franchising authorities. Franchises usually require the consent of the
franchising authority prior to the sale, assignment, transfer or change in
ownership or operating control of the franchisee.
The Cable Communications Policy Act of 1984 (the "1984 Cable Act") and the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act") provide significant procedural protections for cable operators seeking
renewal of their franchises. See "Business - Cable Television Operations -
Regulation". In connection with a renewal, a franchising authority may impose
different and more stringent terms. The Company has never lost a franchise as a
result of a failure to obtain a renewal.
(9)
<PAGE>
Programming and Entertainment Operations
General.
The Company conducts its programming activities through Rainbow Media, a company
75% owned by CSC Holdings and 25% by NBC Cable.
Rainbow Media's businesses include national and regional programming networks
and the Madison Square Garden sports and entertainment business. Rainbow Media
also owns interests in 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 Networks, LLC ("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
Theater 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 England Seawolves
professional arena football team, the Hartford Wolf Pack professional hockey
team, the Madison Square Garden Network, Fox Sports New York and Radio City
Entertainment (which operates Radio City Music Hall in New York City).
Additionally, Madison Square Garden manages and operates the Hartford Civic
Center. 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, as well as MSG MetroChannels
which provide regional and local sports, news and educational programming to the
New York 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.
(10)
<PAGE>
The following table sets forth ownership information and estimated subscriber
information as of December 31, 1998 for each of the programming businesses whose
ownership interest is held directly or indirectly by Rainbow Media. Rainbow
Media is a 75% owned subsidiary of CSC Holdings. NBC owns the remaining 25%
interest. Regional Programming Partners ("RPP") is a 60% owned subsidiary of
Rainbow Media, with the remaining 40% interest owned by Fox/Liberty.
<TABLE>
<CAPTION>
Affiliated
Programming Viewing Basic
Businesses Subscribers Subscribers (1) Ownership (2)
- - ---------- ----------- --------------- -------------
(In Millions)
<S> <C> <C> <C>
National Entertainment:
American Movie Classics 63.7 68.6 Rainbow Media - 100%
Romance Classics 12.4 19.9 Rainbow Media - 100%
Bravo 31.5 38.8 Rainbow Media - 100%
Bravo Latin America 4.2 5.2 Rainbow Media - 100%
The Independent Film Channel 7.8 21.0 Rainbow Media - 100%
MuchMusic 9.6 17.1 Rainbow Media and Chum, Ltd. - 50% each
Sports:
Madison Square Garden Network/FSNY 11.4 14.5 RPP - 96.3%; ITT - 3.7% (3)
Fox Sports Pacific 2.8 3.1 RPP and Fox/Liberty - 50% each
Fox Sports Chicago 3.1 3.2 RPP and Fox/Liberty - 50% each
Fox Sports New England 2.9 3.7 RPP and Media One - 50% each (4)
Fox Sports Ohio 2.1 2.3 RPP - 100%
Fox Sports Cincinnati 2.4 2.6 RPP - 100%
SportsChannel Florida 3.0 3.1 RPP - 30%; Front Row - 70%
News Services:
News12 Long Island .7 .8 Rainbow Media - 100%
News12 Connecticut .2 .2 Rainbow Media - 100%
News12 New Jersey 1.6 1.7 Rainbow Media and Newark Star Ledger - 50% each
News12 Westchester .2 .2 Rainbow Media - 100%
News12 Bronx .2 .2 Rainbow Media - 100%
Neighborhood News L.I. .1 .1 Rainbow Media - 100%
Other:
MSG Metro Guide 2.4 2.6 RPP - 100%
MSG Metro Traffic and Weather 2.4 2.6 RPP - 100%
MSG Metro Learning 2.4 2.6 RPP - 100%
</TABLE>
- - ----------
(1) Represents the total number of basic subscribers available in systems that
carry the service.
(2) Various of these programming businesses, other than those which are
wholly-owned by Rainbow Media, are subject to puts, calls, rights of first
refusal and restrictions on transfer.
(3) See "Madison Square Garden" for a discussion of certain puts and calls
with respect to Madison Square Garden.
(4) In January 1998, Media One, Inc. purchased a 50% interest in Fox Sports
New England for approximately $19 million.
(11)
<PAGE>
Rainbow Media's existing structure reflects three significant transactions that
were consummated in 1997.
NBC Transaction
On April 1, 1997, Rainbow Media consummated a transaction in which Rainbow
Programming Holdings, Inc. merged with and into Rainbow Media, a newly formed
subsidiary of CSC Holdings. In addition, NBC Cable received a 25% equity
interest (which interest may be increased by up to an additional 2% under
certain circumstances without additional payment) in Class C Common Stock of
Rainbow Media. CSC Holdings owns the remaining 75% equity interest in Rainbow
Media. The partnership interests in certain of Rainbow Media's programming
services formerly owned by NBC Cable are now owned by subsidiaries of Rainbow
Media.
Fox/Liberty Transactions
On December 18, 1997, Rainbow Media organized three partnerships with Fox
Sports, a subsidiary of Fox/Liberty: Regional Programming Partners (the
partnership that owns the interest in Madison Square Garden and in the regional
sports programming businesses previously owned by Rainbow Media), National
Sports Partners (the partnership that owns and operates Fox Sports Net) and
National Advertising Partners (the partnership that manages and sells national
advertising for certain of the regional sports networks in which Regional
Programming Partners owns interests and certain regional sports networks owned
by Fox/Liberty) (the "Fox/Liberty Transactions").
In connection with the formation of Regional Programming Partners, affiliates of
Rainbow Media, through various indirect transfers, contributed to Regional
Programming Partners, in consideration for the issuance of a 60% general
partnership interest, their interests in Madison Square Garden, SportsChannel
Chicago, SportsChannel Pacific, SportsChannel New England, SportsChannel Ohio,
SportsChannel Cincinnati, SportsChannel Florida and Metro Channel LLC.
Fox/Liberty contributed $850 million in cash to Regional Programming Partners in
exchange for a 40% general partnership interest. A subsidiary of Rainbow Media
is the managing general partner of Regional Programming Partners.
In connection with the formation of National Sports Partners, Rainbow Media
contributed to National Sports Partners, in consideration for the issuance of a
50% general partnership interest, its interests in American Sports Classics LLC,
Prime SportsChannel and SportsChannel Ventures, Inc. Fox/Liberty contributed, in
consideration for the issuance of a 50% general partnership interest, certain
assets, including the assets pertaining to or used in the business of Fox Sports
and interests in Prime SportsChannel and Fox Watch Productions Inc. A subsidiary
of Fox Sports is the managing partner of National Sports Partners.
In connection with the formation of National Advertising Partners, Rainbow Media
contributed to National Advertising Partners, in consideration for the issuance
of a 50% general partnership interest, certain assets relating to the national
advertising of certain of the regional sports programming services in which
Rainbow Media had an interest. Fox/Liberty contributed, in consideration for the
issuance of a 50% general partnership interest, certain assets relating to the
national advertising of the regional sports programming services in which Fox
Sports had an
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interest. A subsidiary of Fox Sports is the managing general partner of National
Advertising Partners.
Madison Square Garden
In March 1995, a partnership formed by Rainbow Media and ITT Corporation ("ITT")
acquired the business and assets of Madison Square Garden. Madison Square Garden
owns and operates the Madison Square Garden Arena and the adjoining Theater 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 England Seawolves professional arena football
team, the Hartford Wolf Pack professional hockey team, the Madison Square Garden
Network, Fox Sports New York and Radio City Entertainment (which operates Radio
City Music Hall in New York City). The purchase price was $1,009.1 million.
On June 17, 1997, Madison Square Garden redeemed a portion of ITT's interest in
Madison Square Garden for $500 million and Rainbow Media contributed its
SportsChannel Associates programming company to Madison Square Garden, which,
together with the redemption, increased Rainbow Media's interest in Madison
Square Garden to 89.8% and reduced ITT's interest to 10.2%. In connection with
the Fox/Liberty Transactions discussed above, Rainbow Media's interest in
Madison Square Garden was contributed to Regional Programming Partners. ITT's
interest in Madison Square Garden was further reduced to 7.8% as a result of the
$450 million capital contribution by Regional Programming Partners to Madison
Square Garden as of December 18, 1997, which was used by Madison Square Garden
to pay down outstanding debt. ITT's interest was further reduced to 3.7% in June
1998, when MSG redeemed a portion of ITT's interest following ITT's exercise of
its first put right. In March 1999, ITT and the Company entered into an
agreement under which ITT exercised its second put for the remainder of its
interest in MSG and settled certain matters between the parties for a net
payment of $87 million. Consummation of this transaction is subject to league
and regulatory approvals and is expected to occur in the second quarter of 1999.
CSC Holdings and Rainbow Media entered into agreements with the National Hockey
League (the "NHL") and the National Basketball Association ("NBA"), agreeing,
among other things, to conduct themselves in accordance with the relevant rules
of each league. The approvals of the NHL and the NBA are required for certain
transactions involving Cablevision Parent, CSC Holdings, Rainbow Media, Regional
Programming Partners and MSG, including certain transfers of ownership
interests.
On December 5, 1997, Madison Square Garden purchased Radio City Entertainment,
the production company that operates Radio City Music Hall in New York City and
produces The Radio City Christmas Spectacular and shows featuring the Radio City
Rockettes and simultaneously entered into a 25-year lease for Radio City Music
Hall.
Telephone and Modem Services
The Company, through Lightpath, a Competitive Local Exchange Carrier, provides
basic and advanced local telecommunications services to the business market.
Lightpath provides a full range of local dial tone, switched services, private
line and advanced networking features on the local and
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long distance levels on its own facilities and network. As of December 31, 1998,
Lightpath serviced over 1,200 industrial, commercial and institutional accounts
on Long Island. In addition, the Company has begun providing residential
telephone and cable modem internet access service in portions of the greater New
York City Metropolitan area and parts of southern Connecticut. At December 31,
1998, the Company served approximately 11,200 modem subscribers.
The Wiz
On February 9, 1998, Cablevision Electronics Investments, Inc. ("Cablevision
Electronics"), a wholly-owned subsidiary of CSC Holdings, acquired substantially
all of the assets associated with 40 The Wiz consumer electronics store
locations from The Wiz, Inc. and certain of its subsidiaries and affiliates
(collectively, "TWI"). TWI had filed for bankruptcy protection on December 16,
1997. Cablevision Electronics paid approximately $93 million, including
transaction costs, for the assets. In addition, prior to closing, Cablevision
Electronics provided approximately $8 million for TWI to meet certain operating
costs. The Wiz is an electronics retailer selling primarily video and audio
equipment, home office equipment, compact disks and other pre-recorded music,
digital video disks, and VHS video and other pre-recorded movies.
Theaters
In December 1998, Cablevision Parent acquired all of the outstanding shares of
stock of Clearview Cinema Group, Inc. ("Clearview") pursuant to an Agreement and
Plan of Merger entered into in August 1998. The total purchase price amounted to
approximately $157.7 million (including assumed debt of $80 million) of which
approximately $33.4 million was paid in shares of Cablevision Parent's Class A
Common Stock.
From December 1998 through February 1999, CSC Holdings acquired a total of 16
movie theaters from Loews Cineplex Entertainment Corporation ("Loews"), for an
aggregate purchase price of approximately $89 million. These theaters are
located in the New York Metropolitan area. In connection with this acquisition,
Loews has granted CSC Holdings a right of first offer on an additional 21 movie
theaters in the greater New York Metropolitan area until December 1999.
At Home Corporation
The Company owns warrants to acquire approximately 10.2 million shares of common
stock of At Home Corporation, which warrants are exercisable at $.50 per share.
At Home Corporation distributes high-speed interactive services to residences
and businesses using its own network architecture and a variety of transport
options, including the cable industry's hybrid fiber coaxial infrastructure.
These warrants were issued to the Company in exchange for certain agreements of
the Company with respect to the distribution of the At Home internet access
service to cable subscribers.
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Other Investments
CSC Holdings holds a 49.9% interest, and certain preferential distribution
rights, in NorthCoast Communications, LLC ("NorthCoast"). NorthCoast holds
certain licenses to conduct a personal communications service ("PCS") business.
CSC Holdings has contributed an aggregate of approximately $38.0 million as of
December 31, 1998 to NorthCoast (either directly or through a loan to NorthCoast
Operating Co., Inc. ("NorthCoast Operating"), the other member in NorthCoast).
Rainbow Media holds a 50% interest in R/L DBS Company LLC, a joint venture with
Loral Space and Communications, Ltd. ("R/L DBS"). R/L DBS holds certain
frequencies granted by the FCC for the operation of a direct broadcast satellite
business. CSC Holdings has contributed an aggregate of approximately $14.9
million through December 31, 1998 to R/L DBS or its predecessor businesses.
Competition
Cable Television
The Systems generally compete with the direct reception of broadcast television
signals by antenna and with other methods of delivering television signals to
the home for a fee. The extent of such competition depends upon the number and
quality of the signals available by direct antenna reception as compared to the
number and quality of signals distributed by the cable system. The Systems also
compete to varying degrees with other communications and entertainment media,
including movies, theater and other entertainment activities.
The Telecommunications Act of 1996 ("1996 Telecom Act") repealed the 1984 Act
prohibition against telco-cable cross-ownership and provides that a local
exchange telephone company may provide video programming directly to subscribers
through a variety of means, including (1) as a radio-based (MMDS or DBS)
multichannel video programming distributor; (2) as a cable operator, fully
subject to the franchising, rate regulation and other provisions of the 1984 and
1992 Cable Acts; and (3) through an "open video system" ("OVS") that is
certified by the Federal Communications Commission ("FCC") to be offering
nondiscriminatory access to a portion of its channel capacity for unaffiliated
program distributors, subject only to selected portions of the regulations
applicable to cable operators. Non-telephone companies may also become an OVS
and provide video competition to cable systems without obtaining a franchise,
although a recent court decision has restored certain municipal franchising
powers over OVS, making OVS a less attractive alternative. A local telephone
company also may provide the "transmission of video programming" on a common
carrier basis. As noted below, telephone companies in several of the Company's
franchise areas have applied for franchises to offer cable service fully subject
to the 1984 and 1992 Cable Acts. Several companies have sought to become an OVS
in areas in which the Company operates cable systems in Boston, New York City
and Westchester County, New York. One, RCN Corporation ("RCN") is currently
operating an OVS or franchised cable systems in Boston, New York City, and a
number of Massachusetts communities in which the Company operates cable systems.
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The 1996 Telecom Act also prohibits a telephone company or a cable system
operator in the same market from acquiring each other, except in limited
circumstances, such as areas of smaller population.
Four DBS systems are now operational in the United States, some with investment
by companies with substantial resources such as Hughes Electronics Corp. Both
C-Band and Ku-Band DBS delivery of television signals are competitive
alternatives to cable television. Legislation has been introduced in Congress to
change the federal copyright laws to permit DBS systems to retransmit local
broadcast television signals to DBS customers. If enacted, such legislation
could enhance the competitive position of DBS systems.
Cable television also competes with the home video industry. Owners of
videocassette recorders are able to rent many of the same movies, special events
and music videos that are available on certain premium services. The
availability of videocassettes has affected the degree to which the Systems are
able to sell premium service units and pay-per-view offerings to some of its
subscribers.
Multipoint distribution services ("MDS"), which deliver premium television
programming over microwave superhigh frequency channels received by subscribers
with a special antenna, and multichannel multipoint distribution service
("MMDS"), which is capable of carrying four channels of television programming,
also compete with certain services provided by the Systems. By acquiring several
MMDS licenses or subleasing from several MMDS operators and holders of other
types of microwave licenses, a single entity can increase channel capacity to a
level more competitive with cable systems. MDS and MMDS systems are not required
to obtain a municipal franchise, are less capital intensive, require lower
up-front capital expenditures and are subject to fewer local and FCC regulatory
requirements than cable systems. The ability of MDS and MMDS systems to serve
homes and to appeal to consumers is affected by their less extensive channel
capacity and the need for unobstructed line of sight over-the-air transmission.
The Systems compete with MDS and MMDS operators generally in its metropolitan
service areas.
Satellite master antenna systems ("SMATV") generally serve large multiple
dwelling units. The FCC has preempted all state and local regulation of SMATV
operations. SMATV is limited to the buildings within which the operator has
received permission from the building owner to provide service. The Systems
compete with SMATV operators primarily in the New York City metropolitan area.
The 1996 Telecom Act amends the definition of cable system to exclude facilities
that do not use public rights-of-way (e.g., SMATV operators serving multiple
buildings not under common ownership or control), thus exempting such facilities
from franchise and other requirements applicable to cable operators.
The FCC has established a new local multipoint distribution service ("LMDS",
sometimes referred to as "cellular cable") in the higher bands of the
electromagnetic spectrum that could be used to offer multichannel video in
competition with cable systems, as well as two-way communications services. The
FCC has held auctions to select licensees. The FCC barred both telephone and
cable companies from bidding for LMDS frequencies in their own service areas.
The 1984 Cable Act specifically legalized, under certain circumstances,
reception by private home earth stations of satellite-delivered cable
programming services. Direct broadcast satellite ("DBS") systems permit
satellite transmissions from the low-power C-Band to be received by antennae
approximately 60 to 72 inches in diameter at the viewer's home. Higher power DBS
systems providing transmissions over the Ku-Band permit the use of smaller
receiver antennae and thus are more appealing to customers.
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The full extent to which developing media will compete with cable television
systems may not be known for several years. There can be no assurance that
existing, proposed or as yet undeveloped technologies will not become dominant
in the future and render cable television systems less profitable or even
obsolete.
Although substantially all the franchises of the Systems are non-exclusive, most
franchising authorities have granted only one franchise in an area. Other cable
television operators could receive franchises for areas in which the Systems are
operated or a municipality could build a competing cable system. Southern New
England Telephone ("SNET"), the dominant telephone company in Connecticut has
obtained a statewide franchise to build and operate a competing cable television
system in the communities in Connecticut in which the Systems are operating
pursuant to cable franchises. Ameritech has obtained franchises to offer cable
service in certain of the Company's franchise areas in the Midwest. RCN has
obtained or applied for cable franchises in a number of communities in
Massachusetts in which the Company operates. The 1992 Cable Act described below
prohibits municipalities from unreasonably refusing to grant competitive
franchises and facilitates the franchising of second cable systems or
municipally-owned cable systems. See "Regulation - 1992 Cable Act," below.
Programming and Entertainment
Rainbow Media competes with numerous programming services for cable television
system distribution and for subscribers, including network television, other
national and regional cable services, independent broadcast television stations,
television superstations, the home videocassette industry, and developing
pay-per-view services. Rainbow Media and the other programming services are
competing for limited channel capacity and for inclusion in the most widely
distributed service tier of the systems offering their programming services.
Many of these program distributors are large, publicly-held companies which have
greater financial resources than Rainbow Media.
Rainbow Media also competes for the availability of programming, through
competition for telecast rights to films and competition for rights agreements
with sports teams. The Company anticipates that such competition will increase
as the number of programming distributors increases.
In general, Rainbow Media's programming services compete with other forms of
television-related services and entertainment media on the basis of the price of
services, the variety and quality of programming offered and the effectiveness
of Rainbow Media's marketing efforts.
Numerous businesses compete with Madison Square Garden and Radio City
Entertainment for the entertainment expenditures of consumers.
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Telephone and Modem Services
Lightpath faces substantial competition from incumbent local exchange carriers
("ILECs"), such as Bell Atlantic, which are the dominant providers of local
telephone services in their respective service areas. ILECs have significant
advantages over Lightpath, including greater capital resources, an existing
fully operational local network, and long-standing relationships with customers.
While Lightpath and the ILECs are competitors, Lightpath must also enter into
interconnection agreements with each ILEC so that Lightpath's customers can make
and receive calls from customers served by the ILEC. Federal and State law and
regulations require ILECs to enter into such agreements and provide such
facilities and services, and establish the methodology for setting the price for
these facilities and services. The specific price, terms and conditions of each
agreement, however, depends on the outcome of negotiations between Lightpath and
an ILEC. Agreements are also subject to approval by the state public service
commission. Lightpath has entered into interconnection agreements with Bell
Atlantic for New York, New Jersey and Connecticut, which have been approved by
the respective state commissions. In addition, it has reached an agreement with
SNET covering SNET's service area in Connecticut, which has been approved by the
Connecticut Department of Public Utility Control and an agreement with Ameritech
for Ohio, approval for which is pending.
Lightpath also faces competition from one or more competitive access providers
("CAPs") and other new entrants in the local telecommunications marketplace,
such as Teleport Communications Group, Inc. ("Teleport"), now part of AT&T and
MFS Communications Company, Inc. ("MFS"), now part of MCI/Worldcom. In addition
to the ILECs and competitive service providers, other potential competitors
capable of offering private line and special access services include electric
utilities, long distance carriers, microwave carriers, wireless telephone system
operators (such as cellular, PCS, and specialized mobile radio), and private
networks built by large end users. A continuing trend toward business
combinations and alliances in the telecommunications industry may create
significant new competitors to Lightpath.
Many ILECs and certain of Lightpath's other potential competitors have
financial, personnel and other resources significantly greater than those of
Lightpath. Some of these competitors have existing networks or conduits that
could be adapted to provide local exchange services. There can be no assurance
that Lightpath will be able to compete effectively against these competitors.
Lightpath may also face competition from new technologies and services
introduced in the future.
Retail Electronics
The consumer retail electronics industry has experienced consolidation and slow
growth in recent years due to difficult conditions, including flat demand for
consumer electronics and, until recently, a lack of new product introductions.
The consumer retail electronics business however, remains highly competitive.
The Wiz competes with national and regional retail electronics chains which
continue to increase their expansion in the New York Metropolitan area,
computer, office product and entertainment superstores, general merchandise
retailers, discount stores, local independent retailers and mail order and "e"
commerce services. Some of these competitors have significantly
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greater financial resources than Cablevision Electronics. Competition is
primarily based on price, service and selection of merchandise. The Wiz competes
on the basis of these factors and also plans to differentiate itself from its
competitors by continued implementation of new marketing and merchandising
strategies. These new strategies (including a new store prototype, incorporating
technological innovations such as interactive kiosks demonstrating cable modem
service) are designed to emphasize the variety of other products and services of
the Company which are expected to be available to customers of The Wiz.
Regulation
Cable Television
1984 Cable Act. The 1984 Cable Act set uniform national guidelines for cable
regulation under the Communications Act of 1934. While several of the provisions
of the 1984 Cable Act have been amended or superseded by the 1992 Cable Act
and/or the 1996 Telecom Act, each described below, other provisions of the 1984
Act, including the principal provisions relating to the franchising of cable
television systems, remain in place. The 1984 Cable Act authorizes states or
localities to franchise cable television systems but sets limits on their
franchising powers. It sets a ceiling on cable franchise fees of 5% of gross
revenues and prohibits localities from requiring cable operators to carry
specific programming services. The 1984 Cable Act protects cable operators
seeking franchise renewals by limiting the factors a locality may consider and
requiring a due process hearing before denial. The 1984 Cable Act does not,
however, prevent another cable operator from being authorized to build a
competing system. The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable franchises and from unreasonably refusing to award an
additional competitive franchise.
The 1984 Cable Act allows localities to require free access to public,
educational or governmental channels, but sets limits on the number of
commercial leased access channels cable television operators must make available
for potentially competitive services. The 1984 Cable Act prohibits obscene
programming and requires the sale or lease of devices to block programming
considered offensive.
1992 Cable Act. The 1992 Cable Act represented a significant change in the
regulatory framework under which cable television systems operate.
After the effective date of the 1984 Cable Act, and prior to the enactment of
the 1992 Cable Act, rates for cable services were unregulated for substantially
all of the Systems. The 1992 Cable Act reintroduced rate regulation for certain
services and equipment provided by most cable systems in the United States,
including substantially all of the Company's systems. While several of the
provisions of the 1992 Cable Act have been amended or superseded by the 1996
Telecom Act, other provisions remain in place.
The 1992 Cable Act requires each cable system to establish a basic service
package consisting, at a minimum, of all local broadcast signals and all
non-satellite delivered distant broadcast signals that the cable system wishes
to carry, and all public, educational and governmental access
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programming. The rates for the basic service package are subject to regulation
by local franchising authorities. Under the FCC's 1993 rate regulation rules, a
cable operator whose per channel rates exceeded an FCC established benchmark was
required to reduce its per channel rates for the basic service package by up to
10% unless it could justify higher rates on the basis of its costs. In 1994,
after reconsideration, the FCC ordered a further reduction of 7% in rates for
the basic service tier, for an overall reduction of 17%. Franchise authorities
(local municipalities or state cable television regulators) are also empowered
to regulate the rates charged for the installation and lease of the equipment
used by subscribers to receive the basic service package (including a converter
box, a remote control unit and, if requested by a subscriber, an addressable
converter box or other equipment required to access programming offered on a per
channel or per program basis), including equipment that may also be used to
receive other packages of programming, and the installation and monthly use of
connections for additional television sets. The FCC's rules require franchise
authorities to regulate rates for equipment and connections for additional
television sets on the basis of an actual cost formula developed by the FCC,
plus a return of 11.25%. No additional charge is permitted for the delivery of
regulated services to additional sets unless the operator incurs additional
programming costs in connection with the delivery of such services to multiple
sets.
The FCC may, in response to complaints by a franchising authority, reduce the
rates for service packages other than the basic service package if it finds that
such rates are unreasonable. The FCC will in response to complaints also
regulate, on the basis of actual cost, the rates for equipment used only to
receive these higher packages. Services offered on a per channel or per program
basis are not subject to rate regulation by either municipalities or the FCC.
The FCC's rules provide that, unless a cable operator can justify higher rates
on the basis of its costs, increases in the rates charged by the operator for
the basic service package or any other regulated package of service may not
exceed an inflation indexed amount, plus increases in certain costs beyond the
cable operator's control, such as taxes, franchise fees and increased
programming costs that exceed the inflation index. Increases in fees paid to
broadcast stations for the retransmission of their signals above those in effect
on October 6, 1994 may be passed through to subscribers.
In 1994 the FCC also adopted guidelines for cost-of-service showings that
establish a regulatory framework pursuant to which a cable television operator
may attempt to justify rates in excess of the benchmarks. In addition, the FCC
has adopted guidelines that permit rate adjustments attributed to the cost of a
rebuild or substantial upgrade of a cable system to be added to the operators
benchmark rate.
In 1994 the FCC also reversed its prior policy regarding rate regulation of
packages of a la carte services. A la carte services that are offered in a
package are now subject to rate regulation by the FCC.
The FCC, in addition to revising its rules governing a la carte channels, also
revised its regulations governing the manner in which cable operators could
charge subscribers for new cable programming services. The FCC instituted a
three-year flat fee mark-up plan, now lapsed, for
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charges relating to new channels of cable programming services in addition to
the basic formula for calculating the permissible rate for new services.
Under the 1992 Cable Act, systems may not require subscribers to purchase any
cable programming service tier other than the basic service package as a
condition of access to video programming offered on a per channel or per program
basis. Cable systems are allowed up to ten years to the extent necessary to
implement the necessary technology to facilitate this access. It is expected
that the Systems will be capable of implementing the technology mandated by the
1992 Cable Act by the Act's deadline.
In addition, the 1992 Cable Act:
(i) requires cable programmers under certain circumstances to offer their
programming to present and future competitors of cable television such as
MMDS, SMATV and DBS, and prohibits new exclusive contracts with program
suppliers without FCC approval,
(ii) directs the FCC to set standards for limiting the number of channels that
a cable television system operator could program with programming services
controlled by such operator,
(iii) bars municipalities from unreasonably refusing to grant additional
competitive franchises,
(iv) requires cable television operators to carry ("Must Carry") all local
broadcast stations (including home shopping broadcast stations), or, at
the option of a local broadcaster, to obtain the broadcaster's prior
consent for retransmission of its signal ("Retransmission Consent"),
(v) requires cable television operators to obtain the consent of any non-local
broadcast station prior to retransmitting its signal, and
(vi) regulates the ownership by cable operators of other media such as MMDS and
SMATV.
In connection with clause (ii) of the immediate preceding paragraph concerning
limitations on affiliated programming, the FCC has established a 40% limit on
the number of channels of a cable television system that can be occupied by
programming services in which the system operator has an attributable interest
and a national limit of 30% on the number of households that any cable company
can serve. This 30% national limit, because of court proceedings, has never been
implemented. The FCC recently asked for comments on whether the limit should be
increased beyond 30%, or whether it should revise its rules to consider the
presence in the national market of all multichannel video programming providers
rather than cable operators alone in applying any national percentage limit. The
FCC also issued a parallel notice asking for a review of its cable ownership
arbitration rules, to determine whether it should increase its voting stock
benchmark, not attribute cable subscribers if an operator certifies that the
interest held is a passive minority investor interest, and recognize partial,
scaled cable MSO interests in subscribers served by certain joint ventures and
other cross-MSO investments. The outcome of these FCC proceedings could affect
the Company because of TCI's investment in the Company.
In connection with clause (iv) above concerning retransmission of a local
broadcaster's signals, a substantial number of local broadcast stations are
currently carried by the Systems and have elected to negotiate for
Retransmission Consent. The Systems have Retransmission Consent agreements with
most broadcast stations they currently carry, but a number of these agreements
are temporary in nature and the potential remains for discontinuation of
carriage if an agreement is not renewed
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following their expiration. The Company has had to drop a few local stations
because of failure to reach retransmission consent agreements.
In connection with clause (i) above 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 satellite-delivered
services and from unreasonably refusing to sell any such service to any
multichannel video programming distributor. In several instances, Rainbow Media
has been ordered by the FCC to provide satellite-delivered programming to
multi-channel video programmers after such multi-channel video programmers have
filed complaints pursuant to these program-access rules. The FCC has recently
declined to extend these program-access rules to cover some
terrestrial-delivered programming by programmers such as Rainbow Media, but
proposals have been made to Congress in support of such extensions. It is not
possible to predict whether such an extension might in the future be adopted by
the FCC or Congress and, if so, what effect it might have on the Company.
The FCC adopted or imposed new regulations under the 1992 Cable Act in the areas
of customer service, technical standards, equal employment opportunity, privacy,
rates for leased access channels, obscenity and indecency, disposition of a
customer's home wiring and compatibility between cable systems and other
consumer electronic equipment such as "cable ready" television sets and
videocassette recorders.
1996 Telecom Act. The 1996 Telecom Act deregulates the rates for non-basic tiers
of service provided by all cable operators after March 31, 1999. It permits
regulated equipment rates to be computed by aggregating costs of broad
categories of equipment at the franchise, system, regional or company level. It
also eliminates the right of individual subscribers to file rate complaints with
the FCC concerning certain non-basic cable programming service tiers, and
requires such complaints to be filed by franchising authorities following
receipt of at least two subscriber complaints.
The 1992 Cable Act provided that all rate regulation, for both the upper tiers
and for basic service, is eliminated when a cable system is subject to
"effective competition" from another multichannel video programming provider
such as MMDS, DBS, a telephone company, or a combination of all of these. The
1996 Telecom Act expanded the definition of "effective competition" to include
instances in which a local telephone company or its affiliate (or a multichannel
video programming distributor using the facilities of a telephone company or its
affiliates) offers comparable video programming directly to subscribers by any
means (other than DBS) in the cable operator's franchise area. Since telephone
companies are providing or planning to provide video services in several of the
franchise areas served by the Systems, this provision will allow the Systems
greater flexibility in packaging and pricing in those markets if the FCC makes a
finding of "effective competition" in these markets based on telephone company
competition.
The 1996 Telecom Act also eliminates the uniform rate structure requirements of
the 1992 Cable Act for cable operators in areas subject to effective competition
or for video programming offered on a per channel or per program basis, and
allows non-uniform bulk discount rates to be offered to multiple dwelling units.
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Other FCC Regulation. In addition to the rules and regulations promulgated by
the FCC under the 1984 Cable Act, the 1992 Cable Act and the 1996 Telecom Act,
the FCC has promulgated other rules affecting the Company. FCC rules require
that cable systems black out certain network and sports programming on imported
distant broadcast signals upon request. The FCC also requires that cable systems
delete syndicated programming carried on distant signals upon the request of any
local station holding the exclusive right to broadcast the same program within
the local television market and, in certain cases, upon the request of the
copyright owner of such programs. These rules affect the diversity and cost of
the programming options for the Systems.
FCC regulation also includes matters regarding restrictions on origination and
cablecasting by cable system operators; application of the rules governing
political broadcasts; customer service; ownership and control of cable home
wiring in single family residences and multiple dwelling units and limitations
on advertising contained in nonbroadcast children's programming.
Implementing provisions of the 1993 Budget Act, the FCC has adopted requirements
for payment of annual "regulatory fees" which may be passed on to subscribers as
"external cost" adjustments to basic cable service. Fees are also assessed for
other licenses held by cable operators, including licenses for business radio,
cable television relay systems (CARS) and earth stations, which, however, may
not be collected directly from subscribers.
The FCC has the authority to regulate utility company rates for cable rental of
pole and conduit space. States can establish preemptive regulations in this
area, and the states in which the Systems operate have done so. The 1996 Telecom
Act modifies the pole attachment provisions of the Communications Act by
requiring that utilities provide cable systems and telecommunications carriers
with nondiscriminatory access to any pole, conduit or right-of-way controlled by
the utility. The FCC has adopted new regulations to govern the charges for pole
attachments used by companies providing telecommunications services, including
cable operators. These regulations are likely to significantly increase the
rates charged to cable companies providing voice and data, in addition to video
services. These new pole attachment regulations do not become effective,
however, until five years after enactment of the 1996 Telecom Act in 2001, and
any subsequent increases in attachment rates resulting from the FCC's new
regulations will be phased in equal annual increments over a subsequent period
of five years, until 2006.
The FCC's technical guidelines for signal leakage became substantially more
stringent in 1990, requiring upgrading expenditures by the Systems. Two-way
radio stations, microwave-relay stations and satellite earth stations used by
the Systems are licensed by the FCC.
Federal Copyright Regulation. There are no restrictions on the number of distant
broadcast television signals that cable television systems can import, but cable
systems are required to pay copyright royalty fees to receive a compulsory
license to carry them. The United States Copyright Office has increased the
royalty fee from time to time. The FCC and the Copyright offices have, at
different times, recommended to Congress changes in the compulsory licenses for
cable television carriage of broadcast signals. This could adversely affect the
ability of the Systems to obtain such programming and could increase the cost of
such programming. No prediction can be made as to whether Congress will enact
any such changes to the copyright laws.
(23)
<PAGE>
Cable Television Cross-Media Ownership Limitations. In addition to the
prohibition on telephone company-cable cross-ownership, now removed by the 1996
Telecom Act, the 1984 Cable Act prohibited any person or entity from owning
broadcast television and cable properties in the same market. The 1992 Cable Act
imposed limits on new acquisitions of SMATV or MMDS systems by cable operators
in their franchise areas. The 1996 Telecom Act repeals the statutory ban on
cable-broadcast station cross-ownership to permit common ownership or control of
a television station and a cable system with overlapping service areas, but
leaves in place the cable system-television station cross-ownership restriction
contained in the FCC's rules and does not prejudge the Commission's review of
the regulation, which was initiated in 1998. The FCC has eliminated its
regulations concerning broadcast network-cable cross-ownership to permit common
control of both a television network and a cable system, as required by the 1996
Telecom Act. The 1996 Telecom Act removes the statutory ban on cable-MMDS
cross-ownership on any cable operator in a franchise area where one cable
operator is subject to effective competition.
State and Municipal Regulation of Cable Television. Regulatory responsibility
for essentially local aspects of the cable business such as franchisee
selection, system design and construction, safety, and consumer services remains
with either state or local officials and, in some jurisdictions, with both. The
1992 Cable Act expanded the factors that a franchising authority can consider in
deciding whether to renew a franchise and limits the damages for certain
constitutional claims against franchising authorities for their franchising
activities. New York law provides for comprehensive state-wide regulation,
including approval of transfers of cable franchises and consumer protection
legislation. Massachusetts, New Jersey and Connecticut also have substantial
cable regulatory authority at the state level. State and local franchising
jurisdiction is not unlimited, however, and must be exercised consistently with
the provisions of the 1984 Cable Act and the 1992 Cable Act. Among the more
significant restrictions that the 1984 Cable Act imposes on the regulatory
jurisdiction of local franchising authorities is a 5% ceiling on franchise fees
and mandatory renegotiation of certain franchise requirements if warranted by
changed circumstances.
Telecommunications Regulation. The 1996 Telecom Act removes barriers to entry in
the local telephone market that is now monopolized by the BOCs and other
incumbent local exchange carriers by preempting state and local laws that
restrict competition and by requiring incumbent local exchange telephone
companies to provide nondiscriminatory access and interconnection to potential
competitors, such as cable operators and long distance companies. At the same
time, the law eliminated the Modified Final Judgment and permits the BOCs to
enter the market for long distance service (through a separate subsidiary), on a
state-by-state basis, after they satisfy a "competitive checklist." The 1996
Telecom Act also facilitates the entry of utility companies into the
telecommunications market. One utility company, Boston Edison, has teamed with
one of the Company's competitors, RCN, to provide bundled telecommunications and
video services in the Boston market.
The 1996 Telecom Act also eliminates or streamlines many of the requirements
applicable to local exchange carriers, and requires the FCC and states to review
universal service programs and encourage access to advanced telecommunications
services provided by all entities, including cable companies, by schools,
libraries and other public institutions. The FCC and, in some cases, states are
required to conduct numerous rulemaking proceedings to implement these
provisions.
(24)
<PAGE>
Programming and Entertainment
Cable television program distributors such as Rainbow Media are not regulated by
the FCC under the Communications Act of 1934. To the extent that regulations and
laws, either presently in force or proposed, hinder or stimulate the growth of
the cable television and satellite industries, the business of Rainbow Media
will be directly affected. As discussed above under "Business - Cable Television
Operations - Regulation", the 1992 Cable Act limits in certain ways the
Company's ability to freely manage the Rainbow Media services or carry the
Rainbow Media services on their affiliates' systems and imposes or could impose
other regulations on the Rainbow Media companies. The "program access"
provisions of the 1992 Cable Act require that Rainbow Media services be sold,
under certain circumstances, to multichannel video programming providers that
compete with the Company's local cable systems. The 1996 Telecom Act extends the
program access requirements of the 1992 Cable Act to a telephone company that
provides video programming by any means directly to subscribers, and to
programming in which such a company holds an attributable ownership interest,
thus allowing the Company's cable systems similar access to programming
developed by their telephone company competitors.
The 1984 Cable Act limits the number of commercial leased access channels that a
cable television operator must make available for potentially competitive
services but the 1992 Cable Act empowered the FCC to set the rates and
conditions for such leased access channels, which it has done in a manner
designed to increase use of such channels.
Satellite common carriers, from whom Rainbow Media and its affiliates obtain
transponder channel time to distribute their programming, are directly regulated
by the FCC. All common carriers must obtain from the FCC a certificate for the
construction and operation of their interstate communications facilities.
Satellite common carriers must also obtain FCC authorization to utilize
satellite orbital slots assigned to the United States by the World
Administrative Radio Conference. Such slots are finite in number, thus limiting
the number of carriers that can provide satellite service and the number of
channels available for program producers and distributors such as Rainbow Media
and its affiliates. Nevertheless, there are at present numerous competing
satellite services that provide transponders for video services to the cable
industry.
All common carriers must offer their communications service to Rainbow Media and
others on a nondiscriminatory basis (including by means of a lottery). A
satellite carrier cannot unreasonably discriminate against any customer in its
charges or conditions of carriage.
The operations of the professional sports franchises owned by Madison Square
Garden, L.P., are regulated by the leagues in which the teams participate. Both
the NBA and the NHL have regulations governing, among other things, player
matters and transfers of ownership interests and licensing matters.
Telephone and Modem Services
As a telecommunications carrier, Lightpath is subject to regulation by the FCC
and by the state public service commission in each state in which it provides
service. In order to provide service,
(25)
<PAGE>
moreover, Lightpath must seek approval from each such state commission.
Lightpath has obtained this approval from the state commissions in New York,
Connecticut, Massachusetts, New Jersey and Ohio.
Lightpath's regulatory obligations vary from state-to-state and include some or
all of the following requirements: filing tariffs (rates, terms and conditions);
filing operational, financial, and customer service reports; seeking approval to
transfer the assets or capital stock of the telephone company; seeking approval
to issue stocks, bonds, and other forms of indebtedness of the telephone
company; and filing all contracts or other documentation involving transactions
between the telephone company and its affiliates. States may also impose
requirements on competitive carriers to contribute to the funding of discounted
"universal" telecommunications services for educational institutions, low income
persons, and persons in rural areas.
As Lightpath offers interstate long distance services, it is subject to various
FCC requirements, including the payment of regulatory fees, Telecommunication
Relay Services funding, and the contributions to the maintenance of "universal
service" as required by the 1996 Telecom Act. Also under the 1996 Telecom Act,
Lightpath must compensate carriers that terminate calls originating on
Lightpath's network (Lightpath is entitled to compensation from carriers when it
terminates calls); interconnect directly or indirectly with other carriers; make
its telecommunications services available for resale; and provide number
portability, dialing parity, and access-to-rights-of-way.
Employees and Labor Relations
As of December 31, 1998, the Company had 12,140 full-time, 3,684 part-time and
4,420 temporary employees of which 514, 975 and 2,467, respectively, were
covered under collective bargaining agreements. The Company believes that its
relations with its employees are satisfactory.
Item 2. Properties
The Company generally leases the real estate where its business offices,
microwave receiving antennae, earth stations, transponders, microwave towers,
warehouses, headend equipment, hub sites, program production studios and access
studios are located. As of December 1998, the Company occupies a leased
headquarters building located in Bethpage, New York with approximately 536,000
square feet of space. Other significant leasehold properties include 106,000
square feet housing Madison Square Garden's office operations and 569,000 square
feet comprising Radio City Music Hall. Cablevision Electronics leases 40 retail
store locations, a warehouse and a corporate office aggregating approximately
1,537,000 square feet. The Company believes its properties are adequate for its
use.
The Company generally owns all assets (other than real property) related to its
cable television operations, including its program production equipment, headend
equipment (towers, antennae, electronic equipment and satellite earth stations),
cable system plant (distribution equipment, amplifiers, subscriber drops and
hardware), converters, test equipment, tools and maintenance equipment. The
Company, through Madison Square Garden, also owns the Madison Square Garden
arena and theater complex in New York City comprising 1,016,000 square feet.
(26)
<PAGE>
Cablevision Cinemas, LLC leases 48 theater locations with approximately 45,000
seats and owns an additional 12 theaters with approximately 8,600 seats.
The Company generally leases its service and other vehicles.
Item 3. Legal Proceedings
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that the resolution of such lawsuits will have a
material adverse impact on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
(27)
<PAGE>
PART II
Item 5. Market for the Registrants' Common Equity and Related Stockholder
Matters
Cablevision Systems Corporation's Class A Common Stock is and CSC Holdings,
Inc.'s Class A Common Stock prior to the consummation of the Holding Company
Reorganization on March 4, 1998, was traded on the American Stock Exchange under
the symbol "CVC". The following table sets forth the high and low sales prices
(adjusted for the two-for-one stock splits) for the last two years of Class A
Common Stock as reported by the American Stock Exchange for the periods
indicated.
1998 1997
---------------------- ---------------------
Quarter High Low High Low
------- ---- --- ---- ---
First 33-1/2 21-25/32 8-7/8 7-7/16
Second 42 26-9/16 13-53/64 6-25/32
Third 45-15/16 32 15-11/16 12-9/32
Fourth 50-1/4 36-1/2 23-15/16 15-7/8
As of March 19, 1999, there were 904 holders of record of Cablevision Systems
Corporation Class A Common Stock.
There is no public trading market for the Cablevision Systems Corporation Class
B Common Stock, par value $.01 per share ("Class B Common Stock"). As of March
19, 1999, there were 23 holders of record of Class B Common Stock.
All outstanding shares of common stock of CSC Holdings are held by Cablevision
Systems Corporation.
See Item 1. "Business - The Holding Company Reorganization and TCI Transactions"
for a description of the changes to the Company's capitalization as a result of
the Reorganization.
Dividends. Neither CSC Holdings (prior to the Reorganization) nor Cablevision
Systems Corporation (after the Reorganization) have paid any dividends on shares
of Class A or Class B Common Stock. Cablevision Systems Corporation does not
anticipate paying any cash dividends on shares of Cablevision Systems
Corporation Class A or Class B Common Stock in the foreseeable future.
Cablevision Systems Corporation and CSC Holdings may pay cash dividends on their
capital stock only from surplus as determined under Delaware law. Holders of
Cablevision Parent Class A and Cablevision Parent Class B Common Stock are
entitled to receive dividends equally on a per share basis if and when such
dividends are declared by the Board of Directors of Cablevision Parent from
funds legally available therefore. No dividend may be declared or paid in cash
or property on shares of either Cablevision Parent Class A or Cablevision Parent
Class B Common Stock unless the same dividend is paid simultaneously on each
share of the other class of common stock. In the
(28)
<PAGE>
case of any stock dividend, holders of Cablevision Parent Class A Common Stock
are entitled to receive the same percentage dividend (payable in shares of
Cablevision Parent Class A Common Stock) as the holders of Cablevision Parent
Class B Common Stock receive (payable in shares of Cablevision Parent Class B
Common Stock). In December 1998, CSC Holdings paid a dividend of $42.1 million
to Cablevision Parent.
CSC Holdings paid $29.3 million of cash dividends on the Series I Preferred
Stock and $132.5 million of dividends in additional shares of Series H and M
Preferred Stock in 1998. CSC Holdings is restricted from paying dividends on its
preferred stock under the provisions of its senior credit agreement if a default
has occurred and is continuing under such agreement. Additionally, CSC Holdings'
senior credit agreement, senior debentures and senior subordinated debt
instruments may restrict the payment of dividends in respect of any shares of
capital stock in certain circumstances.
Dividends may not be paid in respect of shares of the Company's common stock
unless all dividends due and payable in respect of the preferred stock of CSC
Holdings have been paid or provided for. See Item 7. - "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources-Restricted Group."
(29)
<PAGE>
Item 6. Selected Financial Data
SELECTED FINANCIAL AND STATISTICAL DATA
The operating and balance sheet data included in the following selected
financial data have been derived from the consolidated financial statements of
Cablevision Systems Corporation and CSC Holdings, Inc. Acquisitions made by
these companies were accounted for under the purchase method of accounting and,
accordingly, the acquisition costs were allocated to the net assets acquired
based on their fair value, except for assets previously owned by Mr. Dolan or
affiliates of Mr. Dolan which were recorded at historical cost. Acquisitions are
reflected in operating, balance sheet and statistical data from the time of
acquisition. The selected financial data presented below should be read in
conjunction with the financial statements of Cablevision Systems Corporation and
CSC Holdings, Inc. and notes thereto included in Item 8 of this Report.
<TABLE>
<CAPTION>
Cablevision Systems Corporation
-----------------------------------------------------------------------
December 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues .............................................. $ 3,265,143 $ 1,949,358 $ 1,315,142 $ 1,078,060 $ 837,169
Operating expenses
Technical and operating (including cost of sales of
$390,751 in 1998) ................................ 1,659,537 853,800 538,272 412,479 302,885
Selling, general and administrative ............... 882,816 514,574 313,476 266,209 195,942
Restructuring charge .............................. -- -- -- -- 4,306
Depreciation and amortization ..................... 734,107 499,809 388,982 319,929 271,343
----------- ----------- ----------- ----------- -----------
Operating profit (loss) ............................... (11,317) 81,175 74,412 79,443 62,693
Other income (expense):
Interest expense, net ............................. (402,374) (363,208) (265,015) (311,887) (261,781)
Share of affiliates' net loss ..................... (37,368) (27,165) (82,028) (93,024) (82,864)
Gain on sale of programming interests and
cable assets, net ................................ 170,912 372,053 -- 35,989 --
Gain on redemption of subsidiary preferred stock .. -- 181,738 -- -- --
Write off of deferred interest and financing costs (23,482) (24,547) (37,784) (5,517) (9,884)
Loss on redemption of debentures .................. -- -- -- -- (7,088)
Provision for preferential payment to related party (980) (10,083) (5,600) (5,600) (5,600)
Minority interests ................................ (124,677) (209,461) (137,197) (28,886) (9,814)
Miscellaneous, net ................................ (19,218) (12,606) (6,647) (8,225) (7,198)
----------- ----------- ----------- ----------- -----------
Net loss .............................................. $ (448,504) $ (12,104) $ (459,859) $ (337,707) $ (321,536)
=========== =========== =========== =========== ===========
Basic and diluted net loss per common share ........... $ (3.16) $ (.12) $ (4.63) $ (3.54) $ (3.43)
=========== =========== =========== =========== ===========
Average number of common shares outstanding
(in thousands) ....................................... $ 142,016 $ 99,608 $ 99,308 $ 95,304 $ 93,776
=========== =========== =========== =========== ===========
Cash dividends declared per common share .............. $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
</TABLE>
(30)
<PAGE>
<TABLE>
<CAPTION>
Cablevision Systems Corporation
---------------------------------------------------------------------------
December 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets ................................... $ 7,061,062 $ 5,614,788 $ 3,034,725 $ 2,502,305 $ 2,176,413
Total debt ..................................... 5,357,608 4,694,062 3,334,701 3,157,107 3,169,236
Minority interests ............................. 719,007 821,782 -- -- --
Deficit investment in affiliates ............... -- -- 512,800 453,935 393,637
Preferred stock of CSC Holdings, Inc. .......... 1,579,670 1,456,549 1,338,006 590,492 9,410
Stockholders' deficiency ....................... (2,611,685) (2,711,514) (2,707,026) (2,224,417) (1,827,945)
Statistical Data:
Homes passed by cable .......................... 5,115,000 4,398,000 3,858,000 3,328,000 2,899,000
Basic service subscribers ...................... 3,412,000 2,844,000 2,445,000 2,061,000 1,768,000
Basic service subscribers as a percentage of
homes passed ............................... 66.7% 64.7% 63.4% 61.9% 61.0%
Number of premium television units ............. 5,137,000 4,183,000 3,862,000 3,990,000 3,208,000
Average number of premium units per basic
subscriber at period end ................... 1.5 1.5 1.6 1.9 1.8
Average monthly revenue per basic subscriber (1) $ 42.56 $ 38.53 $ 36.71 $ 37.07 $ 36.33
</TABLE>
- - ----------
(1) Based on recurring service revenues divided by average subscribers for the
month of December.
(31)
<PAGE>
<TABLE>
<CAPTION>
CSC Holdings, Inc.
-----------------------------------------------------------------------
December 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues .............................................. $ 2,912,419 $ 1,949,358 $ 1,315,142 $ 1,078,060 $ 837,169
Operating expenses
Technical and operating (including cost of
sales of $390,751 in 1998) ....................... 1,524,555 853,800 538,272 412,479 302,885
Selling, general and administrative ............... 820,015 514,574 313,476 266,209 195,942
Restructuring charge .............................. -- -- -- -- 4,306
Depreciation and amortization ..................... 577,635 499,809 388,982 319,929 271,343
----------- ----------- ----------- ----------- -----------
Operating profit (loss) ............................... (9,786) 81,175 74,412 79,443 62,693
Other income (expense):
Interest expense, net ............................. (369,072) (363,208) (265,015) (311,887) (261,781)
Share of affiliates' net loss ..................... (37,368) (27,165) (82,028) (93,024) (82,864)
Gain on sale of programming interests and cable
assets, net ...................................... 171,127 372,053 -- 35,989 --
Gain on redemption of subsidiary preferred stock .. -- 181,738 -- -- --
Write off of deferred interest and financing costs (23,482) (24,547) (37,784) (5,517) (9,884)
Loss on redemption of debentures .................. -- -- -- -- (7,088)
Provision for preferential payment to related party (980) (10,083) (5,600) (5,600) (5,600)
Minority interests ................................ 48,378 (60,694) (9,417) (8,637) (3,429)
Miscellaneous, net ................................ (18,350) (12,606) (6,647) (8,225) (7,198)
----------- ----------- ----------- ----------- -----------
Net income (loss) ..................................... (239,533) 136,663 (332,079) (317,458) (315,151)
Preferred dividend requirements ....................... (161,872) (148,767) (127,780) (20,249) (6,385)
----------- ----------- ----------- ----------- -----------
Net loss applicable to common shareholder ............. $ (401,405) $ (12,104) $ (459,859) $ (337,707) $ (321,536)
=========== =========== =========== =========== ===========
Basic and diluted net loss per common share* .......... $ -- $ (.12) $ (4.63) $ (3.54) $ (3.43)
=========== =========== =========== =========== ===========
Average number of common shares outstanding (in
thousands)* ........................................... $ -- 99,608 99,308 95,304 93,776
=========== =========== =========== =========== ===========
Cash dividends declared per common share* ............. $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
</TABLE>
* Per share information for the year ended December 31, 1998 is not presented
since CSC Holdings, Inc. became a wholly-owned subsidiary of Cablevision Parent
in 1998.
(32)
<PAGE>
<TABLE>
<CAPTION>
CSC Holdings, Inc.
---------------------------------------------------------------------------
December 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets ................................... $ 5,935,860 $ 5,614,788 $ 3,034,725 $ 2,502,305 $ 2,176,413
Total debt ..................................... 4,834,608 4,694,062 3,334,701 3,157,107 3,169,236
Minority interests ............................. 785,545 821,782 -- -- --
Deficit investment in affiliates ............... -- -- 512,800 453,935 393,637
Redeemable preferred stock ..................... 1,256,339 1,123,808 1,005,265 257,751 --
Stockholders' deficiency ....................... (2,824,353) (2,378,773) (2,374,285) (1,891,676) (1,818,535)
Statistical Data:
Homes passed by cable .......................... 3,949,000 4,398,000 3,858,000 3,328,000 2,899,000
Basic service subscribers ...................... 2,569,000 2,844,000 2,445,000 2,061,000 1,768,000
Basic service subscribers as a percentage of
homes passed ............................... 65.0% 64.7% 63.4% 61.9% 61.0%
Number of premium television units ............. 4,234,000 4,183,000 3,862,000 3,990,000 3,208,000
Average number of premium units per basic
subscriber at period end ................... 1.7 1.5 1.6 1.9 1.8
Average monthly revenue per basic subscriber (1) $ 42.74 $ 38.53 $ 36.71 $ 37.07 $ 36.33
</TABLE>
- - ----------
(1) Based on recurring service revenues divided by average subscribers for the
month of December.
(33)
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Annual Report, including the section entitled "1999 Outlook," 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,
(vi) other risks and uncertainties inherent in the cable television business,
(vii) financial community and rating agency perceptions of the Company and its
business, operations, financial condition and the industry in which it
operates, and
(viii) the factors described in the Company's recently filed registration
statement on Form S-3, including the section entitled "Risk Factors"
contained therein.
The information contained herein concerning Year 2000 issues ("Y2K") constitutes
forward looking information. The identification and remediation of Y2K issues is
a technological effort that has never been undertaken before and estimates of
the outcome, time and expense of this endeavor are, for that reason,
particularly hard to make with any certainty. As a result, the Company's
estimates may prove to be materially inaccurate. More specifically, the
Company's forecasts may prove to be wrong for the following reasons, among
other:
(i) the Company's forecasts are dependent upon the representations of third
parties which may be inaccurate or mistaken;
(ii) the nature of the Y2K issue is such that detection of all issues is
difficult and cannot be assured and, as a result, problems may exist which
have not been, and are not, identified in a timely manner;
(iii) because of the lack of experience with problems of this nature and
magnitude, it is difficult to estimate remediation costs with accuracy;
(iv) remediation requires the efforts of third parties whose performance is
beyond the control of the Company; and
(v) because the Y2K issues are so widespread and because the number of third
parties who can provide meaningful remediation services is limited, the
Company may have difficulty obtaining the timely assistance of such third
parties, particularly as such services are needed closer to January 1,
2000.
The Company disclaims any obligation to update the forward-looking statements
contained or incorporated by reference herein.
(34)
<PAGE>
Recent Transactions - Cablevision Systems Corporation
1998 Acquisitions. In March 1998, the Company acquired certain cable television
systems in New York and New Jersey from TCI. See also "Recent Transactions - CSC
Holdings, Inc." below.
Recent Transactions - CSC Holdings, Inc.
1998 Acquisitions. In December 1998, CSC Holdings acquired the net assets of
Clearview Cinema Group, Inc. ("Clearview") and certain assets from Loews
Cineplex Entertainment Corporation ("Loews"). In February 1998, Cablevision
Electronics acquired substantially all of the assets associated with 40 The Wiz
consumer electronics store locations. In addition, in June 1998, CSC Holdings
purchased 50% of ITT's remaining minority interest in Madison Square Garden.
1998 Dispositions. In 1998, CSC Holdings completed the sale of substantially all
of the assets of U.S. Cable Television Group, L.P. ("U.S. Cable") and the sale
of several smaller cable television systems. Also in 1998, CSC Holdings
transferred its cable television system in Rensselaer, New York plus
approximately $16 million in cash in exchange for Time Warner's Litchfield,
Connecticut system. In addition, Rainbow Media completed the sale of an interest
in a regional sports programming business.
1997 Acquisitions and Transactions. In April 1997, CSC Holdings exchanged 25% of
its interest in Rainbow Media for NBC's interest in certain of Rainbow Media's
programming entities. In June 1997, CSC Holdings redeemed a portion of ITT's
interest in Madison Square Garden which increased Rainbow Media's interest in
Madison Square Garden from 50% to 89.8%. In June 1997, CSC Holdings acquired
from Warburg Pincus the equity interest that Warburg Pincus had in certain cable
television systems in Massachusetts giving the Company full ownership of these
systems. In July 1997, CSC Holdings acquired from Warburg Pincus the Series A
Preferred Stock of A-R Cable Services, Inc. ("A-R Cable") which resulted in the
consolidation of A-R Cable's operations from the date of the transaction. In
December 1997, Rainbow Media completed certain transactions with Fox/Liberty
Networks, LLC ("Fox/Liberty"). Also in December 1997, Madison Square Garden
acquired all of the membership interests in Radio City Entertainment.
1997 Dispositions. In 1997, CSC Holdings completed the sale of certain cable
television systems and Rainbow Media completed the sale of the assets of a radio
station.
The above transactions completed in 1997 and 1998 are collectively referred to
as the "Net Acquisitions."
(35)
<PAGE>
Results of Operations - Cablevision Systems Corporation
The following table sets forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
Cablevision Systems Corporation
-----------------------------------------------------------
Years Ended December 31,
-----------------------------------------------------------
1998 1997
---------------------------- ---------------------------- (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues .............................................. $ 3,265,143 100% $ 1,949,358 100% $ 1,315,785
Operating expenses:
Technical and operating (including cost of sales
of $390,751 in 1998) .......................... 1,659,537 51 853,800 44 (805,737)
Selling, general & administrative .................. 882,816 27 514,574 26 (368,242)
Depreciation and amortization ...................... 734,107 22 499,809 26 (234,298)
----------- ----------- -----------
Operating profit (loss) ............................... (11,317) -- 81,175 4 (92,492)
Other income (expense):
Interest expense, net .............................. (402,374) (12) (363,208) (19) (39,166)
Share of affiliates' net loss ...................... (37,368) (1) (27,165) (1) (10,203)
Gain on sale of programming interests and cable
assets, net .................................... 170,912 5 372,053 19 (201,141)
Gain on redemption of subsidiary preferred stock ... -- -- 181,738 9 (181,738)
Write off of deferred interest and financing costs . (23,482) (1) (24,547) (1) 1,065
Provision for preferential payment to related party (980) -- (10,083) -- 9,103
Minority interests ................................. (124,677) (4) (209,461) (11) 84,784
Miscellaneous, net ................................. (19,218) (1) (12,606) (1) (6,612)
----------- ----------- -----------
Net loss .............................................. $ (448,504) (14)% $ (12,104) (1)% $ (436,400)
=========== =========== ===========
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1) ............................... $ 722,790 $ 580,984
Net cash provided by operating activities (2) ......... 400,072 241,463
Net cash used in investing activities (2) ............. (468,423) (248,616)
Net cash provided by (used in) financing activities (2) (167,964) 405,682
</TABLE>
- - ----------
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows."
(36)
<PAGE>
Comparison of Year Ended December 31, 1998 Versus Year Ended December 31, 1997.
Consolidated Results - Cablevision Systems Corporation
Revenues for the year ended December 31, 1998 increased $1,315.8 million (67%)
as compared to revenues for the prior year. Approximately $1,093.7 million (56%)
of the increase was attributable to the Net Acquisitions; approximately $88.8
million (5%) resulted from higher revenue per subscriber; and approximately
$101.1 million (5%) was from increases in other revenue sources such as Rainbow
Media's programming services, advertising on the Company's cable television
systems, revenue derived from the developing commercial telephone business and
revenue recognized in connection with the At Home transaction. The remaining
increase of $32.2 million (1%) was attributable to internal growth of 67,300 in
the average number of subscribers during the year.
Technical and operating expenses (including cost of sales) for 1998 increased
$805.7 million (94%) over the 1997 amount. Approximately $708.4 million (83%)
was attributable to the Net Acquisitions, with the remaining $97.3 million (11%)
attributable to increased costs directly associated with the growth in
subscribers and revenues discussed above, as well as to increases in programming
costs for cable television services. As a percentage of revenues, technical and
operating expenses increased 7% during 1998 as compared to 1997.
Selling, general and administrative expenses increased $368.2 million (72%) for
1998 as compared to the 1997 level. Approximately $212.8 million (41%) was
directly attributable to the Net Acquisitions and $74.7 million (15%) was due to
charges related to an incentive stock plan. The remaining $80.7 million (16%)
increase resulted from higher customer service, administrative and sales and
marketing costs. As a percentage of revenues, selling, general and
administrative expenses increased 1% in 1998 compared to 1997. Excluding the
effects of the incentive stock plan, as a percentage of revenues such costs
decreased 1%.
Operating profit before depreciation and amortization increased $141.8 million
(24%) to $722.8 million for 1998 from $581.0 million for 1997. The Net
Acquisitions contributed approximately $172.4 million (29%) of the increase.
This increase was partially offset by a decrease of $30.6 million (5%) resulting
from the combined effect of the revenue and expense changes discussed above. On
a pro forma basis, giving effect to the Net Acquisitions as if they had occurred
on January 1, 1997 and excluding the incentive stock plan charges referred to
above, operating profit before depreciation and amortization would have
increased 11.2% in 1998. Operating profit before depreciation and amortization
is presented here to provide additional information about the Company's ability
to meet future debt service, capital expenditures and working capital
requirements. Operating profit before depreciation and amortization should be
considered in addition to and not as a substitute for net income (loss) and cash
flows as indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
Depreciation and amortization expense increased $234.3 million (47%) during 1998
as compared to 1997. Approximately $212.6 million (43%) of the increase was
directly attributable to the Net Acquisitions. The remaining $21.7 million (4%)
increase resulted primarily from depreciation on
(37)
<PAGE>
new plant assets, offset by a decrease in amortization expense resulting from
certain intangible assets becoming fully amortized during 1998.
Net interest expense increased $39.2 million (11%) during 1998 compared to 1997.
The net increase is primarily attributable to debt incurred to fund acquisitions
and capital expenditures, partly offset by lower interest rates.
Share of affiliates' net losses increased to $37.4 million for 1998 from $27.2
million in 1997. For the year ended December 31, 1998, such amount consisted of
the Company's share of the net profits and losses of certain programming
businesses in which the Company has varying minority ownership interests. For
the year ended December 31, 1997, such amount consisted primarily of the
Company's share of net losses in certain cable affiliates for the period prior
to consolidation ($37.9 million) and the Company's share of the net profits in
certain programming businesses in which the Company had varying ownership
interests.
Gain on sale of programming interests and cable assets for the year ended
December 31, 1998 consists primarily of a gain of $153.3 million from the
disposition of certain cable television systems and $17.7 million from the sale
of an interest in a regional sports programming business. For the year ended
December 31, 1997, the gain consists primarily of a gain of approximately $305.0
million resulting from the Fox/Liberty transactions, a gain of approximately
$59.0 million resulting from the sale of certain cable television systems, and a
gain of approximately $7.4 million from the sale of Rainbow Media's radio
station.
Gain on redemption of subsidiary preferred stock for the year ended December 31,
1997 represents the gain recognized upon the redemption of A-R Cable's Series A
Preferred Stock of $181.7 million. Such gain represents primarily the reversal
of accrued preferred dividends in excess of amounts paid.
Write off of deferred interest and financing costs of $23.5 million in 1998
consists principally of the premium of $14.9 million paid to redeem Clearview's
senior notes payable. Additionally, in 1998 the Company wrote off deferred
financing costs of $4.7 million in connection with amendments to the Company's
credit agreements. The write off of deferred interest and financing costs of
$24.5 million in 1997 consists principally of the payment of a premium of $8.4
million to redeem the Company's 10 3/4% Senior Subordinated Debentures due 2004
and the write off of $5.3 million in deferred financing costs in connection with
such redemption. In addition, the Company wrote off deferred financing costs of
$4.1 million in connection with the repayment of Cablevision of Ohio's bank debt
and $6.5 million in connection with the amendment to and repayment of the term
loans of the Madison Square Garden credit facility.
Provision for preferential payment to related party consists of the expensing of
the proportionate amount due with respect to an annual payment to Charles F.
Dolan made in connection with the acquisition of Cablevision of New York City.
Effective March 4, 1998 these preferential payments were terminated upon the
retirement of Mr. Dolan's preferred interest.
Minority interests for the year ended December 31, 1998 include CSC Holdings'
preferred stock dividend requirements, Fox Liberty's 40% share of the net income
of Regional Programming
(38)
<PAGE>
Partners, ITT's share of the net loss of Madison Square Garden and NBC's share
of the net loss of Rainbow Media. Minority interests for the year ended December
31, 1997 include CSC Holdings' preferred stock dividend requirements, Fox
Liberty's 40% share of the net income of Regional Programming Partners since the
date of the transaction, ITT's share of the net income of Madison Square Garden
since the date of acquisition and NBC's 25% share of the net income of Rainbow
Media since the date of the transaction.
Net miscellaneous expense increased to $19.2 million for the year ended December
31, 1998 compared to $12.6 million for the prior year. Approximately $9.6
million of the increase related to federal alternative minimum taxes and state
income taxes. The remaining decrease of $3.0 million reflects a reduction in
various other miscellaneous items.
Business Segments Results - Cablevision Systems Corporation
The Company classifies its business interests into three fundamental areas:
Telecommunication Services, consisting principally of its cable television,
telephone and modem services operations; Rainbow Media, consisting principally
of interests in cable television programming networks and MSG, which owns and
operates professional sports teams, regional cable television networks, live
productions and entertainment venues; and Retail Electronics, which represents
the operations of Cablevision Electronics' retail electronics stores. The
Company allocates certain costs to each segment based upon their proportionate
estimated usage of services.
Telecommunication Services
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
the Company's telecommunication services segment.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1998 1997
--------------------------- ---------------------------
% of % of
Amount Revenues Amount Revenues
------ -------- ------ --------
(dollars in thousands)
----------------------
<S> <C> <C> <C> <C>
Revenues $1,888,855 100% $1,366,668 100%
Operating expenses 769,842 41 552,355 41
Selling, general and administrative expenses 432,435 23 301,762 22
Depreciation and amortization 547,629 29 399,056 29
========== ==========
Operating profit $ 138,949 7% $ 113,495 8%
========== ==========
</TABLE>
Revenues for the year ended December 31, 1998 increased $522.2 million (38%) as
compared to revenues for the prior year. Approximately $333.4 million (24%) of
the increase was attributable to the Net Acquisitions; approximately $88.8
million (7%) resulted from higher revenue per subscriber and approximately $32.2
million (2%) was attributable to internal growth of 67,300 in the average number
of subscribers during the year. Approximately $56.3 million (4%) was
attributable to revenues from the Company's developing telephone business and
revenue
(39)
<PAGE>
recognized in connection with the At Home transaction. The remaining increase of
approximately $11.5 million (1%) resulted from other revenue sources.
Operating expenses for 1998 increased $217.5 million (39%) over the 1997 amount.
Approximately $137.2 million (25%) was attributable to the Net Acquisitions,
with the remaining $80.3 million (14%) attributable to increased costs directly
associated with the growth in subscribers and revenues discussed above, as well
as to increases in programming costs for cable television services. As a
percentage of revenues, operating expenses remained relatively constant during
1998 as compared to 1997.
Selling, general and administrative expenses increased $130.7 million (43%) for
1998 as compared to the 1997 level. Approximately $48.8 million (16%) was
directly attributable to the Net Acquisitions and $36.1 million (12%) was due to
charges related to an incentive stock plan. The remaining $45.8 million (15%)
increase resulted from higher customer service, administrative and sales and
marketing costs. As a percentage of revenues, selling, general and
administrative expenses increased 1% in 1998 compared to 1997. Excluding the
effects of the incentive stock plan, as a percentage of revenues such costs
decreased 1%.
Depreciation and amortization expense increased $148.6 million (37%) during 1998
as compared to 1997. Approximately $135.6 million (34%) of the increase was
directly attributable to the Net Acquisitions. The remaining $13.0 million (3%)
increase resulted primarily from depreciation on new plant assets, partially
offset by a decrease in amortization expense resulting from certain intangible
assets becoming fully amortized during 1998.
Rainbow Media
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
Rainbow Media.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1998 1997
--------------------------- ---------------------------
% of % of
Amount Revenues Amount Revenues
------ -------- ------ --------
(dollars in thousands)
----------------------
<S> <C> <C> <C> <C>
Revenues $ 1,007,639 100% $ 637,648 100%
Operating expenses 590,151 58 351,578 55
Selling, general and administrative expenses 351,727 35 214,912 34
Depreciation and amortization 166,661 17 90,634 14
=========== ===========
Operating loss $ (100,900) (10)% $ (19,476) (3)%
=========== ===========
</TABLE>
Revenues for the year ended December 31, 1998 increased $370.0 million (58%) as
compared to revenues for the prior year. Approximately $332.5 million (52%) of
the increase was attributable to the Net Acquisitions; approximately $24.8
million (4%) resulted from internal growth in programming network subscribers;
and approximately $7.4 million (1%) from an increase in cable television
advertising sales. The remaining increase of $5.3 million (1%) was primarily
attributable to the launch of new programming networks.
(40)
<PAGE>
Operating expenses for 1998 increased $238.6 million (68%) over the 1997 amount.
Approximately $218.0 million (62%) was attributable to the Net Acquisitions,
with the remaining $20.6 million (6%) attributable to increased costs directly
associated with the growth in revenues discussed above. As a percentage of
revenues, operating expenses increased 3% during 1998 as compared to 1997.
Selling, general and administrative expenses increased $136.8 million (64%) for
1998 as compared to the 1997 level. Approximately $70.2 million (33%) was
directly attributable to the Net Acquisitions and $38.5 million (18%) was due to
charges related to an incentive stock plan. The remaining $28.1 million (13%)
increase was primarily attributable to sales and marketing initiatives related
to the promotion of new and established programming networks and from higher
administrative costs. As a percentage of revenues, selling, general and
administrative expenses increased 1% in 1998 compared to 1997. Excluding the
effects of the incentive stock plan, as a percentage of revenues such costs
decreased 1%.
Depreciation and amortization expense increased $76.0 million (84%) during 1998
as compared to 1997. Approximately $71.4 million (79%) of the increase was
directly attributable to the Net Acquisitions. The remaining $4.6 million (5%)
increase resulted primarily from depreciation on new fixed assets.
Retail Electronics
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
the Company's retail electronics segment, Cablevision Electronics. The
information presented is for the period from the date of acquisition, February
9, 1998 through December 31, 1998.
Period Ended December 31, 1998
------------------------------
Amount % of Revenue
------ ------------
(dollars in thousands)
----------------------
Revenues $ 464,388 100%
Cost of sales 390,751 84
Selling, general and administrative
expenses 93,803 20
Depreciation and amortization 4,293 1
===========
Operating loss $ (24,459) (5)%
===========
Revenues for the period ended December 31, 1998 amounted to approximately $464.4
million. Approximately $179.5 million (39%) was derived from the sale of video
equipment, $112.8 million (24%) from the sale of audio equipment and $94.6
million (20%) from the sale of home office equipment. The remaining $77.5
million (17%) of the revenue was derived from the sale of compact disks and
other pre-recorded music, digital video disks, VHS video and other pre-recorded
movies and warranty and service contracts.
(41)
<PAGE>
Cost of sales for 1998 amounted to approximately $390.8 million (84% of
revenues) from the date of acquisition through December 31, 1998. Cost of sales
includes the cost of merchandise sold, including freight costs incurred, as well
as store occupancy and buying costs.
Selling, general and administrative expenses amounted to approximately $93.8
million (20% of revenues) from the date of acquisition through December 31,
1998. Selling, general and administrative expenses consist of all retail store
expenses, including the salaries and commissions of sales personnel, the costs
of advertising, operating the distribution center and corporate support
functions.
Depreciation and amortization expense amounted to approximately $4.3 million (1%
of revenues) from the date of acquisition through December 31, 1998.
Depreciation and amortization expense includes the depreciation of all property
and equipment and the amortization of intangible assets which resulted from the
acquisition.
(42)
<PAGE>
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
Cablevision Systems Corporation
----------------------------------------------------------
Years Ended December 31,
----------------------------------------------------------
1997 1996
--------------------------- --------------------------- (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues ............................................... $ 1,949,358 100% $ 1,315,142 100% $ 634,216
Operating expenses:
Technical and operating ............................. 853,800 44 538,272 41 (315,528)
Selling, general & administrative ................... 514,574 26 313,476 24 (201,098)
Depreciation and amortization ....................... 499,809 26 388,982 29 (110,827)
----------- ----------- -----------
Operating profit ....................................... 81,175 4 74,412 6 6,763
Other income (expense):
Interest expense, net ............................... (363,208) (19) (265,015) (20) (98,193)
Share of affiliates' net loss ....................... (27,165) (1) (82,028) (6) 54,863
Gain on sale of programming interests and cable
assets, net .................................... 372,053 19 -- -- 372,053
Gain on redemption of subsidiary preferred stock .... 181,738 9 -- -- 181,738
Write off of deferred interest and financing costs .. (24,547) (1) (37,784) (3) 13,237
Provision for preferential payment to related party . (10,083) -- (5,600) -- (4,483)
Minority interests .................................. (209,461) (11) (137,197) (11) (72,264)
Miscellaneous, net .................................. (12,606) (1) (6,647) (1) (5,959)
----------- ----------- -----------
Net income (loss) ...................................... $ (12,104) (1)% $ (459,859) (35)% $ 447,755
=========== =========== ===========
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1) ................................ $ 580,984 $ 463,394
Net cash provided by operating activities (2) .......... 241,463 170,114
Net cash used in investing activities (2) .............. (248,616) (741,748)
Net cash provided by financing activities (2) .......... 405,682 567,914
</TABLE>
- - ----------
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows."
(43)
<PAGE>
Comparison of Year Ended December 31, 1997 Versus Year Ended December 31, 1996.
Cablevision Systems Corporation
Revenues for the year ended December 31, 1997 increased $634.2 million (48%) as
compared to revenues for the prior year. Approximately $490.4 million (37%) of
the increase was attributable to the Net Acquisitions; approximately $60.1
million (5%) resulted from higher revenue per subscriber; and approximately
$50.9 million (4%) was from increases in other revenue sources such as Rainbow
Media's programming services, advertising on the Company's cable television
systems and revenue derived from the developing commercial telephony business.
The remaining increase of $32.7 million (2%) was attributable to internal growth
of 72,600 in the average number of subscribers during the year.
Technical and operating expenses for 1997 increased $315.5 million (59%) over
the 1996 amount. Approximately 48% was attributable to the Net Acquisitions,
with the remaining 11% attributable to increased costs directly associated with
the growth in subscribers and revenues discussed above, as well as to increases
in programming rates for certain cable television services. As a percentage of
revenues, technical expenses increased 3% during 1997 as compared to 1996.
Selling, general and administrative expenses increased $201.1 million (64%) for
1997 as compared to the 1996 level. Approximately 34% was directly attributable
to the Net Acquisitions and 21% was due to charges related to an incentive stock
plan. The remaining 9% increase resulted from higher customer service,
administrative and sales and marketing costs. As a percentage of revenues,
selling, general and administrative expenses increased 2% in 1997 compared to
1996. Excluding the effects of the incentive stock plan, as a percentage of
revenues such costs decreased 1%.
Operating profit before depreciation and amortization increased $117.6 million
(25%) to $581.0 million for 1997 from $463.4 million for 1996. Approximately
$126.3 million (27%) of the increase was attributable to the Net Acquisitions.
The remaining decrease of $8.7 million (2%) resulted from the combined effect of
the revenue and expense changes discussed above. On a pro forma basis, giving
effect to the Net Acquisitions as if they had occurred on January 1, 1996 and
excluding the incentive stock plan charges referred to above, operating profit
before depreciation and amortization would have increased 14% in 1997. Operating
profit before depreciation and amortization is presented here to provide
additional information about the Company's ability to meet future debt service,
capital expenditures and working capital requirements. Operating profit before
depreciation and amortization should be considered in addition to and not as a
substitute for net income and cash flows as indicators of financial performance
and liquidity as reported in accordance with generally accepted accounting
principles.
Depreciation and amortization expense increased $110.8 million (28%) during 1997
as compared to 1996. Approximately 23% of the increase was directly attributable
to the Net Acquisitions. The remaining 5% increase resulted primarily from
depreciation on new plant assets, offset by a decrease in depreciation and
amortization for certain assets held for sale and a decrease in amortization
expense resulting from certain intangible assets becoming fully amortized during
1997.
(44)
<PAGE>
Net interest expense increased $98.2 million (37%) during 1997 compared to 1996.
Approximately 35% of the increase is attributable to the Net Acquisitions. The
remaining increase of 2% is due to higher debt balances, partly offset by lower
interest rates on bank debt.
Share of affiliates' net losses of $27.2 million for 1997 and $82.0 million for
1996 consist primarily of the Company's share of net losses in certain cable
affiliates for the period prior to consolidation ($37.9 million in 1997 and
$74.0 million in 1996) and the Company's net share of the profits and losses in
certain programming businesses in which the Company has varying ownership
interests, which share of net income (losses) amounted to $10.7 million in 1997
and $(8.0) million in 1996.
Gain on sale of programming interests and cable assets for the year ended
December 31, 1997 consists primarily of a gain of approximately $305.0 million
resulting from the Fox/Liberty transactions, a gain of approximately $59.0
million resulting from the sale of certain cable television systems and a gain
of approximately $7.4 million from the sale of Rainbow Media's radio station.
Gain on redemption of subsidiary preferred stock for the year ended December 31,
1997 represents the gain recognized upon the redemption of A-R Cable's Series A
Preferred Stock of $181.7 million. Such gain represents primarily the reversal
of accrued preferred dividends in excess of amounts paid.
Write off of deferred interest and financing costs of $24.5 million in 1997
consist principally of the payment of a premium of $8.4 million to redeem the
Company's 10 3/4% Senior Subordinated Debentures due 2004 and the write off of
$5.3 million in deferred financing costs in connection with such redemption. In
addition, the Company wrote off deferred financing costs of $4.1 million in
connection with the repayment of Cablevision of Ohio's bank debt and $6.5
million in connection with the amendment to and repayment of the term loans of
the Madison Square Garden credit facility. Write off of deferred interest and
financing costs of $37.8 million for 1996 consist principally of $24 million
related to a refinancing of the Company's subsidiary, V Cable, Inc. and
approximately $10.7 million related to the replacement of the Company's former
$1.5 billion Restricted Group credit facility with a new $1.7 billion credit
facility.
Provision for preferential payment to related party consists of the expensing of
the proportionate amount due with respect to an annual payment to Charles F.
Dolan made in connection with the acquisition of Cablevision of New York City.
Effective March 4, 1998, these preferential payments were terminated upon the
retirement of Mr. Dolan's preferred interest.
Minority interest for the year ended December 31, 1997 represents CSC Holdings'
preferred stock dividend requirements, Fox Liberty's 40% share of the net income
of Regional Programming Partners since the date of the transaction, ITT's share
of the net income of Madison Square Garden since the date of acquisition and
NBC's 25% share of the net income of Rainbow Media since the date of the
transaction. For 1996, the minority interest represented CSC Holdings' preferred
stock dividend requirements and NBC's 25% share of the net income of American
Movie Classics.
(45)
<PAGE>
Results of Operations - CSC Holdings, Inc.
The following table sets forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
CSC Holdings, Inc.
-----------------------------------------------------------
Years Ended December 31,
-----------------------------------------------------------
1998 1997
---------------------------- ---------------------------- (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues ............................................... $ 2,912,419 100% $ 1,949,358 100% $ 963,061
Operating expenses:
Technical and operating (including cost of sales
of $390,751 in 1998 ............................ 1,524,555 52 853,800 44 (670,755)
Selling, general & administrative ................... 820,015 28 514,574 26 (305,441)
Depreciation and amortization ....................... 577,635 20 499,809 26 (77,826)
----------- ----------- -----------
Operating profit (loss) ................................ (9,786) -- 81,175 4 (90,961)
Other income (expense):
Interest expense, net ............................... (369,072) (13) (363,208) (19) (5,864)
Share of affiliates' net loss ....................... (37,368) (1) (27,165) (1) (10,203)
Gain on sale of programming interests and cable
assets, net .................................... 171,127 6 372,053 19 (200,926)
Gain on redemption of subsidiary preferred stock .... -- -- 181,738 9 (181,738)
Write off of deferred interest and financing costs .. (23,482) (1) (24,547) (1) 1,065
Provision for preferential payment to related party . (980) -- (10,083) -- 9,103
Minority interests .................................. 48,378 2 (60,694) (3) 109,072
Miscellaneous, net .................................. (18,350) (1) (12,606) (1) (5,744)
----------- ----------- -----------
Net income (loss) ...................................... $ (239,533) (8)% $ 136,663 7% $ (376,196)
=========== =========== ===========
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1) ................................ $ 567,849 $ 580,984
Net cash provided by operating activities (2) .......... 249,496 271,687
Net cash used in investing activities (2) .............. (387,618) (248,616)
Net cash provided by (used in) financing activities (2) (98,320) 375,458
</TABLE>
- - ----------
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about CSC Holdings' ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows."
(46)
<PAGE>
Comparison of Year Ended December 31, 1998 Versus Year Ended December 31, 1997.
Consolidated Results - CSC Holdings, Inc.
Revenues for the year ended December 31, 1998 increased $963.1 million (49%) as
compared to revenues for the prior year. Approximately $741.0 million (38%) of
the increase was attributable to the Net Acquisitions; approximately $88.8
million (5%) resulted from higher revenue per subscriber; and approximately
$101.1 million (5%) was from increases in other revenue sources such as Rainbow
Media's programming services, advertising on CSC Holdings' cable television
systems, revenue derived from the developing commercial telephone business and
revenue recognized in connection with the At Home transaction. The remaining
increase of $32.2 million (1%) was attributable to internal growth of 67,300 in
the average number of subscribers during the year.
Technical and operating expenses (including cost of sales) for 1998 increased
$670.8 million (79%) over the 1997 amount. Approximately $573.5 million (67%)
was attributable to the Net Acquisitions, with the remaining $97.3 million (12%)
attributable to increased costs directly associated with the growth in
subscribers and revenues discussed above, as well as to increases in programming
costs for cable television services. As a percentage of revenues, technical and
operating expenses increased 8% during 1998 as compared to 1997.
Selling, general and administrative expenses increased $305.4 million (59%) for
1998 as compared to the 1997 level. Approximately $150.0 million (28%) was
directly attributable to the Net Acquisitions and $74.7 million (15%) was due to
increased charges related to an incentive stock plan. The remaining $80.7
million (16%) increase resulted from higher customer service, administrative and
sales and marketing costs. As a percentage of revenues, selling, general and
administrative expenses increased 2% in 1998 compared to 1997. Excluding the
effects of the incentive stock plan, as a percentage of revenues such costs
remained relatively constant.
Operating profit before depreciation and amortization decreased $13.1 million
(2%) to $567.9 million for 1998 from $581.0 million for 1997. Approximately
$30.6 million of the decrease resulted from the combined effect of the revenue
and expense changes discussed above, partially offset by an increase of $17.5
million attributable to the Net Acquisitions. On a pro forma basis, giving
effect to the Net Acquisitions as if they had occurred on January 1, 1997 and
excluding the incentive stock plan charges referred to above, operating profit
before depreciation and amortization would have increased 11.5% in 1998.
Operating profit before depreciation and amortization is presented here to
provide additional information about CSC Holdings' ability to meet future debt
service, capital expenditures and working capital requirements. Operating profit
before depreciation and amortization should be considered in addition to and not
as a substitute for net income (loss) and cash flows as indicators of financial
performance and liquidity as reported in accordance with generally accepted
accounting principles.
Depreciation and amortization expense increased $77.8 million (16%) during 1998
as compared to 1997. Approximately $56.1 million (12%) of the increase was
directly attributable to the Net Acquisitions. The remaining $21.7 million (4%)
increase resulted primarily from depreciation on
(47)
<PAGE>
new plant assets, offset by a decrease in amortization expense resulting from
certain intangible assets becoming fully amortized during 1998.
Net interest expense increased $5.9 million (2%) during 1998 compared to 1997.
The net increase is primarily attributable to debt incurred to fund acquisitions
and capital expenditures, partly offset by lower interest rates.
Share of affiliates' net losses increased to $37.4 million for 1998 from $27.2
million in 1997. For the year ended December 31, 1998, such amount consisted of
CSC Holdings' share of the net profits and losses of certain programming
businesses in which CSC Holdings has varying minority ownership interests. For
the year ended December 31, 1997, such amount consisted primarily of CSC
Holdings' share of net losses in certain cable affiliates for the period prior
to consolidation ($37.9 million) and CSC Holdings' share of the net profits in
certain programming businesses in which CSC Holdings had varying ownership
interests.
Gain on sale of programming interests and cable assets for the year ended
December 31, 1998 consists primarily of a gain of $153.4 million from the
disposition of certain cable television systems and $17.7 million from the sale
of an interest in a regional sports programming business. For the year ended
December 31, 1997, the gain consists primarily of a gain of approximately $305.0
million resulting from the Fox/Liberty transactions, a gain of approximately
$59.0 million resulting from the sale of certain cable television systems and a
gain of approximately $7.4 million from the sale of Rainbow Media's radio
station.
Gain on redemption of subsidiary preferred stock for the year ended December 31,
1997 represents the gain recognized upon the redemption of A-R Cable's Series A
Preferred Stock of $181.7 million. Such gain represents primarily the reversal
of accrued preferred dividends in excess of amounts paid.
Write off of deferred interest and financing costs of $23.5 million in 1998
consists principally of the premium of $14.9 million paid to redeem Clearview's
senior notes payable. Additionally, in 1998 CSC Holdings wrote off deferred
financing costs of $4.7 million in connection with amendments to CSC Holdings'
credit agreements. The write off of deferred interest and financing costs of
$24.5 million in 1997 consists principally of the payment of a premium of $8.4
million to redeem CSC Holdings' 10-3/4% Senior Subordinated Debentures due 2004
and the write off of $5.3 million in deferred financing costs in connection with
such redemption. In addition, CSC Holdings wrote off deferred financing costs of
$4.1 million in connection with the repayment of Cablevision of Ohio's bank debt
and $6.5 million in connection with the amendment to and repayment of the term
loans of the Madison Square Garden credit facility.
Provision for preferential payment to related party consists of the expensing of
the proportionate amount due with respect to an annual payment to Charles F.
Dolan made in connection with the acquisition of Cablevision of New York City.
Effective March 4, 1998, these preferential payments were terminated upon the
retirement of Mr. Dolan's preferred interest.
Minority interests for the year ended December 31, 1998 include Fox Liberty's
40% share of the net income of Regional Programming Partners, ITT's share of the
net loss of Madison Square
(48)
<PAGE>
Garden and NBC's share of the net loss of Rainbow Media. Minority interests for
the year ended December 31, 1997 include Fox Liberty's 40% share of the net
income of Regional Programming Partners since the date of the transaction, ITT's
share of the net income of Madison Square Garden since the date of acquisition
and NBC's 25% share of the net income of Rainbow Media since the date of the
transaction.
Net miscellaneous expense increased to $18.4 million for the year ended December
31, 1998 compared to $12.6 million for the prior year. Approximately $9.6
million of the increase related to federal alternative minimum taxes and state
income taxes. The remaining decrease of $3.8 million reflects a reduction in
various other miscellaneous items.
Business Segments Results - CSC Holdings, Inc.
CSC Holdings classifies its business interests into three fundamental areas:
Telecommunication Services, consisting principally of its cable television,
telephone and modem services operations; Rainbow Media, consisting principally
of interests in cable television programming networks and MSG, which owns and
operates professional sports teams, regional cable television networks, live
productions and entertainment venues; and Retail Electronics, which represents
the operations of Cablevision Electronics' retail electronics stores.
Telecommunication Services
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
CSC Holdings' telecommunication services segment.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1998 1997
---------------------- --------------------
% of % of
Amount Revenues Amount Revenues
------ -------- ------ --------
(dollars in thousands)
----------------------
<S> <C> <C> <C> <C>
Revenues $ 1,513,393 100% $ 1,366,668 100%
Operating expenses 612,122 41 552,355 41
Selling, general and administrative expenses 369,634 24 301,762 22
Depreciation and amortization 391,157 26 399,056 29
----------- -----------
Operating profit $ 140,480 9% $ 113,495 8%
=========== ===========
</TABLE>
Revenues for the year ended December 31, 1998 increased $146.7 million (11%) as
compared to revenues for the prior year. Approximately $88.8 million (7%) of the
increase resulted from higher revenue per subscriber and approximately $32.2
million (2%) was attributable to internal growth of 67,300 in the average number
of subscribers during the year. Approximately $56.3 million (4%) was
attributable to CSC Holdings' developing telephone business and revenue
recognized in connection with the At Home transaction. The remaining increase of
approximately $11.5 million
(49)
<PAGE>
(1%) resulted from other revenue sources. These increases were offset by a
decrease of approximately $42.1 million (3%) as a result of the Net
Acquisitions.
Operating expenses for 1998 increased $59.8 million (11%) over the 1997 amount.
An approximate $80.3 million (15%) increase was attributable to increased costs
directly associated with the growth in subscribers and revenues discussed above,
as well as to increases in programming costs for cable television services. This
increase was partially offset by a decrease of $20.5 million (4%) as a result of
the Net Acquisitions. As a percentage of revenues, operating expenses remained
relatively constant during 1998 as compared to 1997.
Selling, general and administrative expenses increased $67.9 million (22%) for
1998 as compared to the 1997 level. Approximately $36.1 million (12%) was due to
charges related to an incentive stock plan and approximately $45.8 million (15%)
resulted from higher customer service, administrative and sales and marketing
costs. These increases were partially offset by a decrease of approximately
$14.0 million (5%) as a result of the Net Acquisitions. As a percentage of
revenues, selling, general and administrative expenses increased 2% in 1998
compared to 1997. Excluding the effects of the incentive stock plan, as a
percentage of revenues such costs remained relatively constant.
Depreciation and amortization expense decreased $7.9 million (2%) during 1998 as
compared to 1997. The net decrease was comprised primarily of a $20.8 million
(5%) decrease directly attributable to the Net Acquisitions and a $12.9 million
(3%) increase resulting primarily from depreciation on new plant assets,
partially offset by a decrease in amortization expense resulting from certain
intangible assets becoming fully amortized during 1998.
Rainbow Media
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
Rainbow Media.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1998 1997
---------------------- --------------------
% of % of
Amount Revenues Amount Revenues
------ -------- ------ --------
(dollars in thousands)
----------------------
<S> <C> <C> <C> <C>
Revenues $ 1,007,639 100% $ 637,648 100%
Operating expenses 590,151 58 351,578 55
Selling, general and administrative expenses 351,727 35 214,912 34
Depreciation and amortization 166,661 17 90,634 14
----------- ----------
Operating loss $ (100,900) (10)% $ (19,476) (3)%
=========== ==========
</TABLE>
Revenues for the year ended December 31, 1998 increased $370.0 million (58%) as
compared to revenues for the prior year. Approximately $332.5 million (52%) of
the increase was attributable to the Net Acquisitions; approximately $24.8
million (4%) resulted from internal growth in programming network subscribers;
and approximately $7.4 million (1%) from an increase in cable
(50)
<PAGE>
television advertising sales. The remaining increase of $5.3 million (1%) was
primarily attributable to the launch of new programming networks.
Operating expenses for 1998 increased $238.6 million (68%) over the 1997 amount.
Approximately $218.0 million (62%) was attributable to the Net Acquisitions,
with the remaining $20.6 million (6%) attributable to increased costs directly
associated with the growth in revenues discussed above. As a percentage of
revenues, operating expenses increased 3% during 1998 as compared to 1997.
Selling, general and administrative expenses increased $136.8 million (64%) for
1998 as compared to the 1997 level. Approximately $70.2 million (33%) was
directly attributable to the Net Acquisitions and $38.5 million (18%) was due to
charges related to an incentive stock plan. The remaining $28.1 million (13%)
increase was primarily attributable to sales and marketing initiatives related
to the promotion of new and established programming networks and from higher
administrative costs. As a percentage of revenues, selling, general and
administrative expenses increased 1% in 1998 compared to 1997. Excluding the
effects of the incentive stock plan, as a percentage of revenues such costs
decreased 1%.
Depreciation and amortization expense increased $76.0 million (84%) during 1998
as compared to 1997. Approximately $71.4 million (79%) of the increase was
directly attributable to the Net Acquisitions. The remaining $4.6 million (5%)
increase resulted primarily from depreciation on new fixed assets.
Retail Electronics
The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to revenue for
CSC Holdings' retail electronics segment, Cablevision Electronics. The
information presented is for the period from the date of acquisition, February
9, 1998 through December 31, 1998.
Period Ended December 31, 1998
------------------------------
Amount % of Revenue
------ ------------
(dollars in thousands)
----------------------
Revenues $ 464,388 100%
Cost of sales 390,751 84
Selling, general and administrative
expenses 93,803 20
Depreciation and amortization 4,293 1
---------
Operating loss $ (24,459) (5)%
=========
Revenues for the period ended December 31, 1998 amounted to approximately $464.4
million. Approximately $179.5 million (39%) was derived from the sale of video
equipment, $112.8 million (24%) from the sale of audio equipment and $94.6
million (20%) from the sale of home office equipment. The remaining $77.5
million (17%) of the revenue was derived from the sale of compact disks and
other pre-recorded music, digital video disks, VHS video and other pre-recorded
movies and warranty and service contracts.
(51)
<PAGE>
Cost of sales for 1998 amounted to approximately $390.8 million (84% of
revenues) from the date of acquisition through December 31, 1998. Cost of sales
includes the cost of merchandise sold, including freight costs incurred, as well
as store occupancy and buying costs.
Selling, general and administrative expenses amounted to approximately $93.8
million (20% of revenues) from the date of acquisition through December 31,
1998. Selling, general and administrative expenses consist of all retail store
expenses, including the salaries and commissions of sales personnel, the costs
of advertising, operating the distribution center and corporate support
functions.
Depreciation and amortization expense amounted to approximately $4.3 million (1%
of revenues) from the date of acquisition through December 31, 1998.
Depreciation and amortization expense includes the depreciation of all property
and equipment and the amortization of intangible assets which resulted from the
acquisition.
(52)
<PAGE>
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
CSC Holdings, Inc.
-----------------------------------------------------------
Years Ended December 31,
-----------------------------------------------------------
1997 1996
----------------------------------------------------------- (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues ............................................... $ 1,949,358 100% $ 1,315,142 100% $ 634,216
Operating expenses:
Technical and operating ............................. 853,800 44 538,272 41 (315,528)
Selling, general & administrative ................... 514,574 26 313,476 24 (201,098)
Depreciation and amortization ....................... 499,809 26 388,982 29 (110,827)
----------- ----------- -----------
Operating profit ....................................... 81,175 4 74,412 6 6,763
Other income (expense):
Interest expense, net ............................... (363,208) (19) (265,015) (20) (98,193)
Share of affiliates' net loss ....................... (27,165) (1) (82,028) (6) 54,863
Gain on sale of programming interests and cable
assets, net .................................... 372,053 19 -- -- 372,053
Gain on redemption of subsidiary preferred stock .... 181,738 9 -- -- 181,738
Write off of deferred interest and financing costs .. (24,547) (1) (37,784) (3) 13,237
Provision for preferential payment to related party . (10,083) -- (5,600) -- (4,483)
Minority interests .................................. (60,694) (3) (9,417) (1) (51,277)
Miscellaneous, net .................................. (12,606) (1) (6,647) (1) (5,959)
----------- ----------- -----------
Net income (loss) ...................................... $ 136,663 7% $ (332,079) (25)% $ 468,742
=========== =========== ===========
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1) ................................ $ 580,984 $ 463,394
Net cash provided by operating activities (2) .......... 271,687 200,380
Net cash used in investing activities (2) .............. (248,616) (741,748)
Net cash provided by financing activities (2) .......... 375,458 537,648
</TABLE>
- - ----------
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about CSC Holdings' ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
(2) See Item 8. - "Consolidated Statements of Cash Flows."
(53)
<PAGE>
Comparison of Year Ended December 31, 1997 Versus Year Ended December 31, 1996.
CSC Holdings, Inc.
Revenues for the year ended December 31, 1997 increased $634.2 million (48%) as
compared to revenues for the prior year. Approximately $490.4 million (37%) of
the increase was attributable to the Net Acquisitions; approximately $60.1
million (5%) resulted from higher revenue per subscriber; and approximately
$50.9 million (4%) was from increases in other revenue sources such as Rainbow
Media's programming services, advertising on CSC Holdings' cable television
systems and revenue derived from the developing commercial telephony business.
The remaining increase of $32.7 million (2%) was attributable to internal growth
of 72,600 in the average number of subscribers during the year.
Technical and operating expenses for 1997 increased $315.5 million (59%) over
the 1996 amount. Approximately 48% was attributable to the Net Acquisitions,
with the remaining 11% attributable to increased costs directly associated with
the growth in subscribers and revenues discussed above, as well as to increases
in programming rates for certain cable television services. As a percentage of
revenues, technical expenses increased 3% during 1997 as compared to 1996.
Selling, general and administrative expenses increased $201.1 million (64%) for
1997 as compared to the 1996 level. Approximately 34% was directly attributable
to the Net Acquisitions and 21% was due to charges related to an incentive stock
plan. The remaining 9% increase resulted from higher customer service,
administrative and sales and marketing costs. As a percentage of revenues,
selling, general and administrative expenses increased 2% in 1997 compared to
1996. Excluding the effects of the incentive stock plan, as a percentage of
revenues such costs decreased 1%.
Operating profit before depreciation and amortization increased $117.6 million
(25%) to $581.0 million for 1997 from $463.4 million for 1996. Approximately
$126.3 million (27%) of the increase was attributable to the Net Acquisitions.
The remaining decrease of $8.7 million (2%) resulted from the combined effect of
the revenue and expense changes discussed above. On a pro forma basis, giving
effect to the Net Acquisitions as if they had occurred on January 1, 1996 and
excluding the incentive stock plan charges referred to above, operating profit
before depreciation and amortization would have increased 14% in 1997. Operating
profit before depreciation and amortization is presented here to provide
additional information about CSC Holdings' ability to meet future debt service,
capital expenditures and working capital requirements. Operating profit before
depreciation and amortization should be considered in addition to and not as a
substitute for net income and cash flows as indicators of financial performance
and liquidity as reported in accordance with generally accepted accounting
principles.
Depreciation and amortization expense increased $110.8 million (28%) during 1997
as compared to 1996. Approximately 23% of the increase was directly attributable
to the Net Acquisitions. The remaining 5% increase resulted primarily from
depreciation on new plant assets, offset by a decrease in depreciation and
amortization for certain assets held for sale and a decrease in amortization
expense resulting from certain intangible assets becoming fully amortized during
1997.
(54)
<PAGE>
Net interest expense increased $98.2 million (37%) during 1997 compared to 1996.
Approximately 35% of the increase is attributable to the Net Acquisitions. The
remaining increase of 2% is due to higher debt balances, partly offset by lower
interest rates on bank debt.
Share of affiliates' net losses of $27.2 million for 1997 and $82.0 million for
1996 consist primarily of CSC Holdings' share of net losses in certain cable
affiliates for the period prior to consolidation ($37.9 million in 1997 and
$74.0 million in 1996) and CSC Holdings' net share of the profits and losses in
certain programming businesses in which CSC Holdings has varying ownership
interests, which share of net income (losses) amounted to $10.7 million in 1997
and $(8.0) million in 1996.
Gain on sale of programming interests and cable assets for the year ended
December 31, 1997 consists primarily of a gain of approximately $305.0 million
resulting from the Fox/Liberty transactions, a gain of approximately $59.0
million resulting from the sale of certain cable television systems and a gain
of approximately $7.4 million from the sale of Rainbow Media's radio station.
Gain on redemption of subsidiary preferred stock for the year ended December 31,
1997 represents the gain recognized upon the redemption of A-R Cable's Series A
Preferred Stock of $181.7 million. Such gain represents primarily the reversal
of accrued preferred dividends in excess of amounts paid.
Write off of deferred interest and financing costs of $24.5 million in 1997
consist principally of the payment of a premium of $8.4 million to redeem CSC
Holdings' 10 3/4% Senior Subordinated Debentures due 2004 and the write off of
$5.3 million in deferred financing costs in connection with such redemption. In
addition, CSC Holdings wrote off deferred financing costs of $4.1 million in
connection with the repayment of Cablevision of Ohio's bank debt and $6.5
million in connection with the amendment to and repayment of the term loans of
the Madison Square Garden credit facility. Write off of deferred interest and
financing costs of $37.8 million for 1996 consists principally of $24 million
related to a refinancing of CSC Holdings' subsidiary, V Cable, Inc. and
approximately $10.7 million related to the replacement of CSC Holdings' former
$1.5 billion Restricted Group credit facility with a new $1.7 billion credit
facility.
Provision for preferential payment to related party consists of the expensing of
the proportionate amount due with respect to an annual payment to Charles F.
Dolan made in connection with the acquisition of Cablevision of New York City.
Effective March 4, 1998, these preferential payments were terminated upon the
retirement of Mr. Dolan's preferred interest.
Minority interest for the year ended December 31, 1997 represents Fox Liberty's
40% share of the net income of Regional Programming Partners since the date of
the transaction, ITT's share of the net income of Madison Square Garden since
the date of acquisition and NBC's 25% share of the net income of Rainbow Media
since the date of the transaction. For 1996, the minority interest represented
NBC's 25% share of the net income of American Movie Classics.
(55)
<PAGE>
Other Items
Dividend requirements applicable to preferred stocks amounted to $148.8 million
for 1997, representing an increase of $21.0 million for the year primarily due
to CSC Holdings' issuances of preferred stock during the first quarter of 1996.
Liquidity and Capital Resources
Cablevision Systems Corporation does not have any operations independent of its
subsidiaries. In addition, Cablevision Systems Corporation has no borrowings and
does not have outstanding any securities other than its Class A Common Stock and
Class B Common Stock, on which it does not intend to pay any dividends in the
foreseeable future. Accordingly, Cablevision Systems Corporation does not have
cash needs independent of the needs of its subsidiaries.
Cablevision Systems Corporation is structured as a restricted group and an
unrestricted group of subsidiaries.
The Restricted Group includes all of CSC Holdings' cable operations in and
around the greater New York City Metropolitan area, in and around the greater
Cleveland, Ohio Metropolitan area and in and around the Boston, Massachusetts
Metropolitan area and the commercial telephone operations of the Company's
subsidiary, Cablevision Lightpath, Inc. on Long Island, New York. At December
31, 1998, the Restricted Group encompassed approximately 2,569,000 cable
television subscribers, including approximately 49,000 subscribers in systems
held for sale (see Note 3 - "Net Assets Held for Sale").
The Unrestricted Group principally includes the Company's cable television
operations other than those included in the Restricted Group. At December 31,
1998, the Unrestricted Group encompassed approximately 843,000 cable television
subscribers of the TCI Systems ("Unrestricted Cable"). Other Unrestricted Group
subsidiaries ("Unrestricted Other") include Rainbow Media, including Madison
Square Garden, and other companies engaged in certain development activities
("New Media"). Cablevision Electronics which acquired substantially all of the
assets associated with 40 The Wiz consumer electronics store locations on
February 9, 1998 and Cablevision Cinemas which owns the Company's motion picture
theater assets are also included in the Unrestricted Group.
1999 Outlook
The Company forecasts capital investment of between $800 million and $900
million in its New York, Massachusetts and Ohio cable properties and Long Island
commercial telephone business in 1999. The Company estimates that it will make
approximately 75% of such investment in the New York area businesses. This
investment includes startup capital for digital video services as well as the
rebuild of approximately 40% more plant miles to 750 MHz in 1999 than that which
was rebuilt in 1998. Additionally, the Company forecasts capital investments
aggregating between $250 million and $300 million for its New Media businesses,
Madison Square Garden, Rainbow Media, retail electronics and theaters in 1999.
Among other things, this $250-$300
(56)
<PAGE>
million of capital includes investments for the Radio City Music Hall
restoration, as well as investments to expand residential telephone service on
Long Island and Connecticut, roll out the non-Long Island based commercial
telephone business and nearly double the number of homes marketed for cable
modems. In addition, the Company may from time to time complete acquisitions
that may be material and that may involve the incurrence of indebtedness.
Over the past two years, the Company has reduced its leverage and has
experienced improved debt ratings. The Company will seek to finance its 1999
capital expenditures in a manner that does not adversely affect its debt
ratings. This may involve raising funds through the issuance of trust preferred
securities and/or through asset sales.
The following table presents selected historical results of operations and other
financial information related to the captioned groups or entities as of and for
the year ended December 31, 1998.
<TABLE>
<CAPTION>
Operating
Profit
(Loss)
Before
Depreciation
and Interest Capital
Revenues Amortization Expense Expenditures
-------- ------------ ------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Restricted Group.................. $1,452,526 $ 556,411 $ 326,107 $ 422,079
Other Unrestricted Cable.......... 20,910 5,974 2,034 3,370
TCI Systems....................... 375,462 154,941 33,394 30,858
New Media......................... 39,957 (30,748) 42 48,849
Rainbow Media (including MSG and
AMC).............................. 1,007,639 65,761 58,088 45,394
Retail Electronics................ 464,388 (20,166) 5,800 2,332
Other............................. (95,739) (9,383) 937 8,760
---------- ---------- ---------- ----------
Total.......................... $3,265,143 $ 722,790 $ 426,402 $ 561,642
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Restricted Unrestricted
Group Group Total
----- ----- -----
(dollars in thousands)
----------------------
<S> <C> <C> <C>
Debt and Redeemable Preferred Stock
Senior debt ............................... $ 899,388 $ 523,000 $1,422,388
Senior notes and debentures ............... 2,194,443 -- 2,194,443
Subordinated debentures ................... 1,048,375 -- 1,048,375
---------- ---------- ----------
4,142,206 523,000 4,665,206
---------- ---------- ----------
Redeemable preferred stock of CSC Holdings 1,256,339 -- 1,256,339
Rainbow Media
RMHI senior debt ....................... -- 95,548 95,548
AMC senior debt ........................ -- 205,157 205,157
MSG senior debt ........................ -- 330,000 330,000
---------- ---------- ----------
Total Rainbow Media debt .......... -- 630,705 630,705
---------- ---------- ----------
Retail Electronics debt ................... -- 44,542 44,542
Other debt ................................ -- 17,155 17,155
---------- ---------- ----------
Total debt and redeemable preferred
stock .......................... $5,398,545 $1,215,402 $6,613,947
========== ========== ==========
</TABLE>
(57)
<PAGE>
Restricted Group
The Company believes that, for the Restricted Group, internally generated funds,
together with funds available under the Restricted Group's Credit Agreement,
will be sufficient through 1999 to meet projected funding requirements.
Acceleration of the Company's plant upgrade, combined with additional amounts in
respect of the start up and operation of new businesses, such as high speed
internet access and digital video services, to expand residential telephone
services and to roll out the non-Long Island based commercial telephone
business, as well as additional capital investments or acquisitions may require
raising additional capital. The Company may obtain the requisite funds through
the incurrence of additional indebtedness, the issuance of trust preferred
securities and/or asset sales. The Company will seek to finance its 1999 capital
expenditures in a manner that does not adversely affect its debt ratings.
In February 1998, CSC Holdings issued $300 million face amount of 7-7/8% Senior
Debentures due 2018. The net proceeds of $291.7 million were used to repay
outstanding borrowings under the CSC Holdings Credit facility.
In June 1998, promissory notes totaling $151 million were redeemed with bank
borrowings under the CSC Holdings and MFR credit facilities.
In July 1998, CSC Holdings issued $500 million face amount of 7-1/4% Senior
Notes due 2008 and $500 million face amount of 7-5/8% Senior Debentures due
2018. The net proceeds of $985 million were used to repay outstanding borrowings
under the CSC Holdings credit facility.
In May 1998, CSC Holdings and certain other subsidiaries of the Company
completed a new $2.8 billion credit facility. The $2.8 billion reducing
revolving credit facility, maturing in March 2007, consists of a $1.4 billion
CSC Holdings credit facility, a $1.4 billion MFR credit facility (for its New
Jersey cable operations) of which $600 million is available, and an $800 million
credit facility for the TCI Systems. While the $800 million TCI Systems credit
facility is in place, only $600 million of the $1.4 billion MFR facility may be
utilized. In July 1998, the Company reduced the CSC Holdings credit facility by
$400 million to $1.0 billion, and the MFR credit facility by $200 million to
$1.2 billion, which includes a reduction of the TCI credit facility by $100
million to $700 million.
On March 3, 1999, taking into account the commitment reduction, the Restricted
Group had total usage under its existing Credit Agreement (including the MFR
credit facility) of $1,021.0 million and letters of credit of $34.4 million
issued on behalf of CSC Holdings. Unrestricted and undrawn funds available to
the Restricted Group amounted to approximately $444.6 million as of March 3,
1999. Upon the transfer of the TCI Systems to CSC Holdings, which is expected to
occur by April 4, 1999, the full amount of the MFR facility may be utilized. On
a pro forma basis, the unrestricted and undrawn funds available to the
Restricted Group as of March 3, 1999 would be $654.1 million (see table below).
(58)
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------
As of March 3, 1999
(in thousands)
--------------------------------------------------------------
CSC Holdings MFR TCI Total
------------ --- --- -----
<S> <C> <C> <C> <C>
Total facility $ 1,000,000 $ 500,000(1) $700,000 $ 2,200,000
Outstanding debt 575,000 446,000 490,500 1,511,500
Outstanding letters of credit 34,400 -- -- 34,400
----------- ---------- -------- -----------
Availability $ 390,600 $ 54,000 $209,500 $ 654,100
=========== ========== ======== ===========
</TABLE>
- - ----------
(1) Represents the MFR credit facility of $1.2 billion, net of $700 million
restricted for the TCI Systems.
The Credit Agreement contains certain financial covenants that may limit the
Restricted Group's ability to utilize all of the undrawn funds available
thereunder, including covenants requiring the Restricted Group to maintain
certain financial ratios and restricting the permitted uses of borrowed funds.
As of March 3, 1999, CSC Holdings had entered into interest exchange (swap)
agreements with several of its banks on a notional amount of $225 million, on
which CSC Holdings pays a fixed rate of interest and receives a variable rate of
interest for specified periods, with an average maturity of 11 months. The
average effective annual interest rate on all Restricted Group bank debt
outstanding as of March 3, 1999 was approximately 6.4%.
While the TCI credit facility is outstanding, the terms of the instruments
governing the TCI Systems' indebtedness prohibit transfer of funds (except for
certain payments related to overhead allocations and expense reimbursement) from
the TCI Systems to the Restricted Group and are expected to prohibit such
transfer of funds for the foreseeable future. The Company believes that for the
Restricted Group such limitations on transfer of funds or payments will not have
an adverse effect on the ability of the Company to meet its obligations.
TCI Systems
In May 1998, the TCI Systems entered into an $800 million credit facility which
was reduced by $100 million in July 1998. On March 3, 1999, taking into account
the commitment reduction, usage under the $700 million credit facility was
$490.5 million with undrawn funds of $209.5 million.
The TCI credit facility matures on the earlier of April 4, 1999 or the tenth day
after an IRS tax ruling is received. The Company has not received such ruling.
The Company expects to transfer the TCI Systems to CSC Holdings by April 4,
1999.
(59)
<PAGE>
Rainbow Media
RMHI/AMC
Rainbow Media has a $300 million non-amortizing revolving credit facility
maturing on December 31, 2000 of which $20 million is restricted for specific
purposes. Of the $280 million balance of the facility, a further $180 million is
restricted to provide for repayment of a like amount of inter-company borrowings
from Regional Programming Partners ("RPP") as described below. Direct borrowings
as of March 3, 1999, amounted to $92.7 million leaving a balance of $7.3 million
available to Rainbow Media under the credit facility as of that date.
American Movie Classics, a wholly owned subsidiary of Rainbow Media, has a $100
million reducing revolving credit facility and a $128 million amortizing term
loan, both of which mature on March 31, 2004. The amount of the available
commitment under the revolver will not begin to be reduced until 2002. As of
March 3, 1999, American Movie Classics had outstanding borrowings of $189.3
million, leaving unrestricted funds available of $38.7 million.
In June 1998, American Movie Classics made a $16.4 million distribution to
Rainbow Media by drawing under its revolving credit. Rainbow Media used the
funds to partly repay its bank debt.
Both credit facilities contain certain financial covenants that may limit the
ability to utilize all of the undrawn funds available, including covenants
requiring that certain financial ratios be maintained.
The Company believes that for Rainbow Media and its wholly-owned subsidiaries,
which includes American Movie Classics, internally generated funds, together
with funds available under their existing credit agreement or increases in such
credit facilities will be sufficient through 1999 to meet its projected funding
requirements. There can be no assurance that increases in such credit facilities
will be obtained on acceptable terms or at all.
RPP
In June 1998, RPP, a partnership which is 60% owned by Rainbow Media and 40%
owned by Fox/Liberty, made an inter-company loan to Rainbow Media of $180
million, which Rainbow Media used to repay bank debt. RPP funded this loan from
cash on hand. The inter-company loan is a four year demand note maturing March
31, 2002, which requires quarterly interest payments at LIBOR plus 7/8% per
annum, is subordinated to Rainbow Media's bank debt and requires that Rainbow
Media maintain sufficient availability under its revolving credit to permit the
repayment in full to RPP if RPP requires the funds for its own operating needs.
In June 1998, RPP utilized $94 million of its cash on hand to redeem 50% of
ITT's remaining interest in Madison Square Garden, L.P. ("MSG").
As of March 3, 1999, RPP had cash on hand of $132.2 million. Rainbow Media has
reached an agreement with ITT to purchase its remaining interest in MSG and
settle certain matters between the parties for a payment of $87 million and
expects to fund the payment from RPP's cash on hand.
(60)
<PAGE>
MSG
MSG has a $500 million revolving credit facility maturing on December 31, 2004
(the "MSG Credit Facility"). As of March 3, 1999, outstanding debt under the MSG
Credit Facility was $330 million. In addition, MSG had outstanding letters of
credit of $10 million resulting in unrestricted and undrawn funds available
amounting to $160 million. The MSG Credit Facility contains certain financial
covenants that may limit its ability to utilize all of the undrawn funds
available thereunder, including covenants requiring MSG to maintain certain
financial ratios. The Company believes that for MSG, internally generated funds,
together with funds available under its existing credit agreement will be
sufficient to meet its debt service requirements and to fund capital
expenditures through 1999.
Garden Programming, LLC, an unrestricted subsidiary of MSG, has a $20 million
term loan maturing on July 11, 2002. Garden Programming, LLC has in turn made a
$40 million loan to an unrelated entity, maturing on November 1, 2011.
Retail Electronics
On February 9, 1998, Cablevision Electronics completed the acquisition of
certain assets of TWI. The purchase price and related expenses were funded
through a $50 million equity contribution (not including $8 million in
pre-acquisition funding) from CSC Holdings and approximately $45 million in
borrowings under a $130 million Cablevision Electronics stand alone credit
facility. Under the terms of the credit facility, the total amount of borrowings
available to Cablevision Electronics is subject to an availability calculation
based on a percentage of eligible inventory. On March 3, 1999, usage under the
credit facility was $62.2 million with $8.2 million available thereunder, based
on the level of inventory as of that date. CSC Holdings' investment in
Cablevision Electronics was approximately $87 million at December 31, 1998.
Cablevision Electronics has received other financial support of approximately
$47.2 million, through March 3, 1999, in the form of letters of credit,
guarantees and intercompany loans, in respect of Cablevision Electronics'
inventory purchases. The Company believes that Cablevision Electronics will
require additional financial support from CSC Holdings in respect of planned
increases in inventory purchases and other requirements through 1999 and that
funds available under Cablevision Electronics' credit agreement, together with
this additional financial support, will be sufficient to meet its projected
funding requirements through 1999.
Cablevision Cinemas, LLC
On December 2, 1998, the Company acquired all of the outstanding shares of stock
of Clearview Cinema Group, Inc. ("Clearview") for $24.25 per share. The purchase
price amounted to $157.7 million (including assumed debt of $80 million), which
was funded with $33.4 million in Cablevision Parent Class A Common Stock and
$44.3 million in cash. Additionally, in December 1998, Clearview successfully
redeemed all of its 10-7/8% Senior Notes at a cost of $94.8 million in cash,
funded by CSC Holdings.
(61)
<PAGE>
Cablevision Cinemas, LLC currently has a $15 million revolving credit bank
facility maturing on June 30, 2003. As of March 3, 1999, there were no
outstanding borrowings under this bank facility.
From December 1998 through February 1999, Cablevision Cinemas, LLC acquired
motion picture theaters from Loews for an aggregate purchase price of
approximately $89 million which was funded by equity contributions from CSC
Holdings.
The Company believes that for Cablevision Cinemas, LLC, internally generated
funds, together with funds available under the existing credit agreement will be
sufficient to meet its debt service requirements and to fund capital
expenditures through 1999.
Cablevision Systems Corporation
Operating Activities
Cash provided by operating activities amounted to $400.1 million for the year
ended December 31, 1998 compared to $241.5 million for the year ended December
31, 1997. The 1998 cash provided by operating activities consisted primarily of
depreciation and amortization of $734.1 million, minority interests of $95.3
million, other non-cash items of $68.8 million and a net increase in cash
resulting from changes in assets and liabilities of $121.3 million, offset
primarily by a net loss of $448.5 million and by the net gain on the sale of
programming interests and cable assets of $170.9 million.
Cash provided by operating activities amounted to $241.5 million for the year
ended December 31, 1997 compared to $170.1 million for the year ended December
31, 1996. The 1997 cash provided by operating activities consisted primarily of
depreciation and amortization of $499.8 million, minority interests of $179.2
million, other non-cash items of $64.8 million and a net increase in cash
resulting from changes in assets and liabilities of $63.6 million, offset
primarily by a net loss of $12.1 million, the net gain on the sale of
programming interests and cable assets of $372.1 million and the gain of $181.7
million on the redemption of A-R Cable's Series A Preferred Stock.
Cash provided by operating activities amounted to $170.1 million for the year
ended December 31, 1996. The 1996 cash provided by operating activities
consisted primarily of depreciation and amortization of $389.0 million, minority
interests of $106.9 million and other non-cash items of $143.6 million,
partially offset by a net loss of $459.9 million and a net decrease in cash
resulting from changes in assets and liabilities of $9.5 million.
Investing Activities
Net cash used in investing activities for the year ended December 31, 1998 was
$468.4 million compared to $248.6 million for the year ended December 31, 1997.
The 1998 investing activities consisted of $561.6 million of capital
expenditures, $317.6 million of payments for acquisitions
(62)
<PAGE>
and other items of $35.5 million, offset by net proceeds of $446.3 million from
the sale of programming interests and cable assets.
Net cash used in investing activities for the year ended December 31, 1997 was
$248.6 million compared to $741.7 million for the year ended December 31, 1996.
The 1997 investing activities consisted of $457.6 million of capital
expenditures, $747.1 million of payments for acquisitions, offset by net
proceeds of $945.5 million from the sale of programming interests and cable
assets and other items of $10.6 million.
Net cash used in investing activities for the year ended December 31, 1996 was
$741.7 million. The 1996 investing activities consisted of $449.2 million of
capital expenditures, $113.1 million of payments for acquisitions, $179.5
million in increases in investment in affiliates, offset by net proceeds from
other items of $.1 million.
Financing Activities
Cash used in financing activities amounted to $168.0 million for the year ended
December 31, 1998 compared to net cash provided by financing activities of
$405.7 million for the year ended December 31, 1997. In 1998 the Company's
financing activities consisted primarily of the net repayment of bank debt,
subordinated notes payable, senior notes payable and senior debt of $1,221.0
million, the repayment of an obligation to a related party of $197.2 million and
other net cash payments aggregating $45.9 million, partially offset by $1,296.1
million derived from the issuance of senior notes and debentures.
Cash provided by financing activities amounted to $405.7 million for the year
ended December 31, 1997 compared to $567.9 million for the year ended December
31, 1996. In 1997 the Company's financing activities consisted of $898.0 million
from the issuance of senior notes and debentures and $238.5 million of net
proceeds from bank debt, offset by the redemption of subordinated debentures of
$283.4 million, net repayments of senior debt of $285.9 million, the redemption
of A-R Cable's Series A Preferred Stock of $112.3 million and other net cash
payments aggregating $49.2 million.
Cash provided by financing activities amounted to $567.9 million for the year
ended December 31, 1996. In 1996 the Company's financing activities consisted of
$624.0 million from the issuance of redeemable exchangeable convertible
preferred stock, $399.4 million from the issuance of subordinated debentures,
and net proceeds from bank debt of $477.0 million, partially offset by the net
repayment of senior debt of $905.6 million and other net cash payments
aggregating $26.9 million.
CSC Holdings, Inc.
Operating Activities
Cash provided by operating activities amounted to $249.5 million for the year
ended December 31, 1998 compared to $271.7 million for the year ended December
31, 1997. The
(63)
<PAGE>
1998 cash provided by operating activities consisted primarily of depreciation
and amortization of $577.6 million, other non-cash items of $20.0 million and a
net increase in cash resulting from changes in assets and liabilities of $62.5
million, offset primarily by a net loss of $239.5 million and by the net gain on
the sale of programming interests and cable assets of $171.1 million.
Cash provided by operating activities amounted to $271.7 million for the year
ended December 31, 1997 compared to $200.4 million for the year ended December
31, 1996. The 1997 cash provided by operating activities consisted primarily of
net income of $136.7 million, depreciation and amortization of $499.8 million,
other non-cash items of $125.4 million and a net increase in cash resulting from
changes in assets and liabilities of $63.6 million, offset primarily by the net
gain on the sale of programming interests and cable assets of $372.1 million and
the gain of $181.7 million on the redemption of A-R Cable's Series A Preferred
Stock.
Cash provided by operating activities amounted to $200.4 million for the year
ended December 31, 1996. The 1996 cash provided by operating activities
consisted primarily of depreciation and amortization of $389.0 million and other
non-cash items of $153.0 million, partially offset by a net loss of $332.1
million and a net decrease in cash resulting from changes in assets and
liabilities of $9.5 million.
Investing Activities
Net cash used in investing activities for the year ended December 31, 1998 was
$387.6 million compared to $248.6 million for the year ended December 31, 1997.
The 1998 investing activities consisted of $530.8 million of capital
expenditures, $264.5 million of payments for acquisitions and other net cash
payments of $34.7 million, offset by net proceeds of $442.4 million from the
sale of programming interests and cable assets.
Net cash used in investing activities for the year ended December 31, 1997 was
$248.6 million compared to $741.7 million for the year ended December 31, 1996.
The 1997 investing activities consisted of $457.6 million of capital
expenditures, $747.1 million of payments for acquisitions, offset by net
proceeds of $945.5 million from the sale of programming interests and cable
assets and other items of $10.6 million.
Net cash used in investing activities for the year ended December 31, 1996 was
$741.7 million. The 1996 investing activities consisted of $449.2 million of
capital expenditures, $113.1 million of payments for acquisitions, $179.5
million in increases in investment in affiliates, offset by net proceeds from
other items of $.1 million.
Financing Activities
Cash used in financing activities amounted to $98.3 million for the year ended
December 31, 1998 compared to net cash provided by financing activities of
$375.5 million for the year ended December 31, 1997. In 1998 financing
activities consisted primarily of the net repayment of bank debt, subordinated
notes payable, senior notes payable and senior debt of $1,073.8 million, the
repayment of an obligation to a related party of $197.2 million, the payment of
a dividend to shareholder of $42.0 million in connection with the acquisition of
Clearview, the payment of
(64)
<PAGE>
dividends applicable to preferred stock of $29.3 million, and other net cash
payments aggregating $52.1 million, partially offset by $1,296.1 million derived
from the issuance of senior notes and debentures.
Cash provided by financing activities amounted to $375.5 million for the year
ended December 31, 1997 compared to $537.6 million for the year ended December
31, 1996. In 1997 financing activities consisted of $898.0 million from the
issuance of senior notes and debentures and $238.5 million of net proceeds from
bank debt, offset by the redemption of subordinated debentures of $283.4
million, net repayments of senior debt of $285.9 million, the redemption of A-R
Cable's Series A Preferred Stock of $112.3 million, payments of preferred stock
dividends of $30.2 million and other net cash payments aggregating $49.2
million.
Cash provided by financing activities amounted to $537.6 million for the year
ended December 31, 1996. In 1996 financing activities consisted of $624.0
million from the issuance of redeemable exchangeable convertible preferred
stock, $399.4 million from the issuance of subordinated debentures, and net
proceeds from bank debt of $477.0 million, partially offset by the repayment of
senior debt of $905.6 million, payments of preferred stock dividends of $30.3
million and other net cash payments aggregating $26.9 million.
Year 2000
The year 2000 issue ("Y2K") refers to the inability of certain computerized
systems and technologies to recognize and/or correctly process dates beyond
December 31, 1999. As a result of these issues, the potential exists for
computer system failure or miscalculations by computer programs, which could
cause disruption of the Company's operations.
The Company recognizes the need to ensure that any disruption of its operations
resulting from the Y2K issue is minimized. Accordingly, the Company developed a
plan to identify and address Y2K issues. The Company retained an independent
consulting firm to assist in the development and implementation of this plan.
Pursuant to the Y2K plan, each of the Company's business units has designated a
team (including a Y2K coordinator assisted by a member of the consulting firm)
which is responsible for the Y2K compliance of the systems used by that business
unit. The efforts of each of these business unit teams is coordinated through,
and directed by, a Central Program Management Office (the "CPMO"), consisting of
representatives of the Company's information systems, internal audit,
controllers, legal and finance departments. The CPMO operates under the
direction of the Company's Chief Information Officer, Mr. Thomas Dolan. Y2K
issues that cross business unit lines and cannot be resolved between the CPMO
and the business unit teams, are referred to an Operations Steering Committee
(the "Steering Committee") consisting of the most senior officers of each of the
Company's principal business units. The Steering Committee meets periodically to
review the progress of the Company's Y2K compliance efforts. The Board of
Directors has designated a committee of the Board, consisting of Messrs. James
Dolan, Thomas Dolan, Leo Hindery and Richard Hochman, to monitor the Company's
progress and report to the full Board.
(65)
<PAGE>
Y2K Program - Phases
The Company has developed a six phase program to assess and address the Y2K
issue. These phases consist of the following:
Phase One - Awareness - The Company maintains an ongoing program of
communications with its management and employee base to ensure that all
employees are aware of the Y2K issue and the importance of the Company's efforts
to address the issue. This is accomplished, among other means, through the
distribution of memoranda, the establishment and maintenance of an intranet web
site, and meetings and seminars.
Phase Two - Inventory and Assessment - This phase consisted of the Company's
efforts to identify all of the information technology ("IT") and non-IT systems
used in each area of its businesses. Each identified system has been assessed
for its criticality to the Company's businesses and assigned a criticality
rating on a five point scale consisting of (1) "Critical" (required for
continued operation); (2) "High" (major business impact); (3) "Medium"
(significant business impact); (4) "Low" (minor business impact); and (5)
"Minimal" (insignificant or no business impact). Additionally, during this phase
the Company contacted the vendors of each of its systems to determine which
systems are Y2K compliant or non-compliant. Based upon its Phase Two review,
which was substantially completed during the third fiscal quarter of 1998, the
Company believes that approximately 35% of its IT and non-IT systems may be
non-compliant and that approximately 65% of these non-compliant systems are of a
criticality rating of (3) "Medium" (significant business impact) or above.
Phase Three - Strategy and Planning - During this phase, the Company developed a
testing plan for all compliant systems and developed a strategy for remediating
and testing non-compliant systems. Remediation strategies may range from
software upgrades to replacement, discontinuance or bypass of non-compliant
systems. The Company has substantially completed the strategy and planning stage
for all of its systems.
Phase Four - Portfolio Transformation/Remediation - During this phase, the
Company will execute the remediation strategies for non-compliant systems as
identified during Phase Three. The Company's efforts toward the remediation of
its most critical non-compliant systems is underway.
Phase Five - Testing - During this phase, which is running concurrently with the
remediation phase, the Company is testing all of its compliant systems (of Level
4 or above), and, in conjunction with its Phase Four remediation efforts, its
non-compliant systems. The testing of certain of the Company's most critical
compliant systems is ongoing, with the most significant effort planned over the
next several months.
Phase Six - Implementation - During this phase, all of the Company's remediated
and tested systems will be redeployed.
The completion of phases across the Company's businesses is not expected to
occur sequentially. As the Company will focus initially on its most critical
systems, it is likely that a number of
(66)
<PAGE>
critical systems will be in Phases Four and Five, while less critical systems
are in Phase Three. It is the Company's goal that all IT and non-IT systems with
a criticality rating of 1, 2, 3 and 4 will be tested and implemented by the end
of the third fiscal quarter of 1999. There can be no assurance that the Company
will be successful in achieving this goal.
Costs of Compliance - Because the Company is still in the process of analyzing
remediation methods for non-compliant systems, and has not completed testing of
compliant or non-compliant systems, it is not possible to predict with certainty
the costs that will be incurred in connection with the Y2K program. Further, in
many cases, the Company planned to replace or upgrade certain non-compliant
systems irrespective of Y2K compliance issues. In such cases the portion of such
expenditure attributable to Y2K issues is often not reasonably determinable.
Based on its review to date, the Company believes that the costs associated with
its Y2K program, including costs of replacing or upgrading non-compliant systems
that were not already scheduled to be replaced or upgraded, accelerating
programs that were already contemplated specifically for the purpose of
addressing Y2K issues, and including both internal and external resources, may
range between $40 to $60 million for its existing businesses. This estimate
includes amounts for the Company's telecommunications systems, including cable,
modem and telephone, for Rainbow Media's programming operations, for Madison
Square Garden including the arena, its professional sports teams, its cable
television networks, and for Radio City Entertainment, for the Wiz and for
corporate and company-wide needs. In 1998, the Company incurred approximately
$7.6 million of costs relating to Y2K remediation. There can be no assurance
that actual expenditures will not deviate from these estimates and that the
amount of such deviation will not be material. Such expenditures are expected to
be funded from cash flow from operations and borrowings.
Risks of the Company's Y2K Issues - Many of the IT and non-IT systems that are
necessary for the continued operation of the Company's businesses are dependent
upon components that may not be Y2K compliant. While the Company's Y2K
compliance program is designed to identify and remediate these systems in order
to avoid interruption of its operations, there can be no assurance that it will
be able to identify all noncompliant systems or successfully remediate all those
that are identified. Failure of IT or non-IT systems that are necessary for the
operation of the Company's businesses, including, without limitation, its
billing systems, addressable controller and converter systems, purchasing,
finance and inventory systems, marketing databases and point of sale systems,
could have a material adverse effect on the Company.
The Company is dependent upon third-party products and services, such as utility
services and programming uplinks, for the operation of its businesses. While, as
part of the Inventory and Assessment phase of its Y2K program, the Company has
contacted third party product and service providers to ascertain whether Y2K
compliance issues may exist, it has in many cases not received assurances from
such suppliers. Moreover, in most cases the Company does not have the ability to
verify any assurances it does receive from third party suppliers. If critical IT
or non-IT systems used by such third party suppliers fail as a result of a Y2K
compliance issue, and as a result of such failure the ability of such supplier
to continue to provide such product or service to the Company is interrupted,
the Company's ability to continue to provide services to its customers may be
interrupted. Such an interruption could have a material adverse effect on the
Company. The Company has begun a program to develop contingency plans to address
those
(67)
<PAGE>
risks, with major risk areas identified. There can be no assurance that any such
plan would resolve such problems in a satisfactory manner. In addition to the
risks associated with failure of IT Systems due to Y2K problems, the failure of
non-IT systems would pose significant risks to the Company. For example, the
Company and its subsidiaries operate facilities for both employees and the
public. Failure of the non-IT systems at such facilities could result in health
and safety risks that could lead to the closure or unavailability of such
facilities. This could result in lost revenues to the Company and the risk of
actions against the Company if the businesses of others are disrupted. Also, the
failure of such non-IT systems could result in injury to individuals which could
expose the Company to actions on, by, or on behalf of such individuals.
(68)
<PAGE>
Item 8. Consolidated Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
(formerly CSC Parent Corporation)
Independent Auditors' Report........................................ 70
Consolidated Balance Sheets - December 31, 1998 and 1997............ 71
Consolidated Statements of Operations - years
ended December 31, 1998, 1997 and 1996.......................... 73
Consolidated Statements of Stockholders' Deficiency - years
ended December 31, 1998, 1997 and 1996.......................... 74
Consolidated Statements of Cash Flows - years ended
December 31, 1998, 1997 and 1996................................ 75
Notes to Consolidated Financial Statements.......................... 77
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
Independent Auditors' Report........................................ 109
Consolidated Balance Sheets - December 31, 1998 and 1997............ 110
Consolidated Statements of Operations - years
ended December 31, 1998, 1997 and 1996.......................... 112
Consolidated Statements of Stockholder's Deficiency - years
ended December 31, 1998, 1997 and 1996.......................... 113
Consolidated Statements of Cash Flows - years ended
December 31, 1998, 1997 and 1996................................ 114
Notes to Consolidated Financial Statements.......................... 116
(69)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cablevision Systems Corporation
We have audited the accompanying consolidated balance sheets of Cablevision
Systems Corporation and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' deficiency and cash
flows for each of the years in the three-year period ended December 31, 1998. In
connection with our audits of the consolidated financial statements, we also
audited the financial statement schedule listed in Item 14(a)(2). These
consolidated financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cablevision Systems
Corporation and subsidiaries at December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule
referred to above, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Melville, New York
March 12, 1999
(70)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS 1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents ............................. $ 173,826 $ 410,141
Accounts receivable trade (less allowance for
doubtful accounts of $34,377 and $29,584) .......... 197,726 214,721
Notes and other receivables ........................... 188,455 98,756
Inventory, prepaid expenses and other assets .......... 206,073 55,324
Property, plant and equipment, net .................... 2,506,834 1,831,167
Investments in affiliates ............................. 276,231 207,776
Advances to affiliates ................................ 36,964 19,823
Feature film inventory ................................ 293,310 180,576
Net assets held for sale .............................. 11,006 252,610
Franchises, net of accumulated amortization of
$640,735 and $481,895 .............................. 850,653 383,369
Affiliation and other agreements, net of accumulated
amortization of $181,928 and $129,087 .............. 206,456 253,734
Excess costs over fair value of net assets acquired and
other intangible assets, net of accumulated
amortization of $775,557 and $684,141 .............. 2,003,128 1,615,786
Deferred financing, acquisition and other costs, net of
accumulated amortization of $41,882 and $40,061 .... 110,400 91,005
---------- ----------
$7,061,062 $5,614,788
========== ==========
</TABLE>
See accompanying notes to
consolidated financial statements.
(71)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Accounts payable........................................................ $ 423,039 $ 278,630
Accrued liabilities:
Interest ........................................................... 88,798 54,107
Employee related costs ............................................. 330,700 196,138
Other .............................................................. 465,990 254,621
Feature film and contract obligations .................................. 373,722 292,720
Deferred revenue ....................................................... 334,213 277,693
Bank debt .............................................................. 2,051,549 2,240,358
Senior debt ............................................................ -- 112,500
Senior notes and debentures ............................................ 2,194,443 898,024
Subordinated notes and debentures ...................................... 1,048,375 1,048,245
Subordinated notes payable ............................................. -- 151,000
Obligation to related party ............................................ -- 197,183
Capital lease obligations and other debt ............................... 63,241 46,752
----------- -----------
Total liabilities .................................................. 7,374,070 6,047,971
----------- -----------
Minority interests ..................................................... 719,007 821,782
----------- -----------
Preferred Stock of CSC Holdings ........................................ 1,579,670 1,456,549
Commitments and contingencies
Stockholders' deficiency:
Preferred Stock, $.01 par value, 10,000,000 shares authorized,
none issued ..................................................... -- --
Class A Common Stock, $.01 par value, 200,000,000 shares authorized,
108,267,606 and 55,897,984 shares issued ........................ 1,083 560
Class B Common Stock, $.01 par value, 80,000,000 shares authorized,
43,226,836 and 44,386,836 shares issued ......................... 432 444
Paid-in capital .................................................... 386,495 (161,327)
Accumulated deficit ................................................ (2,999,695) (2,551,191)
----------- -----------
Total stockholders' deficiency ..................................... (2,611,685) (2,711,514)
----------- -----------
$ 7,061,062 $ 5,614,788
=========== ===========
</TABLE>
See accompanying notes to
consolidated financial statements.
(72)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues (including affiliate amounts of $8,009, $9,424 and $9,487) $ 3,265,143 $ 1,949,358 $ 1,315,142
----------- ----------- -----------
Operating expenses:
Technical and operating (including affiliate amounts of $2,942,
$16,581 and $37,610 and cost of sales of $390,751 in 1998) .... 1,659,537 853,800 538,272
Selling, general and administrative ............................. 882,816 514,574 313,476
Depreciation and amortization ................................... 734,107 499,809 388,982
----------- ----------- -----------
3,276,460 1,868,183 1,240,730
----------- ----------- -----------
Operating profit (loss) ........................................... (11,317) 81,175 74,412
----------- ----------- -----------
Other income (expense):
Interest expense ................................................ (426,402) (368,700) (268,177)
Interest income (including affiliate amounts
of $6,041, $1,600 and $568) ................................... 24,028 5,492 3,162
Share of affiliates' net loss ................................... (37,368) (27,165) (82,028)
Gain on sale of programming interests and cable assets, net ..... 170,912 372,053 --
Gain on redemption of subsidiary preferred stock ................ -- 181,738 --
Write off of deferred interest and financing costs .............. (23,482) (24,547) (37,784)
Provision for preferential payment to related party ............. (980) (10,083) (5,600)
Minority interests .............................................. (124,677) (209,461) (137,197)
Miscellaneous, net .............................................. (19,218) (12,606) (6,647)
----------- ----------- -----------
(437,187) (93,279) (534,271)
----------- ----------- -----------
Net loss .......................................................... $ (448,504) $ (12,104) $ (459,859)
=========== =========== ===========
Basic and diluted net loss per common share........................ $ (3.16) $ (.12) $ (4.63)
=========== =========== ===========
Average number of common shares outstanding (in thousands) ........ 142,016 99,608 99,308
=========== =========== ===========
</TABLE>
See accompanying notes to
consolidated financial statements.
(73)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
Years Ended December 31,
1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Class A Class B
Common Common Paid-in Accumulated Treasury
Stock Stock Capital Deficit Stock Total
----- ----- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 ......... $ 568 $ 464 $ (85,829) $(2,079,228) $ (60,392) $(2,224,417)
Net loss ....................... -- -- -- (459,859) -- (459,859)
Issuances of preferred stock ... -- -- (25,979) -- -- (25,979)
Employee stock transactions .... 4 -- 3,225 -- -- 3,229
Conversion of Class B to Class A 12 (12) -- -- -- --
Retirement of treasury stock ... (40) -- (60,352) -- 60,392 --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1996 ......... 544 452 (168,935) (2,539,087) -- (2,707,026)
Net loss ....................... -- -- -- (12,104) -- (12,104)
Employee stock transactions .... 8 -- 7,608 -- -- 7,616
Conversion of Class B to Class A 8 (8) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 ......... 560 444 (161,327) (2,551,191) -- (2,711,514)
Net loss ....................... -- -- -- (448,504) -- (448,504)
Employee stock transactions .... 12 -- 12,071 -- -- 12,083
Issuance of common stock ....... 499 -- 535,751 -- -- 536,250
Conversion of Class B to Class A 12 (12) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 ......... $ 1,083 $ 432 $ 386,495 $(2,999,695) $ -- $(2,611,685)
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to
consolidated financial statements.
(74)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ..................................................................... $(448,504) $ (12,104) $(459,859)
--------- --------- ---------
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization ............................................ 734,107 499,809 388,982
Share of affiliates' net loss ............................................ 37,368 27,165 82,028
Minority interests ....................................................... 95,336 179,237 106,931
Gain on sale of programming interests and cable assets, net .............. (170,912) (372,053) --
Write off of deferred interest and financing costs ....................... 23,482 24,547 37,784
Gain on redemption of subsidiary preferred stock ......................... -- (181,738) --
(Gain) loss on sale of equipment, net .................................... (604) 5,325 4,733
Amortization of deferred financing and debenture discount ................ 8,532 7,707 12,191
Accretion of interest on debt ............................................ -- -- 6,828
Change in assets and liabilities, net of effects of acquisitions and
dispositions:
Accounts receivable trade ............................................ 19,007 (34,268) (2,709)
Notes and other receivables .......................................... (94,164) (67,683) (1,810)
Inventory, prepaid expenses and other assets ......................... (51,425) 1,232 (12,428)
Advances to affiliates ............................................... (21,701) (528) (2,168)
Feature film inventory ............................................... (112,734) (8,269) 9,658
Other deferred costs ................................................. 11,689 -- --
Accounts payable ..................................................... 133,891 50,667 17,134
Accrued liabilities .................................................. 174,557 91,497 (4,618)
Feature film and contract obligations ................................ 81,376 (258) (12,563)
Deferred revenue ..................................................... (18,268) 37,664 --
Minority interests ................................................... (961) (6,486) --
--------- --------- ---------
Net cash provided by operating activities .................................. 400,072 241,463 170,114
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures ......................................................... (561,642) (457,590) (449,165)
Payments for acquisitions, net of cash acquired .............................. (317,594) (747,134) (113,095)
Net proceeds from sale of programming interests and cable assets ............. 446,284 945,534 --
Proceeds from sale of equipment .............................................. 8,817 1,930 814
(Increase) decrease in investments in affiliates, net ........................ (31,035) 9,267 (179,536)
Additions to other intangible assets ......................................... (13,253) (623) (766)
--------- --------- ---------
Net cash used in investing activities............................. $(468,423) $(248,616) $(741,748)
--------- --------- ---------
</TABLE>
See accompanying notes to
consolidated financial statements.
(75)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(Dollars in thousands)
(continued)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from bank debt ............................. $ 5,442,101 $ 3,385,703 $ 2,053,566
Repayment of bank debt .............................. (6,304,757) (3,147,165) (1,576,585)
Proceeds from senior debt ........................... -- 147,750 12,500
Repayment of senior debt ............................ (112,500) (433,617) (918,131)
Repayment of subordinated notes payable ............. (151,000) -- --
Redemption of senior notes payable .................. (94,848) -- --
Issuance of subordinated debentures ................. -- -- 399,385
Redemption of senior subordinated debt .............. -- (283,445) --
Issuance of senior notes and debentures ............. 1,296,076 897,983 --
Redemption of subsidiary preferred stock ............ (9,409) (112,301) --
Issuances of redeemable exchangeable
convertible preferred stock of CSC Holdings, Inc. . -- -- 624,021
Issuance of common stock ............................ 12,082 7,616 3,229
Obligation to related party ......................... (197,183) 4,364 (126)
Payments on capital lease obligations and other debt (12,306) (7,501) (3,321)
Additions to deferred financing and other costs ..... (36,220) (53,705) (26,624)
----------- ----------- -----------
Net cash provided by (used in) financing activities (167,964) 405,682 567,914
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents .. (236,315) 398,529 (3,720)
Cash and cash equivalents at beginning of year ........ 410,141 11,612 15,332
----------- ----------- -----------
Cash and cash equivalents at end of year .............. $ 173,826 $ 410,141 $ 11,612
=========== =========== ===========
</TABLE>
See accompanying notes to
consolidated financial statements.
(76)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company and Related Matters
CSC Parent Corporation ("Parent") was formed on November 21, 1997 as a
wholly-owned subsidiary of Cablevision Systems Corporation ("Cablevision").
Parent did not conduct any business activities prior to March 4, 1998, other
than those incident to its formation and the execution of certain documents in
connection with contributions to Parent of certain partnership interests and
assets of TCI Communications, Inc. (see Note 2).
In connection with the Contribution and Merger Agreement described in Note 2, a
wholly-owned subsidiary of Parent was merged with and into Cablevision and
Cablevision became a wholly-owned subsidiary of Parent (the "Merger"). In the
Merger, each outstanding share of Cablevision Class A Common Stock and
Cablevision Class B Common Stock was converted into one share of Parent Class A
Common Stock and Parent Class B Common Stock, respectively. Subsequent to the
Merger, Cablevision changed its name to CSC Holdings, Inc. ("CSC Holdings") and
Parent changed its name to Cablevision Systems Corporation (the "Company"). The
Merger was accounted for in a manner similar to a pooling of interests, whereby
the assets and liabilities of CSC Holdings have been recorded at historical book
value. Cablevision Systems Corporation's historical financial information
represents the historical financial information of CSC Holdings. References to
the "Company" refer to Cablevision Systems Corporation or CSC Holdings, Inc. as
the context may require.
The Company owns and operates cable television systems and has ownership
interests in companies that produce and distribute national and regional
entertainment and sports programming services, including a majority interest in
Madison Square Garden, L.P. ("MSG"). The Company also owns companies that
provide advertising sales services for the cable television industry, provide
switched telephone service, operate a retail electronics chain and operate
motion picture theaters. The Company classifies its business interests into
three fundamental areas: Telecommunication Services, consisting principally of
its cable television, telephone and modem services operations; Rainbow Media,
consisting principally of interests in cable television programming networks and
MSG, which owns and operates professional sports teams, regional cable
television networks, live productions and entertainment venues; and Retail
Electronics, which represents the operations of its retail electronics stores.
Two-for-One Stock Splits
On March 4, 1998, the Company's Board of Directors declared a two-for-one stock
split to be effected in the form of a common stock dividend of one share of
Class A Common Stock for each share of Class A Common Stock issued and
outstanding and one share of Class B Common Stock for each share of Class B
Common Stock issued and outstanding. The stock dividend was paid on March 30,
1998 to stockholders of record on March 19, 1998.
(77)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
On July 22, 1998, the Company's Board of Directors declared a two-for-one stock
split to be effected as a special stock distribution of one share of Class A
Common Stock for each share of Class A Common Stock issued and outstanding as of
August 10, 1998 and one share of Class B Common Stock for each share of Class B
Common Stock issued and outstanding as of August 10, 1998. The stock dividend
was paid on August 21, 1998 to stockholders of record on August 10, 1998. All
share and per share information has been adjusted to reflect the above
two-for-one stock splits described above.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. The Company's interests in less
than majority-owned entities and until July 2, 1997, its 100% common stock
interest in A-R Cable Services, Inc., are carried on the equity method.
Subsequent to July 2, 1997, results of operations of A-R Cable Services, Inc.
are consolidated with those of the Company (see Note 2). Advances to affiliates
are recorded at cost, adjusted when recoverability is doubtful. All significant
intercompany transactions and balances are eliminated in consolidation.
Revenue Recognition
The Company recognizes cable television and programming revenues as services are
provided to subscribers. Advertising revenues are recognized when commercials
are telecast. Revenues derived from other sources are recognized when services
are provided, events occur or products are delivered.
Long-Lived Assets
Property, plant and equipment, including construction materials, are carried at
cost, which includes all direct costs and certain indirect costs associated with
the construction of cable television transmission and distribution systems, and
the costs of new subscriber installations. Franchises are amortized on the
straight-line basis over the average remaining terms (7 to 11 years) of the
franchises at the time of acquisition. Affiliation and other agreements
(primarily cable television system programming agreements) are amortized on a
straight-line basis over periods ranging from 6 to 10 years. Other intangible
assets are amortized on the straight-line basis over the periods benefited (2 to
10 years), except that excess costs over fair value of net assets acquired are
being amortized on the straight-line basis over periods ranging from 5 to 40
years. The Company reviews its long-lived assets (property, plant and equipment,
and related intangible assets that arose from business combinations accounted
for under the purchase method) for impairment whenever events or circumstances
indicate that the carrying amount of an asset may not be recoverable. If the sum
of the expected cash flows, undiscounted and without interest, is less than the
carrying amount of
(78)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
the asset, an impairment loss is recognized as the amount by which the carrying
amount of the asset exceeds its fair value.
Feature Film Inventory
Rights to feature film inventory acquired under license agreements along with
the related obligations are recorded at the contract value. Costs are charged to
technical and operating expense on the straight-line basis over the respective
contract periods. Amounts payable during the five years subsequent to December
31, 1998 related to feature film telecast rights are $44,438 in 1999, $38,394 in
2000, $27,332 in 2001, $22,375 in 2002 and $19,751 in 2003.
Inventory
Carrying amounts of retail merchandise are determined on an average cost basis
and are stated at the lower of cost or market.
Deferred Financing Costs
Costs incurred to obtain debt are deferred and amortized, on a straight-line
basis, over the life of the related debt.
Income Taxes
Income taxes are provided based upon the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires the
liability method of accounting for deferred income taxes and permits the
recognition of deferred tax assets, subject to an ongoing assessment of
realizability.
Loss Per Share
Basic and diluted net loss per common share is computed by dividing net loss by
the weighted average number of common shares outstanding. Potential dilutive
common shares were not included in the computation as their effect would be
antidilutive. Loss per share amounts have been adjusted, for all years
presented, to reflect the two-for-one stock splits of the Company's common stock
effective March 30, 1998 and August 21, 1998 (see discussion above).
Segment Information
On December 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, `Disclosures about Segments of an Enterprise and Related
Information' (`SFAS 131'). The new rules establish revised standards for public
companies relating to the reporting of financial and descriptive information
about their operating segments in financial statements. The adoption of
(79)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
SFAS 131 does not have a material effect on the Company's primary financial
statements, but does affect the disclosure of segment information contained
elsewhere herein (see Note 15).
Reclassifications
Certain reclassifications have been made in the 1997 and 1996 financial
statements to conform to the 1998 presentation.
Cash Flows
For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents. The Company paid cash interest expense of
approximately $383,179, $352,660, and $252,120 during 1998, 1997 and 1996,
respectively.
During 1998, 1997, and 1996, the Company's noncash investing and financing
activities were as follows:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Capital lease obligations .................. $ 28,795 $ 24,820 $ 2,571
Issuance of common stock in connection
with acquisitions and redemption
of partnership interests .............. 536,250 -- --
Receipt of warrants from At Home
Corporation ........................... 74,788 173,346 --
Capital contribution of equipment by
minority partner ...................... -- 38,000 --
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(80)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 2. ACQUISITIONS, DISPOSITIONS AND RESTRUCTURINGS
Acquisitions
1998 Acquisitions
The Wiz
On February 9, 1998, Cablevision Electronics Investments, Inc. ("Cablevision
Electronics"), a wholly-owned subsidiary of CSC Holdings, acquired substantially
all of the assets associated with 40 The Wiz consumer electronics store
locations from The Wiz, Inc. and certain of its subsidiaries and affiliates
(collectively, "TWI"). TWI had filed for bankruptcy protection on December 16,
1997. Cablevision Electronics paid approximately $101,300 for the assets
(including transaction costs and pre-closing operating costs).
The acquisition was accounted for as a purchase with the operations of the
stores being consolidated with the operations of the Company as of the date of
acquisition. The purchase price was allocated to the specific assets acquired
based upon independent appraisals as follows:
Inventory $ 66,200
Property and equipment 16,800
Other assets 4,000
Liabilities (24,000)
Excess cost over fair
value of net assets acquired 38,300
----------
$ 101,300
==========
TCI Systems
On March 4, 1998, the Company completed a holding company reorganization (the
"Holding Company Reorganization") pursuant to an Amended and Restated
Contribution and Merger Agreement, dated June 6, 1997 (the "Contribution and
Merger Agreement"), by and among the Company, CSC Holdings and TCI
Communications, Inc. ("TCI").
Pursuant to the Contribution and Merger Agreement, TCI caused to be contributed
to the Company or its designees all of the partnership interests and capital
stock of certain entities owned directly or indirectly by TCI and all the assets
related to the businesses of certain cable television systems owned and operated
directly or indirectly by TCI ("TCI Systems"). In consideration for those cable
television systems, the Company issued to certain TCI entities an aggregate of
48,942,172 shares (after adjusting for the March 1998 and August 1998
two-for-one stock splits discussed in Note 1) of the Company's Class A Common
Stock, valued for accounting purposes at approximately $498,000, and assumed
certain liabilities related to such
(81)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
systems (including an aggregate amount of indebtedness for borrowed money equal
to $669,000).
The acquisition was accounted for as a purchase with the operations of the
acquired systems being consolidated with those of the Company as of the
acquisition date. The excess of the purchase price over the net book value of
assets acquired of approximately $739,272 was allocated to the specific assets
acquired based upon independent appraisals as follows:
Property, plant and equipment $ (17,133)
Franchises 594,921
Excess cost over fair value of
net assets acquired 161,484
---------
$ 739,272
=========
Madison Square Garden
On June 17, 1998, the Company purchased 50% of ITT's remaining interest in MSG
for $94,000 pursuant to ITT's exercise of its first put option increasing RPP's
interest in MSG to 96.3% (see discussion below). In March 1999, ITT and the
Company entered into an agreement under which ITT exercised its second put for
the remainder of its interest in MSG and will settle certain matters between the
parties for a payment of $87,000.
Clearview
In December 1998, the Company acquired all of the outstanding shares of stock of
Clearview Cinema Group, Inc. ("Clearview") for approximately $157,700 (including
assumed debt of $80,000) of which approximately $33,400 was paid in shares of
the Company's Class A Common Stock. The remaining purchase price was funded
primarily by a dividend received from CSC Holdings of approximately $42,000.
The acquisition was accounted for as a purchase with the operations of the
acquired business being consolidated with those of the Company as of the
acquisition date. The excess of the purchase price over the net book value of
assets acquired approximates $122,300 and will be allocated to the specific
assets acquired when independent appraisals are obtained.
Loews
In December 1998, the Company acquired interests in the real property and assets
specifically related to 15 movie theaters from Loews Cineplex Entertainment
Corporation ("Loews") for an aggregate purchase price of approximately $67,300.
(82)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The acquisition was accounted for as a purchase with the operations of the
acquired assets being consolidated with those of the Company as of the
acquisition date. The purchase was allocated to the specific assets acquired
based upon independent appraisals as follows:
Property and equipment $ 12,600
Other assets 4,100
Excess cost over fair
value of net assets acquired 50,600
--------
$ 67,300
========
In the first quarter of 1999, the Company purchased one additional theater and
Loews has granted the Company a right of first offer on an additional 21 movie
theaters until December 1999.
1997 Acquisitions:
NBC Transaction
On April 1, 1997, Rainbow Media Holdings, Inc. ("Rainbow Media") consummated a
transaction in which Rainbow Programming Holdings, Inc. merged with and into
Rainbow Media, a newly formed subsidiary of the Company. In addition, NBC Cable,
Inc. (a subsidiary of National Broadcasting Company ("NBC")) received a 25%
equity interest (which interest may be increased by up to an additional 2% under
certain circumstances without additional payment) in Class C Common Stock of
Rainbow Media. The Company owns the remaining 75% equity interest in Rainbow
Media. The partnership interests in certain of Rainbow Media's programming
services formerly owned by NBC are now owned by subsidiaries of Rainbow Media.
The exchange of 25% of the Company's interest in Rainbow Media for NBC's
interests in certain entities was accounted for at historical cost with the
difference between the cost basis of a 25% interest in Rainbow Media and the
partnership interests received in exchange recorded as goodwill of $54,385,
which is being amortized over a 10 year period.
Madison Square Garden
In February 1997, Rainbow Media made a payment to ITT Corporation ("ITT") of
$168,750 plus interest, fully equalizing its interest in MSG, a partnership
among subsidiaries of Rainbow Media and subsidiaries of ITT, and bringing
Rainbow Media's total payments at that time to $360,000, plus interest payments
aggregating $47,700.
In April 1997, the Company and certain of its affiliates and ITT and certain of
its affiliates entered into definitive agreements ("MSG Agreement") relating to
the acquisition by subsidiaries of the Company of ITT's 50 percent interest in
MSG. The transaction closed on June 17, 1997 when MSG borrowed $799,000 under
its credit facility which was used to redeem a portion of ITT's interest in MSG
for $500,000 and to repay its existing indebtedness. Rainbow Media contributed
its SportsChannel Associates programming company to MSG, which, together with
the redemption,
(83)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
increased Rainbow Media's interest in MSG to 89.8% and reduced ITT's interest to
10.2%. In connection with the Fox/Liberty transaction discussed below, Rainbow
Media's interest in MSG was contributed to Regional Programming Partners. ITT's
interest in MSG was further reduced to 7.8% as a result of the $450,000 capital
contribution by Regional Programming Partners to MSG which was used by MSG to
pay down outstanding debt. The remaining 7.8% interest held by ITT is subject to
certain puts and calls as specified in the MSG Agreement (see "1998
Acquisitions" above). The acquisition was accounted for using the purchase
method of accounting. The assets and liabilities and results of operations of
MSG have been consolidated with those of the Company as of June 17, 1997.
Previously, the Company's investment in MSG was accounted for using the equity
method of accounting. The excess of the purchase price over the net book value
of assets acquired of approximately $397,093 was allocated to the specific
assets acquired based upon independent appraisals as follows:
Property, plant and equipment $ 19,687
Affiliation and other agreements 34,168
Franchises 46,125
Excess cost over fair value of net assets acquired 297,113
----------
$ 397,093
==========
Warburg Transactions
In June 1997, the Company acquired from Warburg Pincus Investors, L.P.
("Warburg") the interests that the Company did not already own in A-R Cable
Partners ("Nashoba") and Cablevision of Framingham Holdings, Inc. ("CFHI") for a
purchase price of approximately $33,348 and $7,865, respectively. The
acquisitions of Nashoba and CFHI were accounted for as purchases with the
operations of these companies being consolidated with those of the Company as of
the acquisition date. The excess of the purchase price over the net book value
of assets acquired approximates $97,015 and has been allocated based upon
independent appraisals as follows:
Property, plant and equipment $ 4,060
Franchises 59,923
Excess cost over fair value of net assets acquired 33,032
--------
$ 97,015
========
On July 2, 1997, the Company redeemed from Warburg the Series A Preferred Stock
of A-R Cable Services, Inc. ("A-R Cable") for an aggregate amount of
approximately $112,301. The assets and liabilities of A-R Cable have been
consolidated with those of the Company as of July 2, 1997. Previously, the
Company's investment in A-R Cable was accounted for using the equity method of
accounting. In connection with this transaction, the Company recognized a gain
of $181,738 representing principally the reversal of accrued preferred dividends
in excess of amounts paid.
(84)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Radio City
On December 5, 1997, MSG purchased all of the membership interests in Radio City
Entertainment ("Radio City"), the production company that operates Radio City
Music Hall in New York City, for approximately $70,000 in cash. Simultaneously,
Radio City entered into a 25-year lease for Radio City Music Hall. The assets
and liabilities and results of operations of Radio City have been consolidated
with those of the Company as of the date of acquisition. The excess of the
purchase price over the net book value of assets acquired of approximately
$76,200 was allocated to the specific assets acquired based upon independent
appraisals as follows:.
Property, plant and equipment $ 1,500
Capital lease obligation (80,000)
Other liabilities (13,400)
Excess cost over fair value of net assets acquired 168,100
---------
$ 76,200
=========
Dispositions
Cable Systems
In October 1998, A-R Cable transferred its cable television system in
Rensselaer, New York plus approximately $16,000 in cash to Time Warner
Entertainment Company, L.P. (Time Warner) in exchange for Time Warner's
Litchfield, Connecticut system. The Company recognized a gain of approximately
$15,500 in connection with this transaction.
In February 1997, the Company announced that it was pursuing a plan to dispose
of certain nonstrategic cable television systems. In 1998 and 1997, the Company
completed the sale of cable television systems for aggregate sales prices of
approximately $426,500 and $88,200, respectively, and recognized aggregate gains
of approximately $137,700 and $59,000, respectively.
Regional Programming Partners
In December 1997, Rainbow Media and Fox/Liberty Networks, LLC ("Fox") organized
Regional Programming Partners (a partnership that owns the interest in MSG and
in regional sports programming businesses previously owned by Rainbow Media)
("RPP"). In connection with the formation of RPP, affiliates of Rainbow Media
indirectly contributed to RPP in consideration for the issuance of a 60% general
partnership interest in RPP their ownership interests in several regional sports
networks, including their interest in MSG. In consideration for the issuance of
a 40% general partnership interest in RPP, Fox contributed $850,000 in cash to
RPP. Thereafter, RPP made a capital contribution of approximately $450,000 to
MSG which was used by MSG to repay a portion of MSG's debt. As a result of RPP's
investment in MSG, RPP's interest in MSG increased from 89.8% to 92.2%. In
connection with this transaction, Rainbow Media recognized a
(85)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
gain of approximately $305,000. See discussion above under "Acquisitions - 1998
Acquisitions - Madison Square Garden" for further increases in RPP's interest in
MSG.
Other
In 1998 and 1997, RPP and Rainbow Media completed the sale of an interest in a
sports programming business and substantially all of the assets of a radio
station. In connection with these sales, RPP and Rainbow Media recognized gains
of $17,700 and $7,400, respectively.
A-R Cable Restructuring
In 1992, the Company and A-R Cable consummated a restructuring and refinancing
transaction (the "A-R Cable Restructuring"). Among other things, this
transaction involved an additional $45,000 investment in A-R Cable by the
Company to purchase a new Series B Preferred Stock and the purchase of a new
Series A Preferred Stock in A-R Cable by Warburg for $105,000. As a result of
the A-R Cable Restructuring, the Company no longer had financial or voting
control over A-R Cable's operations. Prior to the redemption of A-R Cable's
Series A Preferred Stock on July 2, 1997 (see discussion above), the Company
accounted for its investment in A-R Cable using the equity method of accounting
whereby the Company recorded 100% of the net losses of A-R Cable since it
continued to own 100% of A-R Cable's outstanding common stock.
Included in share of affiliates' net loss in the accompanying consolidated
statements of operations for the period ended July 1, 1997 and for the year
ended December 31, 1996 is $35,835 and $68,492, respectively, representing A-R
Cable's net loss plus dividend requirements for the Series A Preferred Stock of
A-R Cable, which was not owned by the Company. Beginning on July 2, 1997, the
operations of A-R Cable have been consolidated with those of the Company.
Pro Forma Results of Operations
The following unaudited pro forma condensed results of operations are presented
for the years ended December 31, 1998 and 1997 as if the acquisitions of the TCI
Systems, MSG, Nashoba, CFHI, the NBC transaction, the A-R Cable consolidation
and the sale of assets of certain cable systems had occurred on January 1, 1998
and 1997, respectively.
(86)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Years Ended December 31,
------------------------
1998 1997
---- ----
Net revenues $3,329,627 $2,554,019
========== ==========
Net loss $ (520,968) $ (21,047)
========== ==========
Net loss per common share $ (3.47) $ (.14)
========== ==========
The pro forma information presented above gives effect to certain adjustments,
including the amortization of acquired intangible assets and increased interest
expense on acquisition debt. The pro forma information has been prepared for
comparative purposes only and does not purport to indicate the results of
operations which would actually have occurred had the transactions been made at
the beginning of the periods indicated or which may occur in the future.
NOTE 3. NET ASSETS HELD FOR SALE
Pursuant to the Company's decision to dispose of certain nonstrategic cable
television systems (see Note 2), the Company had entered into definitive
agreements covering the sale of certain cable television systems as of December
31, 1998 and 1997.
In January 1998, the Company, CSC Holdings and a subsidiary of TCI entered into
a non-binding letter of intent for the Company to acquire TCI's cable television
systems (the "TCI Connecticut Systems") in and around Hartford, Vernon, Branford
and Lakeville, Connecticut (the "Proposed TCI CT Transactions"). Under the
non-binding letter of intent, in consideration for the TCI Connecticut Systems,
the Company would (i) transfer to TCI the cable television systems serving
Kalamazoo, Michigan, (ii) transfer to TCI other cable television systems to be
identified by TCI and purchased with approximately $25,000 of funds provided by
the Company, (iii) issue shares of the Company's Class A Common Stock, and (iv)
assume certain indebtedness relating to the TCI Connecticut Systems, which is
anticipated to total approximately $110,000.
A binding definitive agreement has not yet been completed. There can be no
assurance that the Proposed TCI CT Transactions will be consummated in a timely
fashion, or at all.
For financial reporting purposes, the assets and liabilities attributable to
cable systems whose sale or transfer was pending at December 31, 1998 and 1997
have been classified in the consolidated balance sheet as net assets held for
sale and consist of the following:.
(87)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
December, 31
------------
1998 1997
---- ----
Property, plant and equipment, net $ 14,548 $122,577
Intangible assets, net 215 154,352
Other assets (including trade receivables,
prepaid expenses, etc.) 603 2,815
-------- --------
Total assets 15,366 279,744
Total liabilities 4,360 27,134
-------- --------
Net assets $ 11,006 $252,610
======== ========
The accompanying consolidated statement of operations for the year ended
December 31, 1998 and 1997 includes net revenues aggregating approximately
$18,937 and $102,971, respectively, and net income (loss) aggregating
approximately $9,095 and $(11,275), respectively, relating to the cable systems
held for sale or transfer.
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following items, which are
depreciated or amortized primarily on a straight-line basis over the estimated
useful lives shown below:
<TABLE>
<CAPTION>
December 31, Estimated
1998 1997 Useful Lives
---- ---- ------------
<S> <C> <C> <C>
Communication transmission
and distribution systems:
Customer equipment..................... $ 615,867 $ 508,959 4 to 5 years
Headends............................... 125,013 100,551 7 to 10 years
Multimedia............................. 9,075 - 10 years
Central office equipment............... 87,208 60,672 10 years
Infrastructure......................... 2,189,625 1,651,236 10 to 15 years
Program, service and test
equipment............................. 380,350 282,635 2 to 10 years
Microwave equipment.................... 16,947 16,641 2 to 10 years
Construction in progress (including
materials and supplies)............... 133,848 140,455 -
Furniture and fixtures..................... 195,660 128,442 1 to 12 years
Transportation equipment................... 131,476 107,159 4 to 15 years
Building and building improvements......... 171,567 156,254 23 to 40 years
Leasehold improvements..................... 140,766 70,991 Term of lease
Land and land improvements................. 45,573 34,070 -
----------- -----------
4,242,975 3,258,065
Less accumulated depreciation and
amortization............................. 1,736,141 1,426,898
----------- -----------
$ 2,506,834 $ 1,831,167
=========== ===========
</TABLE>
(88)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 5. DEBT
Bank Debt
Restricted Group/TCI Systems
For financing purposes, CSC Holdings, Inc. and certain of its subsidiaries are
collectively referred to as the "Restricted Group". In May 1998, CSC Holdings
and certain other subsidiaries of the Company entered into a new $2.8 billion
reducing revolving credit facility (the "Credit Agreement") with a group of
banks led by Toronto-Dominion (Texas), Inc. ("Toronto-Dominion"), as
administrative and arranging agent. This Credit Agreement replaced a $1.7
billion facility that was also with a group of banks led by Toronto-Dominion.
The $2.8 billion reducing revolving credit facility, maturing in March 2007,
consists of a $1.4 billion CSC Holdings credit facility, a $1.4 billion MFR
credit facility of which $600,000 is available, and an $800,000 credit facility
for the TCI Systems. While the $800,000 TCI Systems credit facility is in place,
only $600,000 of the $1.4 billion MFR facility may be utilized.
In July 1998, CSC Holdings' credit facility was reduced by $400,000 to $1.0
billion, and the MFR credit facility was reduced by $200,000 to $1.2 billion,
which includes a reduction of the TCI Systems credit facility by $100,000 to
$700,000.
The TCI Systems credit facility matures on April 4, 1999 and concurrent with the
transfer of the TCI Systems to CSC Holdings, which is expected to occur by April
4, 1999, the restriction on the MFR credit facility will be eliminated and the
borrowings under the MFR facility will increase by an amount equal to the
borrowings outstanding under the TCI Systems credit facility.
The total amount of bank debt outstanding under the Credit Agreement at December
31, 1998 and 1997 was $1,410,226 and $1,328,098, respectively. As of December
31, 1998, approximately $57,313 was restricted for certain letters of credit
issued on behalf of CSC Holdings.
Unrestricted and undrawn funds available to the Restricted Group and the TCI
Systems under the Credit Agreement amounted to approximately $749,687 at
December 31, 1998. The Credit Agreement contains certain financial covenants
that may limit the Restricted Group's and the TCI Systems' ability to utilize
all of the undrawn funds available thereunder. The Credit Agreement contains
various restrictive covenants, among which are the maintenance of various
financial ratios and tests, and limitations on various payments, including
preferred dividends and dividends on its common stock. The Company was in
compliance with the covenants of its Credit Agreement at December 31, 1998.
Interest on outstanding amounts may be paid, at the option of the Company, based
on the prime rate or Eurodollar rate. CSC Holdings has entered into interest
rate swap agreements with several banks on a notional amount of $225,000 as of
December 31, 1998 whereby CSC Holdings pays a fixed rate of interest ranging
from 5.94% to 8.00% and receives a variable rate ranging from 5.38% to 5.72%.
CSC Holdings enters into interest rate swap agreements to hedge against interest
rate risk, as required by its Credit Agreement, and therefore accounts for these
agreements as hedges of
(89)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
floating rate debt, whereby interest expense is recorded using the revised rate,
with any fees or other payments amortized as yield adjustments. As of December
31, 1998, the interest rate swap agreements expire at various times through the
year 2000 and have a weighted average life of approximately 11 months. The
Company is exposed to credit loss in the event of nonperformance by the other
parties to the interest rate swap agreements; however, the Company does not
anticipate nonperformance by the counterparties. The weighted average interest
rate on all bank indebtedness was 6.48% and 7.60% on December 31, 1998 and 1997,
respectively. The Company is also obligated to pay fees from .1875% to .25% per
annum on the unused loan commitment and from .4% to 1.375% per annum on letters
of credit issued under the Credit Agreement.
Unrestricted Group
U.S. Cable
U.S. Cable Television Group, L.P. ("U.S. Cable"), a subsidiary of the Company,
had a three year $175,000 revolving credit facility maturing on August 13, 1999.
As of December 31, 1997, U.S. Cable had outstanding borrowings under its
revolving credit facility of approximately $155,000. Amounts outstanding under
the facility bore interest at varying rates based upon the banks' base rate or
LIBOR rate, as defined in the loan agreement. The weighted average interest rate
was 7.1% on December 31, 1997. In January 1998, all remaining indebtedness of
U.S. Cable amounting to approximately $156,000 was repaid and its credit
agreement was terminated. The proceeds for such repayment came from the sale of
substantially all the assets of U.S. Cable.
Rainbow Media
In April 1997, Rainbow Media executed a new $300,000, three year credit facility
with Canadian Imperial Bank of Commerce and Toronto-Dominion as co-agents, and a
group of banks. Upon closing, approximately $172,000 was drawn to refinance, in
part, its previous $202,000 credit facility. The balance of the funds utilized
to fully repay the $202,000 facility and to repay $169,000 to the Restricted
Group came from a distribution by American Movie Classics Company. The Rainbow
Media revolving credit facility was amended in December 1997 which, among other
things, extended the maturity date to December 31, 2000. The credit facility
contains certain financial covenants that may limit Rainbow Media's ability to
utilize all the undrawn funds available thereunder, including covenants
requiring it to maintain certain financial ratios. The facility bears interest
at varying rates above the lead bank's base or Eurodollar rate depending on the
ratio of debt to borrower value, as defined in the credit agreement. The loan is
secured by a pledge of the Company's stock in Rainbow Media, a pledge of all of
the stock of all wholly-owned subsidiaries of Rainbow Media and is guaranteed by
the subsidiaries of Rainbow Media, as permitted.
(90)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
At December 31, 1998 and 1997, Rainbow Media had outstanding borrowings of
$67,200 and $176,500, respectively, under its credit facility. Undrawn funds
available to Rainbow Media under the credit facility amounted to approximately
$12,800 at December 31, 1998.
The weighted average interest rate on Rainbow Media's bank debt was 7.7% and
7.8% on December 31, 1998 and 1997, respectively. The credit agreement contains
various restrictive covenants with which Rainbow Media was in compliance at
December 31, 1998.
American Movie Classics Company
In April 1997, American Movie Classics Company ("AMCC") put into place a new
$250,000 credit facility. The facility was comprised of a $200,000 term loan and
a $50,000 revolving loan. The facility was used to make a $205,000 cash
distribution to Rainbow Media, refinance existing indebtedness and for general
corporate purposes. In December 1997, the loan was amended, decreasing the term
loan to $146,000 and increasing the revolving loan to $100,000 ("AMCC Loan
Agreement"). Both loans will mature on March 31, 2004. Borrowings under the AMCC
Loan Agreement bear interest at varying rates above or at the lead bank's base
or above the Eurodollar rate depending on the ratio of debt to cash flow, as
defined in the AMCC Loan Agreement. At December 31, 1998 and 1997, the weighted
average interest rate on bank indebtedness was 6.1% and 6.8%, respectively. The
term loan began amortizing September 30, 1997 and requires quarterly
amortization payments. The revolving loan does not start to reduce until June
30, 2002. On December 31, 1998 and 1997, $128,000 and $143,000, respectively,
was outstanding under the term loan and $64,250 and $56,500, respectively, was
outstanding under the revolving loan. Substantially all of the assets of AMCC,
amounting to approximately $274,600 at December 31, 1998, have been pledged to
secure the borrowings under the AMCC Loan Agreement. The AMCC Loan Agreement
contains various restrictive covenants with which AMCC was in compliance at
December 31, 1998.
Madison Square Garden
In June 1997, MSG entered into an $850,000 credit agreement (the "MSG Credit
Facility") with a group of banks led by Chase Manhattan Bank, as agent. The MSG
Credit Facility expires on December 31, 2004. MSG initially borrowed $650,000
and $149,000 under the term loan and revolver portions, respectively, of the MSG
Credit Facility. In December 1997, the facility was amended to increase the
revolver to $500,000 from $200,000. Also in December 1997, MSG repaid the term
loan of $650,000 with $450,000 contributed by RPP as described in Note 2 and
$200,000 of additional borrowings under the revolver. Loans under the MSG Credit
Facility bear interest at current market rates plus a margin based upon MSG's
consolidated leverage ratio. At December 31, 1998 and 1997, loans outstanding
amounted to $310,000 and $360,000, respectively, and bore interest at 6.038% and
6.785%, respectively. The MSG Credit Facility contains certain financial
covenants with which MSG was in compliance at December 31, 1998. The MSG Credit
(91)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Facility also contains certain financial covenants that may limit MSG's ability
to utilize all of the undrawn funds available thereunder.
In July 1997, a wholly-owned subsidiary of MSG borrowed $20,000 under promissory
notes with various lending institutions which bear interest at LIBOR plus a
margin (7.22% and 7.85% at December 31, 1998 and 1997, respectively) and mature
in July 2002.
Cablevision Electronics
In February 1998, Cablevision Electronics entered into a three year $130,000
revolving credit facility. Under the terms of the credit facility, the total
amount of borrowings available to Cablevision Electronics is subject to an
availability calculation based on a percentage of eligible inventory. The total
amount outstanding under the credit agreement at December 31, 1998 was
approximately $44,542 and bore interest at 7.2%. As of December 31, 1998,
$30,197 was restricted for certain letters of credit issued on behalf of
Cablevision Electronics. Unrestricted and undrawn funds available amounted to
$54,403 on December 31, 1998 based on the level of inventory as of that date.
Borrowings under the credit agreement are secured by Cablevision Electronics'
assets. The credit agreement contains various restrictive covenants with which
Cablevision Electronics was in compliance at December 31, 1998.
Cablevision Cinemas
Cablevision Cinemas, LLC has a $15,000 revolving credit bank facility maturing
on June 30, 2003. As of December 31, 1998, there were no outstanding borrowings
under this bank facility.
Senior Debt
On December 30, 1997, CSC Holdings repaid $222,000 of A-R Cable's debt with
borrowings under CSC Holdings' Credit Facility in connection with the transfer
of certain cable systems from A-R Cable to the Restricted Group. A-R Cable had
outstanding borrowings of $112,500 at December 31, 1997, which was repaid in
1998.
Senior Notes and Debentures
In December 1998, the Company redeemed Clearview's 10-7/8% Senior Notes for
approximately $94,800 in cash. This payment included a premium of $11,200, a
consent fee of $3,600 and accrued interest of $48.
In July 1998, CSC Holdings issued $500,000 principal amount of 7-1/4% Senior
Notes due 2008 (the "2008 Notes") and $500,000 principal amount ($499,516
amortized amount at December 31,
(92)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
1998) of 7-5/8 % Senior Debentures due 2018 (the "Debentures"). The Debentures
were issued at a discount of $495. The 2008 Notes and Debentures are not
redeemable by CSC Holdings prior to maturity.
In February 1998, CSC Holdings issued $300,000 principal amount ($296,721
amortized amount at December 31, 1998) of 7-7/8% Senior Debentures due 2018 (the
"2018 Debentures"). The 2018 Debentures were issued at a discount of $3,429. The
2018 Debentures are not redeemable by CSC Holdings prior to maturity.
In December 1997, CSC Holdings issued $500,000 principal amount ($499,532 and
$499,475 amortized amount at December 31, 1998 and 1997, respectively) of 7-7/8%
Senior Notes due 2007 (the "2007 Notes"). The notes were issued at a discount of
$525. The 2007 Notes are not redeemable by CSC Holdings prior to maturity. The
net proceeds were used to reduce bank borrowings.
In August 1997, CSC Holdings issued $400,000 principal amount ($398,674 and
$398,549 amortized amount at December 31, 1998 and 1997, respectively) of 8-1/8%
Senior Debentures due 2009 (the "2009 Notes"). The 2009 Notes were issued at a
discount of $1,492. The 2009 Notes are not redeemable by CSC Holdings prior to
maturity. The net proceeds were used to reduce bank borrowings.
The indentures under which the senior notes and debentures were issued contain
various convenants, which are generally less restrictive than those contained in
the Company's Credit Agreement, with which the Company was in compliance at
December 31, 1998.
Subordinated Debentures
In May 1996, CSC Holdings issued $150,000 principal amount ($149,545 and
$149,485 amortized amount at December 31, 1998 and 1997, respectively) of 9-7/8%
Senior Subordinated Notes due 2006 (the "2006 Notes") and $250,000 principal
amount of 10-1/2% Senior Subordinated Debentures due 2016 (the "2016
Debentures"). The 2006 Notes are redeemable at CSC Holdings' option, in whole or
in part, on May 15, 2001, May 15, 2002 and May 15, 2003 at the redemption price
of 104.938%, 103.292% and 101.646%, respectively, of the principal amount and
thereafter at 100% of the aggregate principal amount, in each case together with
accrued interest to the redemption date. The 2016 Debentures are redeemable at
CSC Holdings' option, in whole or in part, on May 15, 2006, May 15, 2007, May
15, 2008 and May 15, 2009, at the redemption price of 105.25%, 103.938%,
102.625% and 101.313%, respectively, of the principal amount and thereafter at
100% of the aggregate principal amount, in each case together with accrued
interest to the redemption date.
In November 1995, CSC Holdings issued $300,000 principal amount of 9-1/4% Senior
Subordinated Notes due 2005 (the "2005 Notes"). The 2005 Notes are redeemable at
CSC
(93)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Holdings' option, in whole or in part, on November 1, 2000, November 1, 2001 and
November 1, 2002 at the redemption price of 104.625%, 103.1% and 101.5%,
respectively, of the principal amount and thereafter at 100% of the principal
amount, in each case together with accrued interest to the redemption date.
In February 1993, CSC Holdings issued $200,000 face amount ($199,117 and
$199,056 amortized amounts at December 31, 1998 and 1997, respectively) of its
9-7/8% Senior Subordinated Debentures due 2013 (the "2013 Debentures"). The 2013
Debentures are redeemable, at CSC Holdings' option, on February 15, 2003,
February 15, 2004, February 15, 2005 and February 15, 2006 at the redemption
price of 104.80%, 103.60%, 102.40% and 101.20%, respectively, of the principal
amount and thereafter at the redemption price of 100% of the principal amount,
in each case together with accrued interest to the redemption date.
Also in 1993, CSC Holdings issued $150,000 face amount ($149,713 and $149,704
amortized amounts at December 31, 1998 and 1997, respectively) of its 9-7/8%
Senior Subordinated Debentures due 2023 (the "2023 Debentures"). The 2023
Debentures are redeemable, at CSC Holdings' option, on and after April 1, 2003
at the redemption price of 104.938% reducing ratably to 100% of the principal
amount on and after April 1, 2010, in each case together with accrued interest
to the redemption date.
The indentures under which the subordinated notes and debentures were issued
contain various covenants, which are generally less restrictive than those
contained in the Company's Credit Agreement and with which the Company was in
compliance at December 31, 1998.
Subordinated Notes Payable
In connection with certain acquisitions made in 1994, a subsidiary of the
Company issued promissory notes totaling $141,268 and the Company assumed $9,732
of promissory notes, both of which were repaid in June 1998.
Summary of Five Year Debt Maturities
Total amounts payable by the Company and its subsidiaries under its various debt
obligations, including capital leases, during the five years subsequent to
December 31, 1998 are as follows:
1999 $54,401
2000 98,354
2001 76,020
2002 56,265
2003 229,451
(94)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 6. PREFERRED STOCK OF CSC HOLDINGS, INC.
In February 1996, CSC Holdings issued 6,500,000 depositary shares, representing
65,000 shares of 11-1/8% Series L Redeemable Exchangeable Preferred Stock (the
"Series L Preferred Stock") with a liquidation preference of $650,000, which
were subsequently exchanged for Series M Redeemable Exchangeable Preferred Stock
(the "Series M Preferred Stock") on August 2, 1996 with terms identical to the
Series L Preferred Stock. Net proceeds were approximately $626,000. The
depositary shares are exchangeable, in whole but not in part, at the option of
CSC Holdings, for CSC Holdings' 11-1/8% Senior Subordinated Debentures due 2008.
CSC Holdings is required to redeem the Series M Preferred Stock on April 1, 2008
at a redemption price equal to the liquidation preference of $10,000 per share
plus accumulated and unpaid dividends. The Series M Preferred Stock is
redeemable at various redemption prices beginning at 105.563% at any time on or
after April 1, 2003, at the option of CSC Holdings, with accumulated and unpaid
dividends thereon to the date of redemption. Before April 1, 2001, dividends
may, at the option of CSC Holdings, be paid in cash or by issuing fully paid and
nonassessable shares of Series M Preferred Stock with an aggregate liquidation
preference equal to the amount of such dividends. On and after April 1, 2001,
dividends must be paid in cash. CSC Holdings satisfied its dividend requirements
by issuing 9,263, 8,300 and 6,576 additional shares of Series M Preferred Stock
in 1998, 1997 and 1996, respectively.
In November 1995, CSC Holdings issued 13,800,000 depositary shares representing
1,380,000 shares of 8-1/2% Series I Cumulative Convertible Exchangeable
Preferred Stock (the "Series I Preferred Stock") with an aggregate liquidation
preference of $345,000. The depositary shares are convertible into shares of the
Company's Class A Common Stock, at any time after January 8, 1996 at the option
of the holder, at an initial conversion price of $16.86 per share (adjusted for
the two-for-one stock splits - see Note 1) of Class A Common Stock subject to
adjustment under certain conditions. The Series I Preferred Stock is
exchangeable into 8-1/2% Convertible Subordinated Debentures due 2007, at the
option of CSC Holdings, in whole but not in part, on or after January 1, 1998 at
a rate of $25.00 principal amount of exchange debentures for each depositary
share. The Series I Preferred Stock is redeemable at the option of CSC Holdings,
in whole or in part, on November 1, 1999, November 1, 2000, and November 1, 2001
and thereafter at 102.8%, 101.4% and 100.0%, respectively, of the principal
amount plus accrued and unpaid dividends thereon. CSC Holdings paid a cash
dividend of approximately $29,325 in each of 1998, 1997 and 1996.
In September 1995, CSC Holdings issued 2,500,000 shares of its $.01 par value
11-3/4% Series H Redeemable Exchangeable Preferred Stock (the "Series H
Preferred Stock") with an aggregate liquidation preference of $100 per share.
CSC Holdings is required to redeem the Series H Preferred Stock on October 1,
2007 at a redemption price per share equal to the liquidation preference of $100
per share, plus accrued and unpaid dividends thereon. Before October 1, 2000,
dividends may, at the option of CSC Holdings, be paid in cash or by issuing
fully paid and nonassessable shares of Series H Preferred Stock with an
aggregate liquidation preference equal to the amount of such dividends. On and
after October 1, 2000, dividends must be paid in cash. The
(95)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
terms of the Series H Preferred Stock permit CSC Holdings, at its option, to
exchange the Series H Preferred Stock for CSC Holdings' 11-3/4% Senior
Subordinated Debentures due 2007 in an aggregate principal amount equal to the
aggregate liquidation preference of the shares of Series H Preferred Stock. CSC
Holdings satisfied its dividend requirements by issuing 399,050, 355,415 and
317,549 additional shares of Series H Preferred Stock in 1998, 1997 and 1996,
respectively.
In January 1998, CSC Holdings redeemed all of its outstanding 8% Series C
Cumulative Preferred Stock ("Series C Preferred Stock") for cash of
approximately $9,400 in the aggregate for all outstanding shares, including
accrued dividends.
Preferred stock dividend requirements of CSC Holdings are included in minority
interests in the accompanying consolidated statements of operations.
NOTE 7. INCOME TAXES
The Company and certain of its subsidiaries file consolidated income tax
returns. Effective April 1, 1997, as a result of the transaction described in
Note 2, Rainbow Media files a separate consolidated federal income tax return
with its subsidiaries. At December 31, 1998, the Company had consolidated net
operating loss carry forwards of approximately $880,000 and Rainbow Media had
consolidated federal net operating loss carry forwards of approximately
$539,000. As a result of a holding company reorganization and the 1997 change in
Rainbow Media's ownership described in Note 2, Rainbow Media's loss carry
forwards may be subject to annual limitations on deductions.
The tax effects of temporary differences which give rise to significant portions
of deferred tax assets or liabilities and the corresponding valuation allowance
at December 31, 1998 and 1997 are as follows:
1998 1997
---- ----
Deferred Asset (Liability)
Depreciation and amortization $(182,226) $ 67,234
Receivables from affiliates 23,406 18,681
Benefit plans 108,495 29,841
Allowance for doubtful accounts 7,016 5,538
Deferred gain (130,650) (131,460)
Benefits of tax loss carry forwards 596,175 601,983
Other (50) (58)
--------- ---------
Net deferred tax assets 422,166 591,759
Valuation allowance (422,166) (591,759)
--------- ---------
$ -- $ --
========= =========
(96)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The Company has provided a valuation allowance for the total amount of net
deferred tax assets since realization of these assets is not assured due
principally to the Company's history of operating losses.
NOTE 8. OPERATING LEASES
The Company leases certain office, production, transmission, theater and retail
store facilities under terms of leases expiring at various dates through 2023.
The leases generally provide for fixed annual rentals plus certain real estate
taxes and other costs. Rent expense for the years ended December 31, 1998, 1997
and 1996 amounted to $83,003, $26,773 and $22,195, respectively.
In addition, the Company rents space on utility poles for its operations. The
Company's pole rental agreements are for varying terms, and management
anticipates renewals as they expire. Pole rental expense for the years ended
December 31, 1998, 1997 and 1996 amounted to approximately $12,490, $10,737 and
$8,585, respectively. The minimum future annual rentals for all operating leases
during the next five years, including pole rentals from January 1, 1999 through
December 31, 2003, and thereafter, at rates now in force are approximately:
1999, $96,200; 2000, $87,800; 2001, $83,565; 2002, $80,852; 2003, 78,488;
thereafter, $661,758.
NOTE 9. AFFILIATE TRANSACTIONS
The Company has affiliation agreements with certain cable television programming
companies, in which Rainbow Media directly or indirectly held varying ownership
interests during the three years ended December 31, 1998. Accordingly, the
Company recorded income (losses) of approximately $(31,851), $10,672 and
$(8,018) in 1998, 1997 and 1996, respectively, representing its percentage
interests in the results of operations of these programming companies. At
December 31, 1998, the Company's net deficit investment in these programming
companies amounted to approximately $338. At December 31, 1997, the Company's
investment in these programming companies amounted to approximately $29,644.
Costs incurred by the Company for programming services provided by these
non-consolidated affiliates and included in operating expense for the years
ended December 31, 1998, 1997 and 1996 amounted to approximately $2,942, $16,581
and $37,610, respectively. At December 31, 1998 and 1997 amounts due to certain
of these affiliates, primarily for programming services provided to the Company,
aggregated $3,644 and $7,978, respectively, and are included in accounts
payable. At December 31, 1998 and 1997, amounts due from certain of these
programming affiliates aggregated $13,075 and $2,335, respectively, and are
included in advances to affiliates.
In 1992, the Company acquired from Mr. Dolan substantially all of the interests
in Cablevision of New York City ("CNYC") that it did not previously own. Mr.
Dolan remained a 1% partner in CNYC and was entitled to certain preferential
payments. The total amount owed to Mr. Dolan at December 31, 1997 amounted to
approximately $197,183. In 1998, the Company paid all amounts due Mr. Dolan.
(97)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
During 1998, 1997 and 1996, the Company made advances to or incurred costs on
behalf of other affiliates engaged in providing cable television, cable
television programming, and related services. Amounts due from these affiliates
amounted to $310 and $2,599 at December 31, 1998 and 1997, respectively and are
included in advances to affiliates.
In October 1997, the Company entered into an agreement with At Home Corporation
("@Home") and certain of its shareholders, pursuant to which the Company agreed
to enter into agreements for the distribution of the @Home service over the
Company's cable television systems on the same terms and conditions as @Home's
founding partners, TCI, Comcast Corporation and Cox Communications, Inc. The
Company received a warrant to purchase 7,875,784 shares of @Home's Series A
Common Stock at an exercise price of $.50 per share. Additionally, in 1998 a
warrant to purchase 2,355,514 shares of @Home's Series A Common Stock at $.50
per share was received in connection with the acquisition of the TCI Systems
(see Note 2). The @Home network distributes high-speed interactive services to
residences and businesses using its own network architecture and a variety of
transport options, including the cable industry's hybrid fiber coaxial
infrastructure.
The aggregate fair market value of the warrants received of $248,134, as
determined by independent appraisals, has been recorded in investments in
affiliates in the accompanying consolidated balance sheets. The difference
between the appraised value of the warrants and the price paid has been recorded
as deferred revenue and is being amortized to income over the period which the
Company is obligated to provide the necessary services to @Home. In 1998, the
Company recorded $35,821 of revenue relating to this transaction.
Prior to their acquisition by the Company, the operations of several cable
systems were managed by the Company for a fee equal to 3-1/2% of gross receipts,
as defined, plus reimbursement of certain costs and an allocation of certain
selling, general and administrative expenses. In certain cases, interest was
charged on unpaid amounts. For 1997 and 1996, such management fees, expenses and
interest amounted to approximately $5,973 and $12,436, respectively, of which
$7,724 was reserved by the Company in 1996.
The Company managed the properties of U.S. Cable until its acquisition in August
1996, under management agreements that provided for cost reimbursement,
including an allocation of overhead charges. For 1996, such cost reimbursement
amounted to $2,396.
In August 1996, the Company entered into an agreement with NorthCoast Operating
Co., Inc. ("NorthCoast") and certain of its affiliates, to form a limited
liability company (the "LLC") to participate in the auctions conducted by the
Federal Communications Commission ("FCC") for certain licenses to conduct a
personal communications service ("PCS") business. The Company has contributed an
aggregate of approximately $38,000 to the LLC (either directly or through a loan
to NorthCoast) and holds a 49.9% interest in the LLC and certain preferential
distribution rights. The Company recorded a loss of $5,517 in 1998, representing
its share of the losses of the LLC.
(98)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NorthCoast is a Delaware corporation controlled by John Dolan. John Dolan is a
nephew of Mr. Dolan and a cousin of James Dolan.
In 1996, Rainbow Media invested in a joint venture formed with a subsidiary of
Loral Space and Communications, Ltd. for the purpose of exploiting certain
direct broadcast satellite ("DBS") frequencies. Rainbow Media's investment
amounted to $14,913, $12,867 and $5,756 at December 31, 1998, 1997 and 1996,
respectively. Rainbow Media also contributed to the joint venture its interest
in certain agreements with the licensee of such frequencies.
NOTE 10. BENEFIT PLANS
The Company maintains the CSSC Supplemental Benefit Plan (the "Supplemental
Plan") for the benefit of certain officers and employees of the Company. As part
of the Supplemental Plan, the Company established a nonqualified defined benefit
pension plan, which provides that, upon attaining normal retirement age, a
participant will receive a benefit equal to a specified percentage of the
participant's average compensation, as defined. All participants are 100% vested
in the Supplemental Plan. Net periodic pension cost for the years ended December
31, 1998, 1997 and 1996 was negligible. At December 31, 1998 and 1997, the fair
value of Supplemental Plan assets exceeded the projected benefit obligation by
approximately $2,688 and $2,135 respectively.
Effective January 1, 1998, the Company established a Cash Balance Retirement
Plan (the "Retirement Plan"), which replaced the Company's former money purchase
pension plan. Under the Retirement Plan, the Company will credit a certain
percentage of eligible base pay into an account established for each employee
which will earn a market based rate of return annually.
The Company also maintains a 401(k) savings plan, pursuant to which an employee
can contribute a percentage of eligible annual compensation, as defined. The
Company also makes matching contributions for a portion of employee
contributions to the 401(k) savings plan.
The cost associated with the Retirement Plan, the money purchase pension plan
and the 401(k) savings plan was approximately $10,047, $7,445 and $5,565 for the
years ended December 31, 1998, 1997 and 1996, respectively.
MSG sponsors several non-contributory pension plans covering MSG's employees.
Benefits payable to retirees under these plans are based upon years of service
and participant's compensation and are funded through trusts established under
the plans. Plan assets are invested primarily in common stocks, bonds, United
States government securities and cash. At December 31, 1998 and 1997, the
accrued pension liability amounted to $8,883 and $7,796, respectively, and for
the years ended December 31, 1998 and 1997, net periodic pension cost amounted
to $2,254 and $1,613, respectively.
(99)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
MSG also sponsors a welfare plan which provides certain postretirement health
care and life insurance benefits to certain employees and their dependents who
are eligible for early or normal retirement under MSG's retirement plan. The
welfare plan is insured through a managed care provider and MSG funds these
benefits with premium payments. For the years ended December 31, 1998 and 1997,
the periodic postretirement benefit cost amounted to $84 and $133, respectively,
and the accrued postretirement benefit obligation amounted to $6,087 and $6,036,
respectively.
NOTE 11. STOCK BENEFIT PLANS
The Company has an Employee Stock Plan (the "Stock Plan") under which the
Company is authorized to issue a maximum of 14,000,000 shares. Pursuant to its
terms, no awards could be granted under the Stock Plan after December 5, 1995.
The Company granted under the Stock Plan incentive stock options, nonqualified
stock options, restricted stock, conjunctive stock appreciation rights, stock
grants and stock bonus awards. The exercise price of stock options could not be
less than the fair market value per share of Class A Common Stock on the date
the option was granted and the options could expire no longer than ten years
from date of grant. Conjunctive stock appreciation rights permit the employee to
elect to receive payment in cash, either in lieu of the right to exercise such
option or in addition to the stock received upon the exercise of such option, in
an amount equal to the difference between the fair market value of the stock as
of the date the right is exercised, and the exercise price.
In June 1996, the Company's shareholders approved the First Amended and Restated
1996 Employee Stock Plan, as amended, (the "1996 Plan"), under which the Company
is authorized to issue a maximum of 13,000,000 shares. Under the 1996 Plan, the
Company is able to grant incentive stock options, nonqualified stock options,
restricted stock, conjunctive and alternative stock appreciation rights, stock
grants and stock bonus awards. The other terms of the 1996 Plan are
substantially identical to those of the Stock Plan except that under the 1996
Plan the Compensation Committee has the authority, in its discretion, to add
performance criteria as a condition to any employee's exercise of an award
granted under the 1996 Plan.
During 1998, the Company granted options under the 1996 Plan to purchase
2,265,500 shares of Class A Common Stock and stock appreciation rights related
to 2,265,500 shares under option. The options and related conjunctive stock
appreciation rights are exercisable at various prices ranging from $27.63 to
$43.50 per share and vest in 33 1/3% annual increments beginning one year from
the date of grant.
During 1997, the Company granted options under the 1996 Plan to purchase
2,230,888 shares of Class A Common Stock and stock appreciation rights related
to 2,210,288 shares under option. The options and related conjunctive stock
appreciation rights are exercisable at prices of $7.13 and $7.88 per share and
vest in either 25% or 33 1/3% annual increments beginning one year from the date
of the grant or the beginning of 1997.
(100)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
During 1996, the Company granted options under the 1996 Plan to purchase
2,194,220 shares of Class A Common Stock, stock appreciation rights related to
2,194,220 shares under option and 368,400 bonus award shares. The options and
related conjunctive stock appreciation rights are exercisable at various prices
ranging from $11.97 to $12.38 per share and vest in either 25% or 33 1/3% annual
increments beginning one year from the date of the grant. The bonus awards vest
primarily over a four year period.
As a result of stock awards, bonus awards, stock appreciation rights and the
expensing of the cash payment made for certain executive stock options, the
Company recorded (income)/expense of approximately $146,179, $64,361 and
$(8,558) in 1998, 1997 and 1996, respectively. These amounts reflect vesting
schedules for applicable grants as well as fluctuations in the market price of
the Company's Class A Common Stock.
The Company applies APB 25 and related interpretations in accounting for its
stock option plans. Had compensation cost been recognized consistent with
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), for options
granted in 1995 through 1998, the Company's net loss would have increased by
$16,151, $7,323 and $4,191 in 1998, 1997 and 1996, respectively. Pro forma net
loss per share would have been $(3.27), $(.20) and $(4.67) for the years ended
December 31, 1998, 1997 and 1996, respectively.
The per share weighted average value of stock options issued by the Company
during 1998, 1997 and 1996, as determined by the Black-Scholes option pricing
model, was $14.25, $3.32 and $4.97, respectively, on the date of grant. In 1998,
1997 and 1996, the assumptions of no dividends and an expected life of five
years were used by the Company in determining the value of stock options granted
by the Company. In addition, the calculations assumed a risk free interest rate
of approximately 5.0%, 5.9% and 6.7% and expected volatility of 52.8%, 43.5% and
34% in 1998, 1997 and 1996, respectively.
Pro forma net loss reflects only options granted since December 31, 1994.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS 123 is not reflected in the pro forma net loss amounts discussed
above because compensation cost is calculated over the options' vesting periods
and compensation costs for options granted prior to January 1, 1995 are not
considered.
(101)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Stock transactions under the Stock Plan and the 1996 Plan are as follows:
<TABLE>
<CAPTION>
Shares Stock
Under Appreciation Stock Available Option
Option Rights Awards For Grant Price Range
------ ------ ------ --------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 4,262,728 4,510,748 599,200 -- $3.63-$14.13
1996 Stock Plan -- -- -- 6,000,000
Granted 2,194,220 2,194,220 368,400 (2,562,620) $11.97-$12.38
Exercised/issued (748,564) (954,564) (589,776) -- $3.63-$10.50
Cancelled-Stock Plan (176,568) (87,188) (24,824) -- $6.13-$13.03
Cancelled-1996 Plan (39,200) (39,200) (1,200) 40,400 $12.38
---------- ---------- ---------- ----------
Balance, December 31, 1996 5,492,616 5,624,016 351,800 3,477,780 $3.63-$13.04
Granted 2,230,888 2,210,288 -- (2,230,888) $7.13-$7.88
Exercised/issued (950,924) (1,245,160) -- -- $5.32-$13.03
Cancelled-Stock Plan (964,356) (948,024) (31,196) -- $5.32-$13.03
Cancelled-1996 Plan (300,676) (300,176) (45,452) 346,128 $7.13-$12.38
---------- ---------- ---------- ----------
Balance, December 31, 1997 5,507,548 5,340,944 275,152 1,593,020 $5.32-$13.03
1996 Plan amendment -- -- -- 7,000,000
Granted 2,265,500 2,265,500 -- (2,265,500) $27.63-$43.50
Exercised/issued (1,263,220) (1,164,932) (221,852) -- $6.13-$30.16
Cancelled-Stock Plan (6,604) (6,604) (6,840) -- $6.91-$13.03
Cancelled-1996 Plan (345,364) (345,360) (32,060) 377,424 $7.13-$12.38
---------- ---------- ---------- ----------
Balance, December 31, 1998 6,157,860 6,089,548 14,400 6,704,944 $6.13-$43.50
========== ========== ========== ==========
</TABLE>
The following table summarizes significant ranges of outstanding and exercisable
options at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- --------------------------
Weighted Weighted Weighted
Average Average Average
Ranges of Remaining Exercise Exercise
Exercise Prices Shares Life in Years Price Shares Price
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 6.13 - 9.00 2,582,248 7.7 $7.15 1,683,556 $ 7.12
10.50 - 13.19 1,321,112 6.6 11.72 819,016 11.31
27.63 - 43.50 2,254,500 9.5 29.06 85,667 30.16
</TABLE>
At December 31, 1998, options for approximately 6,157,860 shares were
outstanding with a weighted average exercise price of $16.15 and a weighted
average remaining life of 8 years. At December 31, 1998, options for
approximately 2,588,200 shares were exercisable with a weighted average exercise
price of $9.20 and a weighted average remaining life of 7 years.
(102)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 12. COMMITMENTS AND CONTINGENCIES
The Company, through Rainbow Media, has entered into several contracts,
including rights agreements, with professional sports teams and others relating
to cable television programming. In addition, Rainbow Media, through MSG has
employment agreements with both players and coaches of its professional sports
teams. Certain of these contracts, which provide for payments that are
guaranteed regardless of employee injury or termination, are covered by
disability insurance if certain conditions are met. Future cash payments
required under these contracts as of December 31, 1998 are as follows:
1999 $ 229,933
2000 217,752
2001 153,717
2002 113,925
2003 98,150
Thereafter 1,093,373
----------
Total $1,906,850
==========
The Company and its cable television affiliates have an affiliation agreement
with a program supplier whereby the Company is obligated to make base rate
annual payments, as defined and subject to certain adjustments pursuant to the
agreement, through 2004. The Company would be contingently liable for the base
rate annual payments, based on subscriber usage, of approximately $12,890 in
1999 and for the years 2000 through 2004 such payments would increase by
percentage increases in the Consumer Price Index, or five percent, whichever is
less, over the prior year's base rate annual payment.
NOTE 13. OTHER MATTERS
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that the resolution of these lawsuits will have a
material adverse impact on the financial position of the Company.
NOTE 14. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Cash Equivalents, Accounts Receivable Trade, Notes and Other
Receivables, Prepaid Expenses and Other Assets, Advances to Affiliates, Accounts
Payable, Accrued Liabilities, Accounts Payable to Affiliates, Feature Film and
Contract Obligations, and Obligation to Related Party.
The carrying amount approximates fair value due to the short maturity of these
instruments.
(103)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
At Home Warrants
The fair value of the At Home warrants has been determined by an independent
investment advisor.
Bank Debt, Senior Debt, Senior Notes and Debentures, Subordinated Notes and
Debentures and Subordinated Notes Payable.
The fair values of each of the Company's long-term debt instruments are based on
quoted market prices for the same or similar issues or on the current rates
offered to the Company for instruments of the same remaining maturities.
Interest Rate Swap Agreements
The fair values of interest rate swap and cap agreements are obtained from
dealer quotes. These values represent the estimated amount the Company would
receive or pay to terminate agreements, taking into consideration current
interest rates and the current creditworthiness of the counterparties.
The fair value of the Company's financial instruments are summarized as follows:
December 31, 1998
---------------------------
Carrying Estimated
Amount Fair Value
------ ----------
At Home warrants $ 248,134 $ 755,479
========== ==========
Long term debt instruments:
Bank debt $2,051,549 $2,051,549
Senior notes and debentures 2,194,443 2,271,340
Subordinated notes and debentures 1,048,375 1,168,375
Redeemable exchangeable preferred
stock of CSC Holdings 1,256,339 1,417,241
---------- ----------
$6,550,706 $6,908,505
========== ==========
Interest rate swap agreements:
In a net payable position $ -- $ 4,116
========== ==========
(104)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
December 31, 1997
---------------------------
Carrying Estimated
Amount Fair Value
------ ----------
Long term debt instruments:
Bank debt $2,240,358 $2,240,358
Senior debt 112,500 112,500
Senior notes and debentures 898,024 919,125
Subordinated notes and debentures 1,048,245 1,158,750
Subordinated notes payable 151,000 148,300
Redeemable exchangeable preferred
stock of CSC Holdings 1,123,808 1,307,750
---------- ----------
$5,573,935 $5,886,783
========== ==========
Interest rate swap agreements:
In a net payable position $ -- $ 3,141
========== ==========
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
NOTE 15. SEGMENT INFORMATION
The Company classifies its business interests into three fundamental areas:
Telecommunication Services, consisting principally of its cable television,
telephone and modem services operations; Rainbow Media, consisting principally
of interests in cable television programming networks and MSG, which owns and
operates professional sports teams, regional cable television networks, live
productions and entertainment venues; and Retail Electronics, which represents
the operations of Cablevision Electronics' retail electronics stores.
The Company's reportable segments are strategic business units that are managed
separately . The Company evaluates segment performance based on several factors,
of which the primary financial measure is business segment adjusted operating
cash flow (defined as operating income (loss) before depreciation and
amortization and incentive stock plan expense). The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. Intersegment sales are accounted for at fair value as if
the sales were to third parties. Information as to the operations of the
Company's business segments is set forth below.
(105)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Years Ended December 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
Revenues
Telecommunication Services ..... $ 1,888,855 $ 1,366,668 $ 1,096,634
Rainbow Media .................. 1,007,639 637,648 241,911
Retail Electronics ............. 464,388 -- --
All Other ...................... 6,614 1,707 3,473
Intersegment Elimination ....... (102,353) (56,665) (26,876)
----------- ----------- -----------
Total .................. $ 3,265,143 $ 1,949,358 $ 1,315,142
=========== =========== ===========
Years Ended December 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
Adjusted Operating Cash Flow
Telecommunication Services ..... $ 762,823 $ 545,927 $ 434,904
Rainbow Media .................. 135,259 101,122 21,294
Retail Electronics ............. (19,737) -- --
All Other ...................... (9,376) (1,704) (1,362)
----------- ----------- -----------
Total .................. $ 868,969 $ 645,345 $ 454,836
=========== =========== ===========
Years Ended December 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
Assets
Telecommunication Services ..... $ 4,163,060 $ 2,927,640 $ 2,719,091
Rainbow Media .................. 2,720,127 2,838,987 738,851
Retail Electronics ............. 199,194 -- --
Other .......................... 253,564 10,270 8,802
Corporate and intersegment
eliminations ................. (274,883) (162,109) (432,019)
----------- ----------- -----------
Total .................. $ 7,061,062 $ 5,614,788 $ 3,034,725
=========== =========== ===========
(106)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
A reconciliation of reportable segment amounts to the Company's consolidated
balances is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenue
Total revenue for reportable segments ................ $ 3,360,882 $ 2,004,316 $ 1,338,545
Other revenue and intersegment eliminations .......... (95,739) (54,958) (23,403)
----------- ----------- -----------
Total consolidated revenue ...................... $ 3,265,143 $ 1,949,358 $ 1,315,142
=========== =========== ===========
Adjusted Operating Cash Flow to Net Loss
Total adjusted operating cash flow for
reportable segments ............................. 878,345 647,049 456,198
Other adjusted operating cash flow deficit ........... (9,376) (1,704) (1,362)
Items excluded from adjusted operating cash flow
Depreciation and amortization ................... (734,107) (499,809) (388,982)
Incentive stock plan (expense) income ........... (146,179) (64,361) 8,558
Interest expense ................................ (426,402) (368,700) (268,177)
Interest income ................................. 24,028 5,492 3,162
Share of affiliates' net loss ................... (37,368) (27,165) (82,028)
Gain on sale of programming interests and cable
assets, net ................................ 170,912 372,053 --
Gain on redemption of subsidiary preferred stock -- 181,738 --
Write off of deferred interest and financing
costs ...................................... (23,482) (24,547) (37,784)
Provision for preferential payment to related
party ...................................... (980) (10,083) (5,600)
Minority interests .............................. (124,677) (209,461) (137,197)
Miscellaneous, net .............................. (19,218) (12,606) (6,647)
----------- ----------- -----------
Net loss .............................. $ (448,504) $ (12,104) $ (459,859)
=========== =========== ===========
</TABLE>
Substantially all revenues and assets of the Company's reportable segments are
attributed to or located in the United States.
The Company does not have a single external customer which represents 10 percent
or more of its consolidated revenues.
(107)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
(formerly CSC Parent Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 16. INTERIM FINANCIAL INFORMATION (Unaudited)
The following is a summary of selected quarterly financial data for the years
ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
MARCH 31, JUNE 30, SEPTEMBER 30,
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues .................... $ 675,728 $ 358,549 $ 805,190 $ 438,516 $ 806,871 $ 517,930
Operating expenses .......... 686,888 344,271 785,935 433,359 790,822 501,057
----------- ----------- ----------- ----------- ----------- -----------
Operating profit (loss) ..... $ (11,160) $ 14,278 $ 19,255 $ 5,157 $ 16,049 $ 16,873
=========== =========== =========== =========== =========== ===========
Net income (loss) ........... $ (27,204) $ (111,921) $ (122,951) $ (128,776) $ (113,614) $ 46,454
=========== =========== =========== =========== =========== ===========
Basic net income (loss) per
common share .............. $ (.23) $ (1.13) $ (.82) $ (1.30) $ (.75) $ .47
=========== =========== =========== =========== =========== ===========
Diluted net income (loss) per
common share .............. $ (.23) $ (1.13) $ (.82) $ (1.30) $ (.75) $ .44
=========== =========== =========== =========== =========== ===========
<CAPTION>
DECEMBER 31, TOTAL
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues .................... $ 977,354 $ 634,363 $ 3,265,143 $ 1,949,358
Operating expenses .......... 1,012,815 589,496 3,276,460 1,868,183
----------- ----------- ----------- -----------
Operating profit (loss) ..... $ (35,461) $ 44,867 $ (11,317) $ 81,175
=========== =========== =========== ===========
Net income (loss) ........... $ (184,735) $ 182,139 $ (448,504) $ (12,104)
=========== =========== =========== ===========
Basic net income (loss) per
common share .............. $ (1.22) $ 1.82 $ (3.16) $ (.12)
=========== =========== =========== ===========
Diluted net income (loss) per
common share .............. $ (1.22) $ 1.53 $ (3.16) $ (.12)
=========== =========== =========== ===========
</TABLE>
(108)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholder
CSC Holdings, Inc.
We have audited the accompanying consolidated balance sheets of CSC Holdings,
Inc. (formerly Cablevision Systems Corporation) and subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of operations,
stockholder's deficiency and cash flows for each of the years in the three-year
period ended December 31, 1998. In connection with our audits of the
consolidated financial statements, we also audited the financial statement
schedule listed in Item 14(a)(2). These consolidated financial statements and
the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CSC Holdings, Inc.
and subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule
referred to above, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Melville, New York
March 12, 1999
(109)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS 1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents ................................... $ 173,699 $ 410,141
Accounts receivable trade (less allowance for doubtful
accounts of $31,910 and $29,584) ......................... 191,954 214,721
Notes and other receivables ................................. 143,666 98,756
Inventory, prepaid expenses and other assets ................ 202,512 55,324
Property, plant and equipment, net .......................... 2,110,839 1,831,167
Investments in affiliates ................................... 276,231 207,776
Advances to affiliates ...................................... 37,001 19,823
Feature film inventory ...................................... 293,310 180,576
Net assets held for sale .................................... 11,006 252,610
Franchises, net of accumulated amortization of
$570,319 and $481,895 .................................... 327,293 383,369
Affiliation and other agreements, net of accumulated
amortization of $181,928 and $129,087 .................... 206,456 253,734
Excess costs over fair value of net assets acquired and other
intangible assets, net of accumulated amortization of
$762,589 and $684,141 .................................... 1,854,605 1,615,786
Deferred financing, acquisition and other costs, net of
accumulated amortization of $41,566 and $40,061 .......... 107,288 91,005
---------- ----------
$5,935,860 $5,614,788
========== ==========
</TABLE>
See accompanying notes
to consolidated financial statements.
(110)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Accounts payable.................................................... $ 382,877 $ 278,630
Accrued liabilities:
Interest ........................................................ 85,960 54,107
Employee related costs .......................................... 315,645 196,138
Other ........................................................... 391,304 254,621
Feature film and contract obligations ............................... 373,722 292,720
Deferred revenue .................................................... 334,213 277,693
Bank debt ........................................................... 1,528,549 2,240,358
Senior debt ......................................................... -- 112,500
Senior notes and debentures ......................................... 2,194,443 898,024
Subordinated notes and debentures ................................... 1,048,375 1,048,245
Subordinated notes payable .......................................... -- 151,000
Obligation to related party ......................................... -- 197,183
Capital lease obligations and other debt ............................ 63,241 46,752
----------- -----------
Total liabilities ............................................... 6,718,329 6,047,971
----------- -----------
Minority interests .................................................. 785,545 821,782
----------- -----------
Series H Redeemable Exchangeable Preferred Stock .................... 364,953 325,048
----------- -----------
Series M Redeemable Exchangeable Preferred Stock .................... 891,386 798,760
----------- -----------
Commitments and contingencies
Stockholder's deficiency:
Series A Cumulative Convertible Preferred Stock,
200,000 shares authorized, none issued ....................... -- --
Series B Cumulative Convertible Preferred Stock,
200,000 shares authorized, none issued ....................... -- --
8% Series C Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, 110,622 shares issued
($100 per share liquidation preference) ...................... -- 1
8% Series D Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, none issued ($100 per
share liquidation preference) ................................ -- --
8-1/2% Series I Cumulative Convertible Exchangeable
Preferred Stock, $.01 par value, 1,380,000 shares
authorized and issued ($250 per share liquidation preference) 14 14
Common Stock, $1.00 par value, 1,000 shares authorized,
1,000 and -0- shares issued .................................. 1 --
Class A Common Stock, $.01 par value,
-0- and 55,897,984 shares issued ............................. -- 560
Class B Common Stock, $.01 par value,
-0- and 44,386,836 shares issued ............................. -- 444
Paid-in capital ................................................. 170,287 171,399
Accumulated deficit ............................................. (2,994,655) (2,551,191)
----------- -----------
Total stockholder's deficiency .................................. (2,824,353) (2,378,773)
----------- -----------
$ 5,935,860 $ 5,614,788
=========== ===========
</TABLE>
See accompanying notes
to consolidated financial statements.
(111)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues (including affiliate amounts of $8,009, $9,424 and $9,487) ...... $ 2,912,419 $ 1,949,358 $ 1,315,142
----------- ----------- -----------
Operating expenses:
Technical and operating (including affiliate amounts of $2,298,
$16,581 and $37,610 and cost of sales of $390,751 in 1998) ........... 1,524,555 853,800 538,272
Selling, general and administrative .................................... 820,015 514,574 313,476
Depreciation and amortization .......................................... 577,635 499,809 388,982
----------- ----------- -----------
2,922,205 1,868,183 1,240,730
----------- ----------- -----------
Operating profit (loss) .................................................. (9,786) 81,175 74,412
----------- ----------- -----------
Other income (expense):
Interest expense ....................................................... (393,008) (368,700) (268,177)
Interest income (including affiliate amounts of $6,041, $1,600 and $568) 23,936 5,492 3,162
Share of affiliates' net loss .......................................... (37,368) (27,165) (82,028)
Gain on sale of programming interests and cable assets, net ............ 171,127 372,053 --
Gain on redemption of subsidiary preferred stock ....................... -- 181,738 --
Write off of deferred interest and financing costs ..................... (23,482) (24,547) (37,784)
Provision for preferential payment to related party .................... (980) (10,083) (5,600)
Minority interests ..................................................... 48,378 (60,694) (9,417)
Miscellaneous, net ..................................................... (18,350) (12,606) (6,647)
----------- ----------- -----------
(229,747) 55,488 (406,491)
----------- ----------- -----------
Net income (loss) ........................................................ (239,533) 136,663 (332,079)
Dividend requirements applicable to preferred stock ...................... (161,872) (148,767) (127,780)
----------- ----------- -----------
Net loss applicable to common shareholder ................................ $ (401,405) $ (12,104) $ (459,859)
=========== =========== ===========
Basic and diluted net loss per common share .............................. $ -- $ (.12) $ (4.63)
=========== =========== ===========
Average number of common shares outstanding (in thousands) ............... -- 99,608 99,308
=========== =========== ===========
</TABLE>
See accompanying notes
to consolidated financial statements.
(112)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' DEFICIENCY Years
Ended December 31, 1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Series C Series I Class A Class B
Preferred Preferred Common Common Common
Stock Stock Stock Stock Stock Paid-in Capital
----- ----- ----- ----- ----- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 ........... $ 1 $ 14 $ -- $ 568 $ 464 $ 246,897
Net loss ....................... -- -- -- -- -- --
Issuances of preferred stock ... -- -- -- -- -- (25,979)
Employee stock transactions .... -- -- -- 4 -- 3,225
Conversion of Class B to Class A -- -- -- 12 (12) --
Retirement of treasury stock ... -- -- -- (40) -- (60,352)
Preferred dividend requirements -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1996 ........... 1 14 -- 544 452 163,791
Net income ..................... -- -- -- -- -- --
Employee stock transactions .... -- -- -- 8 -- 7,608
Conversion of Class B to Class A -- -- -- 8 (8) --
Preferred dividend requirements -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 ........... 1 14 -- 560 444 171,399
Net loss ....................... -- -- -- -- -- --
Employee stock transactions .... -- -- -- -- -- 2,444
Redemption of preferred stock .. (1) -- -- -- -- (9,408)
Dividend payment to Parent ..... -- -- -- -- -- --
Issuance of stock .............. -- -- -- -- -- 4,849
Common stock conversion ........ -- -- 1 (560) (444) 1,003
Preferred dividend requirements -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 ........... $ -- $ 14 $ 1 $ -- $ -- $ 170,287
=========== =========== =========== =========== =========== ===========
<CAPTION>
Accumulated Treasury
Deficit Stock Total
------- ----- -----
<S> <C> <C> <C>
Balance December 31, 1995 ........... $(2,079,228) $ (60,392) $(1,891,676)
Net loss ....................... (332,079) -- (332,079)
Issuances of preferred stock ... -- -- (25,979)
Employee stock transactions .... -- -- 3,229
Conversion of Class B to Class A -- -- --
Retirement of treasury stock ... -- 60,392 --
Preferred dividend requirements (127,780) -- (127,780)
----------- ----------- -----------
Balance December 31, 1996 ........... (2,539,087) -- (2,374,285)
Net income ..................... 136,663 -- 136,663
Employee stock transactions .... -- -- 7,616
Conversion of Class B to Class A -- -- --
Preferred dividend requirements (148,767) -- (148,767)
----------- ----------- -----------
Balance December 31, 1997 ........... (2,551,191) -- (2,378,773)
Net loss ....................... (239,533) -- (239,533)
Employee stock transactions .... -- -- 2,444
Redemption of preferred stock .. -- -- (9,409)
Dividend payment to Parent ..... (42,059) -- (42,059)
Issuance of stock .............. -- -- 4,849
Common stock conversion ........ -- -- --
Preferred dividend requirements (161,872) -- (161,872)
----------- ----------- -----------
Balance December 31, 1998 ........... $(2,994,655) $ -- $(2,824,353)
=========== =========== ===========
</TABLE>
See accompanying notes
to consolidated financial statements.
(113)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .......................................................... $(239,533) $ 136,663 $(332,079)
--------- --------- ---------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization .......................................... 577,635 499,809 388,982
Share of affiliates' net loss .......................................... 37,368 27,165 82,028
Minority interests ..................................................... (48,378) 60,694 9,417
Gain on sale of programming interests and cable assets, net ............ (171,127) (372,053) --
Write off of deferred interest and financing costs ..................... 23,482 24,547 37,784
Gain on redemption of subsidiary preferred stock ....................... -- (181,738) --
(Gain) loss on sale of equipment, net .................................. (642) 5,325 4,733
Amortization of deferred financing and debenture discount .............. 8,216 7,707 12,191
Accretion of interest on debt .......................................... -- -- 6,828
Change in assets and liabilities, net of effects of acquisitions and
dispositions:
Accounts receivable trade .......................................... 20,625 (34,268) (2,709)
Notes and other receivables ........................................ (49,375) (67,683) (1,810)
Inventory, prepaid expenses and other assets ....................... (90,277) 1,232 (12,428)
Advances to affiliates ............................................. (21,738) (528) (2,168)
Feature film inventory ............................................. (112,734) (8,269) 9,658
Other deferred costs ............................................... 11,689 -- --
Accounts payable ................................................... 93,729 50,667 17,134
Accrued liabilities ................................................ 148,409 91,497 (4,618)
Feature film and contract obligations .............................. 81,376 (258) (12,563)
Deferred revenue ................................................... (18,268) 37,664 --
Minority interests ................................................. (961) (6,486) --
--------- --------- ---------
Net cash provided by operating activities ................................ 249,496 271,687 200,380
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures ....................................................... (530,784) (457,590) (449,165)
Payments for acquisitions, net of cash acquired ............................ (264,510) (747,134) (113,095)
Net proceeds from sale of programming interests and cable assets ........... 442,425 945,534 --
Proceeds from sale of equipment ............................................ 8,945 1,930 814
(Increase) decrease in investments in affiliates, net ...................... (31,035) 9,267 (179,536)
Additions to other intangible assets ....................................... (12,659) (623) (766)
--------- --------- ---------
Net cash used in investing activities .................................... $(387,618) $(248,616) $(741,748)
--------- --------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(114)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(Dollars in thousands)
(continued)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from bank debt ............................. $ 4,804,101 $ 3,385,703 $ 2,053,566
Repayment of bank debt .............................. (5,519,507) (3,147,165) (1,576,585)
Proceeds from senior debt ........................... -- 147,750 12,500
Repayment of senior debt ............................ (112,500) (433,617) (918,131)
Repayment of subordinated notes payable ............. (151,000) -- --
Redemption of senior notes payable .................. (94,848) -- --
Issuance of subordinated debentures ................. -- -- 399,385
Redemption of senior subordinated debt .............. -- (283,445) --
Issuance of senior notes and debentures ............. 1,296,076 897,983 --
Redemption of subsidiary preferred stock ............ -- (112,301) --
Redemption of preferred stock ....................... (9,409) -- --
Issuances of redeemable exchangeable
convertible preferred stock ....................... -- -- 624,021
Dividends applicable to preferred stock ............. (29,341) (30,224) (30,266)
Payment of dividend to shareholder .................. (42,059) -- --
Issuance of common stock ............................ 2,444 7,616 3,229
Obligation to related party ......................... (197,183) 4,364 (126)
Payments on capital lease obligations and other debt (12,306) (7,501) (3,321)
Additions to deferred financing and other costs ..... (32,788) (53,705) (26,624)
----------- ----------- -----------
Net cash provided by (used in) financing activities (98,320) 375,458 537,648
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents .. (236,442) 398,529 (3,720)
Cash and cash equivalents at beginning of year ........ 410,141 11,612 15,332
----------- ----------- -----------
Cash and cash equivalents at end of year .............. $ 173,699 $ 410,141 $ 11,612
=========== =========== ===========
</TABLE>
See accompanying notes
to consolidated financial statements.
(115)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company and Related Matters
On March 4, 1998, CSC Holdings, Inc. (the "Company") completed a holding company
reorganization (the "Holding Company Reorganization") pursuant to an Amended and
Restated Contribution and Merger Agreement (the "Contribution and Merger
Agreement"), by and among the Company, CSC Parent Corporation ("Parent"), CSC
Merger Corporation, and TCI Communications, Inc., ("TCI"). Pursuant to the
Contribution and Merger Agreement, each outstanding share of the Company's Class
A Common Stock and each outstanding share of the Company's Class B Common Stock
were automatically converted on a share for share basis for Class A Common Stock
and Class B Common Stock of Parent.
As a result of the Holding Company Reorganization, Parent became the holding
company of the Company. In connection with the Holding Company Reorganization,
the Company's name, which formerly was Cablevision Systems Corporation, was
changed to CSC Holdings, Inc. and Parent's name was changed to Cablevision
Systems Corporation.
The preferred stock and debt of the Company remain unchanged as securities of
CSC Holdings, Inc., except that the Company's 8-1/2% Cumulative Convertible
Exchangeable Preferred Stock, par value $0.01 per share (the "Series I Preferred
Stock"), in accordance with its terms, became exchangeable for Parent's Class A
Common Stock instead of being convertible into the Company's Class A Common
Stock.
The Company and its majority-owned subsidiaries own and operate cable television
systems and have ownership interests in companies that produce and distribute
national and regional entertainment and sports programming services, including a
majority interest in Madison Square Garden, L.P. ("MSG"). The Company also owns
companies that provide advertising sales services for the cable television
industry, provide switched telephone service, operate a retail electronics chain
and operate motion picture theaters. Parent allocates certain costs to the
Company based upon its proportionate estimated usage of services. The Company
classifies its business interests into three fundamental areas:
Telecommunication Services, consisting principally of its cable television,
telephone and modem services operations; Rainbow Media, consisting principally
of interests in cable television programming networks and MSG, which owns and
operates professional sports teams, regional cable television networks, live
productions and entertainment venues; and Retail Electronics, which represents
the operations of its retail electronics stores.
Two-for-One Stock Splits
On March 4, 1998, Parent's Board of Directors declared a two-for-one stock split
to be effected in the form of a common stock dividend of one share of Class A
Common Stock for each share of
(116)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Class A Common Stock issued and outstanding and one share of Class B Common
Stock for each share of Class B Common Stock issued and outstanding. The stock
dividend was paid on March 30, 1998 to stockholders of record on March 19, 1998.
On July 22, 1998, Parent's Board of Directors declared a two-for-one stock split
to be effected as a special stock distribution of one share of Class A Common
Stock for each share of Class A Common Stock issued and outstanding as of August
10, 1998 and one share of Class B Common Stock for each share of Class B Common
Stock issued and outstanding as of August 10, 1998. The stock dividend was paid
on August 21, 1998 to stockholders of record on August 10, 1998.
For purposes of the accompanying consolidated financial statements of the
Company, all share and per share information has been adjusted for the
two-for-one splits discussed above.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. The Company's interests in less
than majority-owned entities and until July 2, 1997, its 100% common stock
interest in A-R Cable Services, Inc., are carried on the equity method.
Subsequent to July 2, 1997, results of operations of A-R Cable Services, Inc.
are consolidated with those of the Company (see Note 2). Advances to affiliates
are recorded at cost, adjusted when recoverability is doubtful. All significant
intercompany transactions and balances are eliminated in consolidation.
Revenue Recognition
The Company recognizes cable television and programming revenues as services are
provided to subscribers. Advertising revenues are recognized when commercials
are telecast. Revenues derived from other sources are recognized when services
are provided, events occur or products are delivered.
Long-Lived Assets
Property, plant and equipment, including construction materials, are carried at
cost, which includes all direct costs and certain indirect costs associated with
the construction of cable television transmission and distribution systems, and
the costs of new subscriber installations. Franchises are amortized on the
straight-line basis over the average remaining terms (7 to 11 years) of the
franchises at the time of acquisition. Affiliation and other agreements
(primarily cable television system programming agreements) are amortized on a
straight-line basis over periods ranging from 6 to 10 years. Other intangible
assets are amortized on the straight-line basis over the periods benefited (2 to
10 years), except that excess costs over fair value of net assets acquired are
being amortized on the straight-line basis over periods ranging from 5 to 40
years. The Company reviews its long-lived assets (property, plant and equipment,
and related intangible assets that arose from business combinations accounted
for under the purchase method) for impairment whenever events or circumstances
indicate that the carrying amount of an asset may not be recoverable. If the sum
(117)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
of the expected cash flows, undiscounted and without interest, is less than the
carrying amount of the asset, an impairment loss is recognized as the amount by
which the carrying amount of the asset exceeds its fair value.
Feature Film Inventory
Rights to feature film inventory acquired under license agreements along with
the related obligations are recorded at the contract value. Costs are charged to
technical and operating expense on the straight-line basis over the respective
contract periods. Amounts payable during the five years subsequent to December
31, 1998 related to feature film telecast rights are $44,438 in 1999, $38,394 in
2000, $27,332 in 2001, $22,375 in 2002 and $19,751 in 2003.
Inventory
Carrying amounts of retail merchandise are determined on an average cost basis
and are stated at the lower of cost or market.
Deferred Financing Costs
Costs incurred to obtain debt are deferred and amortized, on a straight-line
basis, over the life of the related debt.
Income Taxes
Income taxes are provided based upon the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires the
liability method of accounting for deferred income taxes and permits the
recognition of deferred tax assets, subject to an ongoing assessment of
realizability.
Loss Per Share
Basic and diluted net loss per common share for the years ended December 31,
1997 and 1996 is computed by dividing net loss after deduction of preferred
stock dividends by the weighted average number of common shares outstanding.
Potential dilutive common shares were not included in the computation as their
effect would be antidilutive. Basic and diluted net loss per common share for
the year ended December 31, 1998 is not presented since the Company is a
wholly-owned subsidiary of Parent. Loss per share amounts have been adjusted,
for all years presented, to reflect the two-for-one stock splits discussed
above.
(118)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Segment Information
On December 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, `Disclosures about Segments of an Enterprise and Related
Information' (`SFAS 131'). The new rules establish revised standards for public
companies relating to the reporting of financial and descriptive information
about their operating segments in financial statements. The adoption of SFAS 131
does not have a material effect on the Company's financial statements, but does
affect the disclosure of segment information contained elsewhere herein (see
Note 15).
Reclassifications
Certain reclassifications have been made in the 1997 and 1996 financial
statements to conform to the 1998 presentation.
Cash Flows
For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents. The Company paid cash interest expense of
approximately $352,929, $352,660, and $252,120 during 1998, 1997 and 1996,
respectively.
During 1998, 1997, and 1996, the Company's noncash investing and financing
activities were as follows:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Capital lease obligations ..................... 28,795 24,820 2,571
Preferred stock dividends ..................... 132,531 118,542 97,514
Issuance of common stock to redeem
certain limited partnership interests .... 4,849 -- --
Receipt of warrants from At Home
Corporation .............................. 74,788 173,346 --
Capital contribution of equipment by
minority partner ......................... -- 38,000 --
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(119)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 2. ACQUISITIONS, DISPOSITIONS AND RESTRUCTURINGS
Acquisitions
1998 Acquisitions
The Wiz
On February 9, 1998, Cablevision Electronics Investments, Inc. ("Cablevision
Electronics"), a wholly-owned subsidiary of the Company, acquired substantially
all of the assets associated with 40 The Wiz consumer electronics store
locations from The Wiz, Inc. and certain of its subsidiaries and affiliates
(collectively, "TWI"). TWI had filed for bankruptcy protection on December 16,
1997. Cablevision Electronics paid approximately $101,300 for the assets
(including transaction costs and pre-closing operating costs).
The acquisition was accounted for as a purchase with the operations of the
stores being consolidated with the operations of the Company as of the date of
acquisition. The purchase price was allocated to the specific assets acquired
based upon independent appraisals as follows:
Inventory $ 66,200
Property and equipment 16,800
Other assets 4,000
Liabilities (24,000)
Excess cost over fair
value of net assets acquired 38,300
----------
$ 101,300
==========
Madison Square Garden
On June 17, 1998, the Company purchased 50% of ITT's remaining interest in MSG
for $94,000 pursuant to ITT's exercise of its first put option increasing RPP's
interest in MSG to 96.3% (see discussion below). In March 1999, ITT and the
Company entered into an agreement under which ITT exercised its second put for
the remainder of its interest in MSG and will settle certain matters between the
parties for a payment of $87,000.
Loews
In December 1998, a subsidiary of the Company acquired interests in the real
property and assets specifically related to 15 movie theaters from Loews
Cineplex Entertainment Corporation ("Loews") for an aggregate purchase price of
approximately $67,300.
(120)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The acquisition was accounted for as a purchase with the operations of the
acquired assets being consolidated with those of the Company as of the
acquisition date. The purchase price was allocated to the specific assets
acquired based upon independent appraisals as follows:
Property and equipment $12,600
Other assets 4,100
Excess cost over fair value
of net assets acquired 50,600
-------
$67,300
=======
In the first quarter of 1999, the Company acquired one additional theater and
Loews has granted the Company a right of first offer on an additional 21 movie
theaters until December 1999.
Clearview
In December 1998, Parent acquired all of the outstanding shares of stock of
Clearview Cinema Group, Inc. ("Clearview") for approximately $157,700 (including
assumed debt of $80,000) of which approximately $33,400 was paid in shares of
Parent's Class A Common Stock. The remaining purchase price was funded primarily
by a dividend paid by the Company to Parent of approximately $42,000. Concurrent
with the acquisition of Clearview, Parent contributed its entire interest in
Clearview to the subsidiary formed to purchase the Loews theaters in exchange
for a minority interest in that subsidiary. As a result, the operations of
Clearview have been consolidated with those of the Company since the date of the
acquisition and the Company has recorded a minority interest representing
Parent's share of the results of operations of the newly formed subsidiary which
owns the Loews theatres and Clearview.
The acquisition of Clearview was accounted for as a purchase with the operations
of the acquired business being consolidated with those of the Company as of the
acquisition date. The excess of the purchase price over the net book value of
assets acquired approximates $122,300 and will be allocated to the specific
assets acquired when independent appraisals are obtained.
1997 Acquisitions:
NBC Transaction
On April 1, 1997, Rainbow Media Holdings, Inc. ("Rainbow Media") consummated a
transaction in which Rainbow Programming Holdings, Inc. merged with and into
Rainbow Media, a newly formed subsidiary of the Company. In addition, NBC Cable,
Inc. (a subsidiary of National Broadcasting Company ("NBC")) received a 25%
equity interest (which interest may be increased by up to an additional 2% under
certain circumstances without additional payment) in Class C Common Stock of
Rainbow Media. The Company owns the remaining 75% equity interest in Rainbow
Media. The partnership interests in certain of Rainbow Media's programming
services formerly owned by NBC are now owned by subsidiaries of Rainbow Media.
The exchange of 25% of the Company's interest in Rainbow
(121)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Media for NBC's interests in certain entities was accounted for at historical
cost with the difference between the cost basis of a 25% interest in Rainbow
Media and the partnership interests received in exchange recorded as goodwill of
$54,385, which is being amortized over a 10 year period.
Madison Square Garden
In February 1997, Rainbow Media made a payment to ITT Corporation ("ITT") of
$168,750 plus interest, fully equalizing its interest in MSG, a partnership
among subsidiaries of Rainbow Media and subsidiaries of ITT, and bringing
Rainbow Media's total payments at that time to $360,000, plus interest payments
aggregating $47,700.
In April 1997, the Company and certain of its affiliates and ITT and certain of
its affiliates entered into definitive agreements ("MSG Agreement") relating to
the acquisition by subsidiaries of the Company of ITT's 50 percent interest in
MSG. The transaction closed on June 17, 1997 when MSG borrowed $799,000 under
its credit facility which was used to redeem a portion of ITT's interest in MSG
for $500,000 and to repay its existing indebtedness. Rainbow Media contributed
its SportsChannel Associates programming company to MSG, which, together with
the redemption, increased Rainbow Media's interest in MSG to 89.8% and reduced
ITT's interest to 10.2%. In connection with the Fox/Liberty transaction
discussed below, Rainbow Media's interest in MSG was contributed to Regional
Programming Partners. ITT's interest in MSG was further reduced to 7.8% as a
result of the $450,000 capital contribution by Regional Programming Partners to
MSG which was used by MSG to pay down outstanding debt. The remaining 7.8%
interest held by ITT is subject to certain puts and calls as specified in the
MSG Agreement (see "1998 Acquisitions" above). The acquisition was accounted for
using the purchase method of accounting. The assets and liabilities and results
of operations of MSG have been consolidated with those of the Company as of June
17, 1997. Previously, the Company's investment in MSG was accounted for using
the equity method of accounting. The excess of the purchase price over the net
book value of assets acquired of approximately $397,093 was allocated to the
specific assets acquired based upon independent appraisals as follows:
Property, plant and equipment $ 19,687
Affiliation and other agreements 34,168
Franchises 46,125
Excess cost over fair value of net assets acquired 297,113
--------
$397,093
========
(122)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Warburg Transactions
In June 1997, the Company acquired from Warburg Pincus Investors, L.P.
("Warburg") the interests that the Company did not already own in A-R Cable
Partners ("Nashoba") and Cablevision of Framingham Holdings, Inc. ("CFHI") for a
purchase price of approximately $33,348 and $7,865, respectively. The
acquisitions of Nashoba and CFHI were accounted for as purchases with the
operations of these companies being consolidated with those of the Company as of
the acquisition date. The excess of the purchase price over the net book value
of assets acquired approximates $97,015 and has been allocated based upon
independent appraisals as follows:
Property, plant and equipment $ 4,060
Franchises 59,923
Excess cost over fair value of net assets acquired 33,032
--------
$ 97,015
========
On July 2, 1997, the Company redeemed from Warburg the Series A Preferred Stock
of A-R Cable Services, Inc. ("A-R Cable") for an aggregate amount of
approximately $112,301. The assets and liabilities of A-R Cable have been
consolidated with those of the Company as of July 2, 1997. Previously, the
Company's investment in A-R Cable was accounted for using the equity method of
accounting. In connection with this transaction, the Company recognized a gain
of $181,738 representing principally the reversal of accrued preferred dividends
in excess of amounts paid.
Radio City
On December 5, 1997, MSG purchased all of the membership interests in Radio City
Entertainment ("Radio City"), the production company that operates Radio City
Music Hall in New York City, for approximately $70,000 in cash. Simultaneously,
Radio City entered into a 25-year lease for Radio City Music Hall. The assets
and liabilities and results of operations of Radio City have been consolidated
with those of the Company as of the date of acquisition. The excess of the
purchase price over the net book value of assets acquired of approximately
$76,200 was allocated to the specific assets acquired based upon independent
appraisals as follows:.
Property, plant and equipment $ 1,500
Capital lease obligation (80,000)
Other liabilities (13,400)
Excess cost over fair value of net assets acquired 168,100
---------
$ 76,200
=========
(123)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Dispositions
Cable Systems
In October 1998, A-R Cable transferred its cable television system in
Rensselaer, New York plus approximately $16,000 in cash to Time Warner
Entertainment Company, L.P. ("Time Warner") in exchange for Time Warner's
Litchfield, Connecticut system. The Company recognized a gain of approximately
$15,500 in connection with this transaction.
In February 1997, the Company announced that it was pursuing a plan to dispose
of certain nonstrategic cable television systems. In 1998 and 1997, the Company
completed the sale of cable television systems for aggregate sales prices of
approximately $426,500 and $88,200, respectively, and recognized aggregate gains
of approximately $137,900 and $59,000, respectively.
Regional Programming Partners
In December 1997, Rainbow Media and Fox/Liberty Networks, LLC ("Fox") organized
Regional Programming Partners (a partnership that owns the interest in MSG and
in regional sports programming businesses previously owned by Rainbow Media)
("RPP"). In connection with the formation of RPP, affiliates of Rainbow Media
indirectly contributed to RPP in consideration for the issuance of a 60% general
partnership interest in RPP their ownership interests in several regional sports
networks, including their interest in MSG. In consideration for the issuance of
a 40% general partnership interest in RPP, Fox contributed $850,000 in cash to
RPP. Thereafter, RPP made a capital contribution of approximately $450,000 to
MSG which was used by MSG to repay a portion of MSG's debt. As a result of RPP's
investment in MSG, RPP's interest in MSG increased from 89.8% to 92.2%. In
connection with this transaction, Rainbow Media recognized a gain of
approximately $305,000. See discussion above under "Acquisitions - 1998
Acquisitions - Madison Square Garden for further increases in RPP's interest in
MSG.
Other
In 1998 and 1997, RPP and Rainbow Media completed the sale of an interest in a
sports programming business and substantially all of the assets of a radio
station. In connection with these sales, RPP and Rainbow Media recognized gains
of $17,700 and $7,400, respectively.
A-R Cable Restructuring
In 1992, the Company and A-R Cable consummated a restructuring and refinancing
transaction (the "A-R Cable Restructuring"). Among other things, this
transaction involved an additional $45,000 investment in A-R Cable by the
Company to purchase a new Series B Preferred Stock and the purchase of a new
Series A Preferred Stock in A-R Cable by Warburg for $105,000. As a result of
the A-R Cable Restructuring, the Company no longer had financial or voting
control over A-R Cable's operations. Prior to the redemption of A-R
(124)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Cable's Series A Preferred Stock on July 2, 1997 (see discussion above), the
Company accounted for its investment in A-R Cable using the equity method of
accounting whereby the Company recorded 100% of the net losses of A-R Cable
since it continued to own 100% of A-R Cable's outstanding common stock.
Included in share of affiliates' net loss in the accompanying consolidated
statements of operations for the period ended July 1, 1997 and for the year
ended December 31, 1996 is $35,835 and $68,492, respectively, representing A-R
Cable's net loss plus dividend requirements for the Series A Preferred Stock of
A-R Cable, which was not owned by the Company. Beginning on July 2, 1997, the
operations of A-R Cable have been consolidated with those of the Company.
Pro Forma Results of Operations
The following unaudited pro forma condensed results of operations are presented
for the years ended December 31, 1998 and 1997 as if the acquisitions of MSG,
Nashoba, CFHI, the NBC transaction, the A-R Cable consolidation and the sale of
assets of certain cable systems had occurred on January 1, 1998 and 1997,
respectively.
Years Ended December 31,
------------------------
1998 1997
---- ----
Net revenues $2,907,145 $2,160,778
========== ==========
Net income (loss) $ (472,567) $ 1,000
========== ==========
The pro forma information presented above gives effect to certain adjustments,
including the amortization of acquired intangible assets and increased interest
expense on acquisition debt. The pro forma information has been prepared for
comparative purposes only and does not purport to indicate the results of
operations which would actually have occurred had the transactions been made at
the beginning of the periods indicated or which may occur in the future.
NOTE 3. NET ASSETS HELD FOR SALE
Pursuant to the Company's decision to dispose of certain nonstrategic cable
television systems (see Note 2), the Company had entered into definitive
agreements covering the sale of certain cable television systems as of December
31, 1998 and 1997.
In January 1998, the Company, Parent and a subsidiary of TCI entered into a
non-binding letter of intent for Parent to acquire TCI's cable television
systems (the "TCI Connecticut Systems") in and around Hartford, Vernon, Branford
and Lakeville, Connecticut (the "Proposed TCI CT Transactions"). Under the
non-binding letter of intent, in consideration for the TCI Connecticut Systems,
Parent would (i) transfer to TCI the cable television systems serving Kalamazoo,
(125)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Michigan, (ii) transfer to TCI other cable television systems to be identified
by TCI and purchased with approximately $25,000 of funds provided by Parent,
(iii) issue shares of Parent's Class A Common Stock, and (iv) assume certain
indebtedness relating to the TCI Connecticut Systems, which is anticipated to
total approximately $110,000.
A binding definitive agreement has not yet been completed. There can be no
assurance that the Proposed TCI CT Transactions will be consummated in a timely
fashion, or at all.
For financial reporting purposes, the assets and liabilities attributable to
cable systems whose sale or transfer was pending at December 31, 1998 and 1997
have been classified in the consolidated balance sheet as net assets held for
sale and consist of the following:
December, 31
------------
1998 1997
---- ----
Property, plant and equipment, net $ 14,548 $122,577
Intangible assets, net 215 154,352
Other assets (including trade receivables,
prepaid expenses, etc.) 603 2,815
-------- --------
Total assets 15,366 279,744
Total liabilities 4,360 27,134
-------- --------
Net assets $ 11,006 $252,610
======== ========
The accompanying consolidated statement of operations for the year ended
December 31, 1998 and 1997 includes net revenues aggregating approximately
$18,937 and $102,971, respectively, and net income (loss) aggregating
approximately $9,095 and $(11,275), respectively, relating to the cable systems
held for sale or transfer.
(126)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following items, which are
depreciated or amortized primarily on a straight-line basis over the estimated
useful lives shown below:
<TABLE>
<CAPTION>
December 31,
------------------ Estimated
1998 1997 Useful Lives
---- ---- ------------
<S> <C> <C> <C>
Communication transmission
and distribution systems:
Customer equipment ................. $ 537,066 $ 508,959 4 to 5 years
Headends ........................... 109,080 100,551 7 to 10 years
Multimedia ......................... 9,075 -- 10 years
Central office equipment ........... 87,203 60,672 10 years
Infrastructure ..................... 1,864,294 1,651,236 10 to 15 years
Program, service and test
equipment ......................... 372,644 282,635 2 to 10 years
Microwave equipment ................ 16,070 16,641 2 to 10 years
Construction in progress (including
materials and supplies) ........... 131,314 140,455 --
Furniture and fixtures ................. 191,607 128,442 1 to 12 years
Transportation equipment ............... 123,797 107,159 4 to 15 years
Building and building improvements ..... 159,166 156,254 23 to 40 years
Leasehold improvements ................. 131,492 70,991 Term of lease
Land and land improvements ............. 41,136 34,070 --
---------- ----------
3,773,944 3,258,065
Less accumulated depreciation and
amortization ......................... 1,663,105 1,426,898
---------- ----------
$2,110,839 $1,831,167
========== ==========
</TABLE>
NOTE 5. DEBT
Bank Debt
Restricted Group/TCI Systems
For financing purposes, the Company and certain of its subsidiaries are
collectively referred to as the "Restricted Group". In May 1998, the Company and
certain other subsidiaries of Parent entered into a new $2.8 billion reducing
revolving credit facility (the "Credit Agreement") with a group of banks led by
Toronto-Dominion (Texas), Inc. ("Toronto-Dominion"), as administrative and
arranging agent. This Credit Agreement replaced a $1.7 billion facility that was
also with a group of banks led by Toronto-Dominion.
The $2.8 billion reducing revolving credit facility, maturing in March 2007,
consists of a $1.4 billion CSC Holdings credit facility, a $1.4 billion MFR
credit facility of which $600,000 is
(127)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
available, and an $800,000 credit facility for certain unrestricted subsidiaries
of Parent acquired from TCI on March 4, 1998 ("TCI Systems"). While the $800,000
TCI Systems credit facility is in place, only $600,000 of the $1.4 billion MFR
facility may be utilized.
In July 1998, CSC Holdings' credit facility was reduced by $400,000 to $1.0
billion, and the MFR credit facility was reduced by $200,000 to $1.2 billion,
which includes a reduction of the TCI Systems credit facility by $100,000 to
$700,000.
The TCI Systems credit facility matures on April 4, 1999 and concurrent with the
transfer of the TCI Systems to CSC Holdings, which is expected to occur by April
4, 1999, the restriction on the MFR credit facility will be eliminated and the
borrowings under the MFR facility will increase by an amount equal to the
borrowings outstanding under the TCI Systems credit facility.
The total amount of bank debt outstanding under the Restricted Group Credit
Agreement at December 31, 1998 and 1997 was $887,226 and $1,328,098,
respectively. As of December 31, 1998, approximately $57,313 was restricted for
certain letters of credit issued on behalf of the Company.
Unrestricted and undrawn funds available to the Restricted Group under the
Credit Agreement amounted to approximately $572,687 at December 31, 1998. The
Credit Agreement contains certain financial covenants that may limit the
Restricted Group's ability to utilize all of the undrawn funds available
thereunder. The Credit Agreement contains various restrictive covenants, among
which are the maintenance of various financial ratios and tests, and limitations
on various payments, including preferred dividends and dividends on its common
stock. The Company was in compliance with the covenants of its Credit Agreement
at December 31, 1998.
Interest on outstanding amounts may be paid, at the option of the Company, based
on the prime rate or Eurodollar rate. The Company has entered into interest rate
swap agreements with several banks on a notional amount of $225,000 as of
December 31, 1998 whereby the Company pays a fixed rate of interest ranging from
5.94% to 8.00% and receives a variable rate ranging from 5.38% to 5.72%. The
Company enters into interest rate swap agreements to hedge against interest rate
risk, as required by its Credit Agreement, and therefore accounts for these
agreements as hedges of floating rate debt, whereby interest expense is recorded
using the revised rate, with any fees or other payments amortized as yield
adjustments. As of December 31, 1998, the interest rate swap agreements expire
at various times through the year 2000 and have a weighted average life of
approximately 11 months. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap agreements;
however, the Company does not anticipate nonperformance by the counterparties.
The weighted average interest rate on all bank indebtedness was 6.53% and 7.60%
on December 31, 1998 and 1997, respectively. The Company is also obligated to
pay fees from .1875% to .25% per annum on the unused loan commitment and from
.4% to 1.375% per annum on letters of credit issued under the Credit Agreement.
(128)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Unrestricted Group
U.S. Cable
U.S. Cable Television Group, L.P. ("U.S. Cable"), a subsidiary of the Company,
had a three year $175,000 revolving credit facility maturing on August 13, 1999.
As of December 31, 1997, U.S. Cable had outstanding borrowings under its
revolving credit facility of approximately $155,000. Amounts outstanding under
the facility bore interest at varying rates based upon the banks' base rate or
LIBOR rate, as defined in the loan agreement. The weighted average interest rate
was 7.1% on December 31, 1997. In January 1998, all remaining indebtedness of
U.S. Cable amounting to approximately $156,000 was repaid and its credit
agreement was terminated. The proceeds for such repayment came from the sale of
substantially all the assets of U.S. Cable.
Rainbow Media
In April 1997, Rainbow Media executed a new $300,000, three year credit facility
with Canadian Imperial Bank of Commerce and Toronto-Dominion as co-agents, and a
group of banks. Upon closing, approximately $172,000 was drawn to refinance, in
part, its previous $202,000 credit facility. The balance of the funds utilized
to fully repay the $202,000 facility and to repay $169,000 to the Restricted
Group came from a distribution by American Movie Classics Company. The Rainbow
Media revolving credit facility was amended in December 1997 which, among other
things, extended the maturity date to December 31, 2000. The credit facility
contains certain financial covenants that may limit Rainbow Media's ability to
utilize all the undrawn funds available thereunder, including covenants
requiring it to maintain certain financial ratios. The facility bears interest
at varying rates above the lead bank's base or Eurodollar rate depending on the
ratio of debt to borrower value, as defined in the credit agreement. The loan is
secured by a pledge of the Company's stock in Rainbow Media, a pledge of all of
the stock of all wholly-owned subsidiaries of Rainbow Media and is guaranteed by
the subsidiaries of Rainbow Media, as permitted.
At December 31, 1998 and 1997, Rainbow Media had outstanding borrowings of
$67,200 and $176,500, respectively, under its credit facility. Undrawn funds
available to Rainbow Media under the credit facility amounted to approximately
$12,800 at December 31, 1998.
The weighted average interest rate on Rainbow Media's bank debt was 7.7% and
7.8% on December 31, 1998 and 1997, respectively. The credit agreement contains
various restrictive covenants with which Rainbow Media was in compliance at
December 31, 1998.
American Movie Classics Company
In April 1997, American Movie Classics Company ("AMCC") put into place a new
$250,000 credit facility. The facility was comprised of a $200,000 term loan and
a $50,000 revolving loan.
(129)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The facility was used to make a $205,000 cash distribution to Rainbow Media,
refinance existing indebtedness and for general corporate purposes. In December
1997, the loan was amended, decreasing the term loan to $146,000 and increasing
the revolving loan to $100,000 ("AMCC Loan Agreement"). Both loans will mature
on March 31, 2004. Borrowings under the AMCC Loan Agreement bear interest at
varying rates above or at the lead bank's base or above the Eurodollar rate
depending on the ratio of debt to cash flow, as defined in the AMCC Loan
Agreement. At December 31, 1998 and 1997, the weighted average interest rate on
bank indebtedness was 6.1% and 6.8%, respectively. The term loan began
amortizing September 30, 1997 and requires quarterly amortization payments. The
revolving loan does not start to reduce until June 30, 2002. On December 31,
1998 and 1997, $128,000 and $143,000, respectively, was outstanding under the
term loan and $64,250 and $56,500, respectively, was outstanding under the
revolving loan. Substantially all of the assets of AMCC, amounting to
approximately $274,600 at December 31, 1998, have been pledged to secure the
borrowings under the AMCC Loan Agreement. The AMCC Loan Agreement contains
various restrictive covenants with which AMCC was in compliance at December 31,
1998.
Madison Square Garden
In June 1997, MSG entered into an $850,000 credit agreement (the "MSG Credit
Facility") with a group of banks led by Chase Manhattan Bank, as agent. The MSG
Credit Facility expires on December 31, 2004. MSG initially borrowed $650,000
and $149,000 under the term loan and revolver portions, respectively, of the MSG
Credit Facility. In December 1997, the facility was amended to increase the
revolver to $500,000 from $200,000. Also in December 1997, MSG repaid the term
loan of $650,000 with $450,000 contributed by RPP as described in Note 2 and
$200,000 of additional borrowings under the revolver. Loans under the MSG Credit
Facility bear interest at current market rates plus a margin based upon MSG's
consolidated leverage ratio. At December 31, 1998 and 1997, loans outstanding
amounted to $310,000 and $360,000, respectively, and bore interest at 6.038% and
6.785%, respectively. The MSG Credit Facility contains certain financial
covenants with which MSG was in compliance at December 31, 1998. The MSG Credit
Facility also contains certain convenants that may limit MSG's ability to
utilize all of the undrawn funds available thereunder.
In July 1997, a wholly-owned subsidiary of MSG borrowed $20,000 under promissory
notes with various lending institutions which bear interest at LIBOR plus a
margin (7.22% and 7.85% at December 31, 1998 and 1997, respectively) and mature
in July 2002.
Cablevision Electronics
In February 1998, Cablevision Electronics entered into a three year $130,000
revolving credit facility. Under the terms of the credit facility, the total
amount of borrowings available to Cablevision Electronics is subject to an
availability calculation based on a percentage of eligible inventory. The total
amount outstanding under the credit agreement at December 31, 1998 was
(130)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
approximately $44,542 and bore interest at 7.2%. As of December 31, 1998,
$30,197 was restricted for certain letters of credit issued on behalf of
Cablevision Electronics. Unrestricted and undrawn funds available amounted to
$54,403 on December 31, 1998 based on the level of inventory as of that date.
Borrowings under the credit agreement are secured by Cablevision Electronics'
assets. The credit agreement contains various restrictive covenants with which
Cablevision Electronics was in compliance at December 31, 1998.
Cablevision Cinemas
Cablevision Cinemas, LLC has a $15,000 revolving credit bank facility maturing
on June 30, 2003. As of December 31, 1998, there were no outstanding borrowings
under this bank facility.
Senior Debt
On December 30, 1997, the Company repaid $222,000 of A-R Cable's debt with
borrowings under CSC Holdings' Credit Facility in connection with the transfer
of certain cable systems from A-R Cable to the Restricted Group. A-R Cable had
outstanding borrowings of $112,500 at December 31, 1997, which was repaid in
1998.
Senior Notes and Debentures
In December 1998, the Company redeemed Clearview's 10-7/8% Senior Notes for
approximately $94,800 in cash. This payment included a premium of $11,200, a
consent fee of $3,600 and accrued interest of $48.
In July 1998, the Company issued $500,000 principal amount of 7-1/4% Senior
Notes due 2008 (the "2008 Notes") and $500,000 principal amount ($499,516
amortized amount at December 31, 1998) of 7-5/8 % Senior Debentures due 2018
(the "Debentures"). The Debentures were issued at a discount of $495. The 2008
Notes and Debentures are not redeemable by the Company prior to maturity.
In February 1998, the Company issued $300,000 principal amount of ($296,721
amortized amount at December 31, 1998) 7- 7/8% Senior Debentures due 2018 (the
"2018 Debentures"). The 2018 Debentures were issued at a discount of $3,429. The
2018 Debentures are not redeemable by the Company prior to maturity.
In December 1997, the Company issued $500,000 principal amount ($499,532 and
$499,475 amortized amount at December 31, 1998 and 1997, respectively) of 7-7/8%
Senior Notes due 2007 (the "2007 Notes"). The notes were issued at a discount of
$525. The 2007 Notes are not
(131)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
redeemable by the Company prior to maturity. The net proceeds were used to
reduce bank borrowings.
In August 1997, the Company issued $400,000 principal amount ($398,674 and
$398,549 amortized amount at December 31, 1998 and 1997, respectively) of 8-1/8%
Senior Debentures due 2009 (the "2009 Notes"). The 2009 Notes were issued at a
discount of $1,492. The 2009 Notes are not redeemable by the Company prior to
maturity. The net proceeds were used to reduce bank borrowings.
The indentures under which the senior notes and debentures were issued contain
various convenants, which are generally less restrictive than those contained in
the Company's Credit Agreement, with which the Company was in compliance at
December 31, 1998.
Subordinated Debentures
In May 1996, the Company issued $150,000 principal amount ($149,545 and $149,485
amortized amount at December 31, 1998 and 1997, respectively) of 9-7/8% Senior
Subordinated Notes due 2006 (the "2006 Notes") and $250,000 principal amount of
10-1/2% Senior Subordinated Debentures due 2016 (the "2016 Debentures"). The
2006 Notes are redeemable at the Company's option, in whole or in part, on May
15, 2001, May 15, 2002 and May 15, 2003 at the redemption price of 104.938%,
103.292% and 101.646%, respectively, of the principal amount and thereafter at
100% of the aggregate principal amount, in each case together with accrued
interest to the redemption date. The 2016 Debentures are redeemable at the
Company's option, in whole or in part, on May 15, 2006, May 15, 2007, May 15,
2008 and May 15, 2009, at the redemption price of 105.25%, 103.938%, 102.625%
and 101.313%, respectively, of the principal amount and thereafter at 100% of
the aggregate principal amount, in each case together with accrued interest to
the redemption date.
In November 1995, the Company issued $300,000 principal amount of 9-1/4% Senior
Subordinated Notes due 2005 (the "2005 Notes"). The 2005 Notes are redeemable at
the Company's option, in whole or in part, on November 1, 2000, November 1, 2001
and November 1, 2002 at the redemption price of 104.625%, 103.1% and 101.5%,
respectively, of the principal amount and thereafter at 100% of the principal
amount, in each case together with accrued interest to the redemption date.
In February 1993, the Company issued $200,000 face amount ($199,117 and $199,056
amortized amounts at December 31, 1998 and 1997, respectively) of its 9-7/8%
Senior Subordinated Debentures due 2013 (the "2013 Debentures"). The 2013
Debentures are redeemable, at the Company's option, on February 15, 2003,
February 15, 2004, February 15, 2005 and February 15, 2006 at the redemption
price of 104.80%, 103.60%, 102.40% and 101.20%, respectively, of the principal
amount and thereafter at the redemption price of 100% of the principal amount,
in each case together with accrued interest to the redemption date.
(132)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Also in 1993, the Company issued $150,000 face amount ($149,713 and $149,704
amortized amounts at December 31, 1998 and 1997, respectively) of its 9-7/8%
Senior Subordinated Debentures due 2023 (the "2023 Debentures"). The 2023
Debentures are redeemable, at the Company's option, on and after April 1, 2003
at the redemption price of 104.938% reducing ratably to 100% of the principal
amount on and after April 1, 2010, in each case together with accrued interest
to the redemption date.
The indentures under which the subordinated notes and debentures were issued
contain various covenants, which are generally less restrictive than those
contained in the Company's Credit Agreement and with which the Company was in
compliance at December 31, 1998.
Subordinated Notes Payable
In connection with certain acquisitions made in 1994, a subsidiary of the
Company issued promissory notes totaling $141,268 and the Company assumed $9,732
of promissory notes, both of which were repaid in June 1998.
Summary of Five Year Debt Maturities
Total amounts payable by the Company and its subsidiaries under its various debt
obligations, including capital leases, during the five years subsequent to
December 31, 1998 are as follows:
1999 $54,401
2000 98,354
2001 76,020
2002 56,265
2003 229,451
NOTE 6. PREFERRED STOCK
In February 1996, the Company issued 6,500,000 depositary shares, representing
65,000 shares of 11-1/8% Series L Redeemable Exchangeable Preferred Stock (the
"Series L Preferred Stock") with a liquidation preference of $650,000, which
were subsequently exchanged for Series M Redeemable Exchangeable Preferred Stock
(the "Series M Preferred Stock") on August 2, 1996 with terms identical to the
Series L Preferred Stock. Net proceeds were approximately $626,000. The
depositary shares are exchangeable, in whole but not in part, at the option of
the Company, for the Company's 11-1/8% Senior Subordinated Debentures due 2008.
The Company is required to redeem the Series M Preferred Stock on April 1, 2008
at a redemption price equal to the liquidation preference of $10,000 per share
plus accumulated and unpaid dividends. The Series M Preferred Stock is
redeemable at various redemption prices beginning at 105.563% at any time on or
after April 1, 2003, at the option of the Company, with accumulated and unpaid
dividends thereon to the
(133)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
date of redemption. Before April 1, 2001, dividends may, at the option of the
Company, be paid in cash or by issuing fully paid and nonassessable shares of
Series M Preferred Stock with an aggregate liquidation preference equal to the
amount of such dividends. On and after April 1, 2001, dividends must be paid in
cash. The Company satisfied its dividend requirements by issuing 9,263, 8,300
and 6,576 additional shares of Series M Preferred Stock in 1998, 1997 and 1996,
respectively.
In November 1995, the Company issued 13,800,000 depositary shares representing
1,380,000 shares of 8-1/2% Series I Cumulative Convertible Exchangeable
Preferred Stock (the "Series I Preferred Stock") with an aggregate liquidation
preference of $345,000. The depositary shares are convertible into shares of
Parent's Class A Common Stock, at any time after January 8, 1996 at the option
of the holder, at an initial conversion price of $16.86 per share (adjusted for
the two-for-one stock splits - see Note 1) of Parent's Class A Common Stock
subject to adjustment under certain conditions. Following the Holding Company
Reorganization referred to in Note 1, the depositary shares are convertible into
a comparable number of shares of Class A Common Stock of Parent. The Series I
Preferred Stock is exchangeable into 8-1/2% Convertible Subordinated Debentures
due 2007, at the option of the Company, in whole but not in part, on or after
January 1, 1998 at a rate of $25.00 principal amount of exchange debentures for
each depositary share. The Series I Preferred Stock is redeemable at the option
of the Company, in whole or in part, on November 1, 1999, November 1, 2000, and
November 1, 2001 and thereafter at 102.8%, 101.4% and 100.0%, respectively, of
the principal amount plus accrued and unpaid dividends thereon. The Company paid
a cash dividend of approximately $29,325 in each of 1998, 1997 and 1996.
In September 1995, the Company issued 2,500,000 shares of its $.01 par value
11-3/4% Series H Redeemable Exchangeable Preferred Stock (the "Series H
Preferred Stock") with an aggregate liquidation preference of $100 per share.
The Company is required to redeem the Series H Preferred Stock on October 1,
2007 at a redemption price per share equal to the liquidation preference of $100
per share, plus accrued and unpaid dividends thereon. Before October 1, 2000,
dividends may, at the option of the Company, be paid in cash or by issuing fully
paid and nonassessable shares of Series H Preferred Stock with an aggregate
liquidation preference equal to the amount of such dividends. On and after
October 1, 2000, dividends must be paid in cash. The terms of the Series H
Preferred Stock permit the Company, at its option, to exchange the Series H
Preferred Stock for the Company's 11-3/4% Senior Subordinated Debentures due
2007 in an aggregate principal amount equal to the aggregate liquidation
preference of the shares of Series H Preferred Stock. The Company satisfied its
dividend requirements by issuing 399,050, 355,415 and 317,549 additional shares
of Series H Preferred Stock in 1998, 1997 and 1996, respectively.
In January 1998, the Company redeemed all of its outstanding 8% Series C
Cumulative Preferred Stock ("Series C Preferred Stock") for cash of
approximately $9,400 in the aggregate for all outstanding shares, including
accrued dividends.
(134)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 7. INCOME TAXES
The Company, Parent and certain of its subsidiaries file consolidated federal
income tax returns. Effective April 1, 1997, as a result of the transaction
described in Note 2, Rainbow Media is no longer included in Parent's
consolidated federal income tax returns, but rather files a separate
consolidated federal income tax return with its subsidiaries. At December 31,
1998, the Company had consolidated net operating loss carry forwards of
approximately $880,000 and Rainbow Media had consolidated federal net operating
loss carry forwards of approximately $539,000. As a result of the Holding
Company Reorganization, described in Note 1 and the 1997 change in Rainbow
Media's ownership described in Note 2, Rainbow Media's loss carry forwards may
be subject to annual limitations on deductions.
The tax effects of temporary differences which give rise to significant portions
of deferred tax assets or liabilities and the corresponding valuation allowance
at December 31, 1998 and 1997 are as follows:
1998 1997
---- ----
Deferred Asset (Liability)
Depreciation and amortization $ 28,918 $ 67,234
Receivables from affiliates 23,406 18,681
Benefit plans 105,439 29,841
Allowance for doubtful accounts 5,980 5,538
Deferred gain (130,650) (131,460)
Benefits of tax loss carry forwards 596,175 601,983
Other (50) (58)
--------- ---------
Net deferred tax assets 629,218 591,759
Valuation allowance (629,218) (591,759)
--------- ---------
$ -- $ --
========= =========
The Company has provided a valuation allowance for the total amount of net
deferred tax assets since realization of these assets is not assured due
principally to the Company's history of operating losses.
NOTE 8. OPERATING LEASES
The Company leases certain office, production, transmission, theater and retail
store facilities under terms of leases expiring at various dates through 2023.
The leases generally provide for fixed annual rentals plus certain real estate
taxes and other costs. Rent expense for the years ended December 31, 1998, 1997
and 1996 amounted to $79,822, $26,773 and $22,195, respectively.
(135)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
In addition, the Company rents space on utility poles for its operations. The
Company's pole rental agreements are for varying terms, and management
anticipates renewals as they expire. Pole rental expense for the years ended
December 31, 1998, 1997 and 1996 amounted to approximately $9,855, $10,737 and
$8,585, respectively. The minimum future annual rentals for all operating leases
during the next five years, including pole rentals from January 1, 1999 through
December 31, 2003, and thereafter, at rates now in force are approximately:
1999, $91,822; 2000, $83,557; 2001, $79,538; 2002, $77,256; 2003, 74,905;
thereafter, $656,303.
NOTE 9. AFFILIATE TRANSACTIONS
The Company has affiliation agreements with certain cable television programming
companies, in which Rainbow Media directly or indirectly held varying ownership
interests during the three years ended December 31, 1998. Accordingly, the
Company recorded income (losses) of approximately $(31,851), $10,672 and
$(8,018) in 1998, 1997 and 1996, respectively, representing its percentage
interests in the results of operations of these programming companies. At
December 31, 1998, the Company's net deficit investment in these programming
companies amounted to approximately $338. At December 31, 1997, the Company's
investment in these programming companies amounted to approximately $29,644.
Costs incurred by the Company for programming services provided by these
non-consolidated affiliates and included in operating expense for the years
ended December 31, 1998, 1997 and 1996 amounted to approximately $2,298, $16,581
and $37,610, respectively. At December 31, 1998 and 1997 amounts due to certain
of these affiliates, primarily for programming services provided to the Company,
aggregated $3,644 and $7,978, respectively, and are included in accounts
payable. At December 31, 1998 and 1997, amounts due from certain of these
programming affiliates aggregated $13,112 and $2,335, respectively, and are
included in advances to affiliates.
In 1992, the Company acquired from Mr. Dolan substantially all of the interests
in Cablevision of New York City ("CNYC") that it did not previously own. Mr.
Dolan remained a 1% partner in CNYC and was entitled to certain preferential
payments. The total amount owed to Mr. Dolan at December 31, 1997 amounted to
approximately $197,183. In 1998, the Company paid all amounts due Mr. Dolan.
During 1998, 1997 and 1996, the Company made advances to or incurred costs on
behalf of other affiliates engaged in providing cable television, cable
television programming, and related services. Amounts due from these affiliates
amounted to $310 and $2,599 at December 31, 1998 and 1997, respectively and are
included in advances to affiliates.
In October 1997, the Company entered into an agreement with At Home Corporation
("@Home") and certain of its shareholders, pursuant to which the Company agreed
to enter into agreements for the distribution of the @Home service over the
Company's cable television systems on the same terms and conditions as @Home's
founding partners, TCI, Comcast Corporation and Cox Communications, Inc. The
Company received a warrant to purchase 7,875,784 shares of @Home's
(136)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Series A Common Stock at an exercise price of $.50 per share. Additionally, in
1998 a warrant to purchase 2,355,514 shares of @Home's Series A Common Stock at
$.50 per share was received in connection with Parent's acquisition of certain
cable television systems from TCI. The @Home network distributes high-speed
interactive services to residences and businesses using its own network
architecture and a variety of transport options, including the cable industry's
hybrid fiber coaxial infrastructure.
The aggregate fair market value of the warrants received of $248,134, as
determined by independent appraisals, has been recorded in investments in
affiliates in the accompanying consolidated balance sheets. The difference
between the appraised value of the warrants and the price paid has been recorded
as deferred revenue and is being amortized to income over the period which the
Company is obligated to provide the necessary services to @Home. In 1998, the
Company recorded $35,821 of revenue relating to this transaction.
Prior to their acquisition by the Company, the operations of several cable
systems were managed by the Company for a fee equal to 3-1/2% of gross receipts,
as defined, plus reimbursement of certain costs and an allocation of certain
selling, general and administrative expenses. In certain cases, interest was
charged on unpaid amounts. For 1997 and 1996, such management fees, expenses and
interest amounted to approximately $5,973 and $12,436, respectively, of which
$7,724 was reserved by the Company in 1996.
The Company managed the properties of U.S. Cable until its acquisition in August
1996, under management agreements that provided for cost reimbursement,
including an allocation of overhead charges. For 1996, such cost reimbursement
amounted to $2,396.
In August 1996, the Company entered into an agreement with NorthCoast Operating
Co., Inc. ("NorthCoast") and certain of its affiliates, to form a limited
liability company (the "LLC") to participate in the auctions conducted by the
Federal Communications Commission ("FCC") for certain licenses to conduct a
personal communications service ("PCS") business. The Company has contributed an
aggregate of approximately $38,000 to the LLC (either directly or through a loan
to NorthCoast) and holds a 49.9% interest in the LLC and certain preferential
distribution rights. The Company recorded a loss of $5,517 in 1998, representing
its share of the losses of the LLC. NorthCoast is a Delaware corporation
controlled by John Dolan. John Dolan is a nephew of Mr. Dolan and a cousin of
James Dolan.
In 1996, Rainbow Media invested in a joint venture formed with a subsidiary of
Loral Space and Communications, Ltd. for the purpose of exploiting certain
direct broadcast satellite ("DBS") frequencies. Rainbow Media's investment
amounted to $14,913, $12,867 and $5,756 at December 31, 1998, 1997 and 1996,
respectively. Rainbow Media also contributed to the joint venture its interest
in certain agreements with the licensee of such frequencies.
(137)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 10. BENEFIT PLANS
The Company maintains the CSSC Supplemental Benefit Plan (the "Supplemental
Plan") for the benefit of certain officers and employees of the Company. As part
of the Supplemental Plan, the Company established a nonqualified defined benefit
pension plan, which provides that, upon attaining normal retirement age, a
participant will receive a benefit equal to a specified percentage of the
participant's average compensation, as defined. All participants are 100% vested
in the Supplemental Plan. Net periodic pension cost for the years ended December
31, 1998, 1997 and 1996 was negligible. At December 31, 1998 and 1997, the fair
value of Supplemental Plan assets exceeded the projected benefit obligation by
approximately $2,688 and $2,135 respectively.
Effective January 1, 1998, the Company established a Cash Balance Retirement
Plan (the "Retirement Plan"), which replaced the Company's former money purchase
pension plan. Under the Retirement Plan, the Company will credit a certain
percentage of eligible base pay into an account established for each employee
which will earn a market based rate of return annually.
The Company also maintains a 401(k) savings plan, pursuant to which an employee
can contribute a percentage of eligible annual compensation, as defined. The
Company also makes matching contributions for a portion of employee
contributions to the 401(k) savings plan.
The cost associated with the Retirement Plan, the money purchase pension plan
and the 401(k) savings plan was approximately $9,272, $7,445 and $5,565 for the
years ended December 31, 1998, 1997 and 1996, respectively.
MSG sponsors several non-contributory pension plans covering MSG's employees.
Benefits payable to retirees under these plans are based upon years of service
and participant's compensation and are funded through trusts established under
the plans. Plan assets are invested primarily in common stocks, bonds, United
States government securities and cash. At December 31, 1998 and 1997, the
accrued pension liability amounted to $8,883 and $7,796, respectively, and for
the years ended December 31, 1998 and 1997, net periodic pension cost amounted
to $2,254 and $1,613, respectively.
MSG also sponsors a welfare plan which provides certain postretirement health
care and life insurance benefits to certain employees and their dependents who
are eligible for early or normal retirement under MSG's retirement plan. The
welfare plan is insured through a managed care provider and MSG funds these
benefits with premium payments. For the years ended December 31, 1998 and 1997,
the periodic postretirement benefit cost amounted to $84 and $133, respectively,
and the accrued postretirement benefit obligation amounted to $6,087 and $6,036,
respectively.
(138)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 11. STOCK BENEFIT PLANS
Parent has Employee Stock Plans (the "Stock Plans") under which it is authorized
to issue incentive stock options, nonqualified stock options, restricted stock,
conjunctive stock appreciation rights, stock grants and stock bonus awards. The
exercise price of stock options can not be less than the fair market value per
share of Parent's Class A Common Stock on the date the option was granted and
the options expire no longer than ten years from date of grant. Conjunctive
stock appreciation rights permit the employee to elect to receive payment in
cash, either in lieu of the right to exercise such option or in addition to the
stock received upon the exercise of such option, in an amount equal to the
difference between the fair market value of the stock as of the date the right
is exercised, and the exercise price.
Under the Stock Plans, employees of the Company have received stock awards,
bonus awards, stock appreciation rights and cash payments made for certain
executive stock options. As a result the Company recorded (income)/expense of
approximately $137,554, $64,361 and $(8,558) in 1998, 1997 and 1996,
respectively. These amounts reflect vesting schedules for applicable grants as
well as fluctuations in the market price of Parent's Class A Common Stock.
NOTE 12. COMMITMENTS AND CONTINGENCIES
The Company, through Rainbow Media, has entered into several contracts,
including rights agreements, with professional sports teams and others relating
to cable television programming. In addition, Rainbow Media, through MSG has
employment agreements with both players and coaches of its professional sports
teams. Certain of these contracts, which provide for payments that are
guaranteed regardless of employee injury or termination, are covered by
disability insurance if certain conditions are met. Future cash payments
required under these contracts as of December 31, 1998 are as follows:
1999 $ 229,933
2000 217,752
2001 153,717
2002 113,925
2003 98,150
Thereafter 1,093,373
----------
Total $1,906,850
==========
The Company and its cable television affiliates have an affiliation agreement
with a program supplier whereby the Company is obligated to make base rate
annual payments, as defined and subject to certain adjustments pursuant to the
agreement, through 2004. The Company would be contingently liable for its
proportionate share of the base rate annual payments, based on subscriber usage,
of approximately $12,890 in 1999 and for the years 2000 through 2004 such
payments would increase by percentage increases in the Consumer Price Index, or
five percent, whichever is less, over the prior year's base rate annual payment.
(139)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 13. OTHER MATTERS
The Company is party to various lawsuits, some involving substantial amounts.
Management does not believe that the resolution of these lawsuits will have a
material adverse impact on the financial position of the Company.
NOTE 14. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Cash Equivalents, Accounts Receivable Trade, Notes and Other
Receivables, Prepaid Expenses and Other Assets, Advances to Affiliates, Accounts
Payable, Accrued Liabilities, Accounts Payable to Affiliates, Feature Film and
Contract Obligations, and Obligation to Related Party.
The carrying amount approximates fair value due to the short maturity of these
instruments.
At Home Warrants
The fair value of the At Home warrants has been determined by an independent
investment advisor.
Bank Debt, Senior Debt, Senior Notes and Debentures, Subordinated Notes and
Debentures, Subordinated Notes Payable and Redeemable Exchangeable Preferred
Stock
The fair values of each of the Company's long-term debt instruments and
redeemable preferred stock are based on quoted market prices for the same or
similar issues or on the current rates offered to the Company for instruments of
the same remaining maturities.
Interest Rate Swap Agreements
The fair values of interest rate swap and cap agreements are obtained from
dealer quotes. These values represent the estimated amount the Company would
receive or pay to terminate agreements, taking into consideration current
interest rates and the current creditworthiness of the counterparties.
(140)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
The fair value of the Company's financial instruments are summarized as follows:
December 31, 1998
-----------------
Carrying Estimated
Amount Fair Value
------ ----------
At Home warrants $ 248,134 $ 755,479
========== ==========
Long term debt instruments:
Bank debt $1,528,549 $1,528,549
Senior notes and debentures 2,194,443 2,271,340
Subordinated notes and debentures 1,048,375 1,168,375
Redeemable exchangeable preferred stock 1,256,339 1,417,241
---------- ----------
$6,027,706 $6,385,505
========== ==========
Interest rate swap agreements:
In a net payable position $ -- $ 4,116
========== ==========
December 31, 1997
-----------------
Carrying Estimated
Amount Fair Value
------ ----------
Long term debt instruments:
Bank debt $2,240,358 $2,240,358
Senior debt 112,500 112,500
Senior notes and debentures 898,024 919,125
Subordinated notes and debentures 1,048,245 1,158,750
Subordinated notes payable 151,000 148,300
Redeemable exchangeable preferred stock 1,123,808 1,307,750
---------- ----------
$5,573,935 $5,886,783
========== ==========
Interest rate swap agreements:
In a net payable position $ -- $ 3,141
========== ==========
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
NOTE 15. SEGMENT INFORMATION
The Company classifies its business interests into three fundamental areas:
Telecommunication Services, consisting principally of its cable television,
telephone and modem services operations; Rainbow Media, consisting principally
of interests in cable television programming networks and MSG, which owns and
operates professional sports teams, regional cable television
(141)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
networks, live productions and entertainment venues; and Retail Electronics,
which represents the operations of Cablevision Electronics' retail electronics
stores.
The Company's reportable segments are strategic business units that are managed
separately . The Company evaluates segment performance based on several factors,
of which the primary financial measure is business segment adjusted operating
cash flow (defined as operating income (loss) before depreciation and
amortization and incentive stock plan expense). The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. Intersegment sales are accounted for at fair value as if
the sales were to third parties. Information as to the operations of the
Company's business segments is set forth below.
Years Ended December 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
Revenues
Telecommunication Services ...... $ 1,513,393 $ 1,366,668 $ 1,096,634
Rainbow Media ................... 1,007,639 637,648 241,911
Retail Electronics .............. 464,388 -- --
All Other ....................... 6,614 1,707 3,473
Intersegment Elimination ........ (79,615) (56,665) (26,876)
----------- ----------- -----------
Total ................... $ 2,912,419 $ 1,949,358 $ 1,315,142
=========== =========== ===========
Years Ended December 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
Adjusted Operating Cash Flow
Telecommunication Services ...... $ 599,257 $ 545,927 $ 434,904
Rainbow Media ................... 135,259 101,122 21,294
Retail Electronics .............. (19,737) -- --
All Other ....................... (9,376) (1,704) (1,362)
--------- --------- ---------
Total ................... $ 705,403 $ 645,345 $ 454,836
========= ========= =========
(142)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Assets
Telecommunication Services ............ $ 3,035,212 $ 2,927,640 $ 2,719,091
Rainbow Media ......................... 2,720,127 2,838,987 738,851
Retail Electronics .................... 199,194 -- --
Other ................................. 253,564 10,270 8,802
Corporate and intersegment eliminations (272,237) (162,109) (432,019)
----------- ----------- -----------
Total ......................... $ 5,935,860 $ 5,614,788 $ 3,034,725
=========== =========== ===========
</TABLE>
A reconciliation of reportable segment amounts to the Company's consolidated
balances is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenue
Total revenue for reportable segments ................ $ 2,985,420 $ 2,004,316 $ 1,338,545
Other revenue and intersegment eliminations .......... (73,001) (54,958) (23,403)
----------- ----------- -----------
Total consolidated revenue ...................... $ 2,912,419 $ 1,949,358 $ 1,315,142
=========== =========== ===========
Adjusted Operating Cash Flow to Net Loss
Total adjusted operating cash flow for
reportable segments ............................. 714,779 647,049 456,198
Other adjusted operating cash flow deficit ........... (9,376) (1,704) (1,362)
Items excluded from adjusted operating cash flow
Depreciation and amortization ................... (577,635) (499,809) (388,982)
Incentive stock plan (expense) income ........... (137,554) (64,361) 8,558
Interest expense ................................ (393,008) (368,700) (268,177)
Interest income ................................. 23,936 5,492 3,162
Share of affiliates' net loss ................... (37,368) (27,165) (82,028)
Gain on sale of programming interests and
cable assets, net .......................... 171,127 372,053 --
Gain on redemption of subsidiary preferred stock -- 181,738 --
Write off of deferred interest and financing
costs ...................................... (23,482) (24,547) (37,784)
Provision for preferential payment to related
party ...................................... (980) (10,083) (5,600)
Minority interests .............................. 48,378 (60,694) (9,417)
Miscellaneous, net .............................. (18,350) (12,606) (6,647)
----------- ----------- -----------
Net income (loss) ..................... $ (239,533) $ 136,663 $ (332,079)
=========== =========== ===========
</TABLE>
(143)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
Substantially all revenues and assets of the Company's reportable segments are
attributed to or located in the United States.
The Company does not have a single external customer which represents 10 percent
or more of its consolidated revenues.
(144)
<PAGE>
CSC HOLDINGS, INC. AND SUBSIDIARIES
(formerly Cablevision Systems Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(continued)
NOTE 16. INTERIM FINANCIAL INFORMATION (Unaudited)
The following is a summary of selected quarterly financial data for the years
ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
MARCH 31, JUNE 30, SEPTEMBER 30,
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................... $ 645,382 $ 358,549 $ 700,352 $ 438,516 $ 697,866 $ 517,930
Operating expenses ........... 656,249 344,271 687,465 433,359 692,571 501,057
----------- ----------- ----------- ----------- ----------- -----------
Operating profit (loss) ...... $ (10,867) $ 14,278 $ 12,887 $ 5,157 $ 5,295 $ 16,873
=========== =========== =========== =========== =========== ===========
Net income (loss)
applicable to common
shareholder ................ $ (23,461) $ (111,921) $ (116,774) $ (128,776) $ (113,083) $ 46,454
=========== =========== =========== =========== =========== ===========
Basic net income (loss) per
common share ............... -- $ (1.13) -- $ (1.30) -- $ .47
=========== =========== =========== =========== =========== ===========
Diluted net income (loss) per
common share ............... -- $ (1.13) -- $ (1.30) -- $ .44
=========== =========== =========== =========== =========== ===========
<CAPTION>
DECEMBER 31, TOTAL
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues...................... $ 868,819 $ 634,363 $ 2,912,419 $ 1,949,358
Operating expenses ........... 885,920 589,496 2,922,205 1,868,183
----------- ----------- ----------- -----------
Operating profit (loss) ...... $ (17,101) $ 44,867 $ (9,786) $ 81,175
=========== =========== =========== ===========
Net income (loss)
applicable to common
shareholder ................ $ (148,087) $ 182,139 $ (401,405) $ (12,104)
=========== =========== =========== ===========
Basic net income (loss) per
common share ............... -- $ 1.82 -- $ (.12)
=========== =========== =========== ===========
Diluted net income (loss) per
common share ............... -- $ 1.53 -- $ (.12)
=========== =========== =========== ===========
</TABLE>
(145)
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial disclosure.
None.
PART III
The information called for by Item 401 of Regulation S-K under Item 10,
Directors and Executive Officers of the Registrant, Item 11, Executive
Compensation, Item 12, Security Ownership of Certain Beneficial Owners and
Management and Item 13, Certain Relationships and Related Transactions, is
hereby incorporated by reference to Cablevision Parent's definitive proxy
statement for its Annual Meeting of Shareholders anticipated to be held in June
1999 or if such definitive proxy statement is not filed with the Commission
prior to April 30, 1999, to an amendment to this report on Form 10-K filed under
cover of Form 10-K/A.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Pursuant to regulations promulgated by the Securities and Exchange Commission,
the Company is required to identify, based solely on a review of reports filed
under Section 16(a) of the Securities Exchange Act of 1934, each person who, at
any time during its fiscal year ended December 31, 1998, was a director, officer
or beneficial owner of more than ten percent of the Company's Class A Common
Stock that failed to file on a timely basis any such reports. Based on such
review, the Company is aware of no such failure.
PART IV
Item 14. Exhibits, Financial Statements, Financial Statement Schedule, and
Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. The financial statements as indicated in the index set forth on page
69.
2. Financial Statement schedule:
Page
No.
---
Schedule supporting consolidated financial statements:
Schedule II - Valuation and Qualifying Accounts.............. 147
Schedules other than that listed above have been omitted, since they are either
not applicable, not required or the information is included elsewhere herein.
3. The Index to Exhibits is on page 150.
(b) Reports on Form 8-K:
Cablevision Systems Corporation has not filed any current reports on Form 8-K
with the Commission during the last quarter of the fiscal period covered by this
report.
CSC Holdings, Inc. has not filed any current reports on Form 8-K with the
Commission during the last quarter of the fiscal period covered by this report.
(146)
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Cablevision Systems Corporation
<TABLE>
<CAPTION>
Balance at
Beginning Charged to Costs Charged to Deductions Balance at
of Period and Expenses Other Accounts Write-Offs End of Period
--------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1998
Allowance for doubtful
accounts................ $29,584 $32,110 $ - $(27,317) $34,377
======= ======= ========= ======== =======
Year Ended December 31, 1997
Allowance for doubtful
accounts................ $12,955 $26,283 $ - $ (9,654) $29,584
======= ======= ========== ========= =======
Year Ended December 31, 1996
Allowance for doubtful
accounts................ $12,678 $18,489 $ - $(18,212) $12,955
======= ======= ========== ======== =======
<CAPTION>
CSC Holdings, Inc.
Balance at
Beginning Charged to Costs Charged to Deductions Balance at
of Period and Expenses Other Accounts Write-Offs End of Period
--------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1998
Allowance for doubtful
accounts................ $29,584 $28,897 $ - $(26,571) $31,910
======= ======= =========== ======== =======
Year Ended December 31, 1997
Allowance for doubtful
accounts................ $12,955 $26,283 $ - $ (9,654) $29,584
======= ======= ========== ========= =======
Year Ended December 31, 1996
Allowance for doubtful
accounts................ $12,678 $18,489 $ - $(18,212) $12,955
======= ======= ========== ======== =======
</TABLE>
(147)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on the 30th day of
March, 1999.
Cablevision Systems Corporation
CSC Holdings, Inc.
By: /s/ William J. Bell
--------------------------
Name: William J. Bell
Title: Vice Chairman
(Cablevision Systems
Corporation and CSC
Holdings, Inc.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Marc A. Lustgarten and Robert S. Lemle, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him in his name, place and stead, in any
and all capacities, to sign this report, and file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons in the capacities and
on the dates indicated on behalf of each of the Registrants.
Name Title Date
---- ----- ----
/s/ James L. Dolan Chief Executive Officer and Director March 30, 1999
- - ------------------------- (Principal Executive Officer)
James L. Dolan
/s/ William J. Bell Vice Chairman and Director March 30, 1999
- - ------------------------- (Principal Financial Officer)
William J. Bell
/s/ Andrew B. Rosengard Executive Vice President March 30, 1999
- - ------------------------- Financial Planning and Controller
Andrew B. Rosengard (Principal Accounting Officer)
(148)
<PAGE>
SIGNATURES
(continued)
/s/ Charles F. Dolan Chairman of the Board of Directors March 30, 1999
- - -------------------------
Charles F. Dolan
/s/ Marc A. Lustgarten Vice Chairman and Director March 30, 1999
- - -------------------------
Marc A. Lustgarten
/s/ Robert S. Lemle Executive Vice President, General March 30, 1999
- - ------------------------- Counsel, Secretary and Director
Robert S. Lemle
/s/ Sheila A. Mahony Senior Vice President and Director March 30, 1999
- - -------------------------
Sheila A. Mahony
/s/ Thomas C. Dolan Senior Vice President and March 30, 1999
- - ------------------------- Chief Information Officer
Thomas C. Dolan and Director
/s/ John Tatta Director and Chairman of the March 30, 1999
- - ------------------------- Executive Committee
John Tatta
/s/ Patrick F. Dolan Director March 30, 1999
- - -------------------------
Patrick F. Dolan
/s/ Charles D. Ferris Director March 30, 1999
- - -------------------------
Charles D. Ferris
Director March 30, 1999
- - -------------------------
Richard H. Hochman
/s/ Victor Oristano Director March 30, 1999
- - -------------------------
Victor Oristano
Director March 30, 1999
- - -------------------------
Vincent Tese
/s/ John C. Malone Director March 30, 1999
- - -------------------------
John C. Malone
/s/ Leo J. Hindery, Jr. Director March 30, 1999
- - -------------------------
Leo J. Hindery, Jr.
(149)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
3.1 Amended and Restated Certificate of Incorporation of Cablevision
Parent (incorporated herein by reference to Exhibit 3.1 to
Cablevision Parent's Registration Statement on Form S-4, dated
January 20, 1998, File No. 333-44547 (the "S-4")).
3.2 Bylaws of Cablevision Parent (incorporated herein by reference to
Exhibit 3.2 to the S-4).
3.3 Certificate of Incorporation of CSC Holdings, Inc. (incorporated
herein by reference to Exhibits 3.1A(i) and 3.1A(ii) to CSC
Holdings' Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 (the "1989 10-K")).
3.4 Amendment to By-laws and complete copy of amended and restated
By-laws of CSC Holdings, Inc. (incorporated herein by reference to
Exhibit 3.2D to CSC Holdings' Registration Statement on Form S-4,
File No. 33-62717).
4.1 Certificate of Designations for CSC Holdings' Series H Redeemable
Exchangeable Preferred Stock (incorporated by reference to Exhibit
4.1E to CSC Holdings' Registration Statement on Form S-4,
Registration No. 33-63691).
4.2 Certificate of Designations for CSC Holdings' Series I Cumulative
Convertible Exchangeable Preferred Stock (incorporated by reference
to Exhibit 99.3 to CSC Holdings' Current Report on Form 8-K (File
No. 1-9046) filed November 7, 1995).
4.3 Certificate of Designations for CSC Holdings' Series M Redeemable
Exchangeable Preferred Stock (incorporated by reference to Exhibit
4.1(f) to CSC Holdings' Registration Statement on Form S-4,
Registration No. 333-00527).
4.4 Indenture dated as of December 1, 1997 relating to CSC Holdings'
$500,000,000 7 7/8% Senior Notes due 2007 (incorporated herein by
reference to Exhibit 4.4 to the S-4).
4.5 Indenture dated as of February 15, 1993 relating to CSC Holdings'
$200,000,000 9 7/8% Senior Subordinated Debentures due February 15,
2013 (incorporated herein by reference to Exhibit 4.3 to the 1992
10-K).
4.6 Indenture dated as of April 1, 1993 relating to CSC Holdings'
$150,000,000 9 7/8% Senior Subordinated Debentures due 2023
(incorporated by reference to CSC Holdings' Registration Statement
on Form S-4, Registration No. 33-61814).
4.7 Supplemental Indenture dated as of November 1, 1995 between CSC
Holdings and the Bank of New York, Trustee to the Indenture dated
November 1, 1995 (incorporated by reference to Exhibit 99.6 to CSC
Holdings' Current Report on Form 8-K (File No. 1-9046), filed
November 1, 1995).
(150)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
4.8 Indenture dated August 15, 1997 relating to CSC Holdings'
$400,000,000 8 1/8% Senior Debentures due 2009 (incorporated herein
by reference to CSC Holdings' Registration Statement on Form S-4,
Registration No. 333-38013).
4.9 Indenture dated as of November 1, 1995 relating to CSC Holdings'
$150,000,000 9 7/8% Senior Subordinated Notes due 2006, $300,000,000
9 1/4% Senior Subordinated Notes due 2005 and $250,000,000 10 1/2%
Senior Subordinated Debentures due 2016 (incorporated by reference
to Exhibit 99.6 to CSC Holdings' Current Report on Form 8-K filed
November 1, 1995).
4.10 Senior Indenture (incorporated by reference to Exhibit 4.1 to CSC
Holdings' Registration Statement on Form S-3, Registration No.
333-57407).
4.11 Subordinated Indenture (incorporated by reference to Exhibit 4.2 to
CSC Holdings' Registration Statement on Form S-3, Registration No.
333-57407).
10.1 Registration Rights Agreement between CSC Systems Company and CSC
Holdings (incorporated herein by reference to Exhibit 10.1 of CSC
Holdings' Registration Statement on Form S-1, Registration No.
033-01936 ("CSC Holdings' Form S-1")).
10.2 Registration Rights Agreement between Cablevision Company and CSC
Holdings (incorporated herein by reference to Exhibit 10.2 to CSC
Holdings' Form S-1).
10.3 Form of Right of First Refusal Agreement between Dolan and CSC
Holdings (incorporated herein by reference to Exhibit 10.4 to CSC
Holdings' Form S-1).
10.4 Supplemental Benefit Plan of CSC Holdings (incorporated herein by
reference to Exhibit 10.7 to CSC Holdings' Form S-1).
10.5 Cablevision Money Purchase Pension Plan, and Trust Agreement dated
as of December 1, 1983 between Cablevision Systems Development
Company and Dolan and Tatta, as Trustees (incorporated herein by
reference to Exhibit 10.8 to CSC Holdings' Form S-1).
10.6 Amendment to the Cablevision Money Purchase Pension Plan adopted
November 6, 1992 (incorporated herein by reference to Exhibit 10.6A
to the 1992 10-K).
10.7 Employment Agreement between Charles F. Dolan and CSC Holdings dated
January 27, 1986 (incorporated herein by reference to Exhibit 10.9
to CSC Holdings' Form S-1).
10.8 Cablevision Amended and Restated Employee Stock Plan (incorporated
herein by reference to Exhibit 10.46 to the 1992 10-K).
(151)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.9 Cablevision 401(k) Savings Plan (incorporated herein by reference to
Exhibit 10.47 to the 1992 10-K).
10.10 Acquisition Agreement and Plan of Merger and Reorganization, dated
as of June 14, 1994, among Cablevision of Boston Limited
Partnership, Cablevision of Boston, Inc., Charles F. Dolan,
Cablevision Systems Boston Corporation, CSC Holdings, COB, Inc.,
Cablevision Systems Services Corporation and Cablevision Finance
Limited Partnership (incorporated herein by reference to Exhibit
10.59 to the June 1994 10-Q).
10.11 Agreement and undertaking, dated as of March 10, 1995 from MSG
Holdings, LP, MSG Eden Corporation, CSC Holdings, Rainbow
Programming Holdings, Inc., Rainbow Garden Corporation, Garden L.P.
Holdings Corp., ITT Corporation, ITT Eden Corp. in favor of the
National Basketball Association (the "NBA"), the member terms of the
NBA, NBA Properties, Inc., the NBA Market Extension Partnership and
Planet Insurance, Ltd. (incorporated herein by reference to Exhibit
10.66 to the 1994 10-K).
10.12 Consent Agreement, dated as of March 10, 1995 by and among the
National Hockey League, MSG Holdings, L.P., MSG Eden Corporation,
ITT Eden Corporation, ITT MSG Inc., ITT Corporation, Garden L.P.
Holdings Corp., Rainbow Garden Corporation, Rainbow Programming
Holdings Inc. and CSC Holdings (incorporated herein by reference to
Exhibit 10.67 to the 1994 10-K).
10.13 Amendment to consulting agreement dated as of November 28, 1994
between CSC Holdings and John Tatta (incorporated herein by
reference to Exhibit 10.68 to the 1994 10-K).
10.14 Employment Agreement, dated as of November 30, 1994, between CSC
Holdings and William J. Bell (incorporated herein by reference to
Exhibit 10.69 to the 1994 10-K).
10.15 Employment Agreement, dated as of November 30, 1994, between CSC
Holdings and Marc A. Lustgarten (incorporated herein by reference to
Exhibit 10.70 to the 1994 10-K).
10.16 Employment Agreement, dated as of November 30, 1994, between CSC
Holdings and Robert S. Lemle (incorporated herein by reference to
Exhibit 10.71 to the 1994 10-K).
10.17 Cablevision Parent Employee Stock Plan (incorporated herein by
reference to Exhibit 10.40 to the S-4).
10.18 Cablevision Parent Long-Term Incentive Plan (incorporated herein by
reference to Exhibit 10.41 to the S-4).
(152)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.19 Cablevision Systems Corporation 1996 Non-Employee Directors Stock
Option Plan (incorporated by reference to CSC Holdings' 1996
Definitive Proxy Statement).
10.20 Agreement, dated February 4, 1996, among CSC Holdings, Rainbow
Programming Holdings, Inc. and ITT Corporation (incorporated herein
by reference to Exhibit 10.74 to the September 1996 10-Q).
10.21 Master Stock Purchase Agreement, dated as of May 10, 1996, between
Warburg Pincus Investors, L.P., a Delaware limited partnership, and
CSC Holdings (incorporated by reference to Exhibit 99 to CSC
Holdings' Current Report on Form 8-K (File No. 1-9046) dated May 10,
1996).
10.22 Letter, dated March 6, 1997, among ITT MSG Inc., ITT Eden Corp.,
Rainbow Garden Corp. and Garden L.P. Holding Corp. (incorporated by
reference to Exhibit 99.2 of CSC Holdings' Current Report on Form
8-K (File No. 1-9046) dated March 6, 1997).
10.23 Letter, dated November 25, 1997, from CSC Holdings to Charles F.
Dolan (incorporated herein by reference to Exhibit 10.49 to the
S-4).
10.24 Form of Guarantee and Indemnification Agreement among Charles F.
Dolan, the Registrant and officers and directors of the Registrant
(incorporated herein by reference to Exhibit 28 to CSC Holdings'
Form S-1).
10.25 Partnership Interest Transfer Agreement, among ITT Corporation, ITT
Eden Corporation, ITT MSG, Inc., CSC Holdings, Rainbow Media
Holdings, Inc., Rainbow Garden Corp., Garden L.P. Holding Corp., MSG
Eden Corporation and Madison Square Garden, L.P., dated as of April
15, 1997. (incorporated by reference to Exhibit 2(a) of CSC
Holdings' Current Report on Form 8-K (File No. 1-9046) dated April
18, 1997 (the "April 1997 8-K")).
10.26 Amendment No. 1 to Partnership Interest Transfer Agreement, dated as
of March 16, 1999.
10.27 Amended and Restated Agreement of Limited Partnership of Madison
Square Garden, L.P., among MSG Eden Corporation, ITT MSG Inc. and
Garden L.P. Holding Corp., dated as of April 15, 1997. (incorporated
by reference to Exhibit 2(b) of the April 1997 8-K).
10.28 SportsChannel Contribution Agreement, among Rainbow Media Holdings,
Inc., Garden L.P. Holding Corp., Rainbow Garden Corp., SportsChannel
New York Holding Partnership, SportsChannel Associates Holding
Corporation, MSG Eden Corporation, ITT MSG Inc., ITT Eden
Corporation, and Madison Square Garden, L.P., dated as of April 15,
1997. (incorporated by reference to Exhibit 2(c) of the April 1997
8-K).
(153)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.29 Aircraft Contribution Agreement, among Garden L.P. Holding Corp.,
MSG Eden Corporation, ITT MSG Inc., ITT Flight Operations, Inc., and
Madison Square Garden, L.P., dated as of April 15, 1997.
(incorporated by reference to Exhibit 2(d) of the April 1997 8-K).
10.30 Formation Agreement, dated as of June 22, 1997, among Rainbow Media
Sports Holdings, Inc. and Fox Sports Net, LLC, attaching Partners)
and Annex B (Partnership Agreement of National Sports Partners).
(incorporated by reference to Exhibit 99.1 of the April 1997 8-K).
10.31 Lease Agreement between Nassau Cable Business Trust, as Landlord and
CSC Holdings, as Tenant, dated as of November 1, 1997 (incorporated
herein by reference to Exhibit 10.56 to the S-4).
10.32 Letter Agreement and Term Sheet, dated October 2, 1997 among CSC
Holdings, At Home Corporation ("At Home"), Comcast Corporation, Cox
Enterprises, Inc., Kleiner, Perkins, Caufield & Byers and
Tele-Communications, Inc., as amended October 10, 1997 (incorporated
by reference to Exhibit 10.01 of the Current Report on Form 8-K
filed by At Home (File No. 000-22697) on October 22, 1997 (the "At
Home October 8-K")).
10.33 Warrant to purchase shares of Series A Common Stock of At Home
issued to CSC Holdings (incorporated by reference to Exhibit 10.03
of the At Home October 8-K).
10.34 Contingent Warrant to purchase shares of Series A Common Stock of At
Home issued to CSC Holdings (incorporated by reference to Exhibit
10.04 of the At Home October 8-K).
10.35 Warrant Purchase Agreement, dated October 10, 1997, between At Home
and CSC Holdings (incorporated by reference to Exhibit 10.02 of the
At Home October 8-K).
10.36 Amended and Restated Stockholders Agreement, dated August 1, 1996,
as amended in May, 1997 (incorporated by reference to Exhibit 4.04
of the Registration Statement on Form S-1 of At Home (File No.
333-27323) (the "At Home S-1")).
10.37 Letter Agreement dated May 15, 1997 among At Home and the parties
thereto, including as exhibits the Master Distribution Agreement
Term Sheet and the Term Sheet for Form of LCO Agreement
(incorporated by reference to Exhibit 10.20 of the At Home S-1).
10.38 Credit Agreement, dated as of June 6, 1997, among Madison Square
Garden, L.P., the several lenders from time to time parties thereto,
the Chase Manhattan Bank, as Administrative Agent, Toronto Dominion
(New York), Inc., as Documentation Agent, and The Bank of Nova
Scotia, as Syndication Agent (incorporated herein by reference to
Exhibit 10.63 to the S-4).
(154)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.39 Asset Purchase Agreement, dated as of August 29, 1997, by and among
U.S. Cable Television Group, L.P., ECC Holding Corporation, Missouri
Cable Partners, L.P., CSC Holdings and Mediacom LLC (incorporated
herein by reference to Exhibit 10.64 to the S-4).
10.40 Loan Agreement, dated as of April 2, 1997, among Rainbow Media
Holdings, Inc., the Guarantors, Canadian Imperial Bank of Commerce,
and Toronto Dominion (Texas), Inc. as Arranging Agents and
Documentation Agents, Canadian Imperial Bank of Commerce, as
Syndication Agent, Toronto Dominion (Texas), Inc., as Administrative
Agent and the other Credit Parties thereto (incorporated by
reference to Exhibit 10.77 of CSC Holdings' Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1997).
10.41 First Amendment, dated November 5, 1997 to the Credit Agreement,
dated as of June 6, 1997, among Madison Square Garden, L.P., the
several lenders from time to time parties thereto, the Chase
Manhattan Bank, as Administrative Agent, Toronto Dominion (New
York), Inc., as Documentation Agent, and The Bank of Nova Scotia, as
Syndication Agent (incorporated herein by reference to Exhibit 10.66
to the S-4).
10.42 Second Amendment, dated December 10, 1997, to the Credit Agreement,
dated as of June 6, 1997, among Madison Square Garden, L.P., the
several lenders from time to time parties thereto, the Chase
Manhattan Bank, as Administrative Agent, Toronto Dominion (New
York), Inc., as Documentation Agent, and The Bank of Nova Scotia, as
Syndication Agent (incorporated herein by reference to Exhibit 10.67
to the S-4).
10.43 Cablevision Parent Stock Option Plan for Non-Employee Directors
(incorporated herein by reference to Exhibit 10.68 to the S-4).
10.44 Asset Purchase Agreement, dated as of January 29, 1998, between The
Wiz, Inc. and each of its subsidiaries and affiliates listed on the
signature pages thereto and Cablevision Electronics Investments,
Inc. (incorporated by reference to Exhibit 99.1 of CSC Holdings'
report on Form 8-K (file no. 1-9046) dated February 5, 1998.
10.45 Amended and Restated Contribution and Merger Agreement, dated as of
June 6, 1997, among Cablevision Parent, CSC Holdings, CSC Merger
Corporation and TCI Communications, Inc. (incorporated herein by
reference to Exhibit 2.1 to the S-4).
10.46 Stockholders Agreement, dated as of March 4, 1998, by and among CSC
Holdings, Tele-Communications, Inc., a Delaware corporation, the
Class B Entities (as defined in the Stockholders Agreement) and the
Investors (as defined in the Stockholders Agreement) (incorporated
herein by reference to Exhibit 4.1 to CSC Holdings' Current Report
on Form 8-K (File No. 1-9046) dated March 4, 1998).
(155)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.47 Sixth Amended and Restated Credit Agreement, dated as of May 28,
1998, among CSC Holdings, Inc., the Restricted Subsidiaries which
are parties thereto, the lenders which are parties thereto (the
"Banks"). Toronto Dominion (Texas), Inc., as Arranging Agent and as
Administrative Agent, The Bank of New York, The Bank of Nova Scotia,
The Canadian Imperial Bank of Commerce, NationsBank, N.A., and The
Chase Manhattan Bank, as Managing Agents, Bank of Montreal, Chicago
Branch, Barclays Bank, PLC, Fleet Bank, N.A., and Royal Bank of
Canada, as agents, Banque Paribas, Credit Lyonnais, BankBoston,
N.A., The First National Bank of Chicago, Mellon Bank, N.A. and
Societe Generale, New York Branch, as Co-Agents, and The Canadian
Imperial Bank of Commerce, The Chase Manhattan Bank and NationsBank,
N.A., as Co-Syndication Agents.
10.48 First Amended and Restated Credit Agreement, dated as of May 28,
1998, among Cablevision MFR, Inc. ("MFR"), CSC Holdings, Inc., the
Guarantors which are parties thereto, the lenders which are parties
thereto (the "Banks"), Toronto Dominion (Texas), Inc., as Arranging
Agent and as Administrative Agent, The Bank of New York, The Bank of
Nova Scotia, The Canadian Imperial Bank of Commerce, NationsBank,
N.A., and The Chase Manhattan Bank, as Managing Agents, Bank of
Montreal, Chicago Branch, Barclays Bank, PLC, Fleet Bank, N.A., and
Royal Bank of Canada, as Agents, Banque Paribas, Credit Lyonnais,
BankBoston, N.A., The First National Bank of Chicago, Mellon Bank,
N.A. and Societe Generale, New York Branch, as Co-Agents, and The
Bank of New York and The Bank of Nova Scotia as Co Syndication
Agents.
10.49 First Amended and Restated Credit Agreement, dated as of May 28,
1998 among CSC TKR, Inc. Cablevision of Brookhaven, Inc.,
Cablevision of Oakland, Inc. Cablevision of Paterson, Inc. CSC TKR
I, Inc. and UA-Columbia Cablevision of Westchester, Inc., the
lenders which are parties thereto, Toronto Dominion (Texas), Inc.,
as Arranging Agent and as Administrative Agent, The Bank of New
York, The Bank of Nova Scotia, The Canadian Imperial Bank of
Commerce, NationsBank, N.A. and The Chase Manhattan Bank, as
Managing Agents, the Bank of Montreal, Chicago Branch, Barclays Bank
PLC, Fleet Bank, N.A. and the Royal Bank of Canada, as Agents, and
Banque Paribas, Credit Lyonnais, BankBoston, N.A., The First
National Bank of Chicago, Mellon Bank, N.A. and Societe Generale,
New York Branch, as Co-Agents.
10.50 Agreement and Plan of Merger, dated as of August 12, 1998 among
Cablevision Parent, CCG Holdings, Inc. and Clearview Cinema Group,
Inc. (incorporated herein by reference to Exhibit 10.1 of
Cablevision Parent's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998).
(156)
<PAGE>
INDEX TO EXHIBITS
(continued)
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
10.51 Stockholders Agreement, dated as of August 12, 1998 between
Cablevision Parent and the stockholders of Clearview Cinema Group,
Inc. party thereto (incorporated herein by reference to Exhibit 10.1
of Cablevision Parent's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998).
21 Subsidiaries of the Registrants.
23.1 Consent of Independent Auditors.
23.2 Consent of Independent Auditors.
27 Financial Data Schedule - CSC Holdings, Inc. and Subsidiaries.
27.1 Financial Data Schedule - Cablevision Systems Corporation and
Subsidiaries.
[Execution Copy]
AMENDMENT NO. 1 TO PARTNERSHIP
INTEREST TRANSFER AGREEMENT
This is AMENDMENT NO. 1, dated as of March __, 1999, to the
PARTNERSHIP INTEREST TRANSFER AGREEMENT dated as of April 15, 1997 (the
"Agreement"), and is among Starwood Hotels and Resorts Worldwide, Inc., a
Maryland corporation ("Starwood"), ITT Corporation, a Nevada corporation
("ITT"), ITT Eden Corporation, a Delaware corporation ("ITTE"), ITT MSG Inc., a
Delaware corporation ("ITT MSG"), Cablevision Systems Corporation, a Delaware
corporation ("Cablevision"), Rainbow Media Holdings, Inc., a Delaware
corporation ("RMHI"), Rainbow Garden Corp., a Delaware corporation ("RGC"),
Garden L.P. Holding Corp., a Delaware corporation ("GHC"), MSG Eden Corporation,
a Delaware corporation ("MSGE"), and Madison Square Garden, L.P., a Delaware
limited partnership ("MSG") (this "Amendment"). Starwood, ITT, ITTE and ITT MSG
are referred to herein collectively as the "Starwood Entities", and Cablevision,
RMHI, RGC, GHC, MSGE and MSG are referred to herein collectively as the
"Cablevision Entities". Capitalized terms used in this Amendment and not
otherwise defined herein shall have them meaning assigned thereto in the
Agreement.
WHEREAS, ITT, ITTE, ITT MSG, Cablevision, RMHI, RGC, GHC, MSGE and
MSG are parties to the Agreement;
WHEREAS, pursuant to Section 2.03 of the Agreement, ITT MSG
exercised the First Put Option and MSG redeemed the Second Transferred Interest
for the First Put Purchase Price on June 17, 1998;
WHEREAS, the parties to the Agreement desire to amend the Agreement
to provide for (a) the acceleration of the Second Put Option and (b) the
revision of the Second Put Purchase Price, and to acknowledge and agree to the
release, waiver and discharge of Claims (as defined in the Releases attached as
Exhibits A and B hereto);
NOW, THEREFORE, in consideration of the premises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
<PAGE>
SECTION 1. Amendment to Section 2.04 of the Agreement. Section 2.04
of the Agreement is hereby amended in its entirety as follows:
SECTION 2.04. Purchase of Remaining MSG ITT Interest. (a) In
addition to the First Put Option and upon the terms and subject to the
conditions set forth in this Agreement, ITT MSG shall have the option (the
"Second Put Option"; each of the First Put Option and Second Put Option
may be hereinafter referred to as a "Put Option") to require Cablevision
to purchase, or, at the election of Cablevision, MSG to redeem, the
balance of the remaining ITT MSG Interest such that immediately following
such transfer or redemption, ITT MSG does not beneficially own an ITT MSG
Interest (the ITT MSG Interest so transferred or redeemed hereunder is
referred to as the "Third Transferred Interest"), on the Second Put Cash
Closing Date for a purchase price of $87 million in cash (such purchase
price, the "Second Put Purchase Price"; each of the First Put Purchase
Price and the Second Put Purchase Price may be hereinafter referred to as
a "Put Purchase Price"). If ITT MSG exercises the Second Put Option,
Cablevision shall purchase, or, at the election of Cablevision, cause MSG
to redeem, the Third Transferred Interest pursuant to the terms of this
Agreement.
(b) Manner of Exercise of the Second Put Option. ITT MSG's execution
and delivery of Amendment No. 1 to this Agreement shall be deemed to be
the exercise of the Second Put Option for all purposes of this Agreement
and such exercise shall be irrevocable.
(c) Cablevision Obligation. Cablevision acknowledges and agrees that
the obligation to pay the Second Put Purchase Price upon the exercise by
ITT MSG of the Second Put Option is and shall remain an obligation of
Cablevision, whether or not Cablevision elects to have MSG pay such Second
Put Purchase Price or has the ability to control MSG.
SECTION 2. Amendment to Section 2.05(b) of the Agreement. Section
2.05(b) of the Agreement is hereby
-2-
<PAGE>
amended in its entirety as follows:
(b) The closing of the Second Put Option (the "Second Put Cash
Closing") shall be held at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York at 10:00 a.m., New York City time, as soon as
practicable after the conditions to the Second Put Cash Closing set forth
in Section 3 of Amendment No. 1 to this Agreement dated as of March __,
1999 have been satisfied or waived. The date on which the Second Put Cash
Closing shall occur is hereinafter referred to as the "Second Put Cash
Closing Date". At the Second Put Cash Closing (i) Cablevision shall
deliver, or cause to be delivered by MSG, to ITT MSG, by wire transfer to
a bank account designated by ITT MSG at least two business days prior to
the Second Put Cash Closing Date, immediately available funds in an amount
equal to the Second Put Purchase Price and (ii) ITT MSG shall deliver to
Cablevision or MSG, as the case may be, a Bill of Sale and Assignment of
Partnership Interest in the form of Exhibit A to effect delivery of title
to the Third Transferred Interest.
SECTION 3. Exercise of Second Put Option; Conditions. (a) On the
date of this Amendment and by the execution hereof by ITT MSG, ITT MSG shall be
deemed to have irrevocably exercised the Second Put Option and the parties
hereto agree that such deemed exercise of the Second Put Option shall be
effective for all purposes of the Agreement.
(b) Conditions to the Obligations of Cablevision Entities. The
obligations of each of the Cablevision Entities to consummate the Second Put
Cash Closing are subject to the satisfaction (or waiver by the Cablevision
Entities) as of the time of the Second Put Cash Closing of the following
conditions:
(i) The representations and warranties of each of ITTE and ITT
MSG made in the Agreement shall be true and correct, as of the date
of the Second Put Cash Closing as though made as of such time,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier
date). ITTE and ITT MSG shall have
-3-
<PAGE>
performed or complied in all material respects with all obligations
and covenants required by the Agreement to be performed or complied
with by each of them by the time of the Second Put Cash Closing. ITT
MSG shall have delivered to Cablevision a certificate dated the
Second Put Cash Closing Date and signed by an authorized officer of
ITT MSG confirming the foregoing.
(ii) MSG shall have received an opinion dated the Second Put
Cash Closing Date of the general counsel or an officer responsible
for legal affairs of Starwood in form and substance reasonably
satisfactory to Cablevision.
(iii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or
other order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be
in force and have the effect of preventing the consummation of the
transactions contemplated to occur at the Second Put Cash Closing.
(iv) Any waiting period under the HSR Act applicable to the
transactions contemplated to occur at the Second Put Cash Closing
shall have expired or been terminated.
(v) All necessary approvals from the NBA and the NHL in
accordance with the League Rules to enable the Cablevision Entities
to consummate the transactions contemplated to occur at the Second
Put Cash Closing shall have been received and such approvals shall
be in effect.
(vi) The Release, in the form attached as Exhibit A to this
Amendment, shall be executed and delivered by each of the Starwood
Entities.
(c) Conditions to the Obligations of Starwood Entities. The
obligations of each of the Starwood Entities to consummate the Second Put Cash
Closing are subject to the satisfaction (or waiver by the Starwood Entities) as
of the
-4-
<PAGE>
time of the Second Put Cash Closing of the following conditions:
(i) The representations and warranties of Cablevision, RGC,
GHC and MSG made in the Agreement shall be true and correct, as of
the date of the Second Put Cash Closing as though made as of such
time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as
of such earlier date). Cablevision, RGC, GHC and MSG shall have
performed or complied in all material respects with all obligations
and covenants required by the Agreement to be performed or complied
with by each of them by the time of the Second Put Cash Closing.
Cablevision shall have delivered to ITT MSG a certificate dated such
Closing Date and signed by an authorized officer of Cablevision
confirming the foregoing.
(ii) ITT MSG shall have received an opinion dated the Second
Put Cash Closing Date of the general counsel of MSG, in form and
substance reasonably satisfactory to ITT MSG.
(iii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or
other order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be
in force and have the effect of preventing the consummation of the
transactions contemplated to occur at the Second Put Cash Closing.
(iv) Any waiting period under the HSR Act applicable to the
transactions contemplated to occur at the Second Put Cash Closing
shall have expired or been terminated.
(v) All necessary approvals from the NBA and the NHL in
accordance with the League Rules to enable the Cablevision Entities
to consummate all the transactions contemplated to occur at the
Second Put Cash Closing shall have been received
-5-
<PAGE>
and such approvals shall be in effect.
(vi) The Release, in the form attached as Exhibit B to this
Amendment, shall be executed and delivered by each of the
Cablevision Entities.
SECTION 4. General Waiver and Release. On the Second Put Cash
Closing Date, the parties hereto shall execute and deliver the Releases, in the
forms attached as Exhibits A and B to this Amendment. The Releases shall be
effective on the Second Put Cash Closing Date.
SECTION 5. Representations and Warranties; Other Agreements. (i)
Each Releasor (as defined in the applicable Release) hereby represents and
warrants that it is the sole and lawful owner of all right, title and interest
in and to every Claim (as defined in the applicable Release) which such Releasor
has agreed to release pursuant to the applicable Release. Each Releasor
represents and warrants that it has not assigned or transferred or purported to
assign or transfer, and agrees that it will not assign or transfer, or purport
to assign or transfer, to any person, any Claims released therein. Each Releasor
shall indemnify, defend and hold harmless the Releasees (as defined in the
applicable Release), and each of them, from and against any Claims based upon or
arising in connection with any such assignment or transfer. Each Releasor
represents that it has not filed any Claims in any jurisdiction against any
Releasees regarding or relating to the matters released through the applicable
Release.
(ii) Each of ITTE and ITT MSG hereby represents and warrants to
Cablevision, RGC and GHC that the representations and warranties of each of ITTE
and ITT MSG made in the Agreement are true and correct as of the date hereof as
though made as of the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of such
earlier date). Each of Cablevision, RGC and GHC hereby represents and warrants
to ITTE and ITT MSG that the representations and warranties of each of
Cablevision, RGC and GHC made in the Agreement are true and correct as of the
date hereof as though made as of the date hereof, except to the extent such
representations and warranties expressly
-6-
<PAGE>
relate to an earlier date (in which case such representations and warranties
shall be true and correct on and as of such earlier date).
SECTION 6. Assignment. This Amendment, the Releases and the rights
and obligations hereunder and thereunder shall not be assignable by any of the
parties hereto without the prior written consent of Cablevision and Starwood.
SECTION 7. Successors and Assigns; No Third-Party Beneficiaries.
This Amendment and the Releases shall be binding on the parties hereto and their
respective permitted successors and permitted assigns. This Amendment and the
Releases are for the sole benefit of the parties hereto and thereto and their
permitted assigns and nothing herein or therein expressed or implied shall give
or be construed to give to any person, other than the parties hereto and thereto
and such assigns and the persons released and discharged pursuant to the
Releases, any legal or equitable rights hereunder and thereunder.
SECTION 8. Amendments. No amendment, modification or waiver in
respect of this Amendment or the Releases shall be effective unless it shall be
in writing and signed by the party against which it is enforced.
SECTION 9. Notices. All notices or other communications required or
permitted to be given hereunder or under the Releases shall be in writing and
shall be deemed to have been duly given (i) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (ii)
on the second business day following the date of dispatch if delivered by
Federal Express or other nationally reputable next-day courier service or (iii)
on the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid. All
notices hereunder or under the Releases shall be delivered as set forth below,
or pursuant to such other instructions as may be designated in writing by the
party to receive such notice, as follows:
(i) if to Cablevision, RMHI, RGC, GHC or MSG,
Cablevision Systems Corporation
1111 Stewart Avenue
-7-
<PAGE>
Bethpage, New York 11714
Telefacsimile: (516) 803-1190
Attention: Robert S. Lemle, Esq.
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telefacsimile: (212) 558-3588
Attention: John P. Mead, Esq.; and
(ii) if to Starwood, ITT, ITTE or ITT MSG,
Starwood Hotels & Resorts Worldwide, Inc.
777 Westchester Avenue
White Plains, NY 10604
Telefacsimile: (914) 640-8250
Attention: Thomas C. Janson, Jr.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telefacsimile: (212) 474-3700
Attention: George W. Bilicic, Jr., Esq.
SECTION 10. Confidentiality. Except as may be necessary to enforce
the provisions of the Agreement, no party hereto shall hereafter issue any press
release or make any other public statement, filing or report that includes
information with respect to the Agreement or the transactions contemplated
thereby without submitting such release, statement, filing or report to the
other parties sufficiently in advance of its issuance to afford the other
parties a reasonable opportunity to review and comment thereon. The parties will
consult with each other in good faith with respect to the need for and substance
of any such release, statement, filing or report, the timing of its issuance and
the means and extent of its dissemination. If
-8-
<PAGE>
a party determines to make public disclosure of information that is subject to
this Section 10, it shall coordinate the contents and timing of its disclosure
with the other parties, and the parties shall make such disclosure jointly
wherever convenient or appropriate.
SECTION 11. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, covenants, conditions and
provisions of this Amendment, the party or parties who are or are to be thereby
adversely affected, in addition to any and all other rights and remedies at law
or in equity, shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this Amendment and all such rights
and remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss, that the adversely affected party or parties shall be
entitled to obtain specific performance and injunctive relief without the
necessity or proving irreparable injury or posting bond or other security, and
that any defense in any action for specific performance or injunctive relief
that a remedy at law would be adequate is waived.
SECTION 12. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 13. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Amendment and the Release or any
transaction contemplated hereby or thereby. Each of the parties hereto and to
the Release agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties hereto and to the Release further agrees that
service of any process, summons, notice or document by U.S.
-9-
<PAGE>
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this Section
11. Each of the parties hereto and to the Release irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Amendment and the Release or the transactions
contemplated hereby or thereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 14. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND WITHOUT
REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the date first written above.
STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC.
By:
--------------------------------
Name:
Title:
ITT CORPORATION
By:
--------------------------------
Name:
Title:
ITT EDEN CORPORATION
By:
--------------------------------
Name:
Title:
ITT MSG INC.
By:
--------------------------------
Name:
Title:
CABLEVISION SYSTEMS CORPORATION
By:
--------------------------------
Name:
Title:
RAINBOW MEDIA HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
RAINBOW GARDEN CORP.
By:
--------------------------------
Name:
Title:
-11-
<PAGE>
GARDEN L.P. HOLDING CORP.
By:
--------------------------------
Name:
Title:
MSG EDEN CORPORATION
By:
--------------------------------
Name:
Title:
MADISON SQUARE GARDEN, L.P.,
By: MSG Eden Corporation,
as general partner
By:
--------------------------------
Name:
Title:
-12-
EXECUTION COPY
- - --------------------------------------------------------------------------------
CSC HOLDINGS, INC.
-------------------------
$1,400,000,000
SIXTH AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 28, 1998
TORONTO DOMINION (TEXAS), INC.
as Arranging Agent and as Administrative Agent
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
THE CANADIAN IMPERIAL BANK OF COMMERCE
NATIONSBANK, N.A.
THE CHASE MANHATTAN BANK
as Managing Agents
BANK OF MONTREAL, CHICAGO BRANCH
BARCLAYS BANK PLC
FLEET BANK, N.A.
ROYAL BANK OF CANADA
as Agents
BANQUE PARIBAS
CREDIT LYONNAIS
BANKBOSTON, N.A.
THE FIRST NATIONAL BANK OF CHICAGO
MELLON BANK, N.A.
SOCIETE GENERALE, NEW YORK BRANCH
as Co-Agents
THE CANADIAN IMPERIAL BANK OF COMMERCE
THE CHASE MANHATTAN BANK
NATIONSBANK, N.A.
as Co-Syndication Agents
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms..........................................2
Section 1.02 Accounting Terms and Determinations...........................22
ARTICLE II
LOANS AND LETTERS OF CREDIT
Section 2.01 Loans.........................................................22
Section 2.02 Manner of Borrowing; Conversion and Continuation..............22
Section 2.03 Letters of Credit.............................................24
Section 2.04 Reductions and Changes of Commitments.........................26
Section 2.05 Commitment Fees...............................................28
Section 2.06 Notes.........................................................28
Section 2.07 Lending Offices...............................................29
Section 2.08 Several Obligations; Remedies Independent....................29
Section 2.09 Use of Proceeds...............................................29
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments...................................................29
Section 3.02 Repayment of Loans............................................30
Section 3.03 Interest......................................................30
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments......................................................31
Section 4.02 Pro Rata Treatment............................................32
Section 4.03 Computations..................................................32
Section 4.04 Non-Receipt of Funds by Administrative Agent..................32
Section 4.05 Sharing of Payments, Etc......................................32
i
<PAGE>
Section 4.06 Commercial Practices in Respect of Letters of Credit..........33
Section 4.07 No Reductions.................................................34
Section 4.08 Taxes.........................................................34
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans..........................35
Section 5.02 Limitation on Types of Loans..................................37
Section 5.03 Illegality....................................................37
Section 5.04 Certain Conversions of Loans Pursuant to Section 5.01 or 5.03.37
Section 5.05 Compensation..................................................37
Section 5.06 Additional Costs in Respect of Letters of Credit..............38
Section 5.07 Replacement of Banks..........................................38
ARTICLE VI
GUARANTEE................................39
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan or Syndicated Letter of Credit...................41
Section 7.02 Each Loan and Letter of Credit................................43
ARTICLE VIII
REPRESENTATIONS
Section 8.01 Existence and Power...........................................43
Section 8.02 Subsidiaries and Affiliates...................................43
Section 8.03 Authority; No Conflict........................................44
Section 8.04 Financial Condition...........................................44
Section 8.05 Litigation, Etc...............................................45
Section 8.06 Titles and Liens..............................................45
Section 8.07 Regulation U..................................................45
Section 8.08 Taxes.........................................................46
Section 8.09 Other Credit Agreements.......................................46
Section 8.10 Full Disclosure...............................................46
ii
<PAGE>
Section 8.11 No Default....................................................46
Section 8.12 Approval of Regulatory Authorities............................46
Section 8.13 Binding Agreements............................................47
Section 8.14 Franchises....................................................47
Section 8.15 Collective Bargaining Agreements..............................47
Section 8.16 Investments...................................................47
ARTICLE IX
PARTICULAR COVENANTS OF THE
COMPANY AND THE RESTRICTED SUBSIDIARIES
Section 9.01 Financial Statements and Other Information....................47
Section 9.02 Taxes and Claims..............................................49
Section 9.03 Insurance.....................................................50
Section 9.04 Maintenance of Existence; Conduct of Business.................50
Section 9.05 Maintenance of and Access to Properties.......................50
Section 9.06 Compliance with Applicable Laws...............................50
Section 9.07 Litigation....................................................50
Section 9.08 Subsidiaries..................................................50
Section 9.09 Franchises....................................................51
Section 9.10 Interest Selection; Interest Swap Agreements..................51
Section 9.11 Indebtedness..................................................51
Section 9.12 Contingent Liabilities........................................52
Section 9.13 Liens.........................................................54
Section 9.14 Leases........................................................54
Section 9.15 Mergers, Acquisitions and Dispositions, Etc...................55
Section 9.16 Investments...................................................57
Section 9.17 Restricted Payments...........................................58
Section 9.18 Business......................................................58
Section 9.19 Transactions with Affiliates..................................59
Section 9.20 Amendments of Certain Instruments.............................59
Section 9.21 Issuance of Stock.............................................59
Section 9.22 Operating Cash Flow...........................................59
Section 9.23 Cash Flow Ratio...............................................60
Section 9.24 Certain Subsidiaries..........................................61
Section 9.25 Permitted Restricted Subsidiary Transactions..................61
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ARTICLE X
DEFAULTS
Section 10.01 Events of Default.............................................61
Section 10.02 Cash Collateral Account.......................................64
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities............................64
Section 11.02 Reliance by Administrative Agent..............................65
Section 11.03 Defaults......................................................65
Section 11.04 Rights as a Bank..............................................65
Section 11.05 Indemnification...............................................65
Section 11.06 Non-Reliance on Administrative Agent and Other Banks..........66
Section 11.07 Failure to Act................................................66
Section 11.08 Resignation or Removal of Administrative Agent................66
Section 11.09 Agency Fee....................................................67
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver.....................................................67
Section 12.02 Notices.......................................................67
Section 12.03 Expenses, Etc.................................................67
Section 12.04 Letter of Credit Indemnification..............................68
Section 12.05 Amendments, Etc...............................................68
Section 12.06 Successors and Assigns........................................69
Section 12.07 Survival......................................................72
Section 12.08 Senior Indebtedness...........................................73
Section 12.09 Conditions to Effectiveness; Assignment.......................73
Section 12.10 Liability of General Partners and Other Persons...............73
Section 12.11 Counterparts..................................................73
Section 12.12 Waiver........................................................73
Section 12.13 Entire Agreement..............................................73
Section 12.14 Governing Law.................................................74
Section 12.15 Captions, Etc.................................................74
Section 12.16 Acceptance of Release of Rights of Guarantors.................74
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Section 12.17 Authorization of Third Parties to Deliver Information
and Discuss Affairs...........................................74
Schedule 1.01(i) Adams-Russell Companies
Schedule 1.01(ii) Franchise Holding Companies
Schedule 1.01(iii) Guarantors
Schedule 1.01(iv) Programming Companies
Schedule 1.01(v) Restricted Subsidiaries
Schedule 1.01(vi) Unrestricted Subsidiaries
Schedule 2.02(a) Notice of Loans
Schedule 2.02(c) Notice of Conversion or Continuation
Schedule 2.07 Applicable Lending Offices
Schedule 8.02 Affiliates
Schedule 8.03 Required Consents and Regulatory Approvals
Schedule 8.05 Existing Litigation
Schedule 8.14 Existing Franchises
Schedule 9.11 Existing Indebtedness
Schedule 9.12 Existing Guarantees
Schedule 9.13 Existing Liens
Schedule 9.16 Existing Investments
Schedule 9.17 Accretion Calculations for Series H and
Series M Preferred Stock
Schedule 12.02 Addresses for Notices
EXHIBIT A Form of Note
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Subscribers' Certificate
EXHIBIT D(1) Form of Certificate as to Quarterly Financial Statements
EXHIBIT D(2) Form of Certificate as to Annual Financial Statements
EXHIBIT E Form of Opinion of General Counsel to the Company and the
Restricted Subsidiaries
EXHIBIT F(1) Form of Opinion of Special New York Counsel to the Company
and the Restricted Subsidiaries
EXHIBIT F(2) Form of Opinion of Special New Jersey Counsel to the Company
and the Restricted Subsidiaries
EXHIBIT F(3) Form of Opinion of Special FCC Counsel to the Company and
the Restricted Subsidiaries
EXHIBIT G Form of Opinion of Special New York Counsel to the
Administrative Agent
EXHIBIT H Form of Assignment and Acceptance Agreement
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SIXTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 28, 1998
among CSC HOLDINGS, INC. (formerly known as Cablevision Systems
Corporation), a Delaware corporation (the "Company"), the Restricted
Subsidiaries (as defined below) which are parties hereto, the Lenders
which are parties hereto, together with their respective successors and
assigns (the "Banks"), and TORONTO DOMINION (TEXAS), INC., as Arranging
Agent and as Administrative Agent, THE BANK OF NEW YORK, THE BANK OF NOVA
SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE, NATIONSBANK, N.A. and THE
CHASE MANHATTAN BANK, as Managing Agents, BANK OF MONTREAL, CHICAGO
BRANCH, BARCLAYS BANK, PLC, FLEET BANK, N.A., and ROYAL BANK OF CANADA, as
Agents, BANQUE PARIBAS, CREDIT LYONNAIS, BANKBOSTON, N.A., THE FIRST
NATIONAL BANK OF CHICAGO, MELLON BANK, N.A. AND SOCIETE GENERALE, NEW YORK
BRANCH as Co-Agents and THE CANADIAN IMPERIAL BANK OF COMMERCE, THE CHASE
MANHATTAN BANK and NATIONSBANK, N.A. as Co-Syndication Agents.
WHEREAS, on September 5, 1996, the Company, certain of its
subsidiaries named therein, the several banks whose names are set forth on the
signature pages thereto, and Toronto Dominion (Texas), Inc., as Arranging Agent
and as Administrative Agent, The Bank of New York, The Bank of Nova Scotia, The
Canadian Imperial Bank of Commerce, NationsBank of Texas, N.A. and The Chase
Manhattan Bank, as Agents, Bank of Montreal, Chicago Branch, Fleet Bank, N.A.,
Mellon Bank, N.A. and Royal Bank of Canada, as Co-Agents, The Bank of Nova
Scotia and The Canadian Imperial Bank of Commerce, as Co-Syndication Agents, and
The Bank of New York, as Documentation Agent, entered into a Fifth Amended and
Restated Credit Agreement, as amended (such Fifth Amended and Restated Credit
Agreement, as amended, being referred to herein as the "1996 Agreement");
WHEREAS, the Company and the Restricted Subsidiaries are engaged in
the business of developing, constructing, owning, acquiring, altering,
repairing, financing, operating, maintaining, publishing, distributing,
promoting and otherwise exploiting cable television systems and related
businesses, including, without limitation, telecommunications services, data
transmission and telephony activities; and
WHEREAS, the Banks have extended credit to the Company, by the
making of loans to the Company and the issuance of letters of credit for the
account of the Company; the Company and the Guarantors have requested that the
Total Commitment (as defined in the 1996 Agreement) be increased; and the
proceeds of the extensions of credit hereunder are to be employed in accordance
with Section 2.09 hereof, and each of the Guarantors expects to derive benefit,
directly or indirectly, from such loans and letters of credit.
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"1996 Agreement" shall have the meaning given to such term in the
first "Whereas" clause of this Agreement.
"1996 Banks" shall mean the "Banks" as defined in the 1996
Agreement.
"Accumulated Funding Deficiency" shall mean an accumulated funding
deficiency as defined in Section 302 of ERISA.
"Adams-Russell Companies" shall mean, collectively, the Persons set
forth on Schedule 1.01(i) hereto.
"Additional Costs" shall have the meaning given to such term in
Section 5.01 hereof.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc. in
its capacity as administrative agent for the Banks hereunder and its successors
in such capacity.
"Affected Loans" shall have the meaning given to such term in
Section 5.04 hereof.
"Affected Type" shall have the meaning given to such term in Section
5.04 hereof.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
provided further that no individual shall be an Affiliate of a corporation or
partnership solely by reason of his or her being an officer, director or partner
of such entity, except in the case of a partner if his or her interests in such
partnership shall qualify him or her as an Affiliate.
"Aggregate Commitment" shall mean, at any time, as to each Bank, the
sum of such Bank's Commitment, CMFRI Commitment and New York/New Jersey
Commitment at such time.
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"Agreement" shall mean this Sixth Amended and Restated Credit
Agreement, including all schedules and exhibits hereto, as the same may be
amended, supplemented or modified from time to time.
"Annualized Operating Cash Flow" shall mean, as at any date, an
amount equal to Operating Cash Flow for the period of three complete consecutive
calendar months ending on or most recently prior to such date, multiplied by
four.
"Applicable Lending Office" shall mean, with respect to each Bank,
for each type of Loan, the lending office of such Bank (or of an affiliate of
such Bank) designated for such type of Loan in Schedule 2.07 hereto or such
other office of such Bank (or of an affiliate of such Bank) as such Bank may
from time to time specify to the Administrative Agent and the Company as the
office by which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean:
(a) With respect to Base Rate Loans, 0.250% at all times
during any Applicable Period if the Cash Flow Ratio as at the end of the
immediately preceding Quarter was greater than 6.00 to 1; 0.125% at all
times during any Applicable Period if the Cash Flow Ratio as at the end of
the immediately preceding Quarter was less than or equal to 6.00 to 1 and
greater than 5.50 to 1; and 0.000% at all times during any Applicable
Period if the Cash Flow Ratio as at the end of the immediately preceding
Quarter was less than or equal to 5.50 to 1; and
(b) With respect to Eurodollar Loans, 1.125% at all times
during any Applicable Period if the Cash Flow Ratio as at the end of the
immediately preceding Quarter was greater than 6.00 to 1; 0.875% at all
times during any Applicable Period if the Cash Flow Ratio as at the end of
the immediately preceding Quarter was less than or equal to 6.00 to 1 and
greater than 5.50 to 1; 0.750% at all times during any Applicable Period
if the Cash Flow Ratio as at the end of the immediately preceding Quarter
was less than or equal to 5.50 to 1 and greater than 5.00 to 1; 0.600% at
all times during any Applicable Period if the Cash Flow Ratio as at the
end of the immediately preceding Quarter was less than or equal to 5.00 to
1 and greater than 4.50 to 1; and 0.400% at all times during any
Applicable Period if the Cash Flow Ratio as at the end of the immediately
preceding Quarter was less than or equal to 4.50 to 1.
For purposes of this definition, the Cash Flow Ratio as at the end of any
Quarter (the "Subject Quarter") shall be determined based upon (i) for the
Quarter ended immediately prior to the Effective Date, the Compliance
Certificate delivered in accordance with Section 7.01, and (ii) for each Subject
Quarter commencing thereafter, (x) the Annualized Operating Cash Flow (as set
forth in the Subscribers' Certificate delivered pursuant to Section 9.01(e) with
respect to the second month of such Subject Quarter and (y) the aggregate
outstanding principal amount of Indebtedness of CSC, the Restricted Subsidiaries
and the New York/New Jersey Companies (as calculated in accordance with the
definition of Cash Flow Ratio) as of the last day of such Subject Quarter (as
certified by the Company to the Administrative Agent at the time of the delivery
of such Subscribers' Certificate).
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As used in this definition, "Applicable Period" shall mean the period from and
including (i)(a) in the case of the first Applicable Period, the Effective Date
and (b) in the case of each subsequent Applicable Period, the first day after
the immediately preceding Applicable Period to but excluding (ii) the fifth
Business Day of the next July, October, January or April (whichever occurs
first) to occur thereafter.
"Assignment and Acceptance" shall have the meaning given to such
term in Section 5.07 hereof.
"Bank Letters of Credit" shall have the meaning given such term in
Section 2.03(b) hereof.
"Banks" shall have the meaning given to such term in the preamble to
this Agreement.
"Base Rate" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the higher of:
(a) the rate of interest adopted by The Toronto-Dominion Bank
(New York Branch), from time to time, as its reference rate for the
determination of interest rates on loans of varying maturities in Dollars
to United States residents of varying degrees of creditworthiness and
being quoted at such time by The Toronto-Dominion Bank (New York Branch)
as its "prime rate," which rate is not necessarily The Toronto-Dominion
Bank's lowest rate of interest; and
(b) the sum (adjusted to the nearest one-quarter of one
percent (1/4 of 1%) or, if there is no nearest one-quarter of one percent
(1/4 of 1%), to the next higher one-quarter of one percent (1/4 of 1%)) of
(i) one-half of one percent (1/2 of 1%) per annum plus (ii) the Federal
Funds Rate.
"Base Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Base Rate" in
this Section 1.01.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City or London.
"Cablevision NYC MLP" shall mean Cablevision of New York City -
Master LP, a New York limited partnership.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property, which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under generally accepted accounting principles
(including Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board) and, for purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with generally accepted accounting principles (including such
Statement No. 13).
4
<PAGE>
"Capital Maintenance Costs" shall mean, with respect to the Loans,
Syndicated Letters of Credit (or participations therein) or Bank Letters of
Credit of each Bank, any costs which such Bank determines are attributable to
the maintenance by such Bank or any of its affiliates, pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law) of any court or governmental or monetary authority, whether in
effect on the Effective Date or thereafter, of capital in respect of its
maintaining Loans, Syndicated Letters of Credit or Bank Letters of Credit
hereunder or its commitment to make Loans or issue or participate in Syndicated
Letters of Credit or Bank Letters of Credit hereunder.
"Cash Flow Ratio" shall mean, as at any date, the ratio of (i) the
sum of the aggregate outstanding principal amount of all Indebtedness of the
Company, the Restricted Subsidiaries and the New York/New Jersey Companies
outstanding on such date (determined on a consolidated and, in respect of the
New York/New Jersey Companies to the extent such companies are not Restricted
Subsidiaries on such date, a combined basis) plus (but without duplication of
Indebtedness supported by Syndicated Letters of Credit or Bank Letters of
Credit) the aggregate undrawn face amount of all Syndicated Letters of Credit
and Bank Letters of Credit outstanding on such date to (ii) Annualized Operating
Cash Flow determined as at the last day of the month covered by the then most
recent Subscribers' Certificate delivered to the Banks pursuant to Section
9.01(e) hereof, a copy of which has been delivered to the Administrative Agent
(and any change in such ratio as a result of a change in the amount of
Indebtedness or Syndicated Letters of Credit, or Bank Letters of Credit shall be
effective as of the date such change shall occur and any change in such ratio as
a result of a change in the amount of Annualized Operating Cash Flow shall be
effective as of the date of receipt by the Administrative Agent of the
Subscribers' Certificate reflecting such change). Notwithstanding the foregoing,
for purposes of calculating the Cash Flow Ratio, (i) there shall be excluded
from Indebtedness (A) the principal amount of any Indebtedness which would
constitute an Investment but for the provision of clause (A) of the final
paragraph of Section 9.16 hereof; (B) any deferred purchase price that would
constitute Indebtedness in connection with any acquisition permitted by Section
9.15(b) to the extent that the Company's obligations in respect of such deferred
purchase price consist solely of an agreement to deliver common stock of the
Company; (C) all obligations under any Interest Swap Agreement; and (D)(x) all
obligations under any Guarantee permitted under subparagraph (ix) of Section
9.12 hereof and (y) all obligations under any Guarantee permitted under
subparagraph (x)(B) of Section 9.12 hereof so long as the obligations under such
Guarantees referred to in this clause (y) are payable, solely at the option of
the Company, in common stock of the Company; and (ii) if on the date of
calculation there are no Loans outstanding, there shall be deducted from
Indebtedness the aggregate amount of Cash On Hand of the Company and its
Restricted Subsidiaries on the date of calculation.
"Cash On Hand" of any Person at any time shall mean all cash held by
such Person at such time and all Investments of such Person of the types
specified in Section 9.16(i) or (ii) of this Agreement held at such time.
"CMFRI" shall mean Cablevision MFR, Inc., a Delaware corporation.
"CMFRI Agreement" shall mean the First Amended and Restated Credit
Agreement, dated as of May 28, 1998, among CMFRI, the Company, the Guarantors
that are
5
<PAGE>
parties thereto, the Banks that are parties thereto, Toronto Dominion (Texas),
Inc., as Arranging Agent and as Administrative Agent, The Bank of New York, The
Bank of Nova Scotia, The Canadian Imperial Bank of Commerce, NationsBank, N.A.
and The Chase Manhattan Bank, as Managing Agents, Bank of Montreal, Chicago
Branch, Barclays Bank PLC, Fleet Bank, N.A. and Royal Bank of Canada, as Agents,
Banque Paribas, Credit Lyonnais, BankBoston, N.A., The First National Bank of
Chicago, Mellon Bank, N.A. and Societe Generale, New York Branch, as Co-Agents,
and The Bank of New York and The Bank of Nova Scotia, as Co-Syndication Agents,
as amended and/or restated and in effect from time to time.
"CMFRI Commitment" shall mean, as to each Bank, its "Commitment" as
such term is used in the CMFRI Agreement (as the same may be reduced or
otherwise adjusted from time to time as provided in the CMFRI Agreement).
"CMFRI Commitment Fees" shall mean "Commitment Fees" as such term is
used in the CMFRI Agreement.
"CMFRI Loans" shall mean "Loans" as such term is used in the CMFRI
Agreement.
"CMFRI Specified Investments" shall mean "Specified Investments" as
such term is used in the CMFRI Agreement.
"CMFRI Total Commitment" shall mean at any time the "Total
Commitment", as that term is used in the CMFRI Agreement (as the same may be
reduced or otherwise adjusted from time to time as provided in the CMFRI
Agreement).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" shall mean, as to each Bank, the amount set forth
opposite its name on the signature pages hereto under the heading "Commitment"
or amount set forth on any Assignment and Acceptance (as the same may be reduced
or otherwise adjusted from time to time as provided in this Agreement).
"Commitment Fee" shall have the meaning given to such term in
Section 2.05 hereof.
"Commitment Percentage" shall mean, as to each Bank at any time, the
percentage obtained by dividing such Bank's Commitment by the Total Commitment.
"Commitment Termination Date" shall mean the Quarterly Date falling
on or nearest to March 31, 2007.
"Company" shall have the meaning given to such term in the preamble
to this Agreement.
"Compliance Certificate" shall mean a certificate of a senior
financial executive of the Company and of the New York/New Jersey Obligors in
substantially the form of Exhibit B hereto.
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"Consolidated Cash Taxes" shall mean, for any period, the sum of all
federal, state and local income and other taxes on operations paid during such
period in respect of the operating revenues of the Company, the Restricted
Subsidiaries, the New York/New Jersey Companies and all tax consolidated
Unrestricted Subsidiaries taken as a whole, net of any actual reimbursements
therefor received from any Unrestricted Subsidiaries.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"CSC Technology" shall mean CSC Technology, Inc., a Delaware
corporation.
"Debt Instruments" shall mean, collectively, the respective notes
and debentures evidencing, and indentures and other agreements governing, any
Indebtedness.
"Default" shall mean an Event of Default or any other event which
with notice and/or passage of time would become an Event of Default.
"Dolan" shall mean Charles F. Dolan.
"Dolan Family Interests" shall mean (i) any Dolan Family Member,
(ii) any trusts for the benefit of any Dolan Family Members, (iii) any estate or
testamentary trust of any Dolan Family Member for the benefit of any Dolan
Family Members, (iv) any executor, administrator, conservator or legal or
personal representative of any Person or Persons specified in clauses (i), (ii)
and (iii) above to the extent acting in such capacity on behalf of any Dolan
Family Member or Members and not individually and (v) any corporation,
partnership, limited liability company or other similar entity, in each case 80%
of which is owned and controlled by any of the foregoing or combination of the
foregoing.
"Dolan Family Members" shall mean Dolan, his spouse, his descendants
and any spouse of any of such descendants.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Effective Date" shall have the meaning given to such term in
Section 12.09 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean, when used with respect to a Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code of which the Company is a member.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan, for any Interest Period, the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m. (London time) on the second
Business Day prior to the first day of such Interest
7
<PAGE>
Period by reference to the British Bankers' Association Interest Settlement
Rates for deposits in Dollars (as set forth by any service selected by the
Administrative Agent that has been nominated by the British Bankers' Association
as an authorized information vendor for the purpose of displaying such rates)
for a period equal to such Interest Period (rounded upward, if necessary, to the
nearest 1/16 of 1%); provided that, if, for any reason, the Administrative Agent
cannot determine the Eurodollar Base Rate for any Interest Period pursuant to
the foregoing provisions of this definition, the Administrative Agent shall
determine the Eurodollar Base Rate by using the offered rates of any three major
banks active in the London interbank market selected by the Administrative
Agent, but in all other respects in accordance with the foregoing provisions of
this definition.
"Eurodollar Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loans for such Interest Period divided by 1
minus the Reserve Requirement for such Loans for such Interest Period.
"Event of Default" shall mean any of the events described in Article
X hereof.
"Excluded Indebtedness" shall have the meaning given to such term in
Section 10.01(e) hereto.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate quoted to The Toronto-Dominion Bank (New
York Branch) on such day on such transactions with Federal funds brokers of
recognized standing as may be determined by the Administrative Agent.
"Franchise" shall mean a franchise, license or other authorization
or right to construct, own, operate, promote and/or otherwise exploit any cable
television system granted by the Federal Communications Commission (or any
successor agency of the Federal government) or any state, county, city, town,
village or other local governmental authority.
"Franchise Holding Companies" shall mean the Persons set forth on
Schedule 1.01(ii) hereto and each other corporation which holds a Franchise as
nominee of the Company or a Restricted Subsidiary.
"Funding Costs" for any Bank shall mean, with respect to any
Eurodollar Loan, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount paid, prepaid or
converted or not borrowed or converted for the period from
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<PAGE>
the date of such payment, prepayment or conversion or failure to borrow or
convert to the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow or convert, the Interest Period for such Loan which would
have commenced on the date of such failure to borrow or convert) had such
principal amount borne interest at the Eurodollar Rate applicable to such Loan
over (ii) the interest component of the amount such Bank would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Bank).
"Guarantee" shall have the meaning given to such term in Section
9.12 hereof.
"Guarantors" shall mean the Persons set forth on Schedule 1.01(iii)
hereto and each New Restricted Subsidiary required to become a Guarantor
pursuant to Section 9.08 hereof.
"Indebtedness" shall mean, as to any Person, Capital Lease
Obligations of such Person and other indebtedness of such Person for borrowed
money (whether by loan or the issuance and sale of debt securities) or for the
deferred purchase or acquisition price of property or services (and including,
without limitation, obligations of such Person for property taxes and judgments
and other awards giving rise to Permitted Liens described in clauses (ii) and
(iii) of the definition of "Permitted Liens" in this Section 1.01) other than
accounts payable (other than for borrowed money) incurred in the ordinary course
of business of such Person. Without limiting the generality of the foregoing,
such term shall include (a) when applied to the Company, any Restricted
Subsidiary and/or any New York/New Jersey Company, all obligations of the
Company, any Restricted Subsidiary and/or any New York/New Jersey Company under
Interest Swap Agreements and (b) when applied to the Company or any other
Person, all Indebtedness of others Guaranteed by such Person.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loans, the period commencing on
the date such Eurodollar Loans are made and ending on the same day in the
first, second, third, sixth or, subject to availability from each Bank,
twelfth calendar month thereafter, as the Company may select as provided
in Section 2.02 hereof; and
(b) With respect to any Base Rate Loans, the period commencing on
the date such Base Rate Loans are made and ending on the next Quarterly
Date thereafter.
Notwithstanding the foregoing: (i) no Interest Period may commence before and
end after any Quarterly Date upon which the Commitments are to be reduced
pursuant to Section 2.04(a) hereof unless, after giving effect thereto, the
aggregate principal amount of the Loans having Interest Periods which end after
such Quarterly Date shall be equal to or less than the amount to which the
Commitments are to be reduced on such Quarterly Date pursuant to said Section
2.04(a); (ii) no Interest Period with respect to any Loan may end after the
Commitment Termination Date; (iii) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or, in the case of an Interest Period for Eurodollar Loans, if
such next succeeding Business Day falls in the next succeeding calendar month,
on the next preceding Business Day); (iv) any Interest Period for a Eurodollar
Loan that
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begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month in which such Interest
Period ends) shall, subject to clause (i) above, end on the last Business Day of
a calendar month; and (v) no more than 24 Interest Periods for all Eurodollar
Loans hereunder shall be in effect at the same time and, if the number of
Interest Periods for Eurodollar Loans would otherwise be in excess of 24,
additional Eurodollar Loans shall not be available hereunder.
"Interest Swap Agreement" shall mean an interest rate swap, cap or
collar agreement or similar arrangement among the Company, any Restricted
Subsidiary and/or any New York/New Jersey Company and one or more banks or
financial institutions providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations among the Company, such
Restricted Subsidiary and/or such New York/New Jersey Company and such banks or
financial institutions, either generally or under specific contingencies, as
said agreement or arrangement shall be modified and supplemented and in effect
from time to time.
"Investments" shall have the meaning given to such term in Section
9.16 hereof.
"Kalamazoo Sale" shall mean the sale of the Kalamazoo, Michigan
cable system currently owned by Cablevision of Michigan, Inc. provided for in
the letter of intent dated as of January 22, 1998 between TCI and the Company.
"Leases" shall mean leases and subleases (excluding Capital Lease
Obligations), licenses to use real and/or tangible personal property, easements
and pole attachments and conduit or trench agreements and other rights to use
telephone or utility poles, conduits or trenches.
"Letter of Credit Liabilities" shall mean, at any time, the sum of
(i) the aggregate undrawn face amount of all Syndicated Letters of Credit
outstanding at such time and (ii) the aggregate unpaid amount of all
Reimbursement Obligations at the time due and payable in respect of previous
drawings made under all Syndicated Letters of Credit.
"Liens" shall have the meaning given to such term in Section 9.13
hereof.
"Loans" shall mean Base Rate Loans and Eurodollar Loans made
pursuant to Section 2.01 hereof.
"Majority Banks" shall mean at any time, Banks having Commitments
aggregating at least 51% of the amount of the Total Commitment.
"Margin Stock" shall mean "margin stock" as defined in Regulation U.
"Materially Adverse Effect" shall mean a materially adverse effect
upon (i) the business, assets, financial condition or results of operations of
the Company, the Restricted Subsidiaries and the New York/New Jersey Companies
taken as a whole on a combined basis in accordance with generally accepted
accounting principles, (ii) the ability of the Company and the Restricted
Subsidiaries taken as a whole to perform the Obligations hereunder or (iii) the
legality, validity, binding nature or enforceability of this Agreement.
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"Multiemployer Plan" shall mean a Plan that is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean proceeds received by the Company or
any of the Restricted Subsidiaries in cash from (x) the sale or other
disposition of property of the Company or any of the Restricted Subsidiaries or
from the incurrence, issuance or sale of Indebtedness or capital stock of the
Company or any of the Restricted Subsidiaries, in each case after deduction of
the costs of, and any income, franchise, transfer or other tax liability arising
from, such sale, disposition, incurrence or issuance or (y) a capital
contribution in respect of the common stock of any class of the Company to the
Company by the holder thereof. If any amount payable to the Company or any such
Restricted Subsidiary in respect of any such sale, disposition, incurrence or
issuance shall be or become evidenced by any promissory note or other negotiable
or non-negotiable instrument, the cash proceeds received on any such note or
instrument shall constitute Net Cash Proceeds.
"New Common Stock" shall mean (x) any common stock of any class of
the Company issued after the Effective Date or (y) any capital contribution to
the Company in respect of the common stock of any class of the Company to the
Company by the holder thereof made after the Effective Date.
"New Preferred Stock" shall mean any preferred stock of the Company
issued after the Effective Date, provided that pursuant to the terms thereof and
of any provision of the Company's charter in respect thereof, such preferred
stock is neither (i) redeemable, payable or required to be purchased or
otherwise retired or extinguished in whole or in part (other than with common
stock or other New Preferred Stock of the Company), or convertible into any
Indebtedness of the Company, at a fixed or determinable date (whether by
operation of a sinking fund or otherwise), at the option of any Person other
than the Company or upon the occurrence of a condition not solely within the
control of the Company (such as a redemption required to be made out of future
earnings) nor (ii) convertible into preferred stock of the Company that may be
so retired, extinguished or converted, in the case of clause (i) or (ii) above,
at any time before the date that is two years after the Commitment Termination
Date as in effect at the time of the issuance of such preferred stock.
"New Restricted Subsidiary" shall mean any New Subsidiary designated
as a Restricted Subsidiary pursuant to Section 9.08(b) and any Unrestricted
Subsidiary redesignated as a Restricted Subsidiary pursuant to Section 9.08(c).
"New Subordinated Debt" shall mean any Permitted Debt having terms
of subordination no less favorable to the Banks than the terms of subordination
of the Company's 9- 7/8% Senior Subordinated Debentures due 2023.
"New Subsidiary" shall mean any Person which becomes a Subsidiary of
the Company after the Effective Date.
"New Unrestricted Subsidiary" shall mean any New Subsidiary deemed
an Unrestricted Subsidiary pursuant to Section 9.08(a).
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"New York/New Jersey Agreement" shall mean the First Amended and
Restated Credit Agreement, dated as of May 28, 1998, among CSC TKR, Inc.,
Cablevision of Brookhaven, Inc., Cablevision of Oakland, Inc., Cablevision of
Paterson, Inc., CSC TKR I, Inc. and UA-Columbia Cablevision of Westchester,
Inc., the Guarantors that are parties thereto, the Banks that are parties
thereto, Toronto Dominion (Texas), Inc., as Arranging Agent and Administrative
Agent, The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank
of Commerce, NationsBank, N.A. and The Chase Manhattan Bank, as Managing Agents,
Bank of Montreal, Chicago Branch, Barclays Bank PLC, Fleet Bank, N.A. and Royal
Bank of Canada, as Agents, and Banque Paribas, Credit Lyonnais, BankBoston,
N.A., The First National Bank of Chicago, Mellon Bank, N.A. and Societe
Generale, New York Branch as Co-Agents, as amended and/or restated and in effect
from time to time.
"New York/New Jersey Commitment" shall mean, as to any Bank, its
"Commitment" as such term is used in the New York/New Jersey Agreement (as the
same may be reduced or otherwise adjusted from time to time as provided in the
New York/New Jersey Agreement).
"New York/New Jersey Companies" shall mean the New York/New Jersey
Obligors and the New York/New Jersey Subsidiaries.
"New York/New Jersey Loans" shall mean "Loans" as such term is used
in the New York/New Jersey Agreement.
"New York/New Jersey Obligors" shall mean the "Obligors" as such
term is used in the New York/New Jersey Agreement.
"New York/New Jersey Subsidiaries" shall mean the Subsidiaries of
the New York/New Jersey Obligors.
"New York/New Jersey Total Commitment" shall mean at any time the
"Total Commitment" as such term is used in the New York/New Jersey Agreement (as
the same may be reduced or otherwise adjusted from time to time as provided in
the New York/New Jersey Agreement).
"Non-US Bank" means a Person that is not a United States Person and
that is not described in Section 881(c)(3) of the Code.
"Notes" shall mean the promissory notes provided for by Section
2.06(a) hereof evidencing the Loans.
"Obligations" shall mean, collectively, the obligations of the
Company hereunder in respect of the principal of and interest on the Loans and
in respect of Bank Letters of Credit, Letter of Credit Liabilities, and all
obligations in respect of fees and other amounts payable by the Company
hereunder.
"Operating Cash Flow" shall mean, for any period, the following for
the Company, the Restricted Subsidiaries and the New York/New Jersey Companies
for such period, determined on a consolidated and, in respect of the New
York/New Jersey Companies to the
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extent such companies are not Restricted Companies during such period, a
combined basis in accordance with generally accepted accounting principles: (i)
aggregate operating revenues minus (ii) aggregate operating expenses (including
technical, programming, sales, selling, general administrative expenses and
salaries and other compensation, in each case net of amounts allocated to
Affiliates, paid to any general partner, director, officer or employee of the
Company, any Restricted Subsidiary or any New York/New Jersey Company, but
excluding interest, depreciation and amortization and compensation in respect of
the Company's employee incentive stock programs (not to exceed in the aggregate
for any calendar year 7% of the Operating Cash Flow for the Company and the
Restricted Subsidiaries for the previous calendar year) and, to the extent
otherwise included in operating expenses, any losses resulting from a write-off
or writedown of Investments by the Company, any Restricted Subsidiary or any New
York/New Jersey Company in Affiliates); provided, however, that for purposes of
determining Operating Cash Flow for any period (A) there shall be excluded (x)
all management fees paid to the Company, any Restricted Subsidiary or any New
York/New Jersey Company during such period by any Unrestricted Subsidiary other
than any such fees paid in cash to the extent not in excess of 3% of Operating
Cash Flow for the Company, the Restricted Subsidiaries and the New York/New
Jersey Companies as determined without including any such fees and (y) the
amortization of deferred installation income and (B) Operating Cash Flow for
such period shall be increased or (except for purposes of the calculations
required by Section 9.15(a)(v)(B)) reduced, as the case may be, by the Operating
Cash Flow of assets acquired or disposed of (including by means of any
redesignation of any Subsidiary pursuant to Section 9.08(c)) by the Company, any
Restricted Subsidiary or any New York/New Jersey Company on or after the first
day of such period, determined on a pro forma basis reasonably satisfactory to
the Administrative Agent (it being agreed that it shall be satisfactory to the
Administrative Agent that such pro forma calculations may be based upon
generally accepted accounting principles as applied in the preparation of the
financial statements for the Company or such New York/New Jersey Company, as the
case may be, delivered in accordance with Section 9.01 hereof rather than as
applied in the financial statements of the company whose assets were acquired
and may include, in the Company's discretion, a reasonable estimate of savings
under existing contracts resulting from any such acquisitions), as though the
Company, such Restricted Subsidiary or such New York/New Jersey Company acquired
or disposed of such assets on the first day of such period.
"Parent Corp." shall mean Cablevision Systems Corp., a Delaware
corporation.
"Participation Agreement" shall have the meaning given to such term
in Section 12.06(c) hereof.
"Payor" shall have the meaning given to such term in Section 4.04
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Debt" shall mean any Indebtedness incurred, issued or
sold by the Company after the Effective Date, provided that:
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(i) such Indebtedness (A) shall be unsecured, (B) shall have a
commercially reasonable interest rate (which rate shall be deemed
commercially reasonable if such Indebtedness is sold by a member of the
National Association of Securities Dealers, Inc. in an underwritten
offering or on a 'best efforts' basis), (C) shall be neither (1)
redeemable, payable or required to be purchased or otherwise retired or
extinguished in whole or in part at a fixed or determinable date (whether
by operation of a sinking fund or otherwise), at the option of any Person
other than the Company or upon the occurrence of a condition not solely
within the control of the Company (such as a redemption required to be
made out of future earnings) nor (2) convertible into any other
Indebtedness or capital stock of the Company that may be so retired,
extinguished or converted, in the case of clause (1) or (2) above, at any
time before the date that is one year after the Commitment Termination
Date as in effect at the time of the incurrence, issuance or sale of such
Indebtedness and (D) shall have terms and conditions no more restrictive
or burdensome than the terms and conditions of the Company's Senior
Debentures due 2009 in an aggregate principal amount of $300,000,000
issued on or about August 21, 1997; and
(ii) at the time of and immediately after giving effect to the
incurrence, issuance or sale of such Indebtedness, no Default shall have
occurred and be continuing, and the Company shall have so certified to the
Administrative Agent;
and provided further, that the Company shall (i) prior to the
issuance of any such Indebtedness, provide notice to the Administrative Agent of
the proposed issuance thereof and of the use of the proceeds thereof and (ii) as
soon as available, provide to the Administrative Agent copies of the Debt
Instruments governing such Indebtedness.
"Permitted Liens" shall mean, with respect to any Person: (i)
pledges or deposits by such Person under workers' compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or Leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or U.S.
Government bonds to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or import duties or for the
payment of rent; (ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens or other Liens arising out of judgments or awards against
such Person with respect to which such Person shall then be prosecuting appeal
or other proceedings for review (and as to which all foreclosures and other
enforcement proceedings shall have been fully bonded or otherwise effectively
stayed); (iii) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith and by appropriate
proceedings (and as to which all foreclosures and other enforcement proceedings
shall have been fully bonded or otherwise effectively stayed); (iv) Liens in
favor of issuers of performance bonds issued pursuant to the request of and for
the account of such Person in the ordinary course of its business; (v) minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of others for rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the use
of real properties or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not incurred in
connection with Indebtedness or other extensions of credit and which do not in
the aggregate materially detract from the value of said properties or
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materially impair their use in the operation of the business of such Person; or
(vi) any Lien on any Margin Stock.
"Permitted Restricted Subsidiary Transaction" shall mean any
transaction by which any Restricted Subsidiary shall (i) pay dividends or make
any distribution on its capital stock or other equity securities or pay any of
its Indebtedness owed to any other Restricted Subsidiaries, (ii) make any loans
or advances to any other Restricted Subsidiaries or (iii) transfer any of its
properties or assets to, or merge or consolidate with or into, any other
Restricted Subsidiaries.
"Person" shall mean an individual, a corporation, a partnership, a
limited liability company, a joint venture or adventure, a trust or estate or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, or any other
legal entity.
"Plan" shall mean, at any time, an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by the
Company or an ERISA Affiliate or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Company or an ERISA Affiliate is then
making or accruing an obligation to make contributions or has within the
preceding six plan years made contributions.
"Pole Rental Leases" shall mean Leases under which the Company and
the Restricted Subsidiaries have the right to use telephone or utility poles,
conduits or trenches for the purpose of supporting or housing cables of the
respective systems.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan or any other amount payable by the Company under this Agreement which is
not paid when due (whether at stated maturity, by acceleration or otherwise), a
rate per annum during the period commencing on the due date until such amount is
paid in full equal to 2% above the Base Rate as in effect from time to time plus
the Applicable Margin for Base Rate Loans; provided that, if such amount in
default is principal of a Eurodollar Loan and the due date is a day other than
the last day of an Interest Period therefor, the "Post-Default Rate" for such
principal shall be, for the period commencing on the due date and ending on the
last day of the Interest Period therefor, 2% above the interest rate for such
Loan for such Interest Period as provided in Section 3.03 hereof,
and thereafter the rate provided for above in this definition and;
provided further, that if such amount in default is any Reimbursement
Obligation, the "Post-Default Rate" for such Reimbursement Obligation shall be a
rate per annum equal to 2 and 3/4% above the Base Rate as in effect from time to
time.
"Programming Companies" shall mean, collectively, the Persons set
forth on Schedule 1.01(iv) hereto, and any New Unrestricted Subsidiary
designated as a Programming Company.
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"Prohibited Transaction" shall mean a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"Proposed Bank" shall have the meaning given to such term in Section
12.06(h) hereof.
"Quarter" shall mean a fiscal quarterly period of the Company.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, the first of which shall be on June 30, 1998, provided
that, if any such day is not a Business Day, the relevant Quarterly Date shall
be the next succeeding Business Day.
"Reduction Amount" shall have the meaning given to such term in
Section 2.04(a) hereof.
"Refunding Proceeds" shall mean, with respect to any New
Subordinated Debt, any New Preferred Stock or any New Common Stock of the
Company, (i) an amount equal to up to 100% of the Net Cash Proceeds thereof, but
only to the extent that the Company purchases, acquires, redeems, retires, pays
or prepays Subordinated Debt or preferred stock of the Company with such Net
Cash Proceeds immediately upon receipt thereof or (ii) the proceeds of Loans
reborrowed by the Company in an aggregate amount not to exceed other Loans that
were prepaid with the Net Cash Proceeds of such New Subordinated Debt, New
Preferred Stock or New Common Stock (less the amount of any such Net Cash
Proceeds constituting Refunding Proceeds by reason of clause (i) above), but, in
each case, only to the extent that the Company purchases, acquires, redeems,
retires, pays or prepays Subordinated Debt or preferred stock of the Company
with such reborrowed amounts.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean, with respect to any Bank, any change
on or after the Effective Date in United States Federal, state or foreign laws
or regulations (including Regulation D) or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank of or under any United States Federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligations" shall mean the obligations of the
Company then outstanding to reimburse the Banks for the amount paid by the Banks
in respect of any drawing under a Syndicated Letter of Credit.
"Reportable Event" shall mean (i) any of the events set forth in
Section 4043(b) (other than a Reportable Event as to which the provision of 30
days' notice to the PBGC is
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waived under applicable regulations), 4068(f) or 4063(a) of ERISA or the
regulations thereunder, (ii) an event requiring the Company or any ERISA
Affiliate to provide security to a Plan under Section 401(a)(29) of the Code and
(iii) any failure to make payments required by Section 412(m) of the Code if
such failure continues for 30 days following the due date for any required
installment.
"Required Payment" shall have the meaning given to such term in
Section 4.04 hereof.
"Required Principal Payments" shall mean for any period an amount
equal to the aggregate of (i) the excess, if any, of the aggregate amount of
Loans and Letter of Credit Liabilities outstanding at the beginning of such
period over the Total Commitment at the end of such period and (ii) the excess,
if any, of the aggregate amount of CMFRI Loans and New York/New Jersey Loans
outstanding at the beginning of such period over the aggregate amount of the
CMFRI Total Commitment and the New York/New Jersey Total Commitment at the end
of such period.
"Reserve Requirement" shall mean, for any Eurodollar Loans of any
Bank for any Interest Period, the rate at which such Bank actually is required
to maintain reserves (including any marginal, supplemental or emergency
reserves) during such Interest Period under Regulation D against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
actually required to be maintained by such Bank by reason of any Regulatory
Change against (A) any category of liabilities which includes deposits by
reference to which the Eurodollar Base Rate for such Eurodollar Loans is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (B) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Restricted Payments" shall mean direct or indirect distributions,
dividends or other payments by the Company or any Restricted Subsidiary on
account of (including, without limitation, sinking fund or other payments on
account of the redemption, retirement, purchase or acquisition of) any general
or limited partnership or joint venture interest in, or any capital stock of,
the Company or such Restricted Subsidiary, as the case may be (whether made in
cash, property or other obligations), other than (i) any such distributions,
dividends and other payments made by the Company or one Restricted Subsidiary to
the Company or another Restricted Subsidiary in respect of such interest in or
stock of the former held by the latter, (ii) distributions of any or all of the
stock of the Adams-Russell Companies or RMHI or (iii) dividends, distributions
and other payments made by Cablevision NYC MLP or Cablevision of Brookline
Limited Partnership to all of the respective partners thereof pro rata in
respect of their interests therein, provided that no change (other than a change
resulting from the redemption of Dolan's interests therein) in (A) the ownership
by such partners of Cablevision NYC MLP or Cablevision of Brookline Limited
Partnership, as the case may be, or (B) the rights of such partners to receive
such payments shall have occurred since the Effective Date.
"Restricted Subsidiaries" shall mean the Persons set forth on
Schedule 1.01(v) hereto and any New Restricted Subsidiary, provided that any
Restricted Subsidiary redesignated
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as an Unrestricted Subsidiary pursuant to and in compliance with Section 9.08(c)
shall cease to be a Restricted Subsidiary.
"RMHI" shall mean RMHI Rainbow Media Holdings, Inc., a New York
corporation.
"Scheduled Reduction Date" shall have the meaning given to such term
in Section 2.04(a) hereof.
"SEC Reports" shall mean the Form 10-K Annual Report of the Company
for the fiscal year ended December 31, 1997 and the Form 10-Q Quarterly Report
of the Company for the period ended March 31, 1998.
"Specified Investments" shall mean any Investment or series of
related Investments by the Company or any of the Restricted Subsidiaries in an
aggregate amount, when added with all CMFRI Specified Investments (without
duplication), for all such Investments not in excess of $100,000,000 in
businesses engaged primarily in the provision of video on demand, cable modem or
residential telephony services and other closely related businesses.
"Subordinated Debt" shall mean (i) $150,000,000 principal amount of
the Company's 9 7/8% Senior Subordinated Debentures due 2023, (ii) $200,000,000
principal amount of the Company's 9 7/8% Senior Subordinated Debentures due
2013, (iii) $150,000,000 principal amount of the Company's 9 7/8% Senior
Subordinated Notes due 2006, (iv) $250,000,000 principal amount of the Company's
10 1/2% Senior Subordinated Debentures due 2016, (v) $300,000,000 principal
amount of the Company's 9 1/4% Senior Subordinated Notes due 2005, (vi) any New
Subordinated Debt and (vii) any other Indebtedness of the Company incurred after
the Effective Date that is subordinated to all Obligations and obligations of
the Company in respect of Interest Swap Agreements.
"Subscribers' Certificate" shall mean a certificate of a senior
financial executive of the Company and the New York/New Jersey Obligors in
substantially the form of Exhibit C hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or adventure, limited liability company,
trust or estate:
(a) in the case of a corporation, of which a majority of the
outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether or
not at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency);
(b) in the case of a partnership or joint venture, in which
such Person is a general partner or joint venturer or of which a majority
of the partnership or other ownership interests;
(c) in the case of a limited liability company, of which a
majority of the ownership interests; or
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(d) in the case of a trust or estate, the beneficial interest
of which
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
"Syndicated Letters of Credit" shall have the meaning given to such
term in Section 2.03(a) hereof.
"Syndicated Letters of Credit Commitment" shall have the meaning
given to such term in Section 2.03(a)(i) hereof.
"Tax" means any Federal, State or foreign tax, assessment or other
governmental charge (including any withholding tax) upon a Person or upon its
assets, revenues, income or profits.
"TCI Acquisition" shall mean the transactions contemplated by the
TCI Acquisition Documents, other than the Second-Tier Reorganization (as defined
in and contemplated by the Master Reorganization Agreement referred to in the
definition of "TCI Acquisition Documents" herein).
"TCI Acquisition Documents" shall mean (i) the Amended and Restated
Contribution and Merger Agreement, dated as of June 6, 1997, by and among the
Company, Parent Corp., CSC Merger Corporation and TCI Communications, Inc., (ii)
the Master Reorganization Agreement, dated as of March 3, 1998, among Parent
Corp. and the Company, and (iii) the Assignment and Assumption Agreement, dated
as of March 4, 1998, by and among Parent Corp., CSC TKR, Inc., CSC TKR I, Inc.,
Cablevision of Oakland, Inc., Cablevision of Brookhaven, Inc. and Cablevision of
Paterson, Inc.
"TD" shall mean The Toronto-Dominion Bank.
"Termination Event" shall mean (i) a Reportable Event, (ii) the
termination of a Plan, or the filing of a notice of intent to terminate a Plan,
or the treatment of a Plan amendment as a termination under Section 4041(c) of
ERISA, (iii) the institution of proceedings to terminate a Plan under Section
4042 of ERISA or (iv) the appointment of a trustee to administer any Plan under
Section 4042 of ERISA.
"Total Available Commitment" shall mean, as of any date, the Total
Commitment as of such date minus an amount equal to the excess of (i) the
aggregate Net Cash Proceeds to be used as specified in all notices given by the
Company to the Administrative Agent in accordance with Sections 2.04(c) hereof
over (ii) the sum of (x) the aggregate amount of all reductions of the Total
Commitment required by reason of the provisos to Section 2.04(c) with respect to
such Net Cash Proceeds and (y) the aggregate amount of Loans (including the
Loans requested to be made on such date) the proceeds of which have been or,
upon the making thereof, will be used for the purposes specified in such notices
in accordance with such Sections.
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments of all the Banks (as the same may be reduced or otherwise
adjusted from time to time as provided in this Agreement).
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"Total Debt Expense" shall mean, for any period, Total Interest
Expense for such period plus an amount equal to the aggregate amount of Required
Principal Payments for such period and all other scheduled payments of principal
on other Indebtedness of the Company, the Restricted Subsidiaries and the New
York/New Jersey Companies (on a consolidated and, in respect of the New York/New
Jersey Companies to the extent such companies are not Restricted Subsidiaries
during such period, a combined basis) during such period (including, but not
limited to, the principal portion paid with respect to Capital Lease
Obligations, but excluding (i) scheduled payments of principal on Subordinated
Debt to the extent such payments are made with Refunding Proceeds or, solely in
the case of any payments of principal of the Company's 9 1/4% Senior
Subordinated Debentures due 2005 in an aggregate principal amount of
$300,000,000 or the Company's 9 7/8% Senior Subordinated Debentures due 2006 in
an aggregate principal amount of $150,000,000 at the final maturity thereof, the
Net Cash Proceeds of Permitted Debt, (ii) all obligations under any Guarantee
permitted under subparagraph (ix) of Section 9.12 hereof, and (iii) all
obligations under any Guarantee permitted under subparagraph (x)(B) of Section
9.12 hereof to the extent the obligation under any such Guarantee was paid in
common stock of the Company); provided that, for purposes of determining Total
Debt Expense for any period, there shall be included or excluded, as the case
may be, all scheduled payments of principal (other than Required Principal
Payments) during such period on Indebtedness of the Company, any Restricted
Subsidiary or any New York/New Jersey Company in respect of assets acquired or
disposed of (including by means of any redesignation of any Subsidiary pursuant
to Section 9.08(c)) by the Company, such Restricted Subsidiary or such New
York/New Jersey Company on or after the first day of such period, determined on
a pro forma basis reasonably satisfactory to the Administrative Agent (it being
agreed that it shall be satisfactory to the Administrative Agent that such pro
forma calculations may be based upon generally accepted accounting principles as
applied in the preparation of the financial statements for the Company or such
New York/New Jersey Company, as the case may be, delivered in accordance with
Section 9.01 hereof rather than as applied in the financial statements of the
company whose assets were acquired and may include, in the Company's discretion,
a reasonable estimate of savings under existing contracts resulting from any
such acquisitions), as though the Company, such Restricted Subsidiary or such
New York/New Jersey Company acquired or disposed of such assets on the first day
of such period.
"Total Fixed Charges" shall mean, for any period, Total Debt Expense
for such period plus (i) all dividends and other distributions in respect of
preferred stock of the Company during such period (other than to the extent any
such dividends and distributions are paid in New Common Stock or New Preferred
Stock) and (ii) all payments on account of the redemption, retirement or
extinguishment in whole or in part (whether by operation of a sinking fund or
otherwise) of any preferred stock of the Company, excluding any such payments to
the extent made with Refunding Proceeds and any such payments made in respect of
the Company's Series H Preferred Stock or Series M Preferred Stock to the extent
permitted by Section 9.17(vii).
"Total Interest Expense" shall mean, for any period, the sum of (i)
the aggregate amount of interest accrued during such period in respect of
Indebtedness (including the interest component of rentals in respect of Capital
Lease Obligations and including, without duplication, discount in respect of
Subordinated Debt and Permitted Debt) of the Company and the Restricted
Subsidiaries and the New York/New Jersey Companies (determined on a consolidated
and, in respect of the New York/New Jersey Companies to the extent such
companies are not Restricted
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Subsidiaries during such period, a combined basis), other than (x) obligations
under any Guarantee permitted under subparagraph (ix) of Section 9.12 hereof,
and (y) obligations under any Guarantee permitted under subparagraph (x)(B) of
Section 9.12 hereof to the extent that such obligation was paid in common stock
of the Company, (ii) the aggregate amount of fees accrued in respect of the
Syndicated Letters of Credit and Bank Letters of Credit hereunder during such
period and (iii) the aggregate amount of Commitment Fees accrued hereunder and
CMFRI Commitment Fees accrued under the CMFRI Agreement and the New York/New
Jersey Commitment Fees accrued under the New York/New Jersey Agreement during
such period. For purposes hereof, the amount of interest accrued in respect of
Indebtedness for any period (A) shall be increased (to the extent not already
treated as interest expense or income, as the case may be) by the excess, if
any, of amounts payable by the Company, any Restricted Subsidiary and/or any New
York/New Jersey Company arising under any Interest Swap Agreements during such
period over amounts receivable by the Company, any Restricted Subsidiary and/or
any New York/New Jersey Company thereunder (or reduced by the excess, if any, of
such amounts receivable over such amounts payable) and interest on a Capital
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such Capital
Lease Obligation in accordance with generally accepted accounting principles
(including Statement of Financial Accounting Standards No. 13) and (B) shall be
increased or reduced, as the case may be, by the amount of interest accrued
during such period in respect of Indebtedness of the Company or any Restricted
Subsidiary or any New York/New Jersey Company in respect of assets acquired or
disposed of (including by means of any redesignation of any Subsidiary pursuant
to Section 9.08(c)) by the Company or such Restricted Subsidiary or such New
York/New Jersey Company on or after the first day of such period, determined on
a pro forma basis reasonably satisfactory to the Administrative Agent (it being
agreed that it shall be satisfactory to the Administrative Agent that such pro
forma calculations may be based upon generally accepted accounting principles as
applied in the preparation of the financial statements for the Company or such
New York/New Jersey Company, as the case may be, delivered in accordance with
Section 9.01 hereof rather than as applied in the financial statements of the
company whose assets were acquired and may include, in the Company's discretion,
a reasonable estimate of savings under existing contracts resulting from any
such acquisitions), as though the Company or such Restricted Subsidiary or such
New York/New Jersey Company acquired or disposed of such assets on the first day
of such period.
"UCP" shall mean the Uniform Customs and Practice for Documentary
Credits, 1993 revision, International Chamber of Commerce Publication No. 500,
as the same may be amended and in effect from time to time.
"United States Person" means a corporation, partnership or other
entity created, organized or incorporated under the laws of the United States of
America or a State thereof (including the District of Columbia).
"Unrestricted Subsidiaries" shall mean the Persons set forth on
Schedule 1.01(vi) hereto and any New Unrestricted Subsidiaries, provided that
any Unrestricted Subsidiary redesignated by the Company as a Restricted
Subsidiary pursuant to and in compliance with Section 9.08(c) shall cease to be
an Unrestricted Subsidiary.
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Section 1.01 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect on December 31, 1997,
applied on a consolidated basis consistent with the audited financial statements
of the Company referred to in Section 8.04 hereof. When any definition involving
the New York/New Jersey Companies (prior to such companies becoming Restricted
Subsidiaries) requires calculations on a combined basis, such calculations shall
eliminate any intercompany items as between the Company, the Restricted
Subsidiaries and the New York/New Jersey Companies. To enable the ready
determination of compliance by the Company and the Restricted Subsidiaries with
the various covenants set forth in Article IX hereof, the Company agrees to
cause the fiscal year of itself, each Restricted Subsidiary and each New
York/New Jersey Company to end each year on December 31 and the first three
Quarters for each such Person in each year to end on March 31, June 30 and
September 30, respectively.
ARTICLE II
LOANS AND LETTERS OF CREDIT
Section 2.01 Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement:
(a) The Loans. On or after the Effective Date, to make one or more
Loans to the Company from time to time on any Business Day prior to the
Commitment Termination Date in an aggregate principal amount not to exceed at
any time outstanding such Bank's Commitment, provided that at no time shall the
aggregate outstanding principal amount of all Loans, together with the aggregate
outstanding principal amount of the Letter of Credit Liabilities, exceed the
Total Available Commitment.
(b) Types of Loans. The Loans, at the option of the Company, may be
made as, and from time to time continued as or converted into, Base Rate Loans
or Eurodollar Loans of any permitted type, or any combination thereof; provided,
however, that each borrowing of Loans shall be in an aggregate amount equal to
$500,000 or an integral multiple of $250,000 in excess thereof.
Section 2.02 Manner of Borrowing; Conversion and Continuation. (a) Notice
of Borrowing. The Company shall give the Administrative Agent (which shall
promptly notify the Banks) notice of each borrowing of Loans hereunder
substantially in the form of Schedule 2.02(a) hereto, which notices shall be
irrevocable and effective only upon receipt by the Administrative Agent, shall
specify the aggregate amount, the type or types and date of the Loans to be
borrowed and (in the case of Eurodollar Loans) the duration of the Interest
Period therefor and shall be given not later than 11:00 a.m. New York time on
the day which is not less than the number of Business Days prior to the date of
such borrowing specified below:
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Type Number of Business Days
---- -----------------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Company to the
Administrative Agent under this Section 2.02(a) may be given orally by telephone
and confirmed in writing within one Business Day. In the case of any
discrepancies between oral and written notices received by the Administrative
Agent, the oral notice shall be effective as understood in good faith by the
Administrative Agent.
(b) Funding. Not later than 1:00 p.m. New York time on the date
specified for each borrowing hereunder, each Bank shall make available the
amount of the Loan to be made by it on such date to the Administrative Agent in
immediately available funds, for the account of the Company. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company designated by the
Company or by wiring the same, in immediately available funds, to any account
specified by the Company in its notice of borrowing.
(c) Conversion and Continuation. (i) All or any part of the
principal amount of any Loan may, on any Business Day, be converted into another
type or types of Loan, except that Eurodollar Loans may be converted only on the
last day of the applicable Interest Period.
(ii) Base Rate Loans shall continue as Base Rate Loans unless
and until such Loans are converted into Eurodollar Loans of any type. Each
Eurodollar Loan shall continue as a Eurodollar Loan until the end of the then
current Interest Period therefor, at which time it shall be automatically
converted into a Base Rate Loan unless the Company shall have given the
Administrative Agent notice in accordance with Section 2.02(c)(iv) hereof
requesting either that such Eurodollar Loan continue as a Eurodollar Loan of
such type for another Interest Period or that such Eurodollar Loan be converted
into a Eurodollar Loan of another type at the end of such Interest Period.
(iii) Notwithstanding anything to the contrary contained in
Section 2.02(c)(i) or (ii) hereof, during an Event of Default, the
Administrative Agent shall, at the direction of the Majority Banks, notify the
Company that Loans may only be converted into or continued as Loans of certain
specified types and, thereafter, until no Event of Default shall continue to
exist, Loans may not be converted into or continued as Loans of any type other
than one or more of such specified types.
(iv) The Company shall give the Administrative Agent (which
shall promptly notify the Banks) notice of each conversion or continuation of
Loans hereunder substantially in the form of Schedule 2.02(c) hereto, which
notices shall be irrevocable and effective only upon receipt by the
Administrative Agent, shall specify (x) the aggregate amount and the type of the
Loans to be converted or continued and (in the case of Eurodollar Loans) the
duration of the Interest Period therefor, (y) the requested date of such
conversion or continuation and (z) the amount and type or types of Loans into
which such Loans are to be converted or as
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which such Loans are to be continued, and shall be given not later than 11:00
a.m. New York time on the day which is not less than the number of Business Days
prior to the date of such conversion or continuation into or as the type of
Loans specified below:
Type Number of Business Days
---- -----------------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Company to the
Administrative Agent under this Section 2.02(c)(iv) may be given orally by
telephone and confirmed in writing within one Business Day. In the case of any
discrepancies between oral and written notices received by the Administrative
Agent, the oral notice shall be effective as understood in good faith by the
Administrative Agent.
Section 2.03 Letters of Credit. (a) Syndicated Letters of Credit. Subject
to the terms and conditions hereof, TD shall issue for the account of the
Company one or more letters of credit (the "Syndicated Letters of Credit"). The
following provisions shall apply to the Syndicated Letters of Credit:
(i) The Syndicated Letters of Credit Commitment shall be an
amount equal to the lesser of (x) $60,000,000 less the aggregate amount of
Reimbursement Obligations then outstanding and (y) the Total Available
Commitment less the aggregate principal amount of the Loans and
Reimbursement Obligations then outstanding.
(ii) The Syndicated Letters of Credit (A) shall each have a
minimum face amount at least equal to $25,000, (B) shall have an aggregate
undrawn face amount not in excess of the Syndicated Letters of Credit
Commitment, (C) shall each have a term not in excess of one year, (D) may,
at the sole option of TD, be renewable, (E) shall not extend beyond the
Commitment Termination Date and (F) shall be utilized for general business
purposes.
(iii) The Company shall give the Administrative Agent at least
five Business Days' prior notice (effective upon receipt) specifying the
date each Syndicated Letter of Credit is to be issued and attaching a
completed form of such Syndicated Letter of Credit and a description of
the nature of the transactions proposed to be supported thereby. Upon the
issuance of each Syndicated Letter of Credit, the Administrative Agent
shall notify each Bank of the contents thereof.
(iv) Upon the date of issuance of each Syndicated Letter of
Credit, TD shall be deemed, without further action by any party hereto, to
have sold to each Bank, and each Bank shall be deemed, without further
action by any party hereto, to have purchased from TD an undivided and
continuing participation, to the extent of such Bank's Commitment
Percentage, in such Syndicated Letter of Credit.
(v) Upon receipt from the beneficiary of any Syndicated Letter
of Credit of any demand for payment under such Syndicated Letter of
Credit, TD shall promptly
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notify the Company as to the amount to be paid as a result of such demand
and the respective payment date.
(vi) Each Bank shall promptly, upon demand by TD, remit to TD,
through the Administrative Agent, its pro rata share of the payment made
by TD together with interest thereon for each day from the day of demand
through the day of payment at a rate equal to the Federal Funds Rate. TD
shall promptly remit to each Bank, through the Administrative Agent, such
Bank's pro rata share of any payment received by TD to the extent that
such Bank has reimbursed TD in accordance with this clause (vi).
(vii) The Company shall not later than noon New York time on
the date of payment of each drawing, reimburse TD, through the
Administrative Agent, for any amounts paid by TD under any Syndicated
Letter of Credit.
(viii) The Company will pay to the Administrative Agent for
the account of each Bank a letter of credit fee on such Bank's Commitment
Percentage of the daily average undrawn face amount of each Syndicated
Letter of Credit for the period from and including the date of issuance
thereof to and including the date of expiration or termination thereof at
a rate per annum equal to the Applicable Margin which would then be in
effect for Eurodollar Loans, such fee to be paid quarterly in arrears on
each Quarterly Date.
(ix) On each day during the period commencing with the
issuance by TD of any Syndicated Letter of Credit and until such
Syndicated Letter of Credit shall have expired or been terminated, the
Commitment of each Bank shall be deemed to be utilized for all purposes
hereof in an amount equal to such Bank's Commitment Percentage of the then
undrawn face amount of such Syndicated Letter of Credit.
(x) The issuance by TD of each Syndicated Letter of Credit
shall, in addition to the conditions precedent set forth in Sections 7.01
and 7.02 hereof, be subject to the conditions precedent that such
Syndicated Letter of Credit shall be completed in such form as shall be
satisfactory to TD in its sole discretion and that the Company shall have
executed and delivered such other instruments and agreements relating to
such Syndicated Letter of Credit as TD shall have requested.
(xi) Each of the parties hereto hereby agrees that the
Syndicated Letters of Credit (as defined in the 1996 Agreement) issued by
TD under the 1996 Agreement prior to the Effective Date, including any
renewals thereof and extensions thereto, shall constitute Syndicated
Letters of Credit for all purposes of this Agreement.
(b) Bank Letters of Credit. Subject to the terms and conditions
hereof, any Bank may from time to time in its sole discretion, upon the request
of the Company, elect to issue for the account of the Company one or more
letters of credit (the "Bank Letters of Credit"). The following provisions shall
apply to the Bank Letters of Credit:
(i) The Bank Letters of Credit (A) shall have an aggregate
face amount not in excess of $10,000,000 and (B) shall not extend beyond
the Commitment Termination Date.
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(ii) Upon receipt from the beneficiary of any Bank Letter of
Credit of any demand for payment under such Bank Letter of Credit, such
Bank shall promptly notify the Company as to the amount to be paid as a
result of such demand and the respective payment date.
(iii) The Company shall immediately upon such drawing
reimburse each Bank issuing a Bank Letter of Credit for any amounts paid
by such Bank upon any drawing under any Bank Letter of Credit.
(iv) The issuance by any Bank of each Bank Letter of Credit
shall, in addition to the conditions precedent set forth in Sections 7.01
and 7.02 hereof, be subject to the conditions precedent that such Bank
Letter of Credit be in such form, contain such terms and support such
transactions as shall be satisfactory to such Bank and that the Company
shall have executed and delivered such other instruments and agreements
relating to such Bank Letter of Credit as such Bank shall have requested.
(c) Reimbursement of Costs and Expenses. The Company agrees to
reimburse the Administrative Agent, the Banks and TD for any costs and expenses
incurred by such parties in connection with the preparation of any Syndicated
Letter of Credit or Bank Letter of Credit pursuant to a notice from the Company
which notice was revoked.
Section 2.04 Reductions and Changes of Commitments. (a) Scheduled
Reductions to Total Commitment. Subject to the adjustments described in Section
2.04(d) hereof, the Total Commitment shall be automatically reduced on each
Quarterly Date falling on or nearest to the date specified in column (x) below
(each such Quarterly Date, a "Scheduled Reduction Date") by the Dollar amount
specified in column (y) below opposite such date (the "Reduction Amount"):
(x) (y)
Quarterly Date
Falling on or Nearest to Reduction Amount
- - ------------------------ ----------------
June 30, 2001 $23,333,333
September 30, 2001 $23,333,333
December 31, 2001 $23,333,334
March 31, 2002 $35,000,000
June 30, 2002 $35,000,000
September 30, 2002 $35,000,000
December 31, 2002 $35,000,000
March 31, 2003 $52,500,000
June 30, 2003 $52,500,000
September 30, 2003 $52,500,000
December 31, 2003 $52,500,000
March 31, 2004 $52,500,000
June 30, 2004 $52,500,000
September 30, 2004 $52,500,000
December 31, 2004 $52,500,000
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March 31, 2005 $52,500,000
June 30, 2005 $52,500,000
September 30, 2005 $52,500,000
December 31, 2005 $52,500,000
March 31, 2006 $70,000,000
June 30, 2006 $70,000,000
September 30, 2006 $70,000,000
December 31, 2006 $70,000,000
March 31, 2007 $280,000,000
The Total Commitment shall be reduced to zero on the Commitment Termination
Date.
(b) Optional Reductions and Terminations. (i) The Company shall have
the right to terminate or reduce the Total Commitment at any time or from time
to time, provided that (A) the Company shall give notice of each such
termination or reduction to the Administrative Agent at least two Business Days
prior thereto, (B) each partial reduction thereof shall be in an aggregate
amount at least equal to $5,000,000 and (C) the Total Commitment may not be
reduced at any time to an amount less than the aggregate principal amount of the
Loans and the Letter of Credit Liabilities outstanding at such time.
(ii) Notwithstanding anything to the contrary in this Agreement, so
long as no Default has occurred and is continuing, the Company shall have the
right to reduce or terminate the Aggregate Commitment of any Bank at any time or
from time to time (subject to clause (F) below) without reducing or terminating
the Aggregate Commitment (or any part thereof) of any other Bank at such time,
provided that (A) such reduction or termination shall be made on terms and
conditions agreed upon in writing by the Company and such Bank, (B) the Company
and such Bank shall have notified the Administrative Agent in writing of such
reduction or termination at least two Business Days prior thereto, (C) such
reduction or termination shall be made pro rata among such Bank's Commitment,
such Bank's CMFRI Commitment and, if the New York/New Jersey Agreement is then
in effect, such Bank's New York/New Jersey Commitment based on the relationship
of each such Commitment to such Bank's Aggregate Commitment, (D) the aggregate
amount of all reductions and terminations of the Aggregate Commitments of Banks
made pursuant to this clause (ii) shall not exceed $420,000,000, (E) after
giving effect to each reduction or termination and any prepayment of such Bank's
Loans pursuant to Section 3.01(b)(iii) in connection therewith, the Total
Commitment may not be less than the aggregate principal amount of the Loans and
the Letter of Credit Liabilities outstanding at such time, and (F) no such
reduction or termination may be made pursuant to this clause (ii) after November
18, 1999 (or such later date as is agreed in writing by the Majority Banks).
(c) Special Mandatory Reductions. At any time at which the Cash Flow
Ratio exceeds 5.50 to 1, the Total Commitment shall be automatically reduced
upon the date of any sale, transfer or other disposition of the types permitted
under Section 9.15(a)(v) hereof (other than the Kalamazoo Sale), by an amount
equal to 50% of the excess of the Net Cash Proceeds thereof over all or any
portion of such Net Cash Proceeds that will be used, as specified in a notice
from the Company to the Administrative Agent, for an acquisition permitted under
Section 9.15(b)(ii) hereof; provided, however, that if the Company or the
applicable Restricted Subsidiary shall not have entered into a binding purchase
agreement with respect to any such
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acquisition on or before the date that is six months after the date of such
disposition, the Total Commitment shall be automatically reduced (without
duplication) on such date by an amount by equal to 50% of the entire Net Cash
Proceeds of such sale, transfer or disposition; and provided further, however,
that if the Company or the applicable Restricted Subsidiary shall have entered
into a binding purchase agreement within six months after the date of such
disposition, but does not complete such acquisition within nine months of
signing such binding purchase agreement, the Total Commitment shall
automatically be reduced (without duplication) on the last day of such
nine-month period by an amount equal to 50% of the entire Net Cash Proceeds of
such sale, transfer or disposition.
(d) Adjustments to Scheduled Reduction. Upon any reduction of the
Total Commitment pursuant to Section 2.04(b)(i) or (c) hereof on any date, the
schedule set forth in Section 2.04(a) hereof shall be adjusted, after giving
effect to any prior adjustments thereto pursuant to this Section 2.04(d), by
reducing the Reduction Amount set forth in column (y) of such schedule opposite
each Scheduled Reduction Date occurring after such date by an amount equal to
(x) the amount of such reduction of the Total Commitment effected pursuant to
Section 2.04(b)(i) or (c) hereof multiplied by (y) a fraction, the numerator of
which is such Reduction Amount as then in effect and the denominator of which is
the Total Commitment then in effect.
(e) No Reinstatement. The Total Commitment once terminated or
reduced may not be reinstated.
(f) Pro Rata Treatment. Except to the extent otherwise provided
herein, each reduction of the Total Commitment shall be applied to the
Commitments of the Banks pro rata in accordance with their respective Commitment
Percentages.
Section 2.05 Commitment Fees. The Company shall pay to the Administrative
Agent for the account of each Bank a commitment fee (the "Commitment Fee") (i)
for the period from and including May 28, 1998 to but excluding the earlier of
(x) the Effective Date and (y) June 30, 1998, on the daily average amount
representing the result of (A) such Bank's Commitment minus (B) such Bank's
Commitment, if any, under (and as defined in) the 1996 Agreement during such
period, at a rate per annum equal to 0.1250% and (ii) for the period from and
including the earlier of (x) the Effective Date and (y) June 30, 1998 to but not
including the earlier of the date such Bank's Commitment is terminated and the
Commitment Termination Date, on the amount of the daily average unutilized
amount of such Bank's Commitment during such period, at a rate per annum equal
to (A) 0.2500% at any time at which the Cash Flow Ratio is greater than or equal
to 5.50 to 1 and (B) 0.1875% at any time at which the Cash Flow Ratio is less
than 5.50 to 1. For purposes of calculating the Commitment Fee, the Commitment
of each Bank shall be deemed to be utilized in an amount equal to (i) the
aggregate outstanding principal amount of such Bank's Loans plus (ii) such
Bank's Commitment Percentage multiplied by the aggregate amount of Letter of
Credit Liabilities. Accrued Commitment Fees under this Section 2.05 shall be
payable in arrears on each Quarterly Date.
Section 2.06 Notes. (a) Form of Notes. The Loans made by each Bank shall
be evidenced by a single Note of the Company, in substantially the form of
Exhibit A hereto, dated the Effective Date and payable to the order of such Bank
in a principal amount equal to its Commitment, as originally in effect, and
otherwise duly completed. Each Bank that is a 1996
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Bank shall deliver its Notes (as defined in the 1996 Agreement), marked
"canceled", to the Company on or promptly after the Effective Date.
(b) Endorsements. Each Bank is hereby authorized by the Company to
endorse on a schedule attached to the Note of such Bank (or any continuation
thereof) the amount and date of each Loan made by such Bank to the Company
hereunder, and the amount of each payment on account of principal of such Loan
received by such Bank, provided that any failure by such Bank to make any such
endorsement shall not affect the obligations of the Company under such Note or
hereunder in respect of such Loans.
Section 2.07 Lending Offices. The Loans of each type made by each Bank
shall be made and maintained at such Bank's Applicable Lending Office set forth
on Schedule 2.07 for Loans of such type.
Section 2.08 Several Obligations; Remedies Independent. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither the Administrative Agent nor any Bank shall be responsible for the
failure of any other Bank to make a Loan to be made by such other Bank. The
amounts payable by the Company at any time hereunder and under the Notes to each
Bank shall be a separate and independent debt and each Bank shall, subject to
Section 10.01 hereof, be entitled to protect and enforce its rights arising out
of this Agreement and the Notes, and it shall not be necessary for any other
Bank or the Administrative Agent to consent to, or be joined as an additional
party in, any proceedings for such purposes.
Section 2.09 Use of Proceeds. The proceeds of the Loans made hereunder
shall be used only for the general business purposes of the Company and the
Restricted Subsidiaries and for any transaction or activity in which the Company
and the Restricted Subsidiaries are permitted to engage under the provisions of
this Agreement. The proceeds of any extension of credit hereunder shall not be
used in violation of the provisions of Section 8.07 hereof.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments. (a) Optional Prepayments. The Company may, at
any time and from time to time (subject, in the case of Eurodollar Loans, to
Section 5.05 hereof), prepay Base Rate Loans on any Business Day if prior notice
is given to the Administrative Agent before 11:00 a.m. New York time on such day
(and if such notice is received by the Administrative Agent after 11:00 a.m. New
York time, on the next succeeding Business Day), and Eurodollar Loans upon not
less than three Business Days' prior notice to the Administrative Agent (and the
Administrative Agent shall promptly notify the Banks in each case of such
notice), which notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be not less than
$5,000,000), and shall be irrevocable and effective only upon receipt by the
Administrative Agent, provided that, in the case of Eurodollar Loans, interest
on the principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date.
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(b) Mandatory Prepayments. (i) The Company shall, in the event of
any reduction of the Total Commitment that reduces the Total Available
Commitment to an amount less than the outstanding undrawn face amount of the
Syndicated Letters of Credit, cause the respective beneficiaries of such
Syndicated Letters of Credit to reduce such undrawn face amount to an amount not
greater than the amount of the Total Available Commitment as so reduced. If such
reduction is not promptly effected, the Company shall upon demand by the
Majority Banks pay to the Administrative Agent an amount in immediately
available funds equal in the aggregate to the undrawn face amount of the
Syndicated Letters of Credit in excess of the Total Available Commitment as so
reduced to be held by the Administrative Agent in a cash collateral account as
collateral for the prompt payment and performance when due of the Company's
Obligations under such Syndicated Letters of Credit.
(ii) The Company shall, upon (A) the incurrence, issuance or
sale of any Permitted Debt permitted under Section 9.11(iii) hereof, prepay
Loans in an amount equal to the Net Cash Proceeds of such Permitted Debt or (B)
any sale, transfer or other disposition permitted under Section 9.15(a)(v)
hereof (other than the Kalamazoo Sale), prepay Loans in an amount equal to 50%
of the Net Cash Proceeds thereof. Amounts prepaid pursuant to this clause (ii)
may be reborrowed in accordance with the provisions of this Agreement, provided
that, notwithstanding anything in this Agreement to the contrary, amounts
prepaid from any sale, transfer or other disposition pursuant to clause (B)
above may be reborrowed by the Company solely for the purpose of effecting
acquisitions permitted under Section 9.15(b)(ii) hereof and solely to the extent
that such disposition has not resulted in a mandatory reduction of the Total
Commitment pursuant to the provisos to Section 2.04(c) hereof.
(iii) On the date of any reduction or termination of any
Bank's Aggregate Commitment pursuant to Section 2.04(b)(ii), the Company shall
repay such Bank's Loans and Reimbursement Obligations in an aggregate amount
such that, after giving effect to such reduction or termination and such
repayment, the respective aggregate outstanding amounts of such Bank's Loans and
Reimbursement Obligations shall equal such Bank's Commitment Percentage of the
respective amounts of all outstanding Loans and Reimbursement Obligations. Each
repayment required by this Section 3.01(b)(iii) shall be applied pro rata among
each type of Loan held by such Bank. The requirements of Section 4.02 shall not
apply to any payment made by the Company pursuant to this clause (iii).
Section 3.02 Repayment of Loans. On each Scheduled Reduction Date, the
Company shall pay to the Administrative Agent for the account of the Banks the
excess, if any, of (i) the aggregate principal amount of the Loans, together
with the Letter of Credit Liabilities, outstanding on such Scheduled Reduction
Date over (ii) the Total Available Commitment (after giving effect to any
termination or reduction of the Total Commitment pursuant to Section 2.04(a)
hereof) on such Scheduled Reduction Date, together with interest thereon accrued
to such Scheduled Reduction Date and any amounts payable pursuant to Section
5.05 hereof in connection therewith.
Section 3.03 Interest. (a) The Company hereby promises to pay to the
Administrative Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period commencing on the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
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(i) if such Loan is a Base Rate Loan, the Base Rate plus the
Applicable Margin; and
(ii) if such Loan is a Eurodollar Loan, the Eurodollar Rate for such
Loan for the Interest Period therefor plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for the account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank, and on any
other amount (including, without limitation, any Reimbursement Obligation and
any obligation of the Company in respect of any Bank Letter of Credit) payable
by the Company hereunder to or for the account of such Bank (but, if such amount
is interest, only to the extent legally enforceable), which shall not be paid in
full when due (whether at stated maturity, by acceleration or otherwise), for
the period commencing on the due date thereof until the same is paid in full.
(b) Accrued interest on each Loan shall be payable (i) on the last
day of each Interest Period for such Loan (and, if such Interest Period is
longer than three months (in the case of a Eurodollar Loan), on each three-month
anniversary of the first day of such Interest Period), (ii) in the case of a
Eurodollar Loan, when such Loan shall be converted or be due by reason of
prepayment and (iii) when such Loan shall be due at maturity or by reason of
acceleration or otherwise (other than by reason of prepayment), except that
interest payable at the Post-Default Rate shall be payable from time to time on
demand of the Administrative Agent, the Majority Banks or any Bank in respect of
its Bank Letter of Credit. Promptly after the determination of any interest rate
provided for herein or any change therein, the Administrative Agent shall notify
the Banks and the Company thereof.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Company
hereunder and under the Notes shall be made in Dollars, in immediately available
funds, to the Administrative Agent not later than 11:00 a.m. New York time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day). The Administrative Agent, or any Bank for whose account any such
payment is made, may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of
the Company with the Administrative Agent or such Bank, as the case may be. The
Company shall, at the time of making each payment hereunder or under any Note,
specify to the Administrative Agent the Loans or other amounts payable by the
Company hereunder to which such payment is to be applied (but in the event that
the Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may apply such payment as it may elect in
its sole discretion, but subject to Section 4.02 hereof). Each payment received
by the Administrative Agent hereunder or under any Note for the account of a
Bank shall be paid promptly to such Bank, in immediately available funds, for
the account of such Bank's Applicable Lending Office for the Loan in respect of
which such payment is made.
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Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) subsequent to the initial borrowing hereunder, the Loans shall be
made by the Banks pro rata according to their respective Commitment Percentages;
(b) each payment by the Company of principal of the Loans shall be made to the
Administrative Agent for the account of the Banks pro rata in accordance with
the respective unpaid principal amounts of such Loans held by the Banks plus
such Banks' respective Commitment Percentages of outstanding Letter of Credit
Liabilities; (c) each payment by the Company of interest on the Loans of a
particular type shall be made to the Administrative Agent for the account of the
Banks holding Loans of such type pro rata in accordance with the respective
unpaid principal amounts of such Loans held by such Banks; and (d) each payment
of the Commitment Fee shall be made for the account of the Banks pro rata in
accordance with their respective Commitment Percentages. In no event shall the
Company at any time be entitled to request or receive any Loans or Syndicated
Letters of Credit if, after giving effect to the making or issuance thereof and
the application of the proceeds thereof, the amount of any Bank's Loans plus its
Letter of Credit Liabilities would exceed such Bank's Commitment Percentage of
the aggregate amount of Loans plus Letter of Credit Liabilities of all Banks
outstanding at such time.
Section 4.03 Computations. Interest on Eurodollar Loans, the Commitment
Fee and fees in respect of Syndicated Letters of Credit shall be computed on the
basis of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable, and interest
on Base Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable, except that
all interest determined on the basis of the Post-Default Rate shall be computed
on the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day).
Section 4.04 Non-Receipt of Funds by Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or the Company (the
"Payor") prior to the date on which such Bank is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder (or
the purchase of a participation by such Bank in a Syndicated Letter of Credit)
or the Company is to make a payment to the Administrative Agent for the account
of one or more of the Banks, as the case may be (such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient of such payment if the Company or a Bank
(and, if such recipient is the Company or the beneficiary of a Syndicated Letter
of Credit and the Company fails to pay the amount thereof to the Administrative
Agent forthwith upon such demand, the Payor) shall, on demand, pay to the
Administrative Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Administrative Agent until the date the Administrative Agent
recovers such amount at the Federal Funds Rate.
Section 4.05 Sharing of Payments, Etc. Each of the Company and the
Guarantors agrees that, in addition to (and without limitation of) any right of
set-off, banker's lien or
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counterclaim a Bank may otherwise have, each Bank shall be entitled, at its
option, to offset balances held by it for account of the Company or any
Restricted Subsidiary at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Bank's Loans
hereunder, or any Reimbursement Obligation or obligations then outstanding in
respect of Bank Letters of Credit held by such Bank hereunder, which is not paid
when due (regardless of whether such balances are then due to the Company or
such Guarantor), in which case it shall promptly notify the Company and the
Administrative Agent thereof, provided that such Bank's failure to give such
notice shall not affect the validity thereof. If a Bank shall obtain payment of
any principal of or interest on any Loan made by it to the Company under this
Agreement, or on any Reimbursement Obligation or obligations then outstanding in
respect of Bank Letters of Credit held by such Bank hereunder, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, and, as a result of such payment, such Bank shall have received a
greater percentage of the amounts then due hereunder by the Company to such Bank
than the percentage received by other Banks, it shall promptly purchase from
such other Banks participations in the Loans made, or Reimbursement Obligations
or obligations then outstanding in respect of Bank Letters of Credit held, by
such other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such excess payment (net of any expense which may be incurred by such Bank in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and interest on the Loans and Reimbursement Obligations or
obligations then outstanding in respect of Bank Letters of Credit held by each
of the Banks. To such end all the Banks shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored. Each of the Company and the
Guarantors agrees that any Bank so purchasing a participation in the Loans made,
or Reimbursement Obligations or obligations then outstanding in respect of Bank
Letters of Credit held, by other Banks may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such participation
as fully as if such Bank were a direct holder of Loans in the amount of such
participation. Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company or any other Guarantor. If under any applicable
bankruptcy, insolvency or other similar law, any Bank receives a secured claim
in lieu of a set-off to which this Section 4.05 applies, such Bank shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Banks entitled under this Section 4.05
to share in the benefits of any recovery on such secured claim.
Section 4.06 Commercial Practices in Respect of Letters of Credit. Without
affecting any rights the Banks may have under applicable law (including under
the UCP), the Company agrees that none of the Banks, the Administrative Agent,
nor any of their respective officers or directors shall be liable or responsible
for, and the obligations of the Company to the Banks, and the Administrative
Agent hereunder shall not in any manner be affected by: (i) the use which may be
made of any Syndicated Letter of Credit or Bank Letter of Credit or the proceeds
thereof by the beneficiary thereof or any other Person; (ii) the validity,
sufficiency or genuineness of documents other than the Syndicated Letters of
Credit or Bank Letters of Credit, or of any endorsement(s) thereon, even if such
documents should, in fact, prove to be in any or all respects, invalid,
insufficient, fraudulent or forged; or (iii) any other circumstances whatsoever
in making or failing to make payment under any Syndicated Letter of Credit or
Bank Letter of
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Credit, except that the Company shall have a claim against a Bank, and such Bank
shall be liable to the Company, to the extent, but only to the extent, of any
direct, as opposed to consequential, damages suffered by the Company which are
caused by such Bank's willful misconduct or gross negligence in determining
whether documents presented under any Syndicated Letter of Credit or Bank Letter
of Credit complied with the terms of such Syndicated Letter of Credit or Bank
Letter of Credit or such Bank's willful failure to pay under such Syndicated
Letter of Credit or Bank Letter of Credit after the presentation to it of
documents strictly complying with the terms and conditions of such Syndicated
Letter of Credit or Bank Letter of Credit. In furtherance and not in limitation
of the foregoing, any Bank may accept documents that appear on their face to be
in order without responsibility for further investigation, regardless of any
notice or information to the contrary.
Section 4.07 No Reductions. All payments due to the Administrative Agent
or any Bank under this Agreement shall be made by the Company without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim or Tax, except, subject to Section 4.08, for
any withholding or deduction for Taxes required to be withheld or deducted under
applicable law.
Section 4.08 Taxes. (a) Taxes Payable by the Company. If under applicable
law any Tax is required to be withheld or deducted from, or is otherwise payable
by the Company in connection with, any payment to the Administrative Agent or
any Bank under this Agreement, the Company shall, subject to Section 4.08(b),
pay to the Administrative Agent or such Bank, as applicable, such additional
amounts as may be necessary so that the net amount received by the
Administrative Agent or such Bank with respect to such payment, after
withholding or deducting all Taxes required to be withheld or deducted, is equal
to the full amount payable under this Agreement.
(b) Limitations . Notwithstanding anything to the contrary contained
herein, the Company shall not be required to pay any additional amount in
respect of withholding of United States Federal income taxes pursuant to this
Section 4.08 to any Bank except to the extent (A) such Taxes are required to be
withheld solely as a result of (1) in the case of a person that is a Bank on the
Effective Date, a Regulatory Change enacted after the Effective Date and (2) in
the case of a Person that becomes a Bank after the Effective Date, a Regulatory
Change enacted after such Person becomes a Bank, and (B) such Bank has not
failed to submit any form or certificate that it is entitled to so submit under
applicable law.
(c) Exemption from U.S. Withholding Taxes . There shall be submitted to
the Company and the Administrative Agent, (A) on or before the first date that
interest or fees are payable to such Bank under this Agreement, (1) if at the
time the same are applicable, (aa) by each Bank that is not a United States
Person, two duly completed and signed copies of Internal Revenue Service Form
1001 or 4224 (or any successor form to the applicable form), in either case
entitling such Bank to a complete exemption from withholding of any United
States federal income taxes on all amounts to be received by such Bank under
this Agreement, or (bb) by each Bank that is a Non-US Bank, (x) a duly completed
Internal Revenue Service Form W-8 (or any successor form to such form) and (y) a
certification in the form of Schedule 4.08(c) that such Bank is a Non-US Bank or
(2) if at the time any of the foregoing are inapplicable, duly completed and
signed copies of such form, if any, as entitles such Bank to exemption from
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withholding of United States federal income taxes to the maximum extent to which
such Bank is then entitled under applicable law, and (B) from time to time
thereafter, prior to the expiration or obsolescence of any previously delivered
form or upon any previously delivered form becoming inaccurate or inapplicable,
such further duly completed and signed copies of such form, if any, as entitles
such Bank to exemption from withholding of United States federal income taxes to
the maximum extent to which such Bank is then entitled under applicable law.
Each Bank shall promptly notify the Company and the Administrative Agent if (A)
it is required to withdraw or cancel any form or certificate previously
submitted by it or any such form or certificate has otherwise become ineffective
or inaccurate or (B) payments to it are or will be subject to withholding of
United States federal income taxes to a greater extent than the extent to which
payments to it were previously subject. Upon the request of the Company or the
Administrative Agent, each Bank that is a United States Person shall from time
to time submit to the Company and the Administrative Agent a certificate to the
effect that it is such a United States Person and a duly completed Internal
Revenue Service Form W-9 (or a successor form to such form).
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans. (a) The Company shall
pay to the Administrative Agent for the account of each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs incurred by such Bank which such Bank determines are attributable to its
making or maintaining any Eurodollar Loans hereunder or its commitment to make
such Eurodollar Loans hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of such Eurodollar Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or its Note in respect of such Eurodollar Loans
(other than taxes imposed on the overall net income of such Bank or of its
Applicable Lending Office for such Eurodollar Loans by the jurisdiction in
which such Bank has its principal office or such Applicable Lending
Office); or
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities
of, such Bank (including such Eurodollar Loans or any deposits referred to
in the definition of "Eurodollar Base Rate" in Section 1.01 hereof), or
any commitments of such Bank; or
(iii) imposes any other condition affecting this Agreement or the
Commitment of such Bank (or any of such extensions of credit or
liabilities).
Each Bank will notify the Company through the Administrative Agent of any event
which will entitle such Bank to compensation pursuant to this Section 5.01(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation, and (if so
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requested by the Company through the Administrative Agent) will designate a
different Applicable Lending Office for the Loans of such Bank affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, be disadvantageous
to such Bank, provided that the Company shall not be obligated to compensate any
Bank under this Section 5.01(a) for any Additional Costs incurred more than six
months prior to the date the respective Bank requests the Company for such
compensation, except for periods preceding such date but which are after the
date such Bank notified the Company of the possibility that such Additional
Costs might be incurred as a result of the respective Regulatory Change. Each
Bank will furnish the Company with a statement setting forth the basis and
amount of each request by such Bank for compensation under this Section 5.01(a).
If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Bank through the Administrative Agent,
require that such Bank's Loans of the type with respect to which such
compensation is requested be converted into Base Rate Loans in accordance with
Section 5.04 hereof.
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on any
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes any Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Company (with a copy to the Administrative Agent), the obligation
of such Bank to make, and to convert Loans of any other type into, Loans of such
type hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect.
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank for Capital Maintenance Costs with respect to
its Loans or Commitment (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Bank to a level below that which such Bank could have achieved but for such law,
regulation, interpretation, directive or request). Each Bank will notify the
Company that it is entitled to compensation pursuant to this Section 5.01(c) as
promptly as practicable after it determines to request such compensation,
provided that the Company shall not be obligated to compensate any Bank under
this Section 5.01(c) for any such costs incurred more than six months prior to
the date the respective Bank requests the Company for such compensation, except
for periods preceding such date but which are after the date such Bank notified
the Company of the possibility that such costs might be incurred.
(d) Determinations by any Bank for purposes of this Section 5.01 of
the effect of any Regulatory Change on its costs of making or maintaining Loans
or maintaining its Commitment or on amounts receivable by it in respect of Loans
or its Commitment, and of the additional amounts required to compensate such
Bank in respect of any Additional Costs, shall be conclusive, provided that such
determinations are made on a reasonable basis.
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Section 5.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall
be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such Loans
as provided in this Agreement; or
(b) the Majority Banks determine (which determination shall be
conclusive) and notify the Administrative Agent that the relevant rates of
interest referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof upon the basis of which the rates of interest for such
Eurodollar Loans are to be determined do not adequately cover the cost to
such Banks of making or maintaining such Loans;
then the Administrative Agent shall promptly notify the Company and each Bank
thereof, and so long as such condition remains in effect, the Banks shall be
under no obligation to make Eurodollar Loans of the affected type.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Bank or
its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Bank
shall promptly notify the Company thereof through the Administrative Agent
(which notice shall include a statement explaining the nature of such
unlawfulness) and such Bank's obligation to make Eurodollar Loans shall be
suspended until such time as such Bank may again make and maintain Eurodollar
Loans and such Bank's outstanding Eurodollar Loans shall be converted into Base
Rate Loans in accordance with Section 5.04 hereof.
Section 5.04 Certain Conversions of Loans Pursuant to Section 5.01 or
5.03. If the obligation of any Bank to make any type of Eurodollar Loans shall
be suspended pursuant to Section 5.01 or 5.03 hereof (Loans of such type being
herein called "Affected Loans" and such type being herein called the "Affected
Type"), all Loans which would otherwise be made by such Bank as Loans of the
Affected Type shall be made instead as Base Rate Loans (and, if an event
referred to in Section 5.01 or 5.03 hereof has occurred and such Bank determines
that it is required to convert such Loans, then, by notice to the Company with a
copy to the Administrative Agent, all Affected Loans of such Bank then
outstanding shall be automatically converted into Base Rate Loans on the date
specified by such Bank in such notice) and, to the extent that Affected Loans
are so made as (or converted into) Base Rate Loans, all payments of principal
which would otherwise be applied to such Bank's Affected Loans shall be applied
instead to its Base Rate Loans.
Section 5.05 Compensation. (a) The Company shall pay to the Administrative
Agent for the account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, costs or expense
incurred by it as a result of:
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(i) any payment, prepayment or conversion of a Eurodollar Loan
made by such Bank for any reason (including, without limitation, the
acceleration of the Loans pursuant to Article X hereof) on a date other
than the last day of an Interest Period for such Loan; or
(ii) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Article VII hereof to be satisfied) to borrow or convert a
Eurodollar Loan to be made by such Bank on the date for such borrowing
specified in the relevant notice of borrowing under Section 2.02 hereof.
(b) Such compensation shall include Funding Costs in the case of any
payment, prepayment or conversion of, or failure to borrow or convert, any Loan
made or to be made as a Eurodollar Loan.
Section 5.06 Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified or deemed
applicable any Tax, reserve, special deposit, Capital Maintenance Costs or other
requirements against or with respect to or measured by reference to Syndicated
Letters of Credit or Bank Letters of Credit issued or to be issued by any Bank
hereunder or participated in by a Bank party to this Agreement on the Effective
Date, and the result shall be to increase the cost to such Bank of issuing or
maintaining any Syndicated Letters of Credit or Bank Letters of Credit hereunder
or to such Bank party to this Agreement on the Effective Date participating
therein, or reduce any amount receivable by such Bank hereunder in respect of
any Syndicated Letters of Credit or Bank Letters of Credit (which increase in
cost, or reduction in amount receivable, shall be the result of such Bank's
reasonable allocation of the aggregate of such increases or reductions resulting
from such event), then, upon demand by such Bank, the Company agrees to pay
immediately to such Bank, such additional amounts as such Bank from time to time
specifies as necessary to compensate such Bank for such increased costs or
reductions in the amounts incurred by such Bank, all as set forth in a statement
submitted to the Company, which statement shall be conclusive provided that such
costs or reductions are determined on a reasonable basis; any such statement
shall set forth the basis for the respective calculation.
Section 5.07 Replacement of Banks. If any Bank requests compensation
pursuant to Section 5.01 or 5.06, or such Bank's obligation to make or continue,
or to convert Loans of any other type into, any type of Eurodollar Loan shall be
suspended pursuant to Section 5.02 or 5.03, or if an event occurs that entitles
such Bank to make a claim pursuant to Section 4.08, the Company, upon three
Business Days' notice to the Administrative Agent and such Bank, may require
that such Bank transfer all of its right, title and interest under this
Agreement, the CMFRI Agreement and the New York/New Jersey Agreement and such
Bank's Note issued hereunder and its notes issued under the CMFRI Agreement and
the New York/New Jersey Agreement to any bank or financial institution
identified by the Company with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld), such assignment to be made pursuant
to an Assignment and Acceptance Agreement substantially in the form of Exhibit H
hereto (an "Assignment and Acceptance") (a) if such proposed transferee agrees
to assume all of the obligations of such Bank hereunder, under the CMFRI
Agreement and under the New York/New Jersey Agreement for consideration equal to
the aggregate outstanding principal
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amount of such Bank's Loans, CMFRI Loans and New York/New Jersey Loans, together
with interest thereon to the date of such transfer, and satisfactory
arrangements are made for payment to such Bank of all other amounts payable
hereunder, under the CMFRI Agreement and under the New York/New Jersey Agreement
to such Bank on or prior to the date of such transfer (including the amounts so
requested pursuant to Section 5.01 or 5.06 or so entitled to be claimed pursuant
to Section 4.08, any fees accrued hereunder and any amounts that would be
payable under Section 5.05 as if all of such Bank's Loans were being prepaid in
full on such date) and (b) if such Bank being replaced has requested
compensation pursuant to Section 5.01 or 5.06 or is entitled to make a claim
pursuant to Section 4.08, such proposed transferee's aggregate requested
compensation, if any, pursuant to Section 5.01 or 5.06, or the amounts, if any,
entitled to be claimed by such proposed transferee pursuant to Section 4.08,
with respect to such replaced Bank's Loans would be lower than that of the Bank
replaced. Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements of the Company contained in Sections 4.08,
5.01, 5.06, 12.03 and 12.04 (without duplication of any payments made to such
Bank by the Company or the proposed transferee) shall survive for the benefit of
any Bank replaced under this Section 5.07 with respect to the time prior to such
replacement.
ARTICLE VI
GUARANTEE
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to the Banks and the Administrative Agent and their
respective successors and assigns and the subsequent holders of the Notes,
irrespective of the validity and enforceability of this Agreement or the Notes
or the obligations of the Company or any of the other Guarantors hereunder or
thereunder or any other circumstance that might otherwise affect the liability
of a guarantor, that: (i) the principal of and interest on the Loans, the Notes,
the Reimbursement Obligations and the obligations of the Company in respect of
Bank Letters of Credit and all other obligations of the Company and the other
Guarantors to the Banks or the Administrative Agent under this Agreement and the
Notes will be promptly paid in full when due, whether at stated maturity, by
acceleration or otherwise, in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, the same will be promptly paid in full when due in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed for whatever reason, the Guarantors will be obligated, jointly and
severally, to pay the same immediately.
(b) Each of the Guarantors hereby waives notice of, and consents to,
any extensions of time of payment, renewals, releases of or delays in obtaining
or realizing upon or failures to obtain or realize upon any collateral for the
obligations of the Company or the other Guarantors under this Agreement, or
other indulgence from time to time granted by any of the Banks or the
Administrative Agent in respect of the Notes or this Agreement. Each of the
Guarantors hereby releases the Company from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or otherwise) any,
"claims" (as defined in section 101(5) of the Bankruptcy Code) against the
Company, whether arising under applicable law or otherwise, to which such
Guarantors are or would be entitled by virtue of their obligations
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hereunder, any payment made pursuant hereto, or the exercise by the
Administrative Agent or the Banks of their rights with respect to any collateral
for the obligations of the Company or the other Guarantors under this Agreement,
including any such claims to which such Guarantors may be entitled as a result
of any right of subrogation, exoneration or reimbursement in each case to the
extent, but only to the extent, that such Guarantor would be deemed a "creditor"
of the Company for purposes of Section 547 of the Bankruptcy Code solely by
reason of such Guarantor's holding or asserting such claim. To the extent not
released by the Guarantors under this Article VI, each of the Guarantors agrees
that it shall not be entitled to any right of subrogation, exoneration,
reimbursement or contribution in respect of any obligations guaranteed hereby
until payment in full of all the Obligations. With respect to the Notes and this
Agreement, each of the Guarantors hereby waives presentment, protest, demand of
payment, notice of dishonor and all other notices and demands whatsoever. Each
of the Guarantors further agrees that, as between such Guarantor, on the one
hand, and the Administrative Agent and the Banks, on the other hand, (i) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Section 10.01 hereof for the purposes of this guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such obligations as provided in Section 10.01 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each of the Guarantors for the purpose of this guarantee. The
obligations of each of the Guarantors under this Article VI shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the Company is rescinded or must be otherwise restored by any
holder of any of the obligations guaranteed hereunder, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise and each of the
Guarantors agrees that it will indemnify the Banks and the Administrative Agent
on demand for reasonable costs and expenses (including, without limitation, fees
of counsel) incurred by the Banks or the Administrative Agent in connection with
such rescission or restoration.
(c) It is the intention of the Guarantors, the Banks and the Company
that the obligations of each Guarantor hereunder shall be in, but not in excess
of, the maximum amount permitted by applicable law. To that end, but only to the
extent such obligations would otherwise be avoidable, the obligations of each
Guarantor hereunder shall be limited to the maximum amount that, after giving
effect to the incurrence thereof, would not render such Guarantor insolvent or
unable to make payments in respect of any of its indebtedness as such
indebtedness matures or leave such Guarantor with an unreasonably small capital.
The need for any such limitation shall be determined, and any such needed
limitation shall be effective, at the time or times that such Guarantor is
deemed, under applicable law, to incur the Obligations hereunder. Any such
limitation shall be apportioned amongst the Obligations pro rata in accordance
with the respective amounts thereof. This paragraph is intended solely to
preserve the rights of the Banks under this Agreement to the maximum extent
permitted by applicable law, and neither the Guarantors, the Company nor any
other Person shall have any right under this paragraph that it would not
otherwise have under applicable law. The Company and each Guarantor agree not to
commence any proceeding or action seeking to limit the amount of the obligation
of such Guarantor under this Article VI by reason of this paragraph. For the
purposes of this paragraph, "insolvency", "unreasonably small capital" and
"unable to make payments in respect of any of its indebtedness as such
indebtedness matures" shall be determined in accordance with applicable law.
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan or Syndicated Letter of Credit. The obligation
of each Bank to make the initial extension of credit hereunder is subject to the
satisfaction of the following conditions precedent on or prior to the date of
such initial extension of credit but in any event no later than June 30, 1998:
(a) Execution and Notes. This Agreement shall have been duly
executed and delivered by each of the Company, the Guarantors, the Banks
and the Administrative Agent, and the Company shall have executed and
delivered to each Bank its respective Note evidencing the Loans to be made
by such Bank hereunder.
(b) Signatures. Each of the Company and the Restricted
Subsidiaries shall have certified to the Administrative Agent (with copies
to be provided for each Bank) the name and signature of each of the
persons authorized (i) to sign on its respective behalf this Agreement
and, in the case of the Company, the Notes and (ii) in the case of the
Company, to borrow under this Agreement. The Banks may conclusively rely
on such certifications until they receive notice in writing from the
Company or such Restricted Subsidiary, as the case may be, to the
contrary.
(c) Proof of Action. The Administrative Agent shall have
received certified copies of all necessary action taken by each of the
Company and the Restricted Subsidiaries to authorize the execution,
delivery and performance of this Agreement and, in the case of the
Company, the Notes.
(d) Opinions of Counsel to the Company and the Restricted
Subsidiaries. The Administrative Agent shall have received opinions of:
(i) Robert Lemle, Esq., General Counsel to the Company and the
Restricted Subsidiaries, substantially in the form of Exhibit E
hereto;
(ii) Sullivan & Cromwell, special New York counsel to the
Company and the Restricted Subsidiaries, substantially in the form
of Exhibit F(1) hereto;
(iii) Schenk, Price, Smith & King, special New Jersey counsel
to the Company and the Restricted Subsidiaries, substantially in the
form of Exhibit F(2) hereto; and
(iv) Piper & Marbury, special FCC counsel to the Company and
the Restricted Subsidiaries, substantially in the form of Exhibit
F(3) hereto;
and covering such other matters as any Bank or Banks or special New York
counsel to the Administrative Agent, Winthrop, Stimson, Putnam & Roberts,
may reasonably request (and for purposes of such opinions such counsel may
rely upon
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opinions of counsel in other jurisdictions, provided that such other
counsel are satisfactory to special counsel to the Administrative Agent
and such other opinions state that the Banks are entitled to rely
thereon).
(e) Opinion of Banks' Counsel. Each Bank shall have received
an opinion of Winthrop, Stimson, Putnam & Roberts, special New York
counsel to the Administrative Agent, substantially in the form of Exhibit
G hereto and covering such other matters as any Bank or Banks may
reasonably request.
(f) Funding Adjustment. The Company shall have made
arrangements satisfactory to the Administrative Agent such that, after
giving effect to the initial extension of credit hereunder, (i) the
outstanding Loans hereunder shall be made by the Banks pro rata in
accordance with their respective Commitment Percentages and (ii) the Loans
(as defined in the 1996 Agreement) and all other amounts owing under the
1996 Agreement to any Bank (as defined in the 1996 Agreement) which is not
a Bank hereunder shall have been repaid in full.
(g) Subscribers' Certificate. The Administrative Agent shall
have received the most recent Subscribers' Certificate required to be
delivered under the 1996 Agreement.
(h) Compliance Certificate. The Banks shall have received a
Compliance Certificate showing that, after giving effect to this
Agreement, the Company is in compliance with the provisions of this
Agreement on a pro forma basis as of the Effective Date.
(i) Other Documents. Such other documents and papers relating
to the documents referred to herein and the transactions contemplated
hereby as any Bank or special counsel to the Administrative Agent shall
reasonably require shall have been received by the Administrative Agent.
(j) Certain Fees. The Company shall have paid the
Administrative Agent, for its own account, fees calculated as specified in
a letter dated the date hereof.
(k) Other Fees. The Company shall have paid such other fees as
may have been agreed by the parties hereto.
(l) Regulatory Approvals. The Company shall have obtained the
approvals of any regulatory authority set forth on Schedule 8.03 hereto
required with respect to this Agreement.
(m) NYC Preferential Payments, NYC Redemption Price and Sutton
Notes. (i) Arrangements satisfactory to the Administrative Agent shall
have been made such that upon giving effect to the initial borrowing
hereunder and the application of the proceeds thereof, all obligations of
the Company and the Restricted Subsidiaries in respect of the NYC
Preferential Payments and the NYC Redemption Price shall have been
satisfied in full and (ii) the Company shall have caused irrevocable
notice to be given sufficient to effect the redemption of the Sutton Notes
(as defined in the 1996
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Agreement) on a date not later than the twentieth day after the Effective
Date, and the Administrative Agent shall have received a certificate of an
officer of the Company to such effect.
(n) CMFRI and New York/New Jersey Agreements. All conditions
precedent to the initial borrowings under the CMFRI Agreement and the New
York/New Jersey Agreement shall have been satisfied.
Section 7.02 Each Loan and Syndicated Letter of Credit. The obligation of
each Bank to make each extension of credit hereunder (which shall not include
any conversion or continuation of any outstanding Loan) is subject to the
additional conditions precedent that: (i) no Default or Event of Default shall
have occurred and be continuing; (ii) the representations and warranties in
Article VIII hereof shall be true on and as of the date of the making of, and
after giving effect to, such extension of credit with the same force and effect
as if made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date; and (iii) to
the extent requested by the Administrative Agent or any Bank, a senior executive
of the Company shall have certified compliance with clauses (i) and (ii) above
to the Administrative Agent.
The Company shall be deemed to have made a representation and
warranty hereunder as of the time of each extension of credit hereunder that the
conditions specified in such clauses have been fulfilled as of such time.
ARTICLE VIII
REPRESENTATIONS
Each of the Company and the other parties hereto (other than the
Banks and the Administrative Agent) represents, warrants and covenants as
follows:
Section 8.01 Existence and Power. Each of the Company and the Restricted
Subsidiaries is a limited or general partnership or corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is duly qualified to transact business and is in good standing
in all jurisdictions in which such qualification is necessary in view of the
properties and assets owned and presently intended to be owned and the business
transacted and presently intended to be transacted by it except for
qualifications the lack of which, singly or in the aggregate, have not had and
are not likely to have a Materially Adverse Effect, and each of the Company and
the Restricted Subsidiaries has full power, authority and legal right to make
and perform such of this Agreement and the Notes to which it is a party.
Section 8.02 Subsidiaries and Affiliates. Schedules 1.01(v) and 1.01(vi)
contain a complete and correct list, as at the date hereof and the date of the
initial extension of credit hereunder, of all Subsidiaries of the Company and a
description of the legal nature of such Subsidiaries, the nature of the
ownership interests (shares of stock or general or limited partnership or other
interests) in such Subsidiaries and the holders of such interests and, except as
disclosed to the Banks in writing prior to the Effective Date, the Company and
each of its Subsidiaries owns all of the ownership interests of its Subsidiaries
indicated in such Schedules as
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being owned by the Company or such Subsidiary, as the case may be, and all such
ownership interests are validly issued and, in the case of shares of stock,
fully paid and non-assessable. Schedule 8.02 hereto contains a complete and
correct list, as at the date hereof and the date of the initial extension of
credit hereunder, of all Affiliates of the Company (including, but not limited
to, the New York/New Jersey Companies) which are not Subsidiaries of the
Company, the nature of the respective ownership interests in each such
Affiliate, and the holder of each such interest.
Section 8.03 Authority; No Conflict. The making and performance by each of
the Company and the Restricted Subsidiaries of such of this Agreement and the
Notes to which it is a party, and each extension of credit hereunder, have been
duly authorized by all necessary action and do not and will not: (i) subject to
the consummation of the action described in Section 8.12 hereof, violate any
provision of any laws, orders, rules or regulations presently in effect (other
than violations that, singly or in the aggregate, have not had and are not
likely to have a Materially Adverse Effect), or any provision of any of the
Company's or the Restricted Subsidiaries' respective partnership agreements,
charters or by-laws presently in effect; or (ii) result in the breach of, or
constitute a default or require any consent (except for the consents described
on Schedule 8.03 hereto, each of which has been duly obtained) under, any
existing indenture or other agreement or instrument to which the Company or any
of the Restricted Subsidiaries is a party or their respective properties may be
bound or affected (other than any breach, default or required consent that,
singly or in the aggregate, have not had and are not likely to have a Materially
Adverse Effect); or (iii) result in, or require, the creation or imposition of
any Lien upon or with respect to any of the properties or assets now owned or
hereafter acquired by the Company or any of the Restricted Subsidiaries.
Section 8.04 Financial Condition. The Company has furnished to each Bank:
(a) The consolidated balance sheet of the Company and its
consolidated Subsidiaries as at December 31, 1997, and the related
consolidated statements of operations, stockholders' equity (deficiency)
and cash flows for the fiscal year ended on said date, said financial
statements having been certified by KPMG Peat Marwick;
(b) The unaudited consolidated balance sheets of the Company and its
consolidated Restricted Subsidiaries as at December 31, 1997, and the
related consolidated statements of operations, stockholders' equity
(deficiency) and cash flows for the fiscal year ended on said date; and
(c) the respective combined balance sheets of the TKR New Jersey/New
York Systems and the TCI New Jersey and New York Systems, in each case as
at December 31, 1995, December 31, 1996 and December 31, 1997, and the
respective related combined statements of operations or earnings, parent's
investment or combined deficit and cash flows for the fiscal years ended
on said dates, said financial statements having been certified by KPMG
Peat Marwick.
All financial statements referred to above are complete and correct in all
material respects (subject, in the case of the unaudited financial statements
referred to above, to year-end and audit adjustments) and fairly present the
financial condition of the respective entity or groups of entities which is or
are the subject of such financial statements (as stated above), on a combined
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and/or consolidated basis to the extent so indicated above, as at the respective
dates of the balance sheets included in such financial statements and the
results of operations of such entity or groups of entities for the respective
periods ended on said dates. None of the Company, its Restricted Subsidiaries
and the New York/New Jersey Companies had on any of said dates any material
contingent liabilities, liabilities for Taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
or operations which are substantial in amount, except as referred to or
reflected or provided for in said financial statements as at said respective
dates or as disclosed to the Banks in writing prior to the date hereof. Except
as disclosed to the Banks in writing prior to the date hereof, since December
31, 1997 there has been no material adverse change in the financial condition
(from that shown by the respective balance sheets as at December 31, 1997
included in said financial statements) or the businesses or operations of the
Company, the Restricted Subsidiaries and the New York/New Jersey Companies taken
as a whole on a pro forma combined basis. As of the Effective Date, except as
disclosed to the Banks in writing prior to the date hereof, since December 31,
1997 there has been no material adverse change in the financial condition or the
businesses or operations of the New York/New Jersey Companies taken as a whole
on a combined basis from that shown by the balance sheets as at December 31,
1997 included in said financial statements for the New York/New Jersey Companies
(it being understood that for purposes of this sentence the New York/New Jersey
Companies shall be deemed to have owned all of the assets acquired by the New
York/New Jersey Companies pursuant to the TCI Acquisition for all periods
covered by said balance sheets until and including the Effective Date).
Section 8.05 Litigation, Etc. Except as disclosed to the Banks on Schedule
8.05, there are no lawsuits or other proceedings pending, or to the knowledge of
the Company or any Restricted Subsidiary threatened, against the Company or any
Restricted Subsidiary or any of their respective properties or assets, before
any court or arbitrator or by or before any governmental commission, bureau or
other regulatory authority that, singly or in the aggregate, could reasonably be
expected to have a Materially Adverse Effect. Neither the Company nor any
Restricted Subsidiary is in default under or in violation of or with respect to
any laws or orders, or any material provision of any rules or regulations, or
any writ, injunction or decree of any court, arbitrator, governmental
commission, bureau or other regulatory authority, or any Franchise, except for
minor defaults which, if continued unremedied, are not likely to have a
Materially Adverse Effect.
Section 8.06 Titles and Liens. Except as set forth on Schedule 9.13, each
of the Company and the Restricted Subsidiaries has good title to its properties
and assets, free and clear of all Liens except those permitted by Section 9.13
hereof.
Section 8.07 Regulation U. None of the proceeds of any of the Loans,
Syndicated Letters of Credit or Bank Letters of Credit shall be used to purchase
or carry, or to reduce or retire or refinance any credit incurred to purchase or
carry, any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock, except that up to $10,000,000 in the
aggregate of such proceeds may be used for such purposes provided that both at
the time of such use and thereafter compliance with Regulation U is maintained.
If requested by any Bank, the Company will furnish to the Banks statements in
conformity with the requirements of Regulation U.
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Section 8.08 Taxes. Each of the Company and the Restricted Subsidiaries
has filed all material tax returns which are required to be filed under any law
applicable thereto except such returns as to which the failure to file, singly
or in the aggregate, has not had and will not have a Materially Adverse Effect,
and has paid, or made provision for the payment of, all Taxes shown to be due
pursuant to said returns or pursuant to any assessment received by the Company
or any of the Restricted Subsidiaries, except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided or
as to which the failure to pay, singly or in the aggregate, has not had and is
not likely to have a Materially Adverse Effect.
Section 8.09 Other Credit Agreements. Schedule 9.11 (Existing
Indebtedness), Schedule 9.12 (Existing Guarantees) and Schedule 9.13 (Existing
Liens) contain complete and correct lists, as at the date hereof and the date of
the initial extension of credit hereunder, of all credit agreements, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees and
other instruments presently in effect (including Capital Lease Obligations)
providing for, evidencing, securing or otherwise relating to any Indebtedness of
the Company and the Restricted Subsidiaries in a principal or face amount equal
to $1,000,000 or more and such lists correctly set forth the names of the debtor
or lessee and creditor or lessor with respect to the Indebtedness outstanding or
to be outstanding thereunder, the rate of interest or rentals, a description of
any security given or to be given therefor, and the maturity or maturities or
expiration date or dates thereof.
Section 8.10 Full Disclosure. None of the financial statements referred to
in Section 8.04 hereof, the SEC Reports or any written statements delivered
pursuant to Section 8.02, 8.04 or 8.15 hereof (each of which has heretofore been
furnished to each Bank) contains, as at the date hereof or the date of the
initial extension of credit hereunder, any untrue statement of a material fact
nor do such financial statements, the SEC Reports and such written statements,
taken as a whole, omit to state a material fact necessary to make the statements
contained therein not misleading.
Section 8.11 No Default. None of the Company and the Restricted
Subsidiaries is in default in the payment or performance or observance of any
contract, agreement or other instrument to which it is a party or by which it or
its properties or assets may be affected or bound, which default, either alone
or in conjunction with all other such defaults, has had or is likely to have a
Materially Adverse Effect.
Section 8.12 Approval of Regulatory Authorities. Except as set forth on
Schedule 8.03 hereto, no approval or consent of, or filing or registration with,
any Federal, state or local commission or other regulatory authority is required
in connection with the execution, delivery and performance by the Company or any
of the Restricted Subsidiaries of such of this Agreement and the Notes to which
it is a party. All such described action required to be taken as a condition to
the execution and delivery of such of this Agreement and the Notes to which the
Company or any of the Restricted Subsidiaries is a party has been duly taken by
all such commissions and authorities or other Persons, as the case may be, and
all such action required to be taken as a condition to the initial extension of
credit hereunder has been or will be duly taken prior to such initial extension
of credit.
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Section 8.13 Binding Agreements. This Agreement constitutes, and the Notes
when executed and delivered will constitute, the legal, valid and binding
obligations of each of the Company and the Restricted Subsidiaries which is a
party thereto, enforceable in accordance with their respective terms (except for
limitations on enforceability under bankruptcy, reorganization, insolvency and
other similar laws affecting creditors' rights generally and limitations on the
availability of the remedy of specific performance imposed by the application of
general equitable principles).
Section 8.14 Franchises. Schedule 8.14 hereto contains a complete and
correct list, as of the date hereof and the date of the initial extension of
credit hereunder, of all of the Franchises granted to the Company and the
Restricted Subsidiaries, in each case together with the expiration date thereof,
or for which applications have been made, or are planned to be made, by the
Company or any Restricted Subsidiary.
Section 8.15 Collective Bargaining Agreements. Except as disclosed to the
Banks in writing prior to the Effective Date, there are no collective bargaining
agreements between the Company or the Restricted Subsidiaries and any trade or
labor union or other employee collective bargaining agent.
Section 8.16 Investments. Schedule 9.16 hereto contains a complete and
correct list, as at the date hereof, of all Investments of the Company and the
Restricted Subsidiaries (other than any Investments in other Restricted
Subsidiaries) in excess of $500,000, showing the respective amounts of each such
Investment and the respective entity (or group thereof) in which each such
Investment has been made.
ARTICLE IX
PARTICULAR COVENANTS OF THE
COMPANY AND THE RESTRICTED SUBSIDIARIES
From the Effective Date and so long as the Commitments of the Banks
shall be in effect and until the payment in full of all Obligations hereunder,
the expiration or termination of all Syndicated Letters of Credit and Bank
Letters of Credit and the performance of all other obligations of the Company
under this Agreement, each of the Company and the Restricted Subsidiaries agrees
that, unless the Majority Banks shall otherwise consent in writing:
A. Informational Covenants:
Section 9.01 Financial Statements and Other Information. The Company will
deliver to each Bank:
(a) As soon as available and in any event within 60 days after the
end of each of the first three Quarters of each fiscal year of the Company: (i)
(A) consolidated statements of operations, stockholders' equity (deficiency) and
cash flows of the Company and its consolidated Subsidiaries, taken together, and
of the Company and the Restricted Subsidiaries, taken together, for such Quarter
and for the period from the beginning of such fiscal year to the end of such
Quarter and (B) the related consolidated balance sheets of the Company and its
consolidated
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Subsidiaries, taken together, and of the Company and the Restricted
Subsidiaries, taken together, as at the end of such Quarter (which financial
statements shall set forth in comparative form the corresponding figures as at
the end of and for the corresponding Quarter in the preceding fiscal year) and
(ii)(A) combined statements of operations or earnings, parent's investment or
combined deficit and cash flows of the New York/New Jersey Companies, prepared
on the same basis as the financial statements referred to in Section 8.04(c),
for such Quarter and for the period from the beginning of such fiscal year to
the end of such Quarter and (B) the related combined balance sheets of the New
York/New Jersey Companies, prepared on the same basis as the financial
statements referred to in Section 8.04(c), as at the end of such Quarter (which
financial statements shall set forth in comparative form the corresponding
figures as at the end of and for the corresponding Quarter in the preceding
fiscal year), all in reasonable detail and accompanied by a certificate in the
form of Exhibit D(1) hereto of a senior financial executive of the Company and
of the New York/New Jersey Companies certifying such financial statements,
subject, however, to year-end and audit adjustments, which certificate shall
include a statement that the senior financial executive signing the same has no
knowledge, except as specifically stated, that any Default has occurred and is
continuing.
(b) As soon as available and in any event within 120 days after the
end of each fiscal year of the Company: (i)(A) consolidated statements of
operations, stockholders' equity (deficiency) and cash flows of the Company and
its consolidated Subsidiaries, taken together, and of the Company and the
Restricted Subsidiaries, taken together, for such fiscal year and (B) the
related consolidated balance sheets of the Company and its consolidated
Subsidiaries, taken together, and of the Company and the Restricted
Subsidiaries, taken together, as at the end of such fiscal year (which financial
statements shall set forth in comparative form the corresponding figures as at
the end of and for the preceding fiscal year) and (ii)(A) combined statements of
operations or earnings, parent's investment or combined deficit and cash flows
of the New York/New Jersey Companies, prepared on the same basis as the
financial statements referred to in Section 8.04(c), for such fiscal year and
(B) the related combined balance sheets of the New York/New Jersey Companies,
prepared on the same basis as the financial statements referred to in Section
8.04(c) as at the end of such fiscal year (which financial statements shall set
forth in comparative form the corresponding figures as at the end of and for the
preceding fiscal year), all in reasonable detail and accompanied by (x) an
opinion of KPMG Peat Marwick or other independent certified public accountants
of recognized standing selected by the Company and reasonably acceptable to the
Majority Banks as to said combined and/or consolidated financial statements and
a certificate of such accountants stating that, in making the examination
necessary for said opinion, they obtained no knowledge, except as specifically
stated, of any failure by the Company, any Restricted Subsidiaries or any New
York/New Jersey Company to perform or observe any of its covenants relating to
financial matters in this Agreement and (y) a certificate in the form of Exhibit
D(2) hereto of a senior financial executive of the Company and of the New
York/New Jersey Companies stating that such financial statements are correct and
complete and fairly present the financial condition and results of operations of
the respective entities covered thereby as at the end of and for such fiscal
year and that the executive signing the same has no knowledge, except as
specifically stated, that any Default has occurred and is continuing.
(c) Promptly after their becoming available, copies of all financial
statements and reports which the Company, any Restricted Subsidiary or any New
York/New Jersey Company
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shall have sent its shareholders generally (other than tax returns unless
specifically requested under clause (h) of this Section 9.01), copies of
financial statements and reports which the Company shall have sent to the
holders of any Permitted Debt or any Indebtedness specified in Schedule 9.11, to
the extent such statements and reports contain information relating to the
designation of the Company's Subsidiaries as "restricted subsidiaries" under the
Debt Instruments governing any such Indebtedness, and to the calculation of
financial ratios thereunder and copies of all regular and periodic reports, if
any, which the Company, any Restricted Subsidiary or any New York/New Jersey
Company shall have filed with the Securities and Exchange Commission, or any
governmental agency substituted therefor, or with any national securities
exchange, or with the Federal Communications Commission, or any governmental
agency substituted therefor.
(d) Within 60 days after the end of each of the first three Quarters
of each year, and within 120 days after the end of each fiscal year of the
Company, a Compliance Certificate, duly completed with respect to such Quarter
or fiscal year, as the case may be.
(e) Within 35 days after the end of each calendar month, a
Subscribers' Certificate, duly completed with respect to such month.
(f) Promptly, notice of the termination, cancellation, nonrenewal or
other loss of any Franchise for a cable television system or systems that has
had or is likely to have, either alone or in conjunction with all other such
losses, a Materially Adverse Effect, the filing of a competing application in
connection with any proceeding for renewal of any such Franchise and of any
proceeding which involves a material risk of the termination, cancellation,
nonrenewal or other loss of any such Franchise.
(g) As soon as possible and in any event within ten days after any
senior executive of the Company or any Restricted Subsidiary or of any general
partner of any Restricted Subsidiary shall have obtained knowledge of the
occurrence of a Default, a statement describing such Default and the action
which is proposed to be taken with respect thereto.
(h) From time to time, with reasonable promptness, such further
information regarding the business, affairs and financial condition of the
Company or any of the Restricted Subsidiaries or any of the New York/New Jersey
Companies or any of their respective Affiliates or other affiliates as any Bank
may reasonably request.
B. Affirmative Covenants:
Section 9.02 Taxes and Claims. Each of the Company and the Restricted
Subsidiaries will pay and discharge all Taxes imposed upon it or upon its income
or profits, or upon any properties or assets belonging to it, and all fees or
other charges for Franchises, prior to the date on which penalties attach
thereto, and all other lawful claims which, if unpaid, might become a Lien
(other than Permitted Liens) upon the property of the Company or any of the
Restricted Subsidiaries or result in the loss of a Franchise, provided that none
of the Company and the Restricted Subsidiaries shall be required to pay any such
Tax, fee or other claim the payment of which is being contested in good faith
and by proper proceedings if it maintains adequate reserves in accordance with
generally accepted accounting principles with respect thereto.
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Section 9.03 Insurance. Each of the Company and the Restricted
Subsidiaries will maintain insurance issued by responsible companies in such
amounts and against such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which the Company or such
Restricted Subsidiary operates. The Company will furnish to any Bank, upon the
request of such Bank from time to time, full information as to the insurance
maintained in accordance with this Section 9.03.
Section 9.04 Maintenance of Existence; Conduct of Business. Each of the
Company and the Restricted Subsidiaries will preserve and maintain its legal
existence and all of its rights, privileges and franchises (including
Franchises), except (i) where a failure to do so, singly or in the aggregate, is
not likely to have a Materially Adverse Effect or (ii) pursuant to a Permitted
Restricted Subsidiary Transaction.
Section 9.05 Maintenance of and Access to Properties. Each of the Company
and the Restricted Subsidiaries will keep all of its properties and assets
necessary in its business in good working order and condition, ordinary wear and
tear excepted, and will permit representatives of the respective Banks to
inspect such properties, and to examine and make extracts from its books and
records, during normal business hours.
Section 9.06 Compliance with Applicable Laws. Each of the Company and the
Restricted Subsidiaries will comply with the requirements of all applicable,
including but not limited to environmental, laws, rules, regulations and orders
of any governmental body or regulatory authority a breach of which is likely to
have, singly or in the aggregate, a Materially Adverse Effect, except where
contested in good faith and by proper proceedings if it maintains adequate
reserves in accordance with generally accepted accounting principles with
respect thereto.
Section 9.07 Litigation. Each of the Company and the Restricted
Subsidiaries will promptly give to the Administrative Agent notice in writing
(and the Administrative Agent will notify each Bank) of all litigation and of
all proceedings before any courts, arbitrators or governmental or regulatory
agencies against it or, to its knowledge, otherwise affecting it or any of its
respective properties or assets, except litigation or proceedings which, if
adversely determined, is not likely to, singly or in the aggregate, have a
Materially Adverse Effect. Following the initial notice of each such litigation
or proceeding, supplementary notices of all material developments in respect
thereof shall be given from time to time in like manner.
Section 9.08 Subsidiaries. (a) Unless Section 9.08(b) is applicable, any
New Subsidiary acquired or formed by the Company shall be deemed an Unrestricted
Subsidiary. The Company may designate any such New Unrestricted Subsidiary as a
Programming Company by giving a notice captioned "Designation of Unrestricted
Subsidiary as Programming Company" to the Administrative Agent promptly upon the
acquisition or formation of such New Unrestricted Subsidiary, such notice to
specify whether such New Unrestricted Subsidiary has been designated as a
"restricted subsidiary" for purposes of any Debt Instruments governing any
Permitted Debt or any Indebtedness specified in Schedule 9.11.
(b) The Company may designate any New Subsidiary as a Restricted
Subsidiary by giving a notice captioned "Designation of Restricted Subsidiary"
to the Administrative Agent
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promptly upon the acquisition or formation of such New Subsidiary, such notice
to specify whether such New Subsidiary has been designated as a "restricted
subsidiary" for purposes of any Debt Instruments governing any Permitted Debt or
any Indebtedness specified in Schedule 9.11. Promptly upon such designation, the
Company will cause (by documentation satisfactory to the Majority Banks) such
New Restricted Subsidiary to undertake all of the obligations of a "Restricted
Subsidiary" and, except in the case of any New Subsidiary that is a Subsidiary
of CMFRI, a "Guarantor" under this Agreement. Each such New Restricted
Subsidiary shall thereafter be a "Restricted Subsidiary" and, if applicable, a
"Guarantor" for all purposes of this Agreement.
(c)(i) The Company may redesignate any Restricted Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted
Subsidiary by giving a notice to the Administrative Agent captioned
"Redesignation of Restricted Subsidiary" or "Redesignation of Unrestricted
Subsidiary", as the case may be, so long as the Company and the Restricted
Subsidiaries shall comply with Section 9.15(a) and (b), as applicable, in
connection with any such redesignation. In the case of any redesignation of any
Unrestricted Subsidiary as a Restricted Subsidiary, promptly upon such
redesignation, the Company will cause (by documentation satisfactory to the
Majority Banks) such New Restricted Subsidiary to undertake all of the
obligations of a "Restricted Subsidiary" and, except in the case of CMFRI or any
Subsidiary of CMFRI, a "Guarantor" under this Agreement. Each such New
Restricted Subsidiary shall thereafter be a "Restricted Subsidiary" and, if
applicable, a "Guarantor" for all purposes of this Agreement.
(ii) Notwithstanding anything to the contrary in this Agreement,
each redesignation of any Restricted Subsidiary as an Unrestricted Subsidiary or
of any Unrestricted Subsidiary as a Restricted Subsidiary pursuant to
subparagraph (i) above shall be deemed a disposition or acquisition of assets,
as the case may be, which shall be subject to Section 9.15(a) and (b), as
applicable.
Section 9.09 Franchises. The Restricted Subsidiaries will comply with all
of their obligations under their respective Franchises, except for failures to
comply which, singly or in the aggregate, are not likely to have a Materially
Adverse Effect.
Section 9.10 Interest Selection; Interest Swap Agreements. The Company
shall, not later than 60 days after the Effective Date and at all times
thereafter, fix or place a limit upon its interest obligations in respect of at
least 50% of the Indebtedness (other than Indebtedness consisting of Obligations
arising solely under Interest Swap Agreements) of the Company and the Restricted
Subsidiaries outstanding at such times, either by the terms of such Indebtedness
or by the entering into of Interest Swap Agreements.
C. Negative Covenants:
Section 9.11 Indebtedness. Neither the Company nor any Restricted
Subsidiary will create, incur or suffer to exist any Indebtedness except:
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(i) Indebtedness hereunder and under the CMFRI Agreement;
(ii) short-term Indebtedness incurred for working capital
purposes up to but not exceeding $30,000,000 in aggregate principal amount
at any one time outstanding provided, however, that no more than
$10,000,000 of such short-term Indebtedness may be incurred from any
Person that is not a Bank;
(iii) Permitted Debt;
(iv) obligations under or in respect of Interest Swap
Agreements up to an aggregate notional principal amount not to exceed at
any time an amount equal to the Aggregate Commitments of all the Banks in
the aggregate at such time less, at any time that any New York/New Jersey
Commitment is in effect, $800,000,000;
(v) Guarantees and letters of credit permitted by Section 9.12
hereof;
(vi) Indebtedness to Restricted Subsidiaries or the Company;
(vii) Capital Lease Obligations other than in respect of
leases of real property, and Indebtedness incurred to finance the purchase
price of property other than real property, so long as the aggregate
principal amount of all such Indebtedness outstanding at any one time
shall not exceed the sum of $50,000,000;
(viii) Indebtedness issued and outstanding on the date hereof
to the extent set forth on Schedule 9.11 hereto and any renewals,
extensions or refundings thereof in a principal amount not to exceed the
amount so renewed, extended or refunded;
(ix) Indebtedness incurred as consideration for any
acquisition permitted by Section 9.15(b) and consisting solely of a
deferred or contingent obligation to deliver common stock of the Company;
(x) (A) Indebtedness in respect of the acquisition,
development or improvement of real estate (including, without limitation,
Indebtedness incurred in connection with the issuance of tax-exempt
industrial development bonds or in connection with a letter of credit
supporting such bonds) and (B) Indebtedness in respect of aircraft leases
up to but not exceeding $45,000,000 in aggregate principal amount at any
one time outstanding, provided that the aggregate principal amount of all
such Indebtedness described in clauses (A) and (B) of this clause (x) at
any one time outstanding shall not exceed $90,000,000; and
(xi) Indebtedness in respect of the Sutton Notes (as defined
in the 1996 Agreement) in an aggregate principal amount not in excess of
$151,000,000, provided that such Indebtedness shall be repaid in full on
or prior to the twentieth day after the Effective Date.
Section 9.12 Contingent Liabilities. Neither the Company nor any
Restricted Subsidiary will, directly or indirectly (including, without
limitation, by means of causing a bank
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to open a letter of credit), guarantee, endorse, contingently agree to purchase
or to furnish funds for the payment or maintenance of, or otherwise be or become
contingently liable upon or with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any Person, or guarantee
the payment of dividends or other distributions upon the stock or other
ownership interests of any Person, or agree to purchase, sell or lease (as
lessee or lessor) property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of its obligations or to
assure a creditor against loss (all such transactions being herein called
"Guarantees"), except:
(i) the Guarantees in Article VI hereof;
(ii) endorsements of negotiable instruments for deposit or
collection in the ordinary course of business;
(iii) the Guarantees described in Schedule 9.12;
(iv) Guarantees by the Company or one or more of the
Restricted Subsidiaries of Indebtedness of, and other obligations
(incurred in the ordinary course of business) of, another Restricted
Subsidiary, but only if such Indebtedness or obligations are permitted by
this Agreement;
(v) other Guarantees by the Company, provided that the
outstanding aggregate amount of the obligations guaranteed does not exceed
$30,000,000 at any time;
(vi) Capital Lease Obligations to the extent they constitute
Guarantees by reason of having been assigned by the lessor to a lender to
such lessor (provided that the obligors in respect of such Capital Lease
Obligations do not increase their liability by reason of such assignment);
(vii) the Syndicated Letters of Credit or Bank Letters of
Credit, provided that Syndicated Letters of Credit or Bank Letters of
Credit which constitute Investments shall be subject to the limits
specified in Section 9.16 hereof;
(viii) surety bonds in an aggregate amount at any one time not
to exceed $50,000,000;
(ix) any Guarantee by the Company of the obligations of any
Unrestricted Subsidiary so long as (A) recourse to the Company thereunder
is limited solely to shares of capital stock of such Unrestricted
Subsidiary or its Subsidiaries and to no other assets of the Company or
the Restricted Subsidiaries and (B) neither the Company nor any Restricted
Subsidiary agrees, in connection therewith, to any limitation on the
amount of Indebtedness which may be incurred by them, to the granting of
any Liens on assets of the Company or any of the Restricted Subsidiaries
(other than shares of stock of such Unrestricted Subsidiary or its
Subsidiaries), to any acquisition or disposition of any assets of the
Company or the Restricted Subsidiaries (other than shares of capital stock
of such Unrestricted Subsidiary or its Subsidiaries) or to any
modification or supplement of this
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Agreement or any agreement entered into by the Company or any of the
Restricted Subsidiaries refinancing any substantial portion of the
Indebtedness outstanding under this Agreement; and
(x) Guarantees which (A) would constitute Investments which
are not prohibited by Section 9.16 hereof (other than by reason of
subsection (iv) thereof) or (B) would constitute Investments but for the
provision of clause (A) of the final paragraph of Section 9.16 hereof.
Section 9.13 Liens. Neither the Company nor any Restricted Subsidiary will
create or suffer to exist any mortgage, pledge, security interest, conditional
sale or other title retention agreement, lien, charge or encumbrance upon any of
its assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation (all such security being herein called "Liens"), except:
(i) Liens on tangible personal property securing Indebtedness
owed to the Company;
(ii) Liens securing Indebtedness permitted by Section
9.11(vii) hereof to the extent such Liens attach solely to the assets (x)
subject to Capital Leases constituting such Indebtedness or (y) acquired
with the proceeds of such Indebtedness;
(iii) Liens securing the obligations of the Company and the
Restricted Subsidiaries hereunder, under the CMFRI Agreement and under New
York/New Jersey Agreement.
(iv) Permitted Liens;
(v) other Liens on tangible personal property in effect on the
date hereof to the extent set forth on Schedule 9.13 hereto; and
(vi) Liens on shares of the capital stock of, or partnership
interest in, any Unrestricted Subsidiary.
In addition, neither the Company nor any Restricted Subsidiary will enter into
or permit to exist any undertaking by it or affecting any of its properties
whereby the Company or such Restricted Subsidiary shall agree with any Person
(other than the Banks or the Administrative Agent) not to create or suffer to
exist any Liens in favor of any other Person, provided that the foregoing
restriction shall not apply to any such undertaking contained in any indenture
or other agreement governing any Permitted Debt (other than any New Subordinated
Debt).
Section 9.14 Leases. Neither the Company nor any Restricted
Subsidiary will incur, assume or have outstanding any obligation to pay rent
under Leases (as lessee, guarantor or otherwise) except:
(i) Pole Rental Leases and Leases of microwave transmission
and/or reception rights related to the operation of the Company and the
Restricted Subsidiaries;
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(ii) obligations under Leases by one Restricted Subsidiary to
another Restricted Subsidiary; and
(iii) obligations under Leases of equipment and other real or
personal property for use in the ordinary course of its business or the
business of a Programming Company or CSC Technology.
Section 9.15 Mergers, Acquisitions and Dispositions, Etc. (a) Neither the
Company nor any Restricted Subsidiary will consolidate or merge with any Person,
or sell, lease, license, assign, transfer or otherwise dispose of any part of
its business, assets or rights (including by means of any redesignation of any
Restricted Subsidiary as an Unrestricted Subsidiary pursuant to Section
9.08(c)), except:
(i) dispositions by Restricted Subsidiaries to, or mergers or
consolidations of Restricted Subsidiaries with or into, the Company or
other Restricted Subsidiaries;
(ii) subject to Section 9.19 hereof, sales by the Company or
any Restricted Subsidiary to Affiliates of surplus inventory, equipment
and fixed assets originally acquired for use by the Company or such
Restricted Subsidiary in its own business;
(iii) dispositions in the ordinary course of business
(including dispositions of obsolete or worn-out property and other
property reasonably determined by the management of the disposing entity
to be not used or useful in its business);
(iv) dispositions of any Margin Stock;
(v) dispositions by the Company or any Restricted Subsidiary
(including, but not limited to, by merger or consolidation of any
Restricted Subsidiary) of assets (including any such dispositions in
connection with which assets are acquired in exchange for any assets so
disposed), provided that, in the case of any such disposition:
(A) immediately prior to, and after giving effect to, such
disposition, no Default shall have occurred and be continuing; and
(B) at any time when the Cash Flow Ratio exceeds 5.50 to 1,
the amount of Operating Cash Flow attributable to the assets to be
disposed (other than pursuant to the Kalamazoo Sale) for the
twelve-month or five-year, as the case may be, period ending on the
last day of the calendar month immediately preceding the month in
which such disposition is to occur (such twelve-month or five-year
period being referred to herein as the relevant "Test Period"),
together with the aggregate amount of Operating Cash Flow for the
relevant Test Period attributable to any other assets so disposed by
the Company, any Restricted Subsidiary or any New York/New Jersey
Company (other than pursuant to the Kalamazoo Sale) during the
twelve-month or five-year, as the case may be, period prior to the
date that such disposition is to occur, shall not exceed (x) in the
case of such twelve-month Test Period, 35% of the aggregate amount
of Operating
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Cash Flow for such Test Period and (y) in the case of such five-year
Test Period, 50% of the aggregate amount of Operating Cash Flow for
such Test Period.
The Company shall furnish to the Administrative Agent prior to any such
disposition (1) a certificate of an officer of the Company certifying
compliance with the requirements of clauses (A) and, if applicable, (B) of
this subparagraph (v) and (2) in the case of any disposition to which
clause (B) is applicable, a reasonably detailed description of such
disposition demonstrating compliance with all of its and the Restricted
Subsidiaries' covenants and agreements under this Agreement both before
and after giving effect to such disposition.
(b) Neither the Company nor any Restricted Subsidiary will purchase
or acquire assets from, or the business or assets of, any other Person
(including by means of any redesignation of any Unrestricted Subsidiary as a
Restricted Subsidiary pursuant to Section 9.08(c)), except:
(i) the purchase of assets in the ordinary course of business
as conducted on the Effective Date by the Company and the Restricted
Subsidiaries;
(ii) the acquisition (including, without limitation, by merger
or consolidation of any Restricted Subsidiary) of all or any part of the
business or assets of any Person, provided that, in the case of any such
acquisition:
(A) immediately prior to, and after giving effect to, any such
acquisition no Default shall have occurred and be continuing; and
(B) if the assets so acquired consist of stock or other
ownership interests of any Person which is to be designated (or
redesignated) a "Restricted Subsidiary", the Company and the
Restricted Subsidiaries shall acquire in the aggregate not less than
80% of the issued and outstanding shares of all classes of stock, or
other ownership interests, of such Person;
the Company shall furnish to the Administrative Agent prior to any such
acquisition (1) a certificate of an officer of the Company certifying
compliance with the requirements of clauses (A) and (B) of this
subparagraph (ii) and (2) a reasonably detailed description of such
acquisition demonstrating compliance with all of its and the Restricted
Subsidiaries' covenants and agreements under this Agreement both before
and after giving effect to such acquisition; and
(iii) purchases and acquisitions by the Company or Restricted
Subsidiaries from (including, but not limited to, by merger or
consolidation with) other Restricted Subsidiaries.
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Section 9.16 Investments. Neither the Company nor any Restricted
Subsidiary will, directly or indirectly, make or permit to remain outstanding
any advances, loans, accounts receivable (other than (x) accounts receivable
arising in the ordinary course of business of the Company or such Restricted
Subsidiary and (y) accounts receivable owing to the Company from any
Unrestricted Subsidiary for management services (other than such accounts
receivable that constitute direct charges or out-of-pocket expenses relating to
such services) provided by the Company to such Unrestricted Subsidiary) or other
extensions of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or capital contributions to
(by means of transfers of property to others, or payments for property or
services for the account or use of others, or otherwise), or purchase or own any
stocks, bonds, notes, debentures or other securities (including, without
limitation, any interests in any partnership, joint venture or joint adventure)
of, or any bank accounts with, or Guarantee any Indebtedness or other
obligations of, any Person (all such transactions being herein called
"Investments"), except:
(i) Bank Deposits. Bank accounts with, and banker's
acceptances and certificates of deposit of, banks having a combined
capital and surplus of at least $100,000,000 and (in the case of the
Company, so long as no Default exists) certificates of deposit of Norstar
Bank of Long Island and (in the case of Restricted Subsidiaries, so long
as no Default exists) demand deposits with Norstar Bank of Long Island and
other banks, provided that the aggregate amount of all such certificates
of deposit and demand deposits with Norstar Bank of Long Island and such
other banks shall not exceed $5,000,000;
(ii) Government Securities and Commercial Paper. Readily
marketable securities issued or guaranteed by the United States Government
and commercial paper rated P-1 by the National Credit Office of Moody's
Investors Service Inc. or bearing a similar rating by another nationally
recognized rating agency;
(iii) Existing Investments. Investments outstanding as of the
date hereof to the extent set forth on Schedule 9.16 hereto;
(iv) Permitted Guarantees. Guarantees permitted under Section
9.12 hereof;
(v) Unspecified Investments. Other Investments made after the
Effective Date so long as, in the case of any Investment in any Person
other than a Restricted Subsidiary or the Company, (A) no Default shall
have occurred both before and after giving effect to each such Investment
and (B) in the case of any such Investment or series of related
Investments (other than Specified Investments) in an aggregate amount in
excess of $50,000,000, the Company shall have furnished to the Banks a
reasonably detailed description of such Investment or series of
Investments demonstrating compliance with all of its and the Restricted
Subsidiaries' covenants and agreements under this Agreement both before
and after giving effect to such Investment or series of Investments.
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Notwithstanding anything in this Section 9.16 to the contrary, (A) Investments
shall not include any transaction that would otherwise constitute an Investment
to the extent the consideration provided by the Company in connection therewith
consists of common stock of the Company or, to the extent that the consideration
provided by the Company consists of a deferred or contingent obligation, (x)
such obligation can be satisfied with the delivery of common stock of the
Company and (y) the Company covenants and agrees in a notice to the Banks that
such obligation shall be satisfied solely by the delivery of such common stock
and (B) the amount of any Investments described herein shall be determined
without regard to writedowns or write-offs thereof that may occur at any time
and from time to time after the date.
Section 9.17 Restricted Payments. Neither the Company nor any Restricted
Subsidiary will, directly or indirectly, make or declare any Restricted Payment
(other than any Restricted Payment payable (and paid) in common stock of the
Company) at any time, except that so long as no Default shall have occurred and
be continuing at the time such Restricted Payment is made or would result from
the making or declaration of such Restricted Payment, the Company may (i) make
Restricted Payments at any time when the Cash Flow Ratio is less than 5.50 to 1,
(ii) make Restricted Payments in respect of preferred stock of the Company to
the extent made with Refunding Proceeds, (iii) purchase for cash, or pay
dividends on the Company's common stock in amounts to be applied by Parent Corp.
solely for the purchase for cash of, capital stock of the Company or Parent
Corp. from any employee of the Company other than Dolan, so long as the amount
of such purchase, together with the amount of all other purchases and payments
of dividends by the Company contemplated by this Section 9.17(iii) on or after
the Effective Date, does not exceed $50,000,000, (iv) make any Restricted
Payment in respect of the preferred stock of the Company to the extent payable
in New Preferred Stock of the Company, (v) pay any dividends or other
distributions in respect of any preferred stock of the Company, (vi) pay any
dividends or other distributions on any common stock of the Company, provided
that the aggregate amount of all such dividends or other distributions made
pursuant to this clause (vi) shall not exceed the sum of (x) $100,000,000 and
(y) the aggregate amount of all Net Cash Proceeds from New Common Stock (other
than any such Net Cash Proceeds previously applied as Refunding Proceeds) and
(vii) make Restricted Payments in cash to the extent made to redeem not more
than 33 1/3% of the Company's Series H Preferred Stock and/or not more than
50%of the Company's Series M Preferred Stock, provided that the aggregate amount
of all such Restricted Payments made pursuant to this clause (vii) shall not
exceed 110% of the aggregate accreted amount of such percentage of such Series H
and Series M Preferred Stock determined in accordance with the calculations set
forth on Schedule 9.17 hereto.
Section 9.18 Business. At any time at which the Cash Flow Ratio exceeds
5.50 to 1, the Company and the Restricted Subsidiaries shall not permit the
portion of consolidated gross revenues of the Company and the Restricted
Subsidiaries derived from the business of developing, constructing, owning,
acquiring, altering, repairing, financing, operating, maintaining, publishing,
distributing, promoting and otherwise exploiting cable television systems and
related businesses, including, without limitation, telecommunications services,
data transmission and telephony activities, for any Quarter to be less than 90%
of the total consolidated gross revenues of the Company and the Restricted
Subsidiaries for such Quarter. None of the Franchise Holding Companies will
engage in any business other than acting as a nominee for the Company or
Restricted Subsidiary for which it holds a Franchise or Franchises and will not
own or hold any property other than such Franchise or Franchises, pole
attachment
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agreements, insurance contracts and related bonds, and stock of other Franchise
Holding Companies, or incur or be liable for any Indebtedness or other
obligations other than obligations (except for borrowed money) arising out of
the ownership or leasing as lessee of any such property which such Franchise
Holding Company is permitted to own or hold by this Section 9.18 (provided that
each such obligation would not be prohibited by any provision of this Agreement
were it incurred by the Company or the Restricted Subsidiary for which such
Franchise Holding Company acts as nominee and all such obligations which, under
generally accepted accounting principles, are required to be reflected on a
balance sheet of such Franchise Holding Company are reflected in the balance
sheets of the Company or the Restricted Subsidiary for which such Franchise
Holding Company acts as nominee required to be furnished to the Banks
hereunder).
Section 9.19 Transactions with Affiliates. Neither the Company nor any
Restricted Subsidiary will effect any transaction with any of its Affiliates
that is not a Restricted Subsidiary on a basis less favorable to the Company or
such Restricted Subsidiary than would at the time be obtainable for a comparable
transaction in arms-length dealing with an unrelated third party.
Section 9.20 Amendments of Certain Instruments. Neither the Company nor
any Restricted Subsidiary will modify or supplement, or consent to any waiver of
any of the provisions of, any Debt Instrument governing any Permitted Debt or
any Indebtedness specified in Schedule 9.11. In addition, the Company will not
amend, modify or supplement any of the provisions of its charter in respect of
preferred stock of the Company, except that the Company may (i) file any
amendment or modification thereto or supplement thereof to permit the issuance
of New Preferred Stock of the Company and (ii) file a certificate of retirement
thereto in respect of (A) the Series A Cumulative Convertible Preferred Stock
and the Series B Cumulative Convertible Preferred Stock of the Company and (B)
any other series of preferred stock of the Company the purchase, acquisition,
redemption or retirement of which is permitted by this Agreement.
Section 9.21 Issuance of Stock. The Company will not permit any Restricted
Subsidiary to issue any shares of stock or other ownership interests in such
Restricted Subsidiary if, after giving effect thereto, the percentage of the
ownership interests in such Restricted Subsidiary held by the Company and the
Restricted Subsidiaries immediately prior to such issuance would be decreased.
D. Financial Covenants:
Section 9.22 Operating Cash Flow. (a) Operating Cash Flow to Total
Interest Expense. The Company and the Restricted Subsidiaries will cause, for
each Quarter, the ratio of Operating Cash Flow for the period of two Quarters
ending with such Quarter to Total Interest Expense for such period of two
Quarters ending with such Quarter to be at least the following respective
amounts at any time during the following respective periods:
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Period Ratio
------ -----
from and including the Effective Date to and
including the Quarter ended December 31,
1998 1.50 to 1
from and including January 1, 1999 to and including
the Quarter ended December 31, 2000 1.75 to 1
on and after January 1, 2000 2.00 to 1
(b) Operating Cash Flow less Consolidated Cash Taxes to Total Fixed
Charges. The Company and the Restricted Subsidiaries will cause, for each
Quarter, the ratio of (i) Operating Cash Flow for the period of two Quarters
ending with such Quarter less Consolidated Cash Taxes paid during such period of
two Quarters to (ii) Total Fixed Charges for such period of two Quarters ending
with such Quarter to be at least 1.20 to 1.
Section 9.23 Cash Flow Ratio. The Company and the Restricted Subsidiaries
will not permit the Cash Flow Ratio to exceed the following respective amounts
at any time during the following respective periods:
Period Ratio
------ -----
from and including the Effective 6.50 to 1
Date to and including December 31, 1999
from and including January 1, 2000 6.25 to 1
to and including September 30, 2000
from and including October 1, 2000 6.00 to 1
to and including June 30, 2001
from and including July 1, 2001 5.75 to 1
to and including December 31, 2001
from and including January 1, 2002 5.50 to 1
to and including June 30, 2002
from and including July 1, 2002 5.25 to 1
to and including December 31, 2002
on and after January 1, 2003 5.00 to 1
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E. Additional Covenants:
Section 9.24 Certain Subsidiaries. The Company will cause each of CMFRI
and its Subsidiaries to comply with each covenant hereunder applicable to it.
Section 9.25 Permitted Restricted Subsidiary Transactions. In the event of
any Permitted Restricted Subsidiary Transaction by CMFRI or any of its
Subsidiaries to any other Restricted Subsidiary, the Company shall cause such
Restricted Subsidiary to, and such Restricted Subsidiary shall, no later than
two Business Days prior to such event, undertake (by documentation satisfactory
to the Majority Banks) all of the obligations of the Company and CMFRI under the
CMFRI Agreement, whereupon such Restricted Subsidiary shall be obligated to pay
all amounts thereunder in accordance with the terms thereof.
ARTICLE X
DEFAULTS
Section 10.01 Events of Default. If any one of the following "Events of
Default" shall occur and be continuing, namely:
(a) Any representation or warranty in this Agreement or in any
certificate, statement or other document furnished to the Banks or the
Administrative Agent under this Agreement (including, without limitation, any
amendment thereto), or any certification made or deemed to have been made by the
Company to any Bank hereunder, shall prove to have been incorrect, or shall be
breached, in any material respect when made or deemed made; or
(b) Default in the payment when due of any principal on any Note or
any Reimbursement Obligation or default in the payment when due of interest on
any Note or any other amount payable to any Bank or the Administrative Agent
hereunder, and the failure to pay such interest or such other amount by 11:00
a.m. on the second next following Business Day; or
(c) Default by the Company or any of the Restricted Subsidiaries in
the performance or observance of any of its agreements in Article IX hereof
(other than Sections 9.01, 9.02, 9.03, 9.04, 9.05, 9.06, 9.07 and 9.16 hereof
but including Section 9.01(g) hereof); or
(d) Default by the Company or any of the Restricted Subsidiaries in
the performance or observance of any of its other agreements herein which shall
remain unremedied for 30 days after notice thereof shall have been given to the
Company by any Bank (provided that such period shall be five days and no such
notice shall be required in the case of a default under Section 9.01(e) or 9.16
hereof and provided further that such period shall be fifteen days and no such
notice shall be required in the case of a default under Section 9.01(d) hereof);
or
(e) Any Indebtedness of the Company or any of the Restricted
Subsidiaries in an aggregate principal amount of $10,000,000 or more, 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
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Subsidiary has established appropriate reserves (herein called "Excluded
Indebtedness"), shall (i) become due before stated maturity by the acceleration
of the maturity thereof by reason of default or (ii) become due by its terms and
shall not be promptly paid or extended; or
(f) Any default under any indenture, credit agreement or loan
agreement or other agreement or instrument under which Indebtedness of the
Company or any of the Restricted Subsidiaries constituting indebtedness for
borrowed money in an aggregate principal amount of $2,000,000 or more is
outstanding (other than Excluded Indebtedness), or by which any such
Indebtedness is evidenced, shall have occurred and shall continue for a period
of time sufficient to permit the holder or holders of any such Indebtedness (or
a trustee or agent on its or their behalf) to accelerate the maturity thereof or
to enforce any Lien provided for by any such indenture, agreement or instrument,
as the case may be, unless such default shall have been permanently waived by
the respective holder of such Indebtedness; or
(g) The Company or any of the Restricted Subsidiaries shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due, (iii) make a general assignment for
the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v)
commence a voluntary case under the Federal bankruptcy laws (as now or hereafter
in effect), (vi) file a petition seeking to take advantage of any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (vii) acquiesce in writing to, or fail to controvert in a
timely and appropriate manner, any petition filed against the Company or any
Restricted Subsidiary in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing; or
(h) A case or other proceeding shall be commenced, without the
application, approval or consent of the Company or any of the Restricted
Subsidiaries, in any court of competent jurisdiction, seeking the liquidation,
reorganization, dissolution, winding up, or composition or readjustment or debts
of the Company or any Restricted Subsidiary, the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or such Restricted
Subsidiary or of all or any substantial part of its assets, or any other similar
action with respect to the Company or such Restricted Subsidiary under the laws
of bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue undismissed, or
unstayed and in effect, for any period of 30 consecutive days, or an order for
relief against the Company or any Restricted Subsidiary shall be entered in an
involuntary case under the Federal bankruptcy laws (as now or hereafter in
effect); or
(i) A judgment for the payment of money in excess of $1,000,000
shall be rendered against the Company or any Restricted Subsidiary and such
judgment shall remain unsatisfied and in effect for any period of 30 consecutive
days without a stay of execution or (if a stay is not provided for by applicable
law) without having been fully bonded; or
(j) Any Franchise issued to the Company or any Restricted Subsidiary
shall be revoked or canceled or expire by its terms and not be renewed, or shall
be modified in a manner
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adverse to the Company or the Restricted Subsidiary utilizing such Franchise, if
such action is likely to have a Materially Adverse Effect; or
(k) (i) Any Termination Event shall occur; (ii) any Accumulated
Funding Deficiency, whether or not waived, shall exist with respect to any Plan;
(iii) any Person shall engage in any Prohibited Transaction involving any Plan;
(iv) the Company or any ERISA Affiliate is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from the Company's or any ERISA Affiliate's complete or partial withdrawal (as
described in Section 4203 or 4205 of ERISA) from such Plan; (v) the Company or
any ERISA Affiliate shall fail to pay when due an amount which is payable by it
to the PBGC or to a Plan under Title IV of ERISA and which, when aggregated with
all other such amounts with respect to the payment of which the Company and its
ERISA Affiliates are at the time in default, exceeds $500,000; (vi) a proceeding
shall be instituted by a fiduciary of any Plan against the Company or any ERISA
Affiliate to enforce Section 515 of ERISA and such proceeding shall not have
been dismissed within 30 days thereafter; and by reason of any or all of such
events described in clauses (i) through (vi) as applicable there shall or could
result in actual or potential liability of the Company and any ERISA Affiliate
in excess of $500,000 in the aggregate; or
(l) (i) Dolan Family Interests shall cease at any time to have
beneficial ownership (within the meaning of Rule 13d-3 (as in effect on the date
hereof) promulgated under the Securities and Exchange Act of 1934, as amended)
of shares of the capital stock of Parent Corp. having sufficient votes to elect
(or otherwise designate) at such time a majority of the members of the Board of
Directors of Parent Corp. or (ii) Parent Corp. shall cease to own directly 100%
of the common stock of the Company, or any Person (other than Parent Corp.)
shall obtain the legal or contractual right to own, or to cause the transfer of
the ownership of, any of the common stock of the Company, without regard to any
required approval of any other Person; or
(m) Any Event of Default under (and as defined in) the CMFRI
Agreement or the New York/New Jersey Agreement shall have occurred and be
continuing; or
(n) The New York/New Jersey Agreement (other than any provision
thereof which by the terms thereof survives a termination thereof) shall cease
to be in effect at any time and any of the New York/New Jersey Companies shall
have failed to become a Restricted Subsidiary in accordance with Section 9.08(b)
either at or before such time.
THEREUPON, the Administrative Agent may (and, if directed by the
Majority Banks, shall) by notice to the Company terminate the Commitments of the
Banks hereunder (if then outstanding) and the obligation to issue any Syndicated
Letter of Credit hereunder, and/or terminate any Syndicated Letter of Credit
and/or any Bank Letter of Credit by sending the notice of termination as
provided therein and/or declare the unpaid principal of and accrued interest on
the Notes, and all other amounts owing hereunder, to be forthwith due and
payable, whereupon the same shall be and become forthwith due and payable,
without presentment or demand for payment, notice of nonpayment, protest or
further notice or demand of any kind, all of which are hereby expressly waived
by the Company (provided that the Banks' Commitments hereunder, and the
obligation to issue Syndicated Letters of Credit hereunder, shall forthwith
terminate and the
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unpaid principal of and accrued interest on the Notes, and all other amounts
owing hereunder, shall automatically become and be forthwith due and payable
upon the occurrence of any event specified in clause (g) or (h) above without
any such notice or other action, all of which are hereby expressly waived by the
Company).
Section 10.02 Cash Collateral Account. The Company hereby agrees, in
addition to the provisions of Section 10.01 hereof, that upon the occurrence and
during the continuance of any Event of Default, it shall, upon demand by the
Majority Banks (and, in the case of any Event of Default specified in clause (g)
or (h) of Section 10.01 hereof, forthwith, without any demand or the taking of
any other action by the Banks) pay to the Administrative Agent an amount in
immediately available funds equal to the then aggregate undrawn face amount of
the Syndicated Letters of Credit and Bank Letters of Credit and that any amounts
received by the Administrative Agent pursuant to this Section 10.02 (and all
investments of such amounts and earnings and proceeds of such investments) shall
be held by the Administrative Agent in a cash collateral account in the name of
the Administrative Agent entitled "Cablevision Systems Corporation Letter of
Credit Cash Collateral Account" as collateral for the prompt payment and
performance when due of the Company's Obligations to the Banks, as the case may
be, in respect of all then outstanding Syndicated Letters of Credit and Bank
Letters of Credit, and upon satisfaction of the Reimbursement Obligations and
the obligations then outstanding of the Company in respect of the Bank Letters
of Credit, as collateral for all other Obligations. The balance in such
collateral account from time to time (including all earnings thereon) shall be
invested and reinvested by the Administrative Agent in such interest-bearing
obligations of the type described in clauses (i) and (ii) of Section 9.16 hereof
as the Administrative Agent shall from time to time select, and the Company
hereby authorizes and directs the Administrative Agent to collect and receive
any earnings and proceeds of any such Investments and to credit the net amount
of all such receipts to such cash collateral account.
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
with such powers as are specifically delegated to the Administrative Agent by
the terms of this Agreement, together with such other powers as are reasonably
incidental thereto. The Administrative Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and shall
not by reason of this Agreement be a trustee for any Bank. The Administrative
Agent shall not be responsible to any of the Banks for any recitals, statements,
representations or warranties contained in this Agreement or in any certificate
or other document referred to or provided for in, or received by any of the
Banks under, this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document referred to or provided for herein or for any failure by the Company to
perform any of its obligations hereunder. The Administrative Agent may employ
agents and attorneys-in-fact and shall not be responsible, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Administrative Agent nor any of its directors,
officers, employees or agents
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shall be liable or responsible for any action taken or omitted to be taken by it
or them hereunder or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct.
Section 11.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof received by telephone, telex, telegram or cable) believed
by it to be genuine and correct and to have been signed or sent by or on behalf
of the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance with
instructions signed by the Majority Banks, and such instructions of the Majority
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks.
Section 11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on the Obligations) unless the Administrative Agent has
received notice from a Bank or the Company specifying such Default and stating
that such notice is a "Notice of Default". In the event that the Administrative
Agent receives such a notice of the occurrence of a Default, the Administrative
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Administrative Agent shall (subject
to Section 11.07 hereof) take such action with respect to such Default as shall
be reasonably directed by the Majority Banks, provided that, unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may take such action, or refrain from taking such action, with respect to
such Default as it shall deem advisable in the best interest of the Banks.
Section 11.04 Rights as a Bank. With respect to its Commitment and the
Loans made by it, the Administrative Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as Administrative Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
and its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Company, the Restricted Subsidiaries and any of their
affiliates as if it were not acting as Administrative Agent, and the
Administrative Agent and its affiliates may accept fees and other consideration
from the Company, the Restricted Subsidiaries and any of their affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
Section 11.05 Indemnification. The Banks agree to indemnify the
Administrative Agent and the Predecessor Agents (to the extent not reimbursed
under Sections 12.03 and 12.04 hereof, but without limiting the obligations of
the Company under said Sections 12.03 and 12.04), ratably in accordance with the
aggregate principal amount of the Obligations held by the Banks (or, if no Loans
are at the time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may
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be imposed on, incurred by or asserted against the Administrative Agent or any
Predecessor Agent in any way relating to or arising out of this Agreement or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under Sections 12.03
and 12.04 hereof but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or of any
such other documents, provided that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified.
Section 11.06 Non-Reliance on Administrative Agent and Other Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company, the Restricted Subsidiaries and the New York/New Jersey Companies and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any other document contemplated by or referred to
herein. The Administrative Agent shall not be required to keep itself informed
as to the performance or observance by the Company, the Restricted Subsidiaries
and the New York/New Jersey Companies of this Agreement or to inspect the
properties or books of the Company, the Restricted Subsidiaries and the New
York/New Jersey Companies. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company, the
Restricted Subsidiaries and the New York/New Jersey Companies (or any of their
Affiliates) which may come into the possession of the Administrative Agent or
any of its affiliates.
Section 11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
Section 11.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Company and the Administrative Agent may be removed at any
time with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a bank organized or licensed
under the laws of the United States of America or any State having an office (or
an affiliate with an office) in New York, New York and a combined capital and
surplus
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of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After the retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Article XI
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
Section 11.09 Agency Fee. So long as the Commitments are outstanding and
until payment in full of all Obligations hereunder and the expiration or
termination of all Syndicated Letters of Credit and Bank Letters of Credit, the
Company will pay to the Administrative Agent such fees as may have been agreed
to by the Company and the Administrative Agent. Such fees, once paid, shall be
non-refundable.
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver. No failure on the part of the Administrative
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided for
herein shall be by telegraph, cable or in writing and telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified in Schedule 12.02 hereto or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in Section 2.02 hereof, all notices and other
communications hereunder shall be deemed to have been duly given when
transmitted by telecopier, delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice, four Business Days
after the date deposited in the mails, airmail postage prepaid, in each case
given or addressed as aforesaid.
Section 12.03 Expenses, Etc. The Company shall pay or reimburse each of
the Banks and the Administrative Agent for: (a) the reasonable fees and expenses
of Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Administrative Agent, in connection with (i) the negotiation, preparation,
execution and delivery of this Agreement, the Notes and the other documents
contemplated by or referred to herein, the making of the Loans and the issuance
of Syndicated Letters of Credit or Bank Letters of Credit hereunder and (ii) any
amendment, modification or waiver of any of the terms of this Agreement, the
Notes or any of such other documents; (b) all reasonable costs and expenses of
the Banks and the Administrative Agent (including reasonable counsels' fees and
expenses) in connection with the enforcement, protection, preservation or
exercise of any of their rights under this Agreement, the Notes and the other
documents contemplated by or referred to herein; and (c) all transfer, stamp,
documentary
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or other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement, any of the Notes or any other
document referred to herein. The Company shall (to the fullest extent permitted
by applicable law) indemnify the Administrative Agent, the Predecessor Agents,
the Banks and each affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or in any
way relate to or result from any actual or proposed use by the Company of the
proceeds of any of the extensions of credit (whether a Loan, a Syndicated Letter
of Credit or a participation therein, or a Bank Letter of Credit) hereunder
and/or the negotiation, execution, delivery or performance of this Agreement or
the Notes or any extensions of credit (whether a Loan, a Syndicated Letter of
Credit or a participation therein, or a Bank Letter of Credit) made or to be
made hereunder or from any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, and the Company shall reimburse the Administrative Agent and each
Bank, and each affiliate thereof and their respective directors, officers,
employees and agents, upon demand, for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding (but excluding
any such losses, liabilities, claims, damages, or expenses to the extent, but
only to the extent, caused by action taken which constitutes the gross
negligence or willful misconduct of the Person to be indemnified). If and to the
extent that the obligations of the Company under the preceding sentence may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the losses, liabilities, claims, damages
and expenses referred to above as may be permitted by applicable law.
Section 12.04 Letter of Credit Indemnification. The Company hereby
indemnifies and holds harmless each Bank and the Administrative Agent from and
against any and all claims and damages, losses, liabilities, costs or expenses
which such Bank or the Administrative Agent may incur (or which may be claimed
against such Bank or the Administrative Agent by any Person whatsoever) by
reason of or in connection with the execution and delivery or transfer of or
payment or failure to pay under any Syndicated Letter of Credit or Bank Letter
of Credit; provided that the Company shall not be required to indemnify any Bank
or the Administrative Agent for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of such Bank or the Administrative Agent in
determining whether a request presented under any Syndicated Letter of Credit or
Bank Letter of Credit complied with the terms of such Syndicated Letter of
Credit or Bank Letter of Credit or (ii) such Bank's failure to pay under any
Syndicated Letter of Credit or Bank Letter of Credit after the presentation to
it of a request strictly complying with the terms and conditions of the
Syndicated Letter of Credit or Bank Letter of Credit. Nothing in this Section
12.04 is intended to limit the obligations of the Company hereunder.
Section 12.05 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor any consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Majority Banks, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, do any of the following: (a) increase the
Commitment of any of the Banks, extend the Commitment Termination Date or any
date on which the
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Commitments are scheduled to reduce hereunder, or subject the Banks to any
additional obligations; (b) reduce the principal of, or interest on, or fees
with respect to, the Obligations or the amount of any scheduled payments
thereof; (c) postpone any date fixed for payment of principal of, or interest
on, or fees with respect to, the Obligations or the Notes; (d) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Obligations, or the number of Banks which shall be required for the Banks or any
of them to take any action under this Agreement; (e) release all or a
significant portion of any collateral for the Obligations; (f) change any
provision contained in Section 2.04(b)(ii) (other than clause (F) of the proviso
therein), Section 3.01(b)(iii), Section 4.05, Articles V, VI, VII, Section 12.03
hereof or this Section 12.05; and (g) release or remove any Guarantor from its
obligations hereunder other than any such release or removal resulting from a
transaction permitted by Section 9.15 hereof. Anything in this Section 12.05 to
the contrary, no amendment, waiver or consent shall be made with respect to the
matters set forth in the proviso to the previous sentence and the Administrative
Agent shall not release any balance in the cash collateral account described in
Section 10.02 hereof without the prior written consent of each Bank.
Section 12.06 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Neither the Company nor any Guarantor may sell or assign its
rights or obligations hereunder or under the Notes without the prior consent of
all of the Banks and the Administrative Agent.
(c) At any time after the Effective Date, a Bank may sell a
participation of all or part of its rights and obligations under such Bank's
Commitment under this Agreement and the Notes to one or more commercial banks,
investment companies or other financial institutions that enter into
participations of the type contemplated by this Section 12.06 in the ordinary
course of their business and that qualify as "accredited investors," as such
term is defined under Regulation D of the Securities Act of 1933, as amended
(each, a "participant"), such participant's rights against such Bank to be set
forth in a participation agreement (a "Participation Agreement"); provided,
however, that (i) such Bank shall have submitted in writing to the Company and
to the Administrative Agent a request that each of the Company and the
Administrative Agent consent to the choice of such participant, (ii) the Company
and the Administrative Agent shall have consented in writing to the choice of
such participant prior to the time of effectiveness of such participation, such
consent not to be unreasonably withheld or delayed, (iii) such participation,
when added to the contemporaneous participations made by such Bank under the
CMFRI Agreement and, if then in effect, the New York/New Jersey Agreement, must
be in an amount not less than $10,000,000, (iv) such participation shall be sold
pro rata between such Bank's Commitment, such Bank's CMFRI Commitment and, if
the New York/New Jersey Agreement is then in effect, such Bank's New York/New
Jersey Commitment based on the relationship of each such Commitment to such
Bank's Aggregate Commitment and (v) in the event such Bank was party to this
Agreement on the Effective Date, after giving effect to such participation such
Bank's Aggregate Commitment not so participated if any shall be at least
$10,000,000. All amounts payable by the Company to any Bank under Article V
hereof shall be determined as if such Bank had not sold any such participation
and as if such Bank were funding all of its Commitment and Loans in the same way
that it is funding the Commitment and Loans in which no participations have been
sold. In no event shall a Bank that sells a
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participation be obligated to the participant under its Participation Agreement
to refrain from taking any action hereunder or under such Bank's Note except
that such Bank may agree in such Participation Agreement that it will not,
without the consent of such participant, agree to (A) extend the Commitment
Termination Date or any date on which any Commitments are scheduled to reduce
hereunder, (B) reduce the principal of, or interest on, the Obligations or under
the Notes or any Commitment Fee, (C) postpone any date fixed for payment of the
principal of, or interest on, the Obligations or under the Notes, (D) consent to
any release of all or a significant portion of any collateral for the
Obligations or (E) change any provision contained in Article VI hereof. Any Bank
selling a participation hereunder shall promptly notify the Company of the
effectiveness thereof.
(d) At any time after the Effective Date, a Bank may assign part of
its rights and obligations under such Bank's Commitment under this Agreement and
the Notes to one or more commercial banks or other financial institution (each,
an "assignee") pursuant to an Assignment and Acceptance; provided, that (i) such
Bank shall have submitted in writing to the Company and the Administrative Agent
a request that each of the Company and the Administrative Agent consent to the
choice of such assignee, (ii) the Company and the Administrative Agent shall
have consented in writing to the choice of such assignee prior to the time of
effectiveness of such assignment, such consent not to be unreasonably withheld
or delayed, (iii) such assignment, when added to the contemporaneous assignments
made by such Bank under the CMFRI Agreement and, if then in effect, the New
York/New Jersey Agreement, must be in an aggregate amount not less than
$10,000,000, (iv) such assignment shall be made pro rata between such Bank's
Commitment, such Bank's CMFRI Commitment and, if the New York/New Jersey
Agreement is then in effect, such Bank's New York/New Jersey Commitment based on
the relationship of each such Commitment to such Bank's Aggregate Commitment,
(v) the parties to each assignment shall execute and deliver to the
Administrative Agent, for its approval, acceptance and recording in the books
and records maintained pursuant to Section 12.06(f) hereof an Assignment and
Acceptance, together with a processing and recordation fee of, when added to the
processing and recordation fee under the contemporaneous assignment under the
CMFRI Agreement and, if then in effect, the New York/New Jersey Agreement,
$3,500 and (vi) in the event such Bank was party to this Agreement on the
Effective Date, after giving effect to such assignment, such Bank's Aggregate
Commitment shall not be less than $10,000,000. Upon such execution, delivery,
approval, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto, and to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and under the Notes and (y) the Bank assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations hereunder and under the Notes. Any Bank
making an assignment hereunder shall promptly notify the Company of the
effectiveness thereof. In the event of any such assignment, the Company shall,
against receipt of the existing Note of the Bank assignor, issue a new Note to
the Bank assignee and, in the case of a partial assignment, to such Bank
assignor, in either case appropriately reflecting such assignment.
(e) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder shall confirm to and agree
with each other
70
<PAGE>
and the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Company or its
Subsidiaries or the performance or observance by the Company or its Subsidiaries
of any of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Sections 8.04 and 9.01 hereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, such assigning
Bank or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Bank.
(f) The Administrative Agent shall maintain books and records in
which shall be recorded (i) the names and addresses of the Banks and the
Commitments of, and principal amount of Obligations, including the Letter of
Credit Liabilities, owing to, each Bank from time to time; (ii) all other
appropriate debits and credits as provided in this Agreement, including, without
limitation, all interest, fees (including attorneys' fees and disbursements to
the extent reimbursable hereunder), expenses, charges and other Obligations; and
(iii) all payments of Obligations made by the Company or for the Company's
account. All entries in such books and records shall be made in accordance with
the Administrative Agent's customary accounting practices as in effect from time
to time. The Administrative Agent will render a quarterly statement to the
Company detailing all relevant transactions for billing purposes. Each and every
such statement shall be deemed final, binding and conclusive upon the Company in
all respects as to all matters reflected therein (absent manifest error), unless
the Company, within 15 days after the date such statement is rendered, delivers
to the Administrative Agent written notice of any objections which the Company
may have to any such statement. In that event, only those items expressly
objected to in such notice shall be deemed to be disputed by the Company.
Notwithstanding the foregoing, the Administrative Agent's entries in the books
and records evidencing Loans and other financial accommodations made from time
to time shall be final, binding and conclusive upon the Company (absent manifest
error) as to the existence and amount of the Obligations recorded in such books
and records.
(g) The Administrative Agent shall maintain at the applicable
address for notices as determined in accordance with Section 12.02 hereof a copy
of each Assignment and Acceptance delivered to and accepted by it and shall
record in such books and records the names and addresses of each Bank and the
Commitment of, and principal amount of the Loans owing
71
<PAGE>
to, such Bank from time to time. The Company, the Administrative Agent and the
Banks may treat each Person whose name is so recorded as a Bank hereunder for
all purposes of this Agreement.
(h) If any Bank (or, if such Bank has participated any part of its
Loans or Commitment, any of such Bank's participants) does not agree with a
proposal of the Company for an amendment, waiver or consent in respect of an
issue described in the penultimate sentence of Section 12.06(c) hereof, the
Company may require that such Bank (and each of its participants, if any)
transfer all of its right, title and interest under this Agreement, under the
CMFRI Agreement and, if then in effect, under the New York/New Jersey Agreement
and such Bank's Note issued hereunder, its note issued under the CMFRI Agreement
and its note issued under the New York/New Jersey Agreement to any Person (a
"Proposed Bank") identified by the Company who agrees to assume the obligations
of such Bank for a consideration equal to the outstanding principal amount of
such Bank's Loans, CMFRI Loans and New York/New Jersey Loans, together with
interest thereon to the date of such transfer and all other amounts payable
hereunder, under the CMFRI Agreement and, if then in effect, under the New
York/New Jersey Agreement to such Bank on or prior to the date of such transfer
(including any fees accrued hereunder and any amounts which would be payable
under Section 5.05 hereof (or the equivalent provisions of the CMFRI Agreement
and, if then in effect, the New York/New Jersey Agreement) as if all of such
Bank's Loans, CMFRI Loans and New York/New Jersey Loans were being prepaid in
full on such date. Subject to the execution and delivery of such instruments and
agreements relating to such transfer as the Banks (including the Proposed Bank
and such Bank) shall request, such Proposed Bank shall be a "Bank" for all
purposes hereunder.
(i) A Bank may furnish any information concerning the Company, any
of its Subsidiaries or any of the New York/New Jersey Companies in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants).
(j) Notwithstanding anything in the foregoing to the contrary, (x)
each Bank may, without complying with any restrictions set forth in this Section
12.06, sell participations in or assign all or any part of its rights and
obligations under such Bank's Commitment under this Agreement and the Notes to
any affiliate of such Bank, provided that the Company shall consent to the
choice of such affiliate, such consent not to be unreasonably withheld or
delayed, and provided, however, that any participation or assignment made by
such affiliate to a non-affiliate must be effected contemporaneously with its
other affiliates such that the non-affiliate participant or assignee holds pro
rata amounts of the Commitment, the CMFRI Commitment and, if the New York/New
Jersey Agreement is then in effect, the New York/New Jersey Commitment as if
such participation or assignment had been made by such Bank; and (y) each Bank
may at any time, without complying with any restrictions set forth in this
Section 12.06, assign all or any portion of its rights under this Agreement and
the Notes to a Federal Reserve Bank, provided that such assignment shall not
release the Bank assignor from its obligations under this Agreement.
Section 12.07 Survival. The obligations of the Company under Sections
5.01, 5.05, 5.06, 12.03 and 12.04 hereof shall survive the repayment of the
Loans, the Reimbursement Obligations and the obligations of the Company in
respect of Bank Letters of Credit and the expiration and termination of the
Syndicated Letters of Credit and Bank Letters of Credit.
72
<PAGE>
Section 12.08 Senior Indebtedness. The Obligations (including, without
limitation, the obligations of the Company and the Guarantors to pay, when due
(whether at stated maturity, by acceleration or otherwise) the principal of and
interest on the Loans to be made by the Banks to the Company pursuant to Section
2.01 hereof and the Obligations in respect of Syndicated Letters of Credit and
Bank Letters of Credit issued pursuant to Section 2.03 hereof) and the
obligations of the Company and the Restricted Subsidiaries with respect to
Interest Swap Agreements shall constitute "Senior Indebtedness" as such term is
defined in all documents to which the Company or any Restricted Subsidiary is a
party.
Section 12.09 Conditions to Effectiveness; Assignment. (a) This Agreement
shall become effective on the first day (the "Effective Date") on which (i) this
Agreement shall have been duly executed by the parties hereto and (ii) the
conditions precedent to the initial extension of credit under Article VII hereof
shall have been satisfied, at which time the 1996 Agreement shall be amended and
restated by this Agreement. If no Effective Date shall occur, the 1996 Agreement
shall remain in full force and effect.
(b) Upon the Effective Date, each 1996 Bank shall be released from
all duties and obligations under the 1996 Agreement and, except in the case of
any Bank, shall have no further duties or obligations under this Agreement.
Section 12.10 Liability of General Partners and Other Persons. No general
partner of any Restricted Subsidiary that is a partnership, joint venture or
joint adventure shall have any personal liability in respect of such Restricted
Subsidiary's obligation under this Agreement or the Notes by reason of his, her
or its status as such general partner. In addition, no limited partner, officer,
employee, director, stockholder or other holder of an ownership interest of or
in the Company or any Restricted Subsidiary or any partnership, corporation or
other entity which is a stockholder or other holder of an ownership interest of
or in the Company or any Restricted Subsidiary shall have any personal liability
in respect of such obligations by reason of his, her or its status as such
limited partner, officer, employee, director, stockholder or holder.
Section 12.11 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.12 Waiver. THE COMPANY, THE RESTRICTED SUBSIDIARIES, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH ANY OF THEM IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTES OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
Section 12.13 Entire Agreement. This Agreement, the Notes and the letter
referred to in Section 7.01(j) hereof embody the entire agreement among the
Company, the Restricted Subsidiaries and the Banks and supersede all prior
agreements, representations and understandings, if any, relating to the subject
matter hereof.
73
<PAGE>
Section 12.14 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the law of the State of New York.
Section 12.15 Captions, Etc. Captions, section headings and the table of
contents appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
Section 12.16 Acceptance of Release of Rights of Guarantors. The Company
hereby accepts the release effected by Article VI and agrees not to restore or
attempt to restore any of the rights thereby released.
Section 12.17 Authorization of Third Parties to Deliver Information and
Discuss Affairs. The Company hereby confirms that it has authorized and directed
each Person whose preparation or delivery to the Administrative Agent or the
Banks of any opinion, report or other information is a condition or covenant
under this Agreement (including under Article VII and Article IX) to so prepare
or deliver such opinions, reports or other information for the benefit of the
Administrative Agent and the Banks. The Company agrees to confirm such
authorizations and directions provided for in this Section 12.17 from time to
time as may be requested by the Administrative Agent.
Section 12.18 Acknowledgement. The Company hereby acknowledges that
neither the Administrative Agent nor any Bank has any fiduciary relationship
with or fiduciary duty to the Company arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Administrative Agent and the Banks, on the one hand, and the Company, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor.
74
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CSC HOLDINGS, INC.,
for itself and as General Partner of Cablevision
Finance Limited Partnership
By
--------------------------------------------------
Name:
Title:
CABLEVISION OF CONNECTICUT CORPORATION
CABLEVISION AREA 9 CORPORATION
CABLEVISION FAIRFIELD CORPORATION
COMMUNICATIONS DEVELOPMENT CORPORATION
CABLEVISION OF MICHIGAN, INC.
CABLEVISION SYSTEMS DUTCHESS CORPORATION
CABLEVISION SYSTEMS EAST HAMPTON CORPORATION
CABLEVISION SYSTEMS GREAT NECK CORPORATION
CABLEVISION SYSTEMS HUNTINGTON CORPORATION
CABLEVISION SYSTEMS ISLIP CORPORATION
CABLEVISION SYSTEMS LONG ISLAND CORPORATION
CABLEVISION SYSTEMS SUFFOLK CORPORATION
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
CABLEVISION SYSTEMS WESTCHESTER CORPORATION
CABLEVISION OF CLEVELAND G.P., INC., for
itself and as General Partner of
Cablevision of Cleveland, L.P.
CABLEVISION OF CLEVELAND L.P., INC.
3300 LAKESIDE CORPORATION
V CABLE, INC.
VC HOLDING, INC.
ARSENAL MSUB 7, INC.
TELERAMA, INC.
CABLEVISION OF THE MIDWEST HOLDING CO., INC.
CABLEVISION OF THE MIDWEST, INC., for itself
and as General Partner of Complexicable of
Cuyahoga Valley, Ltd.
CABLEVISION SYSTEMS OHIO INVESTMENT
CORPORATION, for itself and as General
Partner of each of Ohio Cablevision
Investors, Ltd., Cablevision of Ohio,
Ltd.,Cablevision of Geauga County, Space
Cable of Ohio, Ltd. and Space Cable of
Strongsville, Ltd.
SHAMROCK CABLE CORPORATION, for itself and as
General Partner of each of Shamrock
Cleveland Cablevision, L.P., Shamrock
Cuyahoga County Cablevision Associates,
L.P. and Shamrock Ohio Cablevision
Associates, L.P.
CSC ACQUISITION CORPORATION
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
CSC ACQUISITION - NY, INC.
CSC ACQUISITION - MA, INC.
A-R CABLE SERVICES - NY, INC.
CABLEVISION LIGHTPATH, INC.
CABLEVISION FINANCE CORPORATION
CABLEVISION OF BOSTON, INC.
CABLEVISION OF BROOKLINE, INC.
CABLEVISION SYSTEMS BROOKLINE CORPORATION,
for itself and as Managing General Partner
of Cablevision of Brookline, L.P.
ARSENAL MSUB 2, INC.
PETRA CABLEVISION CORPORATION
SUFFOLK CABLE CORPORATION
SAMSON CABLEVISION CORP.
SUFFOLK CABLE OF SMITHTOWN, INC.
SUFFOLK CABLE OF SHELTER ISLAND, INC.
NYCGP CORP., for itself and as General
Partner of Cablevision of New York City -
Master L.P.
NYC LP CORP.
CABLEVISION SYSTEMS NEW YORK CITY
CORPORATION, for itself and as Corporate
General Partner of Cablevision of New York
City - Phase I L.P.
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
CABLE SCIENCE CORPORATION
A-R CABLE INVESTMENTS, INC.
FRAMINGHAM HOLDINGS, INC.
CABLEVISION OF FRAMINGHAM HOLDINGS, INC.
CABLEVISION OF FRAMINGHAM, INC.
CABLEVISION OF NASHOBA HOLDINGS, INC.
WP NASHOBA CABLE, INC.
CABLEVISION OF NASHOBA, INC.,
for itself and as General Partner of A-R
Cable Partners
By
--------------------------------------------------
Name:
Title:
of each of the above-named fifty
corporations
CABLEVISION FINANCE LIMITED PARTNERSHIP
By CSC Holdings, Inc.,
as General Partner
CABLEVISION OF BROOKLINE, L.P.
By Cablevision Systems Brookline
Corporation, as Managing General
Partner
CABLEVISION OF NEW YORK CITY - MASTER L.P.
By NYC GP Corp., as General Partner
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
CABLEVISION OF NEW YORK CITY - PHASE I L.P.
By Cablevision Systems New York
City Corporation, as Corporate
General Partner
A-R CABLE PARTNERS
By Cablevision of Nashoba, Inc., as General Partner
CABLEVISION OF CLEVELAND, L.P.
By Cablevision of Cleveland G.P., Inc., as General
Partner
COMPLEXICABLE OF CUYAHOGA VALLEY, LTD.
By Cablevision of the Midwest, Inc., as General
Partner
OHIO CABLEVISION INVESTORS, LTD.
By Cablevision Systems Ohio Investment Corporation,
as General Partner
CABLEVISION OF OHIO, LTD.
By Cablevision Systems Ohio Investment Corporation,
as General Partner
CABLEVISION OF GEAUGA COUNTY
By Cablevision Systems Ohio Investment Corporation,
as General Partner
SPACE CABLE OF OHIO, LTD.
By Cablevision Systems Ohio Investment Corporation,
as General Partner
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
SPACE CABLE OF STRONGSVILLE, LTD.
By Cablevision Systems Ohio Investment Corporation,
as General Partner
SHAMROCK CLEVELAND CABLEVISION, L.P.
By Shamrock Cable Corporation, as General Partner
SHAMROCK CUYAHOGA COUNTY CABLEVISION ASSOCIATES,
L.P.
By Shamrock Cable Corporation, as General Partner
SHAMROCK OHIO CABLEVISION ASSOCIATES, L.P.
By Shamrock Cable Corporation, as General Partner
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$112,500,000 TORONTO DOMINION (TEXAS), INC., as Arranging
Agent, Administrative Agent and Bank
By
-----------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Managing
Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE BANK OF NEW YORK COMPANY, INC.,
as Bank
By
-----------------------------------------
Name:
Title:
$87,500,000 THE BANK OF NOVA SCOTIA, as Bank and
Managing Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE CANADIAN IMPERIAL BANK OF COMMERCE,
as Bank, Managing Agent and
Co-Syndication Agent
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$87,500,000 NATIONSBANK, N.A., as Bank,
Managing Agent and Co-Syndication Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE CHASE MANHATTAN BANK, as Bank,
Managing Agent and Co-Syndication Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 BANK OF MONTREAL, CHICAGO BRANCH,
as Bank and Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 BARCLAYS BANK PLC, as Bank and Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 FLEET BANK, N.A., as Bank and Agent
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$70,000,000 ROYAL BANK OF CANADA, as Bank and Agent
By
-----------------------------------------
Name:
Title:
$57,500,000 MELLON BANK, N.A., as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 BANKBOSTON, N.A., as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 BANQUE PARIBAS, as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$50,000,000 CREDIT LYONNAIS, as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 SOCIETE GENERALE, NEW YORK BRANCH, as Bank
and Co-Agent,
By
-----------------------------------------
Name:
Title:
$37,500,000 FIRST UNION NATIONAL BANK
By
-----------------------------------------
Name:
Title:
$37,500,000 PNC BANK, NATIONAL ASSOCIATION
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$25,000,000 ABN AMRO BANK N.V.
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$25,000,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$25,000,000 UNION BANK OF CALIFORNIA, N.A.
By
-----------------------------------------
Name:
Title:
$12,500,000 BANK OF HAWAII
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$12,500,000 BANQUE FRANCAISE DU COMMERCE EXTERIEUER
By
-----------------------------------------
Name:
Title:
$12,500,000 THE DAI-ICHI KANGYO BANK, LTD.
By
-----------------------------------------
Name:
Title:
$12,500,000 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By
-----------------------------------------
Name:
Title:
$12,500,000 THE FUJI BANK LIMITED, NEW YORK BRANCH
By
-----------------------------------------
Name:
Title:
$12,500,000 GENERAL ELECTRIC CREDIT CORPORATION
By
-----------------------------------------
Name:
Title:
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
<PAGE>
Commitment
$12,500,000 THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
By
-----------------------------------------
Name:
Title:
$12,500,000 THE SUMITOMO BANK, LIMITED
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$12,500,000 SUMMIT BANK
By
-----------------------------------------
Name:
Title:
- - -----------------
$1,400,000,000.00
Sixth Amended and Restated Credit Agreement for CSC Holdings, Inc.
EXECUTION COPY
CABLEVISION MFR, INC.
-----------
$1,400,000,000
FIRST
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 28, 1998
TORONTO DOMINION (TEXAS), INC.
as Arranging Agent and as
Administrative Agent
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
THE CANADIAN IMPERIAL BANK OF COMMERCE
NATIONSBANK, N.A.
THE CHASE MANHATTAN BANK
as Managing Agents
BANK OF MONTREAL, CHICAGO BRANCH
BARCLAYS BANK PLC
FLEET BANK, N.A.
ROYAL BANK OF CANADA
as Agents
BANQUE PARIBAS
CREDIT LYONNAIS
BANKBOSTON, N.A.
THE FIRST NATIONAL BANK OF CHICAGO
MELLON BANK, N.A.
SOCIETE GENERALE, NEW YORK BRANCH
as Co-Agents
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
as Co-Syndication Agents
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms...........................................2
Section 1.02 Accounting Terms and Determinations............................17
ARTICLE II
LOANS
Section 2.01 Loans..........................................................17
Section 2.02 Manner of Borrowing; Conversion and Continuation...............18
Section 2.03 Reductions and Changes of Commitments.........................19
Section 2.04 Commitment Fee.................................................21
Section 2.05 Notes..........................................................22
Section 2.06 Lending Offices................................................22
Section 2.07 Several Obligations; Remedies Independent......................22
Section 2.08 Use of Proceeds................................................22
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments....................................................22
Section 3.02 Repayment of Loans.............................................23
Section 3.03 Interest.......................................................23
<PAGE>
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments.......................................................24
Section 4.02 Pro Rata Treatment.............................................24
Section 4.03 Computations...................................................25
Section 4.04 Non-Receipt of Funds by the Administrative Agent...............25
Section 4.05 Sharing of Payments, Etc.......................................25
Section 4.06 No Reductions..................................................26
Section 4.07 Taxes..........................................................26
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans...........................27
Section 5.02 Limitation on Types of Loans...................................29
Section 5.03 Illegality.....................................................29
Section 5.04 Certain Conversions of Loans Pursuant to Section
5.01 or 5.03..................................................29
Section 5.05 Compensation...................................................29
Section 5.06 Replacement of Banks...........................................30
ARTICLE VI
GUARANTEE.................................31
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan...................................................32
Section 7.02 Each Loan......................................................34
ii
<PAGE>
ARTICLE VIII
REPRESENTATIONS
Section 8.01 Existence and Power............................................34
Section 8.02 Subsidiaries...................................................35
Section 8.03 Authority; No Conflict.........................................35
Section 8.04 Financial Condition............................................35
Section 8.05 Litigation; Etc................................................36
Section 8.06 Titles and Liens...............................................36
Section 8.07 Regulation U...................................................36
Section 8.08 Taxes..........................................................36
Section 8.09 Other Credit Agreements........................................37
Section 8.10 Full Disclosure................................................37
Section 8.11 No Default.....................................................37
Section 8.12 Approval of Regulatory Authorities.............................37
Section 8.13 Binding Agreements.............................................37
Section 8.14 Franchises.....................................................38
Section 8.15 Collective Bargaining Agreements...............................38
Section 8.16 Investments...................................................38
ARTICLE IX
PARTICULAR COVENANTS OF THE COMPANY AND THE GUARANTORS
Section 9.01 Financial Statements and Other Information.....................38
Section 9.02 Taxes and Claims...............................................40
Section 9.03 Insurance......................................................40
Section 9.04 Maintenance of Existence; Conduct of Business..................40
Section 9.05 Maintenance of and Access to Properties........................40
iii
<PAGE>
Section 9.06 Compliance with Applicable Laws................................41
Section 9.07 Litigation.....................................................41
Section 9.08 New Subsidiaries...............................................41
Section 9.09 Franchises.....................................................41
Section 9.10 Indebtedness...................................................41
Section 9.11 Contingent Liabilities.........................................42
Section 9.12 Liens..........................................................43
Section 9.13 Leases.........................................................43
Section 9.14 Mergers, Acquisitions and Dispositions, Etc....................43
Section 9.15 Investments....................................................45
Section 9.16 Restricted Payments............................................46
Section 9.17 Business.......................................................46
Section 9.18 Transactions with Affiliates...................................46
Section 9.19 Issuance of Stock..............................................47
Section 9.20 Operating Cash Flow............................................47
Section 9.21 Cash Flow Ratio................................................47
ARTICLE X
DEFAULTS
Section 10.01 Events of Default..............................................48
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities.............................51
Section 11.02 Reliance by Administrative Agent...............................51
Section 11.03 Defaults.......................................................51
iv
<PAGE>
Section 11.04 Rights as a Bank...............................................52
Section 11.05 Indemnification................................................52
Section 11.06 Non-Reliance on Administrative Agent and Other Banks...........52
Section 11.07 Failure to Act.................................................53
Section 11.08 Resignation or Removal of Administrative Agent.................53
Section 11.09 Agency Fee.....................................................53
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver......................................................53
Section 12.02 Notices........................................................54
Section 12.03 Expenses, Etc..................................................54
Section 12.04 Amendments, Etc................................................54
Section 12.05 Successors and Assigns.........................................55
Section 12.06 Survival.......................................................58
Section 12.07 Senior Indebtedness............................................58
Section 12.08 Conditions to Effectiveness....................................59
Section 12.09 Liability of General Partners and Other Persons................59
Section 12.10 Counterparts...................................................59
Section 12.11 Waiver.........................................................59
Section 12.12 Entire Agreement...............................................59
Section 12.13 Governing Law..................................................59
Section 12.14 Captions, Etc..................................................59
Section 12.15 Waiver of Certain Defenses.....................................59
Section 12.16 Release; Acceptance of Release.................................60
Section 12.17 Authorization of Third Parties to Deliver Information
and Discuss Affairs............................................60
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Section 12.18 Termination of 1996 Agreement and 1996 Pledge
Agreement and Release of Security Interests....................60
Section 12.19 CSC Agreement..................................................61
Section 12.20 Acknowledgement................................................61
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Schedule 2.02(a)(i) Form of Notice of Loan
Schedule 2.02(c) Form of Notice of Conversion
and Continuation
Schedule 2.06 Applicable Lending Offices
Schedule 4.07(c) Form of Certificate of Non-US Bank
Schedule 8.02 Subsidiaries
Schedule 8.03 Required Consents and
Governmental Approvals
Schedule 8.05 Existing Litigation
Schedule 8.14 Existing Franchises
Schedule 9.10 Existing Indebtedness
Schedule 9.11 Existing Guarantees
Schedule 9.12 Existing Liens
Schedule 9.15 Existing Investments
Schedule 12.02 Addresses for Notices
EXHIBIT A Form of Note
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Subscribers' Certificate
EXHIBIT D(1) Form of Certificate as to
Quarterly Financial Statements
EXHIBIT D(2) Form of Certificate as to Annual
Financial Statements
EXHIBIT E Form of Opinion of General Counsel
to the Obligors
EXHIBIT F(1) Form of Opinion of Special New
York Counsel to the Obligors
EXHIBIT F(2) Form of Opinion of Special New Jersey
Counsel to the Obligors
EXHIBIT F(3) Form of Opinion of Special FCC Counsel
Counsel to the Obligors
EXHIBIT G Form of Opinion of Special New
York Counsel to the
Administrative Agent
EXHIBIT H Form of Assignment and Acceptance
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 28, 1998 among
CABLEVISION MFR, INC., a Delaware corporation (the "Company"), CSC HOLDINGS,
INC. (formerly known as Cablevision Systems Corporation), a Delaware corporation
("CSC"), the Guarantors (as defined below) which are parties hereto, the lenders
which are parties hereto, together with their respective successors and assigns
(the "Banks"), and TORONTO DOMINION (TEXAS), INC., as Arranging Agent and as
Administrative Agent, THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA, THE
CANADIAN IMPERIAL BANK OF COMMERCE, NATIONSBANK, N.A. and THE CHASE MANHATTAN
BANK, as Managing Agents, BANK OF MONTREAL, CHICAGO BRANCH, BARCLAYS BANK, PLC,
FLEET BANK, N.A., and ROYAL BANK OF CANADA, as Agents, BANQUE PARIBAS, CREDIT
LYONNAIS, BANKBOSTON, N.A., THE FIRST NATIONAL BANK OF CHICAGO, MELLON BANK,
N.A. and SOCIETE GENERALE, NEW YORK BRANCH as Co-Agents, and THE BANK OF NEW
YORK and THE BANK OF NOVA SCOTIA as Co-Syndication Agents.
WHEREAS, on September 5, 1996, the Company, CSC, the Guarantors named
therein, the several banks whose names are set forth on the signature pages
thereto, and Toronto Dominion (Texas), Inc., as Arranging Agent and as
Administrative Agent, The Bank of New York, The Bank of Nova Scotia, The
Canadian Imperial Bank of Commerce, NationsBank of Texas, N.A. and The Chase
Manhattan Bank, as Agents, Bank of Montreal, Chicago Branch, Fleet Bank, N.A.,
Mellon Bank, N.A. and Royal Bank of Canada, as Co-Agents, The Chase Manhattan
Bank, as Syndication Agent, and NationsBank of Texas, N.A., as Documentation
Agent, entered into a Credit Agreement (such Credit Agreement being referred to
herein as the "1996 Agreement");
WHEREAS, the Company and its Subsidiaries are engaged in the business of
developing, constructing, owning, acquiring, altering, repairing, financing,
operating, maintaining, publishing, distributing, promoting and otherwise
exploiting cable television systems and related businesses, including, without
limitation, telecommunications services, data transmission and telephony
activities; and
WHEREAS, the Banks have extended credit to the Company, by the making of
loans to the Company, in reliance upon collateral security furnished by the
Company and its Subsidiaries; the Company and the Guarantors have requested that
the Total Commitment (as defined in the 1996 Agreement) be increased and that
such collateral security be released; the proceeds of the Loans hereunder are to
be employed in accordance with Section 2.08 hereof; and each of the Obligors and
the Guarantors expects to derive benefit, directly or indirectly, from such
loans.
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"1996 Agreement" shall have the meaning given to such term in the
first "Whereas" clause of this Agreement.
"1996 Banks" shall have the meaning given to the term "Banks" in the
1996 Agreement.
"1996 Pledge Agreement" shall mean the "Pledge Agreement" as such
term is used in the 1996 Agreement.
"1996 Security Agent" shall mean Toronto Dominion (Texas), Inc., in
its capacity as Security Agent under the 1996 Pledge Agreement.
"Accumulated Funding Deficiency" shall mean an accumulated funding
deficiency as defined in Section 302 of ERISA.
"Additional Costs" shall have the meaning given to such term in
Section 5.01 hereof.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc. in
its capacity as administrative agent for the Banks hereunder and its successors
in such capacity.
"Affected Loans" shall have the meaning given to such term in
Section 5.04 hereof.
"Affected Type" shall have the meaning given to such term in Section
5.04 hereof.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
provided further that no individual shall be an Affiliate of a corporation or
partnership solely by
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reason of his or her being an officer, director or partner of such entity,
except in the case of a partner if his or her interests in such partnership
shall qualify him or her as an Affiliate.
"Aggregate Commitment" shall mean, at any time, as to each Bank, the
sum of such Bank's Commitment, CSC Commitment and New York/New Jersey Commitment
at such time.
"Agreement" shall mean this First Amended and Restated Credit
Agreement, including all schedules and exhibits hereto, as the same may be
amended, supplemented or modified from time to time.
"Annualized Operating Cash Flow" shall mean, as at any date, an
amount equal to Operating Cash Flow for the period of three complete consecutive
calendar months ending on or most recently prior to such date, multiplied by
four.
"Applicable Lending Office" shall mean, with respect to each Bank,
for each type of Loan, the lending office of such Bank (or of an affiliate of
such Bank) designated for such type of Loan in Schedule 2.06 hereto or such
other office of such Bank (or of an affiliate of such Bank) as such Bank may
from time to time specify to the Administrative Agent and the Company as the
office by which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean:
(a) With respect to Base Rate Loans, 0.250% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the
immediately preceding Quarter was greater than 6.00 to 1; .125% at all
times during any Applicable Period if the CSC Cash Flow Ratio as at the
end of the immediately preceding Quarter was less than or equal to 6.00 to
1 and greater than 5.50 to 1; and 0.000% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the
immediately preceding Quarter was less than or equal to 5.50 to 1; and
(b) With respect to Eurodollar Loans, 1.125% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the
immediately preceding Quarter was greater than 6.00 to 1; 0.875% at all
times during any Applicable Period if the CSC Cash Flow Ratio as at the
end of the immediately preceding Quarter was less than or equal to 6.00 to
1 and greater than 5.50 to 1; 0.750% at all times during any Applicable
Period if the CSC Cash Flow Ratio as at the end of the immediately
preceding Quarter was less than or equal to 5.50 to 1 and greater than
5.00 to 1; 0.600% at all times during any Applicable Period if the CSC
Cash Flow Ratio as at the end of the immediately preceding Quarter was
less than or equal to 5.00 to 1 and greater than 4.50 to 1; and 0.400% at
all times during any Applicable Period if the CSC Cash Flow Ratio as at
the end of the immediately preceding Quarter was less than or equal to
4.50 to 1;.
For purposes of this definition, the CSC Cash Flow Ratio as at the end of any
Quarter (the "Subject Quarter") shall be determined based upon (i) for the
Quarter ended immediately prior to the Effective Date, the Compliance
Certificate delivered in accordance with Section 7.01 of the CSC Credit
Agreement, and (ii) for each Subject Quarter commencing thereafter, (x) the
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<PAGE>
Annualized Operating Cash Flow (as defined in the CSC Agreement) as set forth in
the Subscribers' Certificate (as defined in the CSC Credit Agreement) delivered
pursuant to Section 9.01(e) of the CSC Credit Agreement with respect to the
second month of such Subject Quarter and (y) the aggregate outstanding principal
amount of Indebtedness of CSC, the Restricted Subsidiaries and the New York/New
Jersey Companies (as calculated in accordance with the definition of CSC Cash
Flow Ratio) as of the last day of such Subject Quarter (as certified by the
Company and the New York/New Jersey Obligors to the Administrative Agent at the
time of the delivery of such Subscribers' Certificate).
As used in this definition, "Applicable Period" shall mean the period from and
including (i)(a) in the case of the first Applicable Period, the Effective Date
and (b) in the case of each subsequent Applicable Period, the first day after
the immediately preceding Applicable Period to but excluding (ii) the fifth
Business Day of the next July, October, January or April (whichever occurs
first) to occur thereafter.
"Assignment and Acceptance" shall have the meaning given to such
term in Section 5.06 hereof.
"Banks" shall have the meaning given to such term in the preamble to
this Agreement.
"Base Rate" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the higher of:
(a) the rate of interest adopted by The Toronto-Dominion Bank (New
York Branch), from time to time, as its reference rate for the
determination of interest rates on loans of varying maturities in Dollars
to United States residents of varying degrees of creditworthiness and
being quoted at such time by The Toronto-Dominion Bank (New York Branch)
as its "prime rate," which rate is not necessarily The Toronto-Dominion
Bank's lowest rate of interest; and
(b) the sum (adjusted to the nearest one-quarter of one percent (1/4
of 1%) or, if there is no nearest one-quarter of one percent (1/4 of 1%),
to the next higher one-quarter of one percent (1/4 of 1%)) of (i) one-half
of one percent (1/2 of 1%) per annum plus (ii) the Federal Funds Rate.
"Base Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Base Rate" in
this Section 1.01.
"BPU" shall mean the New Jersey Board of Public Utilities or
successor thereto.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City or London.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to
4
<PAGE>
use) real and/or personal property, which obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under generally accepted accounting principles (including Statement of
Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board) and, for purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with generally
accepted accounting principles (including such Statement No. 13).
"Capital Maintenance Costs" shall mean, with respect to the Loans of
each Bank, any costs which such Bank determines are attributable to the
maintenance by such Bank or any of its affiliates, pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law) of any court or governmental or monetary authority, whether in
effect on the Effective Date or thereafter, of capital in respect of its
maintaining Loans hereunder or its commitment to make Loans hereunder.
"Cash Flow Ratio" shall mean, as at any date, the ratio of (i) the
sum of the aggregate outstanding principal amount of all Indebtedness of the
Company and the Guarantors (determined on a consolidated and, in respect of the
New York/New Jersey Companies to the extent such companies are not Restricted
Subsidiaries on such date, a combined basis, but excluding all obligations under
any Interest Swap Agreement) outstanding on such date to (ii) Annualized
Operating Cash Flow determined as at the last day of the month covered by the
then most recent Subscribers' Certificate delivered to the Banks pursuant to
Section 9.01(e) hereof, a copy of which has been delivered to the Administrative
Agent (and any change in such ratio as a result of a change in the amount of
Indebtedness shall be effective as of the date such change shall occur and any
change in such ratio as a result of a change in the amount of Annualized
Operating Cash Flow shall be effective as of the date of receipt by the
Administrative Agent of the Subscribers' Certificate reflecting such change).
"Cash Taxes" shall mean, for any period, the sum of (i) all federal
income and other taxes on operations paid by the Company and the Guarantors
during such period in respect of the operating revenues of the Company and the
Guarantors taken as a whole and (ii) all state and local income and other taxes
on operations paid by the Company and the Guarantors during such period in
respect of the income and operations of the Company and the Guarantors taken as
a whole.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" shall mean, as to each Bank, the amount set forth
opposite its name on the signature pages hereto under the heading "Commitment"
or amount set forth on any Assignment and Acceptance (as the same may be reduced
or otherwise adjusted from time to time as provided in this Agreement).
"Commitment Fee" shall have the meaning given to such term in
Section 2.04 hereof.
"Commitment Percentage" shall mean, as to each Bank at any time, the
percentage obtained by dividing such Bank's Commitment by the Total Commitment.
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"Commitment Termination Date" shall mean the Quarterly Date falling
on or nearest to March 31, 2007.
"Company" shall mean Cablevision MFR, Inc.
"Compliance Certificate" shall mean a certificate of a senior
financial executive of the Company and the New York/New Jersey Obligors in
substantially the form of Exhibit B hereto.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"CSC" shall have the meaning given to such term in the preamble to
this Agreement.
"CSC Agreement" shall mean the Sixth Amended and Restated Credit
Agreement, dated as of May 28, 1998, among CSC, the Restricted Subsidiaries
parties thereto, the banks parties thereto and Toronto Dominion (Texas), Inc.,
as Arranging Agent and as Administrative Agent, The Bank of New York, The Bank
of Nova Scotia, The Canadian Imperial Bank of Commerce, NationsBank, N.A. and
The Chase Manhattan Bank, as Managing Agents, Bank of Montreal, Chicago Branch,
Barclays Bank PLC, Fleet Bank, N.A. and Royal Bank of Canada, as Agents, Banque
Paribas, Credit Lyonnais, The First National Bank of Boston, The First National
Bank of Chicago, Mellon Bank, N.A. and Societe Generale, as Co-Agents, and The
Canadian Imperial Bank of Commerce, The Chase Manhattan Bank and NationsBank,
N.A., as Co-Syndication Agents, as amended and/or restated and in effect from
time to time, or, if such agreement shall cease to be in effect, as last in
effect.
"CSC Cash Flow Ratio" shall have the meaning given to the term "Cash
Flow Ratio" in the CSC Agreement.
"CSC Commitment" shall mean, as to each Bank, its "Commitment" as
such term is used in the CSC Agreement (as the same may be reduced or otherwise
adjusted from time to time as provided in the CSC Agreement).
"CSC Loans" shall mean "Loans" as such term is used in the CSC
Agreement.
"CSC Specified Investments" shall mean "Specified Investments" as
such term is used in the CSC Agreement.
"Default" shall mean an Event of Default or any other event which
with notice and/or passage of time would become an Event of Default or an Event
of Default under (and as defined in) the New York/New Jersey Agreement.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Effective Date" shall have the meaning given to such term in
Section 12.08 hereof.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean, when used with respect to a Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code of which the Company or any
Guarantor is a member.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan, for any Interest Period, the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m. (London time) on the second
Business Day prior to the first day of such Interest Period by reference to the
British Bankers' Association Interest Settlement Rates for deposits in Dollars
(as set forth by any service selected by the Administrative Agent that has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period (rounded upward, if necessary, to the nearest 1/16 of 1%);
provided that, if, for any reason, the Administrative Agent cannot determine the
Eurodollar Base Rate for any Interest Period pursuant to the foregoing
provisions of this definition, the Administrative Agent shall determine the
Eurodollar Base Rate by using the offered rates of any three major banks active
in the London interbank market selected by the Administrative Agent, but in all
other respects in accordance with the foregoing provisions of this definition.
"Eurodollar Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loans for such Interest Period divided by 1
minus the Reserve Requirement for such Loans for such Interest Period.
"Event of Default" shall mean any of the events described in Article
X hereof.
"Excluded Indebtedness" shall have the meaning given to such term in
Section 10.01(e) hereto.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate quoted to The Toronto-Dominion Bank (New
York Branch) on such day on such transactions with Federal funds brokers of
recognized standing as may be determined by the Administrative Agent.
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<PAGE>
"Franchise" shall mean a franchise, license or other authorization
or right to construct, own, operate, promote and/or otherwise exploit any cable
television system granted by the Federal Communications Commission (or any
successor agency of the Federal government) or any state, county, city, town,
village or other local governmental authority.
"Funding Costs" for any Bank shall mean, with respect to any
Eurodollar Loan, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount paid, prepaid or
converted or not borrowed or converted for the period from the date of such
payment, prepayment or conversion or failure to borrow or convert to the last
day of the Interest Period for such Loan (or, in the case of a failure to borrow
or convert, the Interest Period for such Loan which would have commenced on the
date of such failure to borrow or convert) had such principal amount borne
interest at the Eurodollar Rate applicable to such Loan over (ii) the interest
component of the amount such Bank would have bid in the London interbank market
for Dollar deposits of leading banks in amounts comparable to such principal
amount and with maturities comparable to such period (as reasonably determined
by such Bank).
"Guarantee" shall have the meaning given to such term in Section
9.11 hereof.
"Guarantor" shall mean each Subsidiary of the Company and to the
extent any New York/New Jersey Company is not a Restricted Subsidiary, each New
York/New Jersey Company.
"Indebtedness" shall mean, as to any Person, Capital Lease
Obligations of such Person and other indebtedness of such Person for borrowed
money (whether by loan or the issuance and sale of debt securities) or for the
deferred purchase or acquisition price of property or services (and including,
without limitation, obligations of such Person for property taxes and judgments
and other awards giving rise to Permitted Liens described in clauses (ii) and
(iii) of the definition of "Permitted Liens" in this Section 1.01) other than
accounts payable (other than for borrowed money) incurred in the ordinary course
of business of such Person. Without limiting the generality of the foregoing,
such term shall include (a) when applied to the Company, all obligations of the
Company and/or any Guarantor under Interest Swap Agreements and (b) when applied
to the Company or any other Person, all Indebtedness of others Guaranteed by
such Person.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loans, the period commencing on
the date such Eurodollar Loans are made and ending on the same day in the
first, second, third, sixth or, subject to availability from each Bank,
twelfth calendar month thereafter, as the Company may select as provided
in Section 2.02 hereof; and
(b) With respect to any Base Rate Loans, the period commencing on
the date such Base Rate Loans are made and ending on the next Quarterly
Date thereafter.
Notwithstanding the foregoing: (i) no Interest Period may commence before and
end after any Quarterly Date upon which the Commitments are to be reduced
pursuant to Section 2.03(a)
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hereof unless, after giving effect thereto, the aggregate principal amount of
the Loans having Interest Periods which end after such Quarterly Date shall be
equal to or less than the amount to which the Commitments are to be reduced on
such Quarterly Date pursuant to said Section 2.03(a); (ii) no Interest Period
with respect to any Loan may end after the Commitment Termination Date; (iii)
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or, in the case of an
Interest Period for Eurodollar Loans, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day); (iv)
any Interest Period for a Eurodollar Loan that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month in which such Interest Period ends) shall, subject to
clause (i) above, end on the last Business Day of a calendar month; and (v) no
more than 12 Interest Periods for all Eurodollar Loans hereunder shall be in
effect at the same time and, if the number of Interest Periods for Eurodollar
Loans would otherwise be in excess of 12, Eurodollar Loans shall not be
available hereunder.
"Interest Swap Agreement" shall mean an interest rate swap, cap or
collar agreement or similar arrangement among the Company and/or any Guarantor
and one or more banks or financial institutions providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations
among the Company and/or such Guarantor and such banks or financial
institutions, either generally or under specific contingencies, as said
agreement or arrangement shall be modified and supplemented and in effect from
time to time.
"Investments" shall have the meaning given to such term in Section
9.15 hereof.
"Leases" shall mean leases and subleases (excluding Capital Lease
Obligations), licenses to use real and/or tangible personal property, easements
and pole attachments and conduit or trench agreements and other rights to use
telephone or utility poles, conduits or trenches.
"Liens" shall have the meaning given to such term in Section 9.12
hereof.
"Loans" shall mean Base Rate Loans and Eurodollar Loans made
pursuant to Section 2.01 hereof.
"Majority Banks" shall mean, at any time, Banks having Commitments
aggregating at least 51% of the amount of the Total Commitment.
"Margin Stock" shall mean "margin stock" as defined in Regulation U.
"Materially Adverse Effect" shall mean a materially adverse effect
upon (i) the business, assets, financial condition or results of operations of
the Company and the Guarantors taken as a whole, (ii) the ability of the Company
and the Guarantors to perform their respective obligations hereunder or under
the New York/New Jersey Agreement or (iii) the legality, validity, binding
nature or enforceability of this Agreement or the New York/New Jersey Agreement.
"Multiemployer Plan" shall mean a Plan that is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
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"Net Cash Proceeds" shall mean proceeds received by the Company or
any of its Subsidiaries in cash from the sale or other disposition of property
of the Company or any of its Subsidiaries, after deduction of the costs of, and
any income, franchise, transfer or other tax liability arising from, such sale
or disposition. If any amount payable to the Company or any such Subsidiary in
respect of any such sale or disposition, shall be or become evidenced by any
promissory note or other negotiable or non-negotiable instrument, the cash
proceeds received on any such note or instrument shall constitute Net Cash
Proceeds.
"New Subsidiary" shall mean any Person that becomes a Subsidiary of
the Company or any New York/New Jersey Company after the date of this Agreement.
"New York/New Jersey Agreement" shall mean the First Amended and
Restated Credit Agreement, dated as of May 28, 1998, among CSC TKR, Inc.,
Cablevision of Brookhaven, Inc., Cablevision of Oakland, Inc., Cablevision of
Paterson, Inc., CSC TKR I, Inc. and UA-Columbia Cablevision of Westchester,
Inc., the Guarantors that are parties thereto, the Banks that are parties
thereto, Toronto Dominion (Texas), Inc., as Arranging Agent and Administrative
Agent, The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank
of Commerce, NationsBank, N.A. and The Chase Manhattan Bank, as Managing Agents,
Bank of Montreal, Chicago Branch, Barclays Bank PLC, Fleet Bank, N.A. and Royal
Bank of Canada, as Agents, Banque Paribas, Credit Lyonnais, The First National
Bank of Boston, The First National Bank of Chicago, and Mellon Bank, N.A. and
Societe Generale, as Co-Agents, as amended and/or restated and in effect from
time to time.
"New York/New Jersey Commitment" shall mean, as to any Bank, its
"Commitment" as such term is used in the New York/New Jersey Agreement (as the
same may be reduced or otherwise adjusted from time to time as provided in the
New York/New Jersey Agreement).
"New York/New Jersey Companies" shall mean the New York/New Jersey
Obligors and the New York/New Jersey Subsidiaries.
"New York/New Jersey Loans" shall mean "Loans" as such term is used
in the New York/New Jersey Agreement.
"New York/New Jersey Obligors" shall mean the "Obligors" as such
term is used in the New York/New Jersey Agreement.
"New York/New Jersey Subsidiaries" shall mean the Subsidiaries of
the New York/New Jersey Obligors.
"New York/New Jersey Total Commitment" shall mean the "Total
Commitment" as such term is used in the New York/New Jersey Agreement.
"Non-US Bank" shall mean a Person that is not a United States Person
and that is not described in Section 881(c)(3) of the Code.
"Notes" shall mean the promissory notes provided for by Section 2.05
hereof evidencing the Loans.
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"Obligations" shall mean, collectively, the obligations of the
Obligors hereunder in respect of the principal of and interest on the Loans and
all obligations in respect of fees and other amounts payable by the Obligors
hereunder.
"Obligors" shall mean, jointly and severally, the Company and CSC,
and "Obligor" shall mean the Company or CSC.
"Operating Cash Flow" shall mean, for any period, the following for
the Company and the Guarantors for such period, determined on a consolidated
and, in respect of the New York/New Jersey Companies to the extent such
companies are not Restricted Subsidiaries during such period, a combined basis
in accordance with generally accepted accounting principles: (i) aggregate
operating revenues minus (ii) aggregate operating expenses (including technical,
programming, sales, selling, general administrative expenses and salaries and
other compensation, in each case net of amounts allocated to Affiliates, paid to
any general partner, director, officer or employee of the Company or any
Guarantor but excluding interest, depreciation and amortization and, to the
extent otherwise included in operating expenses, any losses resulting from a
writeoff or writedown of Investments by the Company or any Guarantor in
Affiliates); provided, however, that for purposes of determining Operating Cash
Flow for any period (A) there shall be excluded (x) all management fees paid to
the Company during such period other than any such fees paid in cash to the
extent not in excess of 3% of Operating Cash Flow for the Company and its
Subsidiaries as determined without including any such fees and (y) the
amortization of deferred installation income and (B) Operating Cash Flow for
such period shall be increased or (except for purposes of the calculations
required by Section 9.14(a)(vi)(B)) reduced, as the case may be, by the
Operating Cash Flow of assets acquired or disposed of by the Company or any
Guarantor on or after the first day of such period, determined on a pro forma
basis reasonably satisfactory to the Administrative Agent (it being agreed that
it shall be satisfactory to the Administrative Agent that such pro forma
calculations may be based upon generally accepted accounting principles as
applied in the preparation of the financial statements for the Company or (if a
New York/New Jersey Company) such Guarantor, as the case may be, delivered in
accordance with Section 9.01 hereof rather than as applied in the financial
statements of the company whose assets were acquired and may include, in the
Company's discretion a reasonable estimate of savings under existing contracts
resulting from any such acquisitions), as though the Company or such Guarantor
acquired or disposed of such assets on the first day of such period.
"Paramus-Hillsdale Sale" shall mean the "Paramus-Hillsdale Sale" as
defined in the New York/New Jersey Agreement.
"Participation Agreement" shall have the meaning given to such term
in Section 12.05(c) hereof.
"Parent Corp." shall mean Cablevision Systems Corp., a Delaware
corporation.
"Payor" shall have the meaning given to such term in Section 4.04
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
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"Permitted Affiliate Transaction" shall mean any transaction by
which the Company or any of its Subsidiaries shall (i) pay dividends or make any
distribution on its capital stock or other equity securities or pay any of its
Indebtedness owed to CSC or any other Restricted Subsidiary, (ii) make any loans
or advances to CSC or any other Restricted Subsidiary or (iii) transfer any of
its properties or assets to, or merge or consolidate into, CSC or any other
Restricted Subsidiary.
"Permitted Liens" shall mean, with respect to any Person: (i)
pledges or deposits by such Person under workers' compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or Leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or U.S.
Government bonds to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or import duties or for the
payment of rent; (ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens or other Liens arising out of judgments or awards against
such Person with respect to which such Person shall then be prosecuting appeal
or other proceedings for review (and as to which all foreclosures and other
enforcement proceedings shall have been fully bonded or otherwise effectively
stayed); (iii) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith and by appropriate
proceedings (and as to which all foreclosures and other enforcement proceedings
shall have been fully bonded or otherwise effectively stayed); (iv) Liens in
favor of issuers of performance bonds issued pursuant to the request of and for
the account of such Person in the ordinary course of its business; (v) minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of others for rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the use
of real properties or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not incurred in
connection with Indebtedness or other extensions of credit and which do not in
the aggregate materially detract from the value of said properties or materially
impair their use in the operation of the business of such Person; or (vi) any
Lien on any Margin Stock.
"Person" shall mean an individual, a corporation, a partnership, a
limited liability company, a joint venture or adventure, a trust or estate or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, or any other
legal entity.
"Plan" shall mean, at any time, an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by the
Company or an ERISA Affiliate or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Company or an ERISA Affiliate is then
making or accruing an obligation to make contributions or has within the
preceding six plan years made contributions.
"Pole Rental Leases" shall mean Leases under which the Company, its
Subsidiaries and/or the New York/New Jersey Companies, have the right to use
telephone or
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utility poles, conduits or trenches for the purpose of supporting or housing
cables of the respective systems.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan or any other amount payable by the Company under this Agreement which is
not paid when due (whether at stated maturity, by acceleration or otherwise), a
rate per annum during the period commencing on the due date until such amount is
paid in full equal to 2% above the Base Rate as in effect from time to time plus
the Applicable Margin for Base Rate Loans; provided that, if such amount in
default is principal of a Eurodollar Loan and the due date is a day other than
the last day of an Interest Period therefor, the "Post-Default Rate" for such
principal shall be, for the period commencing on the due date and ending on the
last day of the Interest Period therefor, 2% above the interest rate for such
Loan for such Interest Period as provided in Section 3.03 hereof, and thereafter
the rate provided for above in this definition.
"Prohibited Transaction" shall mean a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"Proposed Bank" shall have the meaning given to such term in Section
12.05(h) hereof.
"Quarter" shall mean a fiscal quarterly period of the Company.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, the first of which shall be on June 30, 1998, provided
that, if any such day is not a Business Day, the relevant Quarterly Date shall
be the next succeeding Business Day.
"Reduction Amount" shall have the meaning given to such term in
Section 2.03(a) hereof.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean, with respect to any Bank, any change
on or after the Effective Date in United States Federal, state or foreign laws
or regulations (including Regulation D) or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank of or under any United States Federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reportable Event" shall mean (i) any of the events set forth in
Section 4043(b) (other than a Reportable Event as to which the provision of 30
days' notice to the PBGC is waived under applicable regulations), 4068(f) or
4063(a) of ERISA or the regulations thereunder, (ii) an event requiring the
Company or any ERISA Affiliate to provide security to a Plan under
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Section 401(a)(29) of the Code and (iii) any failure to make payments required
by Section 412(m) of the Code if such failure continues for 30 days following
the due date for any required installment.
"Required Payment" shall have the meaning given to such term in
Section 4.04 hereof.
"Required Principal Payments" shall mean for any period an amount
equal the excess, if any, of the aggregate amount of Loans and New York/New
Jersey Loans outstanding at the beginning of such period over the aggregate
amount of the Total Commitment and the New York/New Jersey Total Commitment at
the end of such period.
"Reserve Requirement" shall mean, for any Eurodollar Loans of any
Bank for any Interest Period, the rate at which such Bank actually is required
to maintain reserves (including any marginal, supplemental or emergency
reserves) during such Interest Period under Regulation D against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
actually required to be maintained by such Bank by reason of any Regulatory
Change against (A) any category of liabilities which includes deposits by
reference to which the Eurodollar Base Rate for such Eurodollar Loans is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (B) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Restricted Payments" shall mean direct or indirect distributions,
dividends or other payments by the Company or any Guarantor on account of
(including, without limitation, sinking fund or other payments on account of the
redemption, retirement, purchase or acquisition of) any general or limited
partnership or joint venture interest in, or any capital stock of, the Company
or such Guarantor, as the case may be (whether made in cash, property or
obligations), other than (i) any such distributions, dividends and other
payments made by (i) the Company or any of its Subsidiaries to CSC, or any other
Restricted Subsidiary and (ii) any such distributions, dividends and other
payments made by any New York/New Jersey Subsidiary to any New York/New Jersey
Company.
"Restricted Subsidiary" shall have the meaning given to such term in
the CSC Agreement.
"Scheduled Reduction Date" shall have the meaning given to such term
in Section 2.03(a) hereof.
"Specified Investments" shall mean any Investment or series of
related Investments by the Company or any Guarantor in an aggregate amount, when
added with all CSC Specified Investments (without duplication), for all such
Investments not in excess of $100,000,000 in businesses engaged primarily in the
provision of video on demand, cable modem or residential telephony services and
other closely related businesses.
"Subscribers' Certificate" shall mean a certificate of a senior
financial executive of the Company and the New York/New Jersey Obligors in
substantially the form of Exhibit C hereto.
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"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or adventure, limited liability company,
trust or estate:
(a) in the case of a corporation, of which a majority of the
outstanding capital stock having ordinary voting power to elect a majority of
the Board of Directors of such corporation (irrespective of whether or not at
the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency);
(b) in the case of a partnership or joint venture, in which such
Person is a general partner or joint venturer or of which a majority of the
partnership or other ownership interests;
(c) in the case of a limited liability company, of which a majority
of the ownership interests; or
(d) in the case of a trust or estate, the beneficial interest of
which, is at the time directly or indirectly owned by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
"Tax" means any Federal, State or foreign tax, assessment or other
governmental charge (including any withholding tax) upon a Person or upon its
assets, revenues, income or profits.
"TCI Acquisition" shall mean the transactions contemplated by the
TCI Acquisition Documents, other than the Second-Tier Reorganization (as defined
in and contemplated by the Master Reorganization Agreement referred to in the
definition of "TCI Acquisition Documents" herein).
"TCI Acquisition Documents" shall mean (i) the Amended and Restated
Contribution and Merger Agreement, dated as of June 6, 1997, by and among CSC,
Parent Corp., CSC Merger Corporation and TCI Communications, Inc., (ii) the
Master Reorganization Agreement, dated as of March 3, 1998, between Parent Corp.
and CSC and (iii) the Assignment and Assumption Agreement, dated as of March 4,
1998, by and among Parent Corp., CSC TKR, Inc., CSC TKR I, Inc., Cablevision of
Oakland, Inc., Cablevision of Brookhaven, Inc. and Cablevision of Paterson, Inc.
"Termination Event" shall mean (i) a Reportable Event, (ii) the
termination of a Plan, or the filing of a notice of intent to terminate a Plan,
or the treatment of a Plan amendment as a termination under Section 4041(c) of
ERISA, (iii) the institution of proceedings to terminate a Plan under Section
4042 of ERISA, or (iv) the appointment of a trustee to administer any Plan under
Section 4042 of ERISA.
"Total Available Commitment" shall mean, as of any date, the Total
Commitment as of such date minus an amount equal to the excess of (i) the
aggregate Net Cash Proceeds to be used as specified in all notices given by the
Company to the Administrative Agent in accordance with Sections 2.03(c) hereof
over (ii) the sum of (x) the aggregate amount of all reductions of the Total
Commitment required by reason of the provisos to Section 2.03(c) with respect to
such Net Cash Proceeds and (y) the aggregate amount of Loans (including the
Loans requested to be made
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on such date) the proceeds of which have been or, upon the making thereof, will
be used for the purposes specified in such notices in accordance with such
Section.
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments of all the Banks (as the same may be reduced or otherwise
adjusted from time to time as provided in this Agreement).
"Total Debt Expense" shall mean, for any period, Total Interest
Expense for such period plus an amount equal to Required Principal Payments for
such period and all other scheduled payments of principal on other Indebtedness
of the Company and the Guarantors (on a consolidated and, in respect of the New
York/New Jersey Companies to the extent such companies are not Restricted
Subsidiaries during such period, a combined basis) during such period
(including, but not limited to, the principal portion paid with respect to
Capital Lease Obligations); provided that, for purposes of determining Total
Debt Expense for any period, there shall be included or excluded, as the case
may be, all scheduled payments of principal (other than Required Principal
Payments) during such period on Indebtedness of the Company or any Guarantor in
respect of assets acquired or disposed of by the Company or such Guarantor on or
after the first day of such period, determined on a pro forma basis reasonably
satisfactory to the Administrative Agent (it being agreed that it shall be
satisfactory to the Administrative Agent that such pro forma calculations may be
based upon generally accepted accounting principles as applied in the
preparation of the financial statements for the Company or (if a New York/New
Jersey Company) such Guarantor, as the case may be, delivered in accordance with
Section 9.01 hereof rather than as applied in the financial statements of the
company whose assets were acquired and may include, in the Company's discretion,
a reasonable estimate of savings under existing contracts resulting from any
such acquisitions), as though the Company or such Guarantor acquired or disposed
of such assets on the first day of such period.
"Total Interest Expense" shall mean, for any period, the aggregate
amount of interest accrued in respect of Indebtedness (including the interest
component of rentals in respect of Capital Lease Obligations) of the Company and
the Guarantors (determined on a consolidated and, in respect of the New York/New
Jersey Companies to the extent such companies are not Restricted Subsidiaries
during such period, a combined basis) during such period. For purposes hereof,
the amount of interest accrued in respect of Indebtedness for any period (A)
shall be increased (to the extent not already treated as interest expense or
income, as the case may be) by the excess, if any, of amounts payable by the
Company or any Guarantor arising under any Interest Swap Agreements during such
period over amounts receivable by the Company or such Guarantor, as the case may
be, thereunder (or reduced by the excess, if any, of such amounts receivable
over such amounts payable) and interest on a Capital Lease Obligation shall be
deemed to accrue at an interest rate reasonably determined by the Company to be
the rate of interest implicit in such Capital Lease Obligation in accordance
with generally accepted accounting principles (including Statement of Financial
Accounting Standards No. 13) and (B) shall be increased or reduced, as the case
may be, by the amount of interest accrued during such period in respect of
Indebtedness of the Company or any Guarantor in respect of assets acquired or
disposed of by the Company or such Guarantor on or after the first day of such
period, determined on a pro forma basis reasonably satisfactory to the
Administrative Agent (it being agreed that it shall be satisfactory to the
Administrative Agent that such pro forma calculations may be based upon
generally accepted accounting principles as applied in the preparation of the
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financial statements for the Company or (if a New York/New Jersey Company) such
Guarantor, as the case may be, delivered in accordance with Section 9.01 hereof
rather than as applied in the financial statements of the company whose assets
were acquired and may include, in the discretion of the Company, a reasonable
estimate of savings under existing contracts resulting from any such
acquisitions), as though the Company or such Guarantor acquired or disposed of
such assets on the first day of such period.
"United States Person" means a corporation, partnership or other
entity created, organized or incorporated under the laws of the United States of
America or a State thereof (including the District of Columbia).
Section 1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect on December 31, 1996,
applied on a consolidated basis consistent with the audited financial statements
of the Company referred to in Section 9.01 hereof. When any definition involving
the New York/New Jersey Companies (prior to such companies becoming Restricted
Subsidiaries) requires calculations on a combined basis, such calculations shall
eliminate any intercompany items as between the Company, its Subsidiaries and
the New York/New Jersey Companies. To enable the ready determination of
compliance by the Company and the Guarantors with the various covenants set
forth in Article IX hereof, each of the Company and the Guarantors agrees to
cause its fiscal year to end each year on December 31 and the first three
Quarters for each such Person in each year to end on March 31, June 30 and
September 30, respectively.
ARTICLE II
LOANS
Section 2.01 Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement:
(a) The Loans. On or after the Effective Date, to make one or more
Loans to the Obligors from time to time on any Business Day prior to the
Commitment Termination Date in an aggregate principal amount not to exceed at
any time outstanding such Bank's Commitment; provided that at no time shall the
aggregate outstanding principal amount of all Loans exceed the Total Available
Commitment.
(b) Types of Loans. The Loans, at the option of the Company, may be
made as, and from time to time continued as or converted into, Base Rate Loans
or Eurodollar Loans of any permitted type, or any combination thereof; provided,
however, that each borrowing of Loans shall be in an aggregate amount equal to
$500,000 or an integral multiple of $250,000 in excess thereof.
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Section 2.02 Manner of Borrowing; Conversion and Continuation. (a) Notice
of Borrowing. The Company shall give the Administrative Agent (which shall
promptly notify the Banks) notice of each borrowing of Loans hereunder
substantially in the form of Schedule 2.02(a) hereto, which notices shall be
irrevocable and effective only upon receipt by the Administrative Agent, shall
specify the aggregate amount, the type or types and date of the Loans to be
borrowed and (in the case of Eurodollar Loans) the duration of the Interest
Period therefor and shall be given not later than 11:00 a.m. New York time on
the day which is not less than the number of Business Days prior to the date of
such borrowing specified below:
Type Number of Business Days
---- -----------------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Company to the
Administrative Agent under this Section 2.02(a) may be given orally by telephone
and confirmed in writing within one Business Day. In the case of any
discrepancies between oral and written notices received by the Administrative
Agent, the oral notice shall be effective as understood in good faith by the
Administrative Agent.
(b) Funding. Not later than 1:00 p.m. New York time on the date
specified for borrowing hereunder, each Bank shall make available the amount of
the Loan to be made by it on such date to the Administrative Agent in
immediately available funds, for the account of the Obligors. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Obligors by depositing the same, in
immediately available funds, in a joint account of the Obligors designated by
the Company or by wiring the same, in immediately available funds, to any
account specified by the Company in its notice of borrowing.
(c) Conversion and Continuation. (i) All or any part of the
principal amount of any Loan may, on any Business Day, be converted into another
type or types of Loans, except that Eurodollar Loans may be converted only on
the last day of the applicable Interest Period.
(ii) Base Rate Loans shall continue as Base Rate Loans unless and
until such Loans are converted into Eurodollar Loans of any type. Each
Eurodollar Loan shall continue as a Eurodollar Loan until the end of the then
current Interest Period therefor, at which time it shall be automatically
converted into a Base Rate Loan unless the Company shall have given the
Administrative Agent notice in accordance with Section 2.02(c)(iv) hereof
requesting either that such Eurodollar Loans continue as Eurodollar Loans of
such type for another Interest Period or that such Eurodollar Loans be converted
into Eurodollar Loans of another type at the end of such Interest Period.
(iii) Notwithstanding anything to the contrary contained in Section
2.02(c)(i) or (ii), during an Event of Default, the Administrative Agent shall,
at the direction of the Majority Banks, notify the Company that Loans may only
be converted into or continued as Loans of certain specified types and,
thereafter, until no Event of Default shall continue to exist, Loans
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<PAGE>
may not be converted into or continued as Loans of any type other than one or
more of such specified types.
(iv) The Company shall give the Administrative Agent (which shall
promptly notify the Banks) notice of each conversion or continuation of Loans
hereunder substantially in the form of Schedule 2.02(c) hereto, which notices
shall be irrevocable and effective only upon receipt by the Administrative
Agent, shall specify (x) the aggregate amount and the type of the Loans to be
converted or continued and (in the case of Eurodollar Loans) the duration of the
Interest Period therefor, (y) the requested date of such conversion or
continuation and (z) the amount and type or types of Loans into which such Loans
are to be converted or as which such Loans are to be continued, and shall be
given not later than 11:00 a.m. New York time on the day which is not less than
the number of Business Days prior to the date of such conversion into or
continuation as the type of Loans specified below:
Type Number of Business Days
---- -----------------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Company to the
Administrative Agent under this Section 2.02(c)(iv) may be given orally by
telephone and confirmed in writing within one Business Day. In the case of any
discrepancies between oral and written notices received by the Administrative
Agent, the oral notice shall be effective as understood in good faith by the
Administrative Agent.
Section 2.03 Reductions and Changes of Commitments. (a) Scheduled
Reductions to Total Commitment. Subject to the adjustments described in Section
2.03(e) hereof, the Total Commitment shall be automatically reduced on each
Quarterly Date falling on or nearest to the date specified in column (x) below
(each such Quarterly Date, a "Scheduled Reduction Date") by the Dollar amount
specified in column (y) below opposite such date (the "Reduction Amount"):
(x) (y)
Quarterly Date
Falling on or Nearest to Reduction Amount
- - ------------------------ ----------------
June 30, 2001 $23,333,333.00
September 30, 2001 $23,333,333.00
December 31, 2001 $23,333,334.00
March 31, 2002 $35,000,000.00
June 30, 2002 $35,000,000.00
September 30, 2002 $35,000,000.00
December 31, 2002 $35,000,000.00
March 31, 2003 $52,500,000.00
June 30, 2003 $52,500,000.00
September 30, 2003 $52,500,000.00
December 31, 2003 $52,500,000.00
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March 31, 2004 $52,500,000.00
June 30, 2004 $52,500,000.00
September 30, 2004 $52,500,000.00
December 31, 2004 $52,500,000.00
March 31, 2005 $52,500,000.00
June 30, 2005 $52,500,000.00
September 30, 2005 $52,500,000.00
December 31, 2005 $52,500,000.00
March 31, 2006 $70,000,000.00
June 30, 2006 $70,000,000.00
September 30, 2006 $70,000,000.00
December 31, 2006 $70,000,000.00
March 31, 2007 $280,000,000.00
The Total Commitment shall be reduced to zero on the Commitment Termination
Date.
(b) Optional Reductions and Terminations. (i) The Company shall have
the right to terminate or reduce the unutilized Total Commitment at any time or
from time to time, provided that (A) the Company shall give notice of each such
termination or reduction to the Administrative Agent at least two Business Days
prior thereto, (B) each partial reduction thereof shall be in an aggregate
amount at least equal to $5,000,000 and (C) the Total Commitment may not be
reduced at any time to an amount less than the aggregate principal amount of the
Loans outstanding at such time.
(ii) Notwithstanding anything to the contrary in this Agreement, so
long as no Default has occurred and is continuing, the Company shall have the
right to reduce or terminate the Aggregate Commitment of any Bank at any time or
from time to time (subject to clause (F) below) without reducing or terminating
the Aggregate Commitment (or any part thereof) of any other Bank at such time,
provided that (A) such reduction or termination shall be made on terms and
conditions agreed upon in writing by the Company and such Bank, (B) the Company
and such Bank shall have notified the Administrative Agent in writing of such
reduction or termination at least two Business Days prior thereto, (C) such
reduction or termination shall be made pro rata among such Bank's Commitment,
such Bank's CSC Commitment and, if the New York/New Jersey Agreement is then in
effect, such Bank's New York/New Jersey Commitment based on the relationship of
each such Commitment to such Bank's Aggregate Commitment, (D) the aggregate
amount of all reductions and terminations of the Aggregate Commitments of Banks
made pursuant to this clause (ii) shall not exceed $420,000,000, (E) after
giving effect to each reduction or termination and any prepayment of such Bank's
Loans pursuant to Section 3.01(b)(iii) in connection therewith, the Total
Commitment may not be less than the aggregate principal amount of the Loans
outstanding at such time, and (F) no such reduction or termination may be made
pursuant to this clause (ii) after November 18, 1999 (or such later date as is
agreed in writing by the Majority Banks).
(c) Special Mandatory Reductions. At any time at which the Cash Flow Ratio
exceeds 5.50 to 1, the Total Commitment shall be automatically reduced upon the
date of any sale, transfer or other disposition of any asset of the Company or
any of its Subsidiaries of the types permitted under Section 9.14(a)(vi) hereof
(other than the Paramus-Hillsdale Sale), by an amount
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equal to 50% of the excess of the Net Cash Proceeds thereof over all or any
portion of such Net Cash Proceeds that will be used, as specified in a notice
from the Company to the Administrative Agent, for an acquisition permitted under
Section 9.14(b)(ii) hereof; provided, however, that if the Company or the
applicable Subsidiary shall not have entered into a binding purchase agreement
with respect to any such acquisition on or before the date that is six months
after the date of such disposition, the Total Commitment shall be automatically
reduced (without duplication) on such date by an amount equal to 50% of the
entire Net Cash Proceeds of such sale, transfer or disposition; and provided
further, however, that if the Company or the applicable Subsidiary shall have
entered into a binding purchase agreement within six months after the date of
such disposition, but does not complete such acquisition within nine months of
signing such binding purchase agreement, the Total Commitment shall
automatically be reduced (without duplication) on the last day of such
nine-month period by an amount equal to 50% of the entire Net Cash Proceeds of
such sale, transfer or disposition.
(d) New York/New Jersey Agreement. (i) The Total Commitment shall be
reduced by $800,000,000, and the Commitment of each Bank reduced by an amount
equal to its pro rata share of such amount, so long as any New York/New Jersey
Commitment is in effect or any Obligation under (and as defined in) the New
York/New Jersey Agreement remains unpaid.
(ii) At the time when the reduction required by clause (i) above
shall no longer be required, the Total Commitment shall be reduced by an amount
equal to the aggregate amount of all reductions of the New York/New Jersey
Commitments pursuant to Section 2.03(b) of the New York/New Jersey Agreement
during the term of such agreement.
(e) Adjustments to Scheduled Reductions. Upon any reduction of the Total
Commitment pursuant to Section 2.03(b), (c) or (d)(ii) hereof on any date, the
schedule set forth in Section 2.03(a) hereof shall be adjusted, after giving
effect to any prior adjustments thereto pursuant to this Section 2.03(e), by
reducing the Reduction Amount set forth in column (y) of such schedule opposite
each Scheduled Reduction Date occurring after such date by an amount equal to
(x) the amount of such reduction of the Total Commitment effected pursuant to
Section 2.03(b), (c) or (d)(ii) hereof multiplied by (y) a fraction, the
numerator of which is such Reduction Amount as then in effect and the
denominator of which is the Total Commitment then in effect.
(f) No Reinstatement. The Total Commitment once terminated or reduced
(other than pursuant to Section 2.03(d)(i) hereof) may not be reinstated.
(g) Pro Rata Treatment. Except to the extent otherwise provided herein,
each reduction of the Total Commitment shall be applied to the Commitments of
the Banks pro rata in accordance with their respective Commitment Percentages.
Section 2.04 Commitment Fee. The Obligors shall pay to the Administrative
Agent for the account of each Bank a commitment fee (the "Commitment Fee") (i)
for the period from and including May 28, 1998 to but excluding the earlier of
(x) the Effective Date and (y) June 30, 1998, on the daily average amount
representing the result of (A) such Bank's Commitment appearing on the signature
pages hereof (without giving effect to any reduction of such Commitment pursuant
to the terms hereof) minus (B) such Bank's Commitment, if any, under (and as
defined in) the 1996 Agreement during such period, at a rate per annum equal to
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0.1250% and (ii) for the period from and including the earlier of (x) the
Effective Date and (y) June 30, 1998 to but not including the earlier of the
date such Bank's Commitment is terminated and the Commitment Termination Date,
on the amount of the daily average unutilized amount of such Bank's Commitment
during such period, at a rate per annum equal to (A) 0.2500% at any time at
which the CSC Cash Flow Ratio is greater than or equal to 5.50 to 1 and (B)
0.1875% at any time at which the CSC Cash Flow Ratio is less than 5.50 to 1. For
purposes of calculating the Commitment Fee, the Commitment of each Bank shall be
deemed to be utilized in an amount equal to the sum of the aggregate outstanding
principal amount of such Bank's Loans. Accrued Commitment Fees under this
Section 2.04 shall be payable in arrears on each Quarterly Date.
Section 2.05 Notes. (a) Form of Notes. The Loans made by each Bank shall
be evidenced by a single Note of the Obligors in substantially the form of
Exhibit A hereto, dated the Effective Date and payable to the order of such Bank
in a principal amount equal to its Commitment as originally in effect, and
otherwise duly completed.
(b) Endorsements. Each Bank is hereby authorized by the Obligors to
endorse on a schedule attached to each Note of such Bank (or any continuation
thereof) the amount and date of each Loan made by such Bank to the Obligors
hereunder, and the amount of each payment on account of principal of such Loan
received by such Bank, provided that any failure by such Bank to make any such
endorsement shall not affect the obligations of the Obligors under such Note or
hereunder in respect of such Loans.
Section 2.06 Lending Offices. The Loans of each type made by each Bank
shall be made and maintained at such Bank's Applicable Lending Office set forth
on Schedule 2.06 for Loans of such type.
Section 2.07 Several Obligations; Remedies Independent. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither the Administrative Agent nor any Bank shall be responsible for the
failure of any other Bank to make a Loan to be made by such other Bank. The
amounts payable by the Obligors at any time hereunder and under the Notes to
each Bank shall be a separate and independent debt and each Bank shall, subject
to Section 10.01 hereof, be entitled to protect and enforce its rights arising
out of this Agreement and its Note and it shall not be necessary for any other
Bank or the Administrative Agent to consent to, or be joined as an additional
party in, any proceedings for such purposes.
Section 2.08 Use of Proceeds. The proceeds of the Loans made hereunder
shall be used only (x) to refinance the New York/New Jersey Agreement and (y)
for the general business purposes of the Company and its Subsidiaries and (z)
for any transaction or activity in which the Company and its Subsidiaries are
permitted to engage under the provisions of this Agreement.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments. (a) Optional Prepayments. Either Obligor may, at
any time and from time to time (subject, in the case of Eurodollar Loans, to
Section 5.05 hereof),
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prepay Base Rate Loans on any Business Day if prior notice is given to the
Administrative Agent before 11:00 a.m. New York time on such day (and if such
notice is received by the Administrative Agent after 11:00 a.m. New York time,
on the next succeeding Business Day), and Eurodollar Loans upon not less than
three Business Days' prior notice to the Administrative Agent (and the
Administrative Agent shall promptly notify the Banks in each case of such
notice), which notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be not less than
$1,000,000), and shall be irrevocable and effective only upon receipt by the
Administrative Agent, provided that, in the case of Eurodollar Loans, interest
on the principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date.
(b) Mandatory Prepayments. (i) The Obligors shall, upon any sale, transfer
or other disposition of any asset of the Company or any of its Subsidiaries
permitted under Section 9.14(a)(vi) hereof, (other than the Paramus-Hillsdale
Sale) prepay Loans in an amount equal to 50% of the Net Cash Proceeds thereof.
Notwithstanding anything in this Agreement to the contrary, amounts prepaid from
any sale, transfer or other disposition pursuant to the foregoing sentence may
be reborrowed by the Obligors solely for the purpose of effecting acquisitions
permitted under Section 9.14(b)(ii) hereof and solely to the extent that such
disposition has not resulted in a mandatory reduction of the Total Commitment
pursuant to the provisos to Section 2.03(c) hereof.
(ii) The Obligors shall, on the date of any reduction of the Total
Commitment pursuant to Section 2.03(d)(ii) hereof, prepay Loans in an amount
equal to the excess of (A) the aggregate amount of the Loans outstanding on such
date over (B) the Total Commitment as so reduced.
(iii) On the date of any reduction or termination of any Bank's
Aggregate Commitment pursuant to Section 2.03(b)(ii), the Obligors shall repay
such Bank's Loans in an aggregate amount such that, after giving effect to such
reduction or termination and such repayment, the aggregate outstanding amount of
such Bank's Loans shall equal such Bank's Commitment Percentage of the amount of
all outstanding Loans. Each repayment required by this Section 3.01(b)(iii)
shall be applied pro rata among each type of Loan held by such Bank. The
requirements of Section 4.02 shall not apply to any payment made by the Obligors
pursuant to this clause (iii).
Section 3.02 Repayment of Loans. On each Scheduled Reduction Date, the
Obligors shall pay to the Administrative Agent for the account of the Banks the
excess, if any, of (i) the aggregate principal amount of the Loans outstanding
on such Scheduled Reduction Date over (ii) the Total Available Commitment (after
giving effect to any termination or reduction thereof pursuant to Section
2.03(a) hereof) on such Scheduled Reduction Date, together with interest thereon
accrued to such Scheduled Reduction Date and any amounts payable pursuant to
Section 5.05 hereof in connection therewith.
Section 3.03 Interest. (a) The Obligors hereby promise to pay to the
Administrative Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period commencing on the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
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(i) if such Loan is a Base Rate Loan, the Base Rate plus the
Applicable Margin; and
(ii) if such Loan is a Eurodollar Loan, the Eurodollar Rate for such
Loan for the Interest Period therefor plus the Applicable Margin.
Notwithstanding the foregoing, the Obligors hereby promise to pay to the
Administrative Agent for the account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank, and on any
other amount payable by the Obligors hereunder to or for the account of such
Bank (but, if such amount is interest, only to the extent legally enforceable),
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise), for the period commencing on the due date thereof
until the same is paid in full.
(b) Accrued interest on each Loan shall be payable (i) on the last day of
each Interest Period for such Loan (and, if such Interest Period is longer than
three months (in the case of a Eurodollar Loan) on each three-month anniversary
of the first day of such Interest Period), (ii) in the case of a Eurodollar
Loan, when such Loan shall be converted or be due by reason of prepayment or
(iii) when such Loan shall be due at maturity or by reason of acceleration or
otherwise (other than by reason of prepayment). Promptly after the determination
of any interest rate provided for herein or any change therein, the
Administrative Agent shall notify the Banks and the Obligors thereof.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Obligors
hereunder and under the Notes shall be made in Dollars, in immediately available
funds, to the Administrative Agent not later than 11:00 a.m. New York time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day). The Administrative Agent, or any Bank for whose account any such
payment is made, may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of
either of the Obligors with the Administrative Agent or such Bank, as the case
may be. The Obligors shall, at the time of making each payment hereunder or
under any Note, specify to the Administrative Agent the Loans or other amounts
payable by the Obligors hereunder to which such payment is to be applied (but in
the event that either of the Obligors fails to so specify, or if an Event of
Default has occurred and is continuing, the Administrative Agent may apply such
payment as it may elect in its sole discretion, but subject to Section 4.02
hereof). Each payment received by the Administrative Agent hereunder or under
any Note for account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for account of such Bank's Applicable Lending
Office for the Loan in respect of which such payment is made.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) subsequent to the initial borrowing hereunder, the Loans shall be
made by the Banks pro rata according to their respective Commitment Percentages;
(b) each payment by either Obligor of
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principal of the Loans shall be made to the Administrative Agent for the account
of the Banks pro rata in accordance with the respective unpaid principal amounts
of such Loans held by the Banks; (c) each payment by either Obligor of interest
on Loans of a particular type shall be made to the Administrative Agent for the
account of the Banks holding Loans of such type pro rata in accordance with the
respective unpaid principal amounts of such Loans held by such Banks; and (d)
each payment of the Commitment Fee shall be made for the account of the Banks
pro rata in accordance with their respective Commitment Percentages.
Section 4.03 Computations. Interest on Eurodollar Loans and the Commitment
Fee shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable, and interest on Base Rate Loans shall be computed on the basis of
a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable, except that all interest determined on the basis of the
Post-Default Rate shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day).
Section 4.04 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or either of the
Obligors (the "Payor") prior to the date on which such Bank is to make payment
to the Agent of the proceeds of a Loan to be made by it hereunder or the
Obligors are to make a payment to the Administrative Agent for the account of
one or more of the Banks, as the case may be (such payment being herein called
the "Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand, pay to the Administrative Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at the Federal Funds Rate.
Section 4.05 Sharing of Payments, Etc. Each of the Obligors and the
Guarantors agrees that, in addition to (and without limitation of) any right of
set-off, banker's lien or counterclaim a Bank may otherwise have, each Bank
shall be entitled, at its option, to offset balances held by it for account of
the Obligors or any Guarantor at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Bank's Loans
hereunder, which is not paid when due (regardless of whether such balances are
then due to either Obligor or such Guarantor), in which case it shall promptly
notify the Administrative Agent and each Obligor or such Guarantor thereof,
provided that such Bank's failure to give such notice shall not affect the
validity thereof. If a Bank shall obtain payment of any principal of or interest
on any Loan made by it to the Obligors under this Agreement, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, and, as a result of such payment, such Bank shall have received a
greater percentage of the amounts then due hereunder by the Obligors to such
Bank than the percentage received by other Banks, it shall promptly purchase
from such other Banks participations in the Loans made by such other Banks in
such amounts, and make such other adjustments from time to time as shall be
equitable to the
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end that all the Banks shall share the benefit of such excess payment (net of
any expense which may be incurred by such Bank in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid principal and interest on
the Loans held by each of the Banks. To such end all the Banks shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Obligors and the Guarantors agree that any Bank so purchasing a participation in
the Loans made by other Banks may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Bank were a direct holder of Loans in the amount of such participation.
Nothing contained herein shall require any Bank to exercise any such right or
shall affect the right of any Bank to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Obligors or the Guarantors. If under any applicable bankruptcy,
insolvency or other similar law, any Bank receives a secured claim in lieu of a
set-off to which this Section 4.05 applies, such Bank shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Banks entitled under this Section 4.05 to
share in the benefits of any recovery on such secured claim.
Section 4.06 No Reductions. All payments due to the Administrative Agent
or any Bank under this Agreement shall be made by the Obligors without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim or Tax, except, subject to Section 4.07, for
any withholding or deduction for Taxes required to be withheld or deducted under
applicable law.
Section 4.07 Taxes. (a) Taxes Payable by the Obligors. If under applicable
law any Tax is required to be withheld or deducted from, or is otherwise payable
by the Obligors in connection with, any payment to the Administrative Agent or
any Bank under this Agreement, the Obligors shall, subject to Section 4.07(b),
pay to the Administrative Agent or such Bank, as applicable, such additional
amounts as may be necessary so that the net amount received by the
Administrative Agent or such Bank with respect to such payment, after
withholding or deducting all Taxes required to be withheld or deducted, is equal
to the full amount payable under this Agreement.
(b) Limitations. Notwithstanding anything to the contrary contained
herein, the Obligors shall not be required to pay any additional amount in
respect of withholding of United States Federal income taxes pursuant to this
Section 4.07 to any Bank except to the extent (A) such Taxes are required to be
withheld solely as a result of (1) in the case of a person that is a Bank on the
Effective Date, a Regulatory Change enacted after the Effective Date and (2) in
the case of a Person that becomes a Bank after the Effective Date, a Regulatory
Change enacted after such Person becomes a Bank, and (B) such Bank has not
failed to submit any form or certificate that it is entitled to so submit under
applicable law. (c) Exemption from U.S. Withholding Taxes
(c) Exemption from U.S. Withholding Taxes. There shall be submitted to the
Company and the Administrative Agent, (A) on or before the first date that
interest or fees are payable to such Bank under this Agreement, (1) if at the
time the same are applicable, (aa) by each Bank that is not a United States
Person, two duly completed and signed copies of Internal Revenue Service Form
1001 or 4224 (or any successor form to the applicable form), in either case
entitling such Bank to a complete exemption from withholding of any United
States federal
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income taxes on all amounts to be received by such Bank under this Agreement, or
(bb) by each Bank that is a Non-US Bank, (x) a duly completed Internal Revenue
Service Form W-8 (or any successor form to such form) and (y) a certification in
the form of Schedule 4.07(c) that such Bank is a Non-US Bank or (2) if at the
time any of the foregoing are inapplicable, duly completed and signed copies of
such form, if any, as entitles such Bank to exemption from withholding of United
States federal income taxes to the maximum extent to which such Bank is then
entitled under applicable law, and (B) from time to time thereafter, prior to
the expiration or obsolescence of any previously delivered form or upon any
previously delivered form becoming inaccurate or inapplicable, such further duly
completed and signed copies of such form, if any, as entitles such Bank to
exemption from withholding of United States federal income taxes to the maximum
extent to which such Bank is then entitled under applicable law. Each Bank shall
promptly notify the Company and the Administrative Agent if (A) it is required
to withdraw or cancel any form or certificate previously submitted by it or any
such form or certificate has otherwise become ineffective or inaccurate or (B)
payments to it are or will be subject to withholding of United States federal
income taxes to a greater extent than the extent to which payments to it were
previously subject. Upon the request of the Company or the Administrative Agent,
each Bank that is a United States Person shall from time to time submit to the
Company and the Administrative Agent a certificate to the effect that it is such
a United States Person and a duly completed Internal Revenue Service Form W-9
(or any successor form to such form).
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans (a) The Obligors shall
pay to the Administrative Agent for the account of each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs incurred by such Bank which such Bank determines are attributable to its
making or maintaining any Eurodollar Loans hereunder or its commitment to make
such Eurodollar Loans hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of such Eurodollar Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or its Note in respect of such Eurodollar Loans (other than
taxes imposed on the overall net income of such Bank or of its Applicable
Lending Office for such Eurodollar Loans by the jurisdiction in which such Bank
has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Bank
(including such Eurodollar Loans or any deposits referred to in the definition
of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitments of such
Bank; or
(iii) imposes any other condition affecting this Agreement or the
Commitment of such Bank (or any of such extensions of credit or liabilities).
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Each Bank will notify the Obligors through the Administrative Agent of any event
which will entitle such Bank to compensation pursuant to this Section 5.01(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation, and (if so requested by the Obligors through the
Administrative Agent) will designate a different Applicable Lending Office for
the Loans of such Bank affected by such event if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Bank, be disadvantageous to such Bank, provided that neither
Obligor shall be obligated to compensate any Bank under this Section 5.01(a) for
any Additional Costs incurred more than six months prior to the date the
respective Bank requests the Company for such compensation, except for periods
preceding such date but which are after the date such Bank notified the Obligors
of the possibility that such Additional Costs might be incurred as a result of
the respective Regulatory Change. Each Bank will furnish the Company with a
statement setting forth the basis and amount of each request by such Bank for
compensation under this Section 5.01(a). If any Bank requests compensation from
the Obligors under this Section 5.01(a), the Company may, by notice to such Bank
through the Administrative Agent, require that such Bank's Loans of the type
with respect to which such compensation is requested be converted into Base Rate
Loans in accordance with Section 5.04 hereof.
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on any
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes any Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Obligors (with a copy to the Administrative Agent), the obligation
of such Bank to make, and to convert Loans of any other type into, Loans of such
type hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect.
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Obligors shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank for Capital Maintenance Costs with respect to
its Loans or Commitment (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Bank to a level below that which such Bank could have achieved but for such law,
regulation, interpretation, directive or request). Each Bank will notify the
Company that it is entitled to compensation pursuant to this Section 5.01(c) as
promptly as practicable after it determines to request such compensation,
provided that neither Obligor shall be obligated to compensate any Bank under
this Section 5.01(c) for any such costs incurred more than six months prior to
the date the respective Bank requests the Obligors for such compensation, except
for periods preceding such date but which are after the date such Bank notified
the Obligors of the possibility that such costs might be incurred.
(d) Determinations by any Bank for purposes of this Section 5.01 of the
effect of any Regulatory Change on its costs of making or maintaining Loans or
maintaining its Commitment
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or on amounts receivable by it in respect of Loans or such Commitment, and of
the additional amounts required to compensate such Bank in respect of any
Additional Costs, shall be conclusive, provided that such determinations are
made on a reasonable basis.
Section 5.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Loans as provided in this
Agreement; or
(b) the Majority Banks determine (which determination shall be conclusive)
and notify the Administrative Agent that the relevant rates of interest referred
to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the
basis of which the rates of interest for such Loans are to be determined do not
adequately cover the cost to such Banks of making or maintaining such Loans;
then the Administrative Agent shall promptly notify the Obligors and each Bank
thereof, and so long as such condition remains in effect, the Banks shall be
under no obligation to make Eurodollar Loans of the affected type.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Bank or
its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Bank
shall promptly notify the Obligors thereof through the Administrative Agent
(which notice shall include a statement explaining the nature of such
unlawfulness) and such Bank's obligation to make Eurodollar Loans shall be
suspended until such time as such Bank may again make and maintain Eurodollar
Loans and such Bank's outstanding Eurodollar Loans shall be converted into Base
Rate Loans in accordance with Section 5.04 hereof.
Section 5.04 Certain Conversions of Loans Pursuant to Section 5.01 or
5.03. If the obligation of any Bank to make any type of Eurodollar Loans shall
be suspended pursuant to Section 5.01 or 5.03 hereof (Loans of such type being
herein called "Affected Loans" and such type being herein called the "Affected
Type"), all Loans which would otherwise be made by such Bank as Loans of the
Affected Type shall be made instead as Base Rate Loans (and, if an event
referred to in Section 5.01 or 5.03 hereof has occurred and such Bank determines
that it is required to convert such Loans, then, by notice to the Obligors with
a copy to the Administrative Agent, all Affected Loans of such Bank then
outstanding shall be automatically converted into Base Rate Loans on the date
specified by such Bank in such notice) and, to the extent that Affected Loans
are so made as (or converted into) Base Rate Loans, all payments of principal
which would otherwise be applied to such Bank's Affected Loans shall be applied
instead to its Base Rate Loans.
Section 5.05 Compensation. (a) The Obligors shall pay to the
Administrative Agent for the account of each Bank, upon the request of such Bank
through the Administrative Agent,
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such amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, costs or expense incurred by it as a result
of:
(i) any payment, prepayment or conversion of a Eurodollar Loan made
by such Bank for any reason (including, without limitation, the acceleration of
the Loans pursuant to Article X hereof) on a date other than the last day of an
Interest Period for such Loan; or
(ii) any failure by either Obligor for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Article VII hereof to be satisfied) to borrow or convert a
Eurodollar Loan to be made by such Bank on the date for such borrowing
specified in the relevant notice of borrowing under Section 2.02 hereof.
(b) Such compensation shall include Funding Costs in the case of any
payment, prepayment or conversion of, or failure to borrow or convert, any Loan
made or to be made as a Eurodollar Loan.
Section 5.06 Replacement of Banks. If any Bank requests compensation
pursuant to Section 5.01, or such Bank's obligation to make or continue, or to
convert Loans of any other type into, any type of Eurodollar Loan shall be
suspended pursuant to Section 5.02 or 5.03, or if an event occurs that entitles
such Bank to make a claim pursuant to Section 4.07, the Company upon three
Business Days' notice to the Administrative Agent and such Bank, may require
that such Bank transfer all of its right, title and interest under this
Agreement, the CSC Agreement and the New York/New Jersey Agreement, such Bank's
Notes and its notes issued under the CSC Agreement and the New York/New Jersey
Agreement to any bank or financial institution identified by the Company with
the consent of the Administrative Agent (which consent shall not be unreasonably
withheld), such assignment to be made pursuant to an Assignment and Acceptance
Agreement substantially in the form of Exhibit H hereto (an "Assignment and
Acceptance") (a) if such proposed transferee agrees to assume all of the
obligations of such Bank hereunder, under the CSC Agreement and the New York/New
Jersey Agreement for consideration equal to the aggregate outstanding principal
amount of such Bank's Loans, CSC Loans and New York/New Jersey Loans, together
with interest thereon to the date of such transfer, and satisfactory
arrangements are made for payment to such Bank of all other amounts payable
hereunder, under the CSC Agreement and under the New York/New Jersey Agreement
to such Bank on or prior to the date of such transfer (including the amounts so
requested pursuant to Section 5.01 or so entitled to be claimed pursuant to
Section 4.07, any fees accrued hereunder and any amounts that would be payable
under Section 5.05 as if all of such Bank's Loans were being prepaid in full on
such date) and (b) if such Bank being replaced has requested compensation
pursuant to Section 5.01 or is entitled to make a claim pursuant to Section
4.07, such proposed transferee's aggregate requested compensation, if any,
pursuant to Section 5.01, or the amounts, if any, entitled to be claimed by such
proposed transferee pursuant to Section 4.07, with respect to such replaced
Bank's Loans would be lower than that of the Bank replaced. Without prejudice to
the survival of any other agreement of the Company hereunder, the agreements of
the Company contained in Sections 4.07, 5.01 and 12.03 (without duplication of
any payments made to such Bank by the Company or the proposed transferee) shall
survive for the benefit of any Bank replaced under this Section 5.06 with
respect to the time prior to such replacement.
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ARTICLE VI
GUARANTEE
(a) Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to the Banks and the Administrative Agent and their respective
successors and assigns and the subsequent holders of the Notes, irrespective of
the validity and enforceability of this Agreement or the Notes or the
obligations of the Obligors or any of the other Guarantors hereunder or
thereunder or any other circumstance that might otherwise affect the liability
of a guarantor, that: (i) the principal of and interest on the Loans and the
Notes and all other obligations of the Obligors and the other Guarantors to the
Banks or the Administrative Agent under this Agreement and the Notes will be
promptly paid in full when due, whether at stated maturity, by acceleration or
otherwise, in accordance with the terms hereof and thereof; and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, the Guarantors will be obligated, jointly and severally, to
pay the same immediately.
(b) Each of the Guarantors hereby waives notice of, and consents to, any
extensions of time of payment, renewals, releases of collateral, delays in
obtaining or realizing upon or failures to obtain or realize upon collateral or
other indulgence from time to time granted by any of the Banks or the
Administrative Agent in respect of the Notes or this Agreement. Each of the
Guarantors hereby releases the Obligors from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or otherwise) any,
"claims" (as defined in section 101(5) of the Bankruptcy Code) against the
Obligors, whether arising under applicable law or otherwise, to which such
Guarantors are or would be entitled by virtue of their obligations hereunder,
any payment made pursuant hereto, or the exercise by the Administrative Agent or
the Banks of their rights with respect to any collateral for the obligations of
the Company or the Guarantors under this Agreement, including any such claims to
which such Guarantors may be entitled as a result of any right of subrogation,
exoneration or reimbursement in each case to the extent, but only to the extent,
that such Guarantor would be deemed a "creditor" of the Obligors for purposes of
Section 547 of the Bankruptcy Code solely by reason of such Guarantor's holding
or asserting such claim. To the extent not released by the Guarantors under this
Article VI, each of the Guarantors agrees that it shall not be entitled to any
right of subrogation, exoneration, reimbursement or contribution in respect of
any obligations guaranteed hereby until payment in full of all the Obligations.
With respect to the Notes and this Agreement, each of the Guarantors hereby
waives presentment, protest, demand of payment, notice of dishonor and all other
notices and demands whatsoever. Each of the Guarantors further agrees that, as
between such Guarantor, on the one hand, and the Administrative Agent and the
Banks, on the other hand, (i) the maturity of the obligations guaranteed hereby
may be accelerated as provided in Section 10.01 hereof for the purposes of this
guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of such obligations as provided in
Section 10.01 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by each of the Guarantors for the purpose of
this guarantee. The obligations of each of the Guarantors under this Article VI
shall be automatically reinstated if and to the extent that for
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any reason any payment by or on behalf of the Obligors is rescinded or must be
otherwise restored by any holder of any of the obligations guaranteed hereunder,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise and each of the Guarantors agrees that it will indemnify the Banks and
the Administrative Agent on demand for reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the Banks or the Administrative
Agent in connection with such rescission or restoration.
(c) It is the intention of the Guarantors, the Banks and the Obligors that
the obligations of each Guarantor hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable law. To that end, but only to the
extent such obligations would otherwise be avoidable, the obligations of each
Guarantor hereunder shall be limited to the maximum amount that, after giving
effect to the incurrence thereof, would not render such Guarantor insolvent or
unable to make payments in respect of any of its indebtedness as such
indebtedness matures or leave such Guarantor with an unreasonably small capital.
The need for any such limitation shall be determined, and any such needed
limitation shall be effective, at the time or times that such Guarantor is
deemed, under applicable law, to incur the Obligations hereunder. Any such
limitation shall be apportioned amongst the Obligations pro rata in accordance
with the respective amounts thereof. This paragraph is intended solely to
preserve the rights of the Banks under this Agreement to the maximum extent
permitted by applicable law, and neither the Guarantors, the Obligors nor any
other Person shall have any right under this paragraph that it would not
otherwise have under applicable law. The Obligors and each Guarantor agree not
to commence any proceeding or action seeking to limit the amount of the
obligation of such Guarantor under this Article VI by reason of this paragraph.
For the purposes of this paragraph, "insolvency", "unreasonably small capital"
and "unable to make payments in respect of any of its indebtedness as such
indebtedness matures" shall be determined in accordance with applicable law.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan. The obligation of each Bank to make its initial
Loan hereunder is subject to the satisfaction of the following conditions
precedent on or prior to the date of such initial Loan but in any event no later
than June 30, 1998:
(a) Execution and Notes. This Agreement shall have been duly executed and
delivered by each of the Obligors, the Guarantors, the Banks and the
Administrative Agent, and the Obligors shall have executed and delivered to each
Bank its respective Note evidencing the Loans to be made by such Bank hereunder.
(b) Signatures. Each of the Obligors and the Guarantors shall have
certified to the Administrative Agent (with copies to be provided for each Bank)
the name and signature of each of the persons authorized to sign on its
respective behalf such of this Agreement and the Notes to which it is a party
and to borrow under this Agreement. The Banks may conclusively rely on such
certifications until they receive notice in writing from the applicable Obligor
or Guarantor to the contrary.
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(c) Proof of Action. The Administrative Agent shall have received
certified copies of all necessary action taken by each of the Obligors and the
Guarantors to authorize the execution, delivery and performance of such of this
Agreement and the Notes to which it is a party.
(d) Opinions of Counsel to the Obligors. The Administrative Agent shall
have received opinions of:
(i) Robert Lemle, Esq., General Counsel to the Obligors and
the Guarantors, substantially in the form of Exhibit E hereto;
(ii) Sullivan & Cromwell, special New York counsel to the
Obligors and the Guarantors, substantially in the form of Exhibit
F(1) hereto;
(iii) Schenk, Price, Smith & King, special New Jersey counsel
to the Obligors and the Guarantors, substantially in the form of
Exhibit F(2) hereto; and
(iv) Piper & Marbury, special FCC counsel to the Obligors,
substantially in the form of Exhibit F(3) hereto;
and covering such other matters as any Bank or Banks or special New York
counsel to the Administrative Agent, Winthrop, Stimson, Putnam & Roberts,
may reasonably request (and for purposes of such opinions such counsel may
rely upon opinions of counsel in other jurisdictions, provided that such
other counsel are satisfactory to special counsel to the Administrative
Agent and such other opinions state that the Banks are entitled to rely
thereon).
(e) Opinion of Banks' Counsel. Each Bank shall have received an opinion of
Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Administrative Agent, substantially in the form of Exhibit G hereto and covering
such other matters as any Bank or Banks may reasonably request.
(f) Certain Fees. The Company shall have paid to the Administrative Agent,
for its own account, fees calculated as specified in a letter dated the date
hereof.
(g) Other Fees. The Company shall have paid such other fees as may have
been agreed by the parties hereto.
(h) CSC and New York/New Jersey Agreements. All conditions precedent to
the initial extensions of credit under the CSC Agreement and the New York/New
Jersey Agreement shall have been satisfied.
(i) Subscribers' Certificate. The Administrative Agent shall have received
the Subscribers' Certificate for the month ended March 31, 1998.
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(j) Compliance Certificate. The Banks shall have received a Compliance
Certificate showing that, after giving effect to this Agreement, the Company and
the Guarantors are in compliance with the provisions of this Agreement on a pro
forma basis as of the Effective Date.
(k) Other Documents. Such other documents and papers relating to the
documents referred to herein and the transactions contemplated hereby as any
Bank or special counsel to the Banks shall reasonably require shall have been
received by the Administrative Agent.
(l) Regulatory Approvals. The Obligors shall have obtained the approval of
the BPU with respect to this Agreement and the uses of proceeds of the Loans
specified in Section 2.08.
(m) Funding Adjustment. The Company shall have made arrangements
satisfactory to the Administrative Agent such that, after giving effect to the
initial Loan hereunder, (i) the outstanding Loans hereunder shall be made by the
Banks pro rata in accordance with their respective Commitment Percentages and
(ii) the Loans (as defined in the 1996 Agreement) and all other amounts owing
under the 1996 Agreement to any Bank (as defined in the 1996 Agreement) which is
not a Bank hereunder shall have been repaid in full.
Section 7.02 Each Loan. The obligation of each Bank to make each of its
Loans (including its initial Loan) hereunder (which shall not include any
conversion or continuation of any outstanding Loan) is subject to the additional
conditions precedent that:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties in Article VIII hereof
shall be true on and as of the date of the making of, and after giving
effect to, such Loan with the same force and effect as if made on and as
of such date, except to the extent that such representations and
warranties expressly relate to an earlier date; and
(c) to the extent requested by the Administrative Agent or any
Bank, a senior executive of the Obligors shall have certified compliance
with paragraphs (a) and (b) above to the Administrative Agent.
The Company shall be deemed to have made a representation and warranty hereunder
as of the time of the making of such Loans hereunder that the conditions
specified in such clauses have been fulfilled as of such time.
ARTICLE VIII
REPRESENTATIONS
Each of the Obligors and the Guarantors represents, warrants and covenants
as follows:
Section 8.01 Existence and Power. Each Obligor and each Guarantor is a
limited or general partnership or corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and is
duly qualified to transact business and is in good standing in all jurisdictions
in which such qualification is necessary in view of the
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properties and assets owned and presently intended to be owned and the business
transacted and presently intended to be transacted by it except for
qualifications the lack of which, singly or in the aggregate, have not had and
are not likely to have a Materially Adverse Effect, and each of CSC, the Company
and each Guarantor has full power, authority and legal right to make and perform
such of this Agreement and the Notes to which it is a party.
Section 8.02 Subsidiaries. As at the Effective Date and the date of the
initial Loan hereunder, the Company has no Subsidiaries other than those set
forth on Schedule 8.02.
Section 8.03 Authority; No Conflict. The making and performance by each of
the Obligors and the Guarantors of such of this Agreement and the Notes to which
it is a party, and each extension of credit hereunder, have been duly authorized
by all necessary action and do not and will not: (i) subject to the consummation
of the action described in Section 8.12 hereof, violate any provision of any
laws, orders, rules or regulations presently in effect (other than violations
that, singly or in the aggregate, have not had and are not likely to have a
Materially Adverse Effect), or any provision of any of the Obligors' or the
Guarantors' partnership agreement, charter or by-laws presently in effect; or
(ii) result in the breach of, or constitute a default or require any consent
(except for the consents described on Schedule 8.03 hereto, each of which has
been duly obtained) under, any existing indenture or other agreement or
instrument to which either Obligor or any Guarantor is a party or its properties
may be bound or affected (other than any breach, default or required consent
that, singly or in the aggregate, have not had and are not likely to have a
Materially Adverse Effect); or (iii) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties or assets
now owned or hereafter acquired by either Obligor or any Guarantor.
Section 8.04 Financial Condition. (a) The Company has furnished to each
Bank:
(i) The consolidated balance sheet of the Company and its
consolidated Subsidiaries as at December 31, 1997, and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
the fiscal year ended on said date, said financial statements having been
certified by KPMG Peat Marwick; and
(ii) the respective combined balance sheets of the TKR New
Jersey/New York Systems and the TCI New Jersey and New York Systems, in each
case as at December 31, 1995, December 31, 1996 and December 31, 1997, and the
respective related combined statements of operations or earnings, parent's
investment or combined deficit and cash flows for the fiscal years ended on said
dates, said financial statements having been certified by KPMG Peat Marwick.
All financial statements referred to above are complete and correct in all
material respects (subject, in the case of the unaudited financial statements
referred to above, to year-end and audit adjustments) and fairly present the
financial condition of the respective entity or groups of entities which is or
are the subject of such financial statements (as stated above), on a combined
and/or consolidated basis to the extent so indicated above, as at the respective
dates of the balance sheets included in such financial statements and the
results of operations of such entity or groups of entities for the respective
periods ended on said dates. None of the Company and the Guarantors had on any
of said dates any material contingent liabilities, liabilities for Taxes,
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unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments or operations which are substantial in amount,
except as referred to or reflected or provided for in said financial statements
as at said respective dates or as disclosed to the Banks in writing prior to the
date hereof. Except as disclosed to the Banks in writing prior to the date
hereof, since December 31, 1997 there has been no material adverse change in the
financial condition (from that shown by the respective balance sheets as at
December 31, 1997 included in said financial statements) or the businesses or
operations of the Company, its Subsidiaries and the New York/New Jersey
Companies taken as a whole on a pro forma combined basis. As of the Effective
Date, except as disclosed to the Banks in writing prior to the date hereof,
since December 31, 1997 there has been no material adverse change in the
financial condition or the businesses or operations of the New York/New Jersey
Companies taken as a whole on a combined basis from that shown by the balance
sheets as at December 31, 1997 included in said financial statements for the New
York/New Jersey Companies (it being understood that for purposes of this
sentence the New York/New Jersey Companies shall be deemed to have owned all of
the assets acquired by the New York/New Jersey Companies pursuant to the TCI
Acquisition for all periods covered by said balance sheets until and including
the Effective Date).
Section 8.05 Litigation; Etc. Except as disclosed to the Banks on Schedule
8.05, there are no lawsuits or other proceedings pending, or to the knowledge of
the Company or any of the Guarantors threatened, against the Company or any of
the Guarantors or any of their respective properties or assets, before any court
or arbitrator or by or before any governmental commission, bureau or other
regulatory authority that, singly or in the aggregate, could reasonably be
expected to have a Materially Adverse Effect. Neither the Company nor any of the
Guarantors is in default under or in violation of or with respect to any laws or
orders, or any material provision of any rules or regulations, or any writ,
injunction or decree of any court, arbitrator, governmental commission, bureau
or other regulatory authority, or any Franchise, except for minor defaults
which, if continued unremedied, are not likely to have a Materially Adverse
Effect.
Section 8.06 Titles and Liens. Except as set forth on Schedule 9.12, each
of the Company and the Guarantors has good title to its properties and assets,
free and clear of all Liens except those permitted by Section 9.12 hereof.
Section 8.07 Regulation U. None of the proceeds of the Loans shall be used
to purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock. If requested by any Bank,
the Obligors will furnish to the Banks statements in conformity with the
requirements of Regulation U.
Section 8.08 Taxes. Each of the Company and the Guarantors has filed all
material tax returns which are required to be filed under any law applicable
thereto except such returns as to which the failure to file, singly or in the
aggregate, has not had and will not have a Materially Adverse Effect, and has
paid, or made provision for the payment of, all Taxes shown to be due pursuant
to said returns or pursuant to any assessment received by the Company or any of
the Guarantors, except such Taxes, if any, as are being contested in good faith
and as to which
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adequate reserves have been provided or as to which the failure to pay, singly
or in the aggregate, has not had and is not likely to have a Materially Adverse
Effect.
Section 8.09 Other Credit Agreements. Schedule 9.10 (Existing
Indebtedness), Schedule 9.11 (Existing Guarantees) and Schedule 9.12 (Existing
Liens) contain complete and correct lists, as at the date hereof and the date of
the initial Loan hereunder, of all credit agreements, indentures, purchase
agreements, obligations in respect of letters of credit, guarantees and other
instruments presently in effect (including Capital Lease Obligations) providing
for, evidencing, securing or otherwise relating to any Indebtedness of the
Company and the Guarantors in a principal or face amount equal to $150,000 or
more and such lists correctly set forth the names of the debtor or lessee and
creditor or lessor with respect to the Indebtedness outstanding or to be
outstanding thereunder, the rate of interest or rentals, a description of any
security given or to be given therefor, and the maturity or maturities or
expiration date or dates thereof.
Section 8.10 Full Disclosure. None of the financial statements referred to
in Section 8.04 hereof or any written statements delivered pursuant to Section
8.02, 8.04 or 8.15 (each of which has heretofore been furnished to each Bank)
contains, as at the date hereof or the date of the initial Loan, any untrue
statement of a material fact nor do such financial statements and such written
statements, taken as a whole, omit to state a material fact necessary to make
the statements contained therein not misleading.
Section 8.11 No Default. None of the Company and the Guarantors is in
default in the payment or performance or observance of any contract, agreement
or other instrument to which it is a party or by which it or its properties or
assets may be affected or bound, which default, either alone or in conjunction
with all other such defaults, has had or is likely to have a Materially Adverse
Effect.
Section 8.12 Approval of Regulatory Authorities. Except as set forth on
Schedule 8.03 hereto and other than the approvals of the BPU referred to in
Section 7.01(l) hereof, no approval or consent of, or filing or registration
with, any Federal, state or local commission or other regulatory authority is
required in connection with the execution, delivery and performance by the
Obligors and the Guarantors of such of this Agreement and the Notes to which
they are a party. All such described action required to be taken as a condition
to the execution and delivery of such of this Agreement and the Notes to which
the Obligors and the Guarantors are a party has been duly taken by all such
commissions and authorities or other Persons, as the case may be, and all such
action required to be taken as a condition to the initial Loans hereunder has
been or will be duly taken prior to such initial Loans.
Section 8.13 Binding Agreements. This Agreement constitutes and the Notes
when executed and delivered will constitute, the legal, valid and binding
obligations of each of the Obligors and the Guarantors, enforceable in
accordance with their respective terms (except for limitations on enforceability
under bankruptcy, reorganization, insolvency and other similar laws affecting
creditors' rights generally and limitations on the availability of the remedy of
specific performance imposed by the application of general equitable
principles).
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Section 8.14 Franchises. Schedule 8.14 hereto contains a complete and
correct list, as of the date hereof and the date of the initial Loan hereunder,
of all of the Franchises granted to the Company and the Guarantors, in each case
together with the expiration date thereof, or for which applications have been
made, or are planned to be made, by the Company or any of the Guarantors.
Section 8.15 Collective Bargaining Agreements. Except as disclosed to the
Banks in writing prior to the Effective Date, there are no collective bargaining
agreements between the Company or any of the Guarantors and any trade or labor
union or other employee collective bargaining agent.
Section 8.16 Investments. Schedule 9.15 hereto contains a complete and
correct list, as at the date hereof, of all Investments of the Company and the
Guarantors in excess of $350,000, showing the respective amounts of each such
Investment and the respective entity in which each such Investment has been
made.
ARTICLE IX
PARTICULAR COVENANTS OF THE COMPANY AND THE GUARANTORS
From the Effective Date and so long as the Commitments of the Banks shall
be in effect and until the payment in full of all Obligations hereunder and the
performance of all other obligations of the Obligors and Guarantors under this
Agreement, each of the Company and the Guarantors agrees that, unless the
Majority Banks shall otherwise consent in writing:
A. Informational Covenants:
Section 9.01 Financial Statements and Other Information. The Company and
the Guarantors will deliver to each Bank:
(a) As soon as available and in any event within 60 days after the end of
each of the first three Quarters of each fiscal year of the Company: (i)(A)
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows of the Company and its consolidated Subsidiaries, taken together, for
such Quarter and for the period from the beginning of such fiscal year to the
end of such Quarter and (B) the related consolidated balance sheets of the
Company and its consolidated Subsidiaries, taken together, as at the end of such
Quarter (which financial statements shall set forth in comparative form the
corresponding figures as at the end of and for the corresponding Quarter in the
preceding fiscal year) and (ii)(A) combined statements of operations or
earnings, parent's investment or combined deficit and cash flows of the New
York/New Jersey Companies, prepared on the same basis as the financial
statements referred to in Section 8.04(b), for such Quarter and for the period
from the beginning of such fiscal year to the end of such Quarter and (B) the
related combined balance sheets of the New York/New
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Jersey Companies, prepared on the same basis as the financial statements
referred to in Section 8.04(b), as at the end of such Quarter (which financial
statements shall set forth in comparative form the corresponding figures as at
the end of and for the corresponding Quarter in the preceding fiscal year), all
in reasonable detail and accompanied by a certificate in the form of Exhibit
D(1) hereto of a senior financial executive of the Company and of the New
York/New Jersey Companies certifying such financial statements, subject,
however, to year-end and audit adjustments, which certificate shall include a
statement that the senior financial executive signing the same has no knowledge,
except as specifically stated, that any Default has occurred and is continuing.
(b) As soon as available and in any event within 120 days after the end of
each fiscal year of the Company: (i)(A) consolidated statements of operations,
stockholders' equity (deficiency) and cash flows of the Company and its
consolidated Subsidiaries, taken together, for such fiscal year and (B) the
related consolidated balance sheets of the Company and its consolidated
Subsidiaries, taken together, as at the end of such fiscal year (which financial
statements shall set forth in comparative form the corresponding figures as at
the end of and for the preceding fiscal year) and (ii)(A) combined statements of
operations or earnings, parent's investment or combined deficit and cash flows
of the New York/New Jersey Companies, prepared on the same basis as the
financial statements referred to in Section 8.04(b), for such fiscal year and
(B) the related combined balance sheets of the New York/New Jersey Companies,
prepared on the same basis as the financial statements referred to in Section
8.04(b), as at the end of such fiscal year (which financial statements shall set
forth in comparative form the corresponding figures as at the end of and for the
preceding fiscal year), all in reasonable detail and accompanied by (x) an
opinion of KPMG Peat Marwick or other independent certified public accountants
of recognized standing selected by the Company and reasonably acceptable to the
Majority Banks as to said combined and/or consolidated financial statements and
a certificate of such accountants stating that, in making the examination
necessary for said opinion, they obtained no knowledge, except as specifically
stated, of any failure by the Company, any of its Subsidiaries or any of the New
York/New Jersey Companies to perform or observe any of its covenants relating to
financial matters in this Agreement, and (y) a certificate in the form of
Exhibit D(2) hereto of a senior financial executive of the Company and of the
New York/New Jersey Companies, stating that such financial statements are
correct and complete and fairly present the financial condition and results of
operations of the respective entities covered thereby as at the end of and for
such fiscal year and that the executive signing the same has no knowledge,
except as specifically stated, that any Default has occurred and is continuing.
(c) Promptly after their becoming available, copies of all financial
statements and reports which the Company or any Guarantor shall have sent its
shareholders generally (other than tax returns unless specifically requested
under clause (h) of this Section 9.01), and copies of all regular and periodic
reports, if any, which the Company or any Guarantor shall have filed with the
Securities and Exchange Commission, or any governmental agency substituted
therefor, or with any national securities exchange, or with the Federal
Communications Commission, or any governmental agency substituted therefor.
(d) Within 60 days after the end of each of the first three Quarters of
each year, and within 120 days after the end of each fiscal year of the Company,
a Compliance Certificate, duly completed with respect to such Quarter or fiscal
year, as the case may be.
(e) Within 35 days after the end of each calendar month, a Subscribers'
Certificate, duly completed with respect to such month.
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(f) Promptly, notice of the termination, cancellation, nonrenewal or other
loss of any Franchise for a cable television system or systems that has had or
is likely to have, either alone or in conjunction with all other such losses, a
Materially Adverse Effect, the filing of a competing application in connection
with any proceeding for renewal of any such Franchise and of any proceeding
which involves a material risk of the termination, cancellation, nonrenewal or
other loss of any such Franchise.
(g) As soon as possible and in any event within ten days after any senior
executive of the Company or any Guarantor or of any general partner of any
Guarantor shall have obtained knowledge of the occurrence of a Default, a
statement describing such Default and the action which is proposed to be taken
with respect thereto.
(h) From time to time, with reasonable promptness, such further
information regarding the business, affairs and financial condition of the
Company or any Guarantor or any of their respective Affiliates or other
affiliates as any Bank may reasonably request.
B. Affirmative Covenants:
Section 9.02 Taxes and Claims. Each of the Company and the Guarantors will
pay and discharge all Taxes imposed upon it or upon its income or profits, or
upon any properties or assets belonging to it, and all fees or other charges for
Franchises, prior to the date on which penalties attach thereto, and all other
lawful claims which, if unpaid, might become a Lien (other than Permitted Liens)
upon the property of the Company or any Guarantor or result in the loss of a
Franchise, provided that neither the Company nor any Guarantor shall be required
to pay any such Tax, fee or other charge the payment of which is being contested
in good faith and by proper proceedings if it maintains adequate reserves in
accordance with generally accepted accounting principles with respect thereto.
Section 9.03 Insurance. Each of the Company and the Guarantors will
maintain insurance issued by responsible companies in such amounts and against
such risks as is usually carried by owners of similar businesses and properties
in the same general areas in which the Company or such Guarantor operates. The
Company and the Guarantors will furnish to any Bank, upon the request of such
Bank from time to time, full information as to the insurance maintained in
accordance with this Section 9.03.
Section 9.04 Maintenance of Existence; Conduct of Business. Each of the
Company and the Guarantors will preserve and maintain its existence and all of
its rights, privileges and franchises (including Franchises), except (i) where a
failure to do so, singly or in the aggregate, is not likely to have a Materially
Adverse Effect, (ii) pursuant to a Permitted Affiliate Transaction or (iii)
pursuant to any merger or consolidation permitted by Section 9.14(a)(i).
Section 9.05 Maintenance of and Access to Properties. Each of the Company
and the Guarantors will keep all of its properties and assets necessary in its
business in good working order and condition, ordinary wear and tear excepted,
and will permit representatives of the respective Banks to inspect such
properties, and to examine and make extracts from its books and records, during
normal business hours.
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Section 9.06 Compliance with Applicable Laws Each of the Company and the
Guarantors will comply with the requirements of all applicable, including but
not limited to environmental, laws, rules, regulations and orders of any
governmental body or regulatory authority a breach of which is likely to have,
singly or in the aggregate, a Materially Adverse Effect, except where contested
in good faith and by proper proceedings if it maintains adequate reserves in
accordance with generally accepted accounting principles with respect thereto.
Section 9.07 Litigation. Each of the Company and the Guarantors will
promptly give to the Administrative Agent notice in writing (and the
Administrative Agent will notify each Bank) of all litigation and of all
proceedings before any courts, arbitrators or governmental or regulatory
agencies against it or, to its knowledge, otherwise affecting it or any of its
respective properties or assets, except litigation or proceedings which, if
adversely determined, is not likely to, singly or in the aggregate, have a
Materially Adverse Effect. Following the initial notice of each such litigation
or proceeding, supplementary notices of all material developments in respect
thereof shall be given from time to time in like manner.
Section 9.08 New Subsidiaries. Promptly upon the acquisition or formation
of any New Subsidiary, the Company and the Guarantors will cause (by
documentation satisfactory to the Administrative Agent) such New Subsidiary to
undertake all of the obligations of a "Guarantor" under this Agreement and, in
the case of any such New Subsidiary which is a Subsidiary of a New York/New
Jersey Company, of a "Guarantor" under (and as defined in) the New York/New
Jersey Agreement. Each such New Subsidiary shall be a "Guarantor" for all
purposes of this Agreement and, as applicable, under the New York/New Jersey
Agreement.
Section 9.09 Franchises. The Company and the Guarantors will comply with
all of their obligations under their respective Franchises, except for failures
to comply which, singly or in the aggregate, are not likely to have a Materially
Adverse Effect.
C. Negative Covenants:
Section 9.10 Indebtedness. Neither the Company nor any of the Guarantors
will create, incur or suffer to exist any Indebtedness except:
(i) Indebtedness hereunder and under the New York/New Jersey
Agreement;
(ii) short-term Indebtedness incurred for working capital purposes
from one or more of the Banks up to but not exceeding $12,000,000 in aggregate
principal amount at any one time outstanding;
(iii) obligations under or in respect of Interest Swap Agreements up
to an aggregate notional principal amount not to exceed at any time the Total
Commitment at such time;
(iv) Guarantees and letters of credit permitted by Section 9.11
hereof;
(v)(A) Indebtedness of the Company or any of its Subsidiaries to any
Guarantor or the Company and (B) Indebtedness of any New York/New Jersey Company
to any other New York/New Jersey Company;
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(vi) Indebtedness in respect of Capital Lease Obligations, so long
as the aggregate principal amount of such Indebtedness outstanding at any one
time shall not exceed the sum of $18,000,000;
(vii) all other Indebtedness issued and outstanding on the date
hereof to the extent set forth on Schedule 9.10 hereto and any renewals,
extensions or refundings thereof in a principal amount not to exceed the amount
so renewed, extended or refunded; and
(viii) Indebtedness in respect of the Sutton Notes (as defined in
the 1996 Agreement) in an aggregate principal amount not tin excess of
$141,300,000, provided that such Indebtedness shall be paid in full on or prior
to the twentieth day after the Effective Date.
Section 9.11 Contingent Liabilities. Neither the Company nor any of the
Guarantors will, directly or indirectly (including, without limitation, by means
of causing a bank to open a letter of credit), guarantee, endorse, contingently
agree to purchase or to furnish funds for the payment or maintenance of, or
otherwise be or become contingently liable upon or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or guarantee the payment of dividends or other distributions upon the
stock or other ownership interests of any Person, or agree to purchase, sell or
lease (as lessee or lessor) property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of its
obligations or to assure a creditor against loss (all such transactions being
herein called "Guarantees"), except:
(i) endorsements of negotiable instruments for deposit or collection
in the ordinary course of business;
(ii) the Guarantees described in Schedule 9.11;
(iii)(A) Guarantees by the Company or one or more of its
Subsidiaries of Indebtedness of, and other obligations (incurred in the ordinary
course of business) of, the Company or any of the Guarantors and (B) Guarantees
by a New York/New Jersey Company of Indebtedness of, and other obligations
(incurred in the ordinary course of business) of another New York/New Jersey
Company, but only if, in the case of clauses (A) and (B) of this clause (iii),
such Indebtedness or other obligations are permitted by the Agreement;
(iv) Capital Lease Obligations to the extent they constitute
Guarantees by reason of having been assigned by the lessor to a lender to such
lessor (provided that the obligors in respect of such Capital Lease Obligations
do not increase their liability by reason of such assignment);
(v) surety bonds in an aggregate amount at any one time not to
exceed $12,500,000;
(vi) Guarantees of Indebtedness which would constitute Investments
which are not prohibited by Section 9.15 (other than by reason of subsection
(iii) thereof);
(vii) the Guarantees in Article VI hereof and in Article VI of the
New York/New Jersey Agreement; and
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(viii) other Guarantees by the Company or any of the Guarantors,
provided that the outstanding aggregate amount of the obligations guaranteed
does not exceed $7,500,000 at any time.
Section 9.12 Liens. Neither the Company nor any of the Guarantors will
create or suffer to exist any mortgage, pledge, security interest, conditional
sale or other title retention agreement, lien, charge or encumbrance upon any of
its assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation (all such security being herein called "Liens"), except:
(i)(A) Liens on tangible personal property of any Subsidiary of the
Company securing Indebtedness owed to the Company and (B) Liens on tangible
personal property of any New York/New Jersey Subsidiary securing Indebtedness
owed to any New York/New Jersey Obligor;
(ii) Liens securing Indebtedness permitted by Section 9.10(vi)
hereof to the extent such Liens attach solely to the assets (x) subject to
Capital Leases constituting such Indebtedness or (y) acquired with the proceeds
of such Indebtedness;
(iii) Permitted Liens; and
(iv) other Liens on tangible personal property in effect on the date
hereof to the extent set forth on Schedule 9.12 hereto.
In addition, neither the Company nor any of the Guarantors will enter into or
permit to exist any undertaking by it or affecting any of its properties whereby
the Company or such Guarantor shall agree with any Person (other than the Banks
or the Administrative Agent hereunder or under the New York/New Jersey
Agreement) not to create or suffer to exist any Liens in favor of any other
Person.
Section 9.13 Leases. Neither the Company nor any of the Guarantors will
incur, assume or have outstanding any obligation to pay rent under Leases (as
lessee, guarantor or otherwise) except:
(i) Pole Rental Leases and Leases of microwave transmission and/or
reception rights related to the operation of the Company and the Guarantors;
(ii) obligations under Leases by one Subsidiary of the Company or
any New York/New Jersey Obligor to another Subsidiary of the Company or any New
York/New Jersey Obligor, as the case may be; and
(iii) obligations under Leases of equipment and other real or
personal property for use in the ordinary course of its business.
Section 9.14 Mergers, Acquisitions and Dispositions, Etc. (a) Neither the
Company nor any of the Guarantors will consolidate or merge with any Person, or
sell, lease, license, assign, transfer or otherwise dispose of any part of its
business, assets or rights except:
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(i) dispositions by the Company or any of its Subsidiaries to, or
mergers or consolidations of any of the Company's Subsidiaries with, CSC or any
other Restricted Subsidiary and dispositions by any New York/New Jersey Company
to, or mergers or consolidations of any New York/New Jersey Company with and
into, any other New York/New Jersey Company or, so long as the New York/New
Jersey Agreement is no longer in effect, the Company or any of its Subsidiaries;
(ii) subject to Section 9.18 hereof, sales by the Company or any of
the Guarantors to Affiliates of surplus inventory, equipment and fixed assets
originally acquired for use by the Company or such Guarantor in its own
business;
(iii) dispositions in the ordinary course of business (including,
without limitation, dispositions of obsolete or worn-out property and other
property reasonably determined by the management of the disposing entity to be
not used or useful in its business);
(iv) dispositions of any Margin Stock;
(v) the Paramus-Hillsdale Sale; and
(vi) dispositions by the Company or any of the Guarantors (other
than, so long as the New York/New Jersey Agreement is in effect, any disposition
by any New York/New Jersey Company to CSC or any Restricted Subsidiary)
(including, without limitation, by merger or consolidation of any Subsidiary of
the Company or any New York/New Jersey Subsidiary) of cable television systems
or portions thereof (including but not limited to, (i) dispositions by way of
merger or consolidation of any Subsidiary of the Company or any New York/New
Jersey Subsidiary and (ii) dispositions in connection with which cable
television systems or portions thereof are acquired in exchange for the cable
television systems or portions thereof so disposed), provided that, in the case
of any such disposition:
(A) immediately prior to, and after giving effect to, such
disposition, no Default shall have occurred and be continuing; and
(B) at any time when the Cash Flow Ratio exceeds 5.50 to 1, the
amount of Operating Cash Flow attributable to the assets to be disposed
for the twelve-month or five-year, as the case may be, period ending on
the last day of the calendar month immediately preceding the month in
which such disposition is to occur (such twelve-month or five year period
being referred to herein as the relevant "Test Period"), together with the
aggregate amount of Operating Cash Flow for the relevant Test Period
attributable to any other assets so disposed by the Company or any
Guarantor during the twelve-month or five-year, as the case may be, period
prior to the date that such disposition is to occur, shall not exceed (x)
in the case of such twelve-month Test Period, 25% of the aggregate amount
of Operating Cash Flow for such Test Period, and (y) in the case of such
five-year Test Period, 35% of the aggregate amount of Operating Cash Flow
for such Test Period.
The Company shall furnish to the Administrative Agent prior to any such
disposition (1) a certificate of an officer of the Company and, if applicable,
the New York/New Jersey Obligors
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certifying compliance with the requirements of clauses (A) and, if applicable,
(B) of this subparagraph (v) and (2) in the case of any disposition to which
clause (b) is applicable, a reasonably detailed description of such disposition
demonstrating compliance with all of the Company's and the Guarantors' covenants
and agreements under this Agreement both before and after giving effect to such
disposition.
(b) Neither the Company nor any of the Guarantors will purchase or acquire
assets from, or the business or assets of, any other Person, except:
(i) the purchase of assets in the ordinary course of business as
conducted on the Effective Date by the Company and the Guarantors; and
(ii) the acquisition (including, without limitation, by merger or
consolidation of any Subsidiary of the Company or any New York/New Jersey
Subsidiary) of all or any part of the business or assets of any Person engaged
in the business of developing, constructing, owning, acquiring, altering,
repairing, financing, operating, maintaining, publishing, distributing,
promoting and otherwise exploiting cable television systems and related
businesses, including, without limitation, telecommunications services, data
transmission and telephony activities, provided that, in the case of any such
acquisition:
(A) immediately prior to, and after giving effect to, any such
acquisition no Default shall have occurred and be continuing; and
(B) if the assets so acquired consist of stock or other
ownership interests of any Person which is to become either a
Subsidiary of the Company or a New York/New Jersey Subsidiary, the
Company and its Subsidiaries or the New York/New Jersey Companies,
as the case may be, shall acquire in the aggregate not less than 80%
of the issued and outstanding shares of all classes of stock, or
other ownership interests, of such Person.
The Company shall furnish to the Administrative Agent prior to any such
acquisition (1) a certificate of an officer of the Company and, if applicable,
the New York/New Jersey Obligors certifying compliance with the requirements of
clauses (A) and (B) of this subparagraph (ii) and (2) a reasonably detailed
description of such acquisition demonstrating compliance with all of the
Company's and the Guarantors' covenants and agreements under this Agreement both
before and after giving effect to such acquisition.
Section 9.15 Investments. Neither the Company nor any of the Guarantors
will make or permit to remain outstanding any advances, loans, accounts
receivable (other than accounts receivable arising in the ordinary course of
business of the Company or such Guarantor) or other extensions of credit
(excluding, however, accrued and unpaid interest in respect of any advance, loan
or other extension of credit) or capital contributions to (by means of transfers
of property to others, or payments for property or services for the account or
use of others, or otherwise), or purchase or own any stocks, bonds, notes,
debentures or other securities (including, without limitation, any interests in
any partnership, joint venture or joint adventure) of, or any bank accounts
with, or Guarantee any Indebtedness or other obligations of, any Person (all
such transactions being herein called "Investments"), except:
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(i) bank accounts with, and banker's acceptances and certificates of
deposit of, banks having a combined capital and surplus of at least
$100,000,000;
(ii) readily marketable securities issued or guaranteed by the
United States Government and commercial paper rated P-1 by the National Credit
Office of Moody's Investors Service Inc. or bearing a similar rating by another
nationally recognized rating agency;
(iii) Guarantees permitted by Section 9.11 hereof;
(iv)(A) loans and advances by the Company or any of its Subsidiaries
to CSC or any other Restricted Subsidiary and (B) loans and advances by any New
York/New Jersey Company to any other New York/New Jersey Company;
(v) Investments outstanding as of the date hereof to the extent set
forth on Schedule 9.15 hereto; and
(vi) other Investments made by the Company and the Guarantors after
the Effective Date so long as, in the case of any Investment by the Company or
any of its Subsidiaries in any Person other than a Subsidiary of the Company and
in the case of any Investment by any New York/New Jersey Company in any Person
other than the Company or any of its Subsidiaries or any New York/New Jersey
Subsidiary, (A) no Default shall have occurred both before and after giving
effect to each such Investment and (B) in the case of any such Investment or
series of related Investments (other than Specified Investments) in an aggregate
amount in excess of $50,000,000, the Company and the Guarantors shall have
furnished to the Banks a reasonably detailed description of such Investment or
series of Investments demonstrating compliance with all of the Company's and the
Guarantors' covenants and agreements under this Agreement and under the New
York/New Jersey Agreement both before and after giving effect to such Investment
or series of Investments.
Section 9.16 Restricted Payments. Neither the Company nor any Guarantor
will, directly or indirectly, make any Restricted Payment.
Section 9.17 Business. At any time when the Cash Flow Ratio exceeds 5.50
to 1, neither the Company and its Subsidiaries nor the New York/New Jersey
Companies shall permit the portion of consolidated gross revenues of the Company
and its Subsidiaries or the New York/New Jersey Companies, as the case may be,
derived from the business of developing, constructing, owning, acquiring,
altering, repairing, financing, operating, maintaining, publishing,
distributing, promoting and otherwise exploiting cable television systems and
related businesses, including, without limitation, telecommunications services,
data transmission and telephony activities, for any Quarter to be less than 90%
of the total consolidated gross revenues of the Company and its Subsidiaries or
the New York/New Jersey Companies, as the case may be, for such Quarter.
Section 9.18 Transactions with Affiliates. Neither the Company nor any
Guarantor will effect any transaction with any of its Affiliates that is not a
Restricted Subsidiary or a New York/New Jersey Company on a basis less favorable
to the Company or such Guarantor than
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would at the time be obtainable for a comparable transaction in arm's-length
dealing with an unrelated third party.
Section 9.19 Issuance of Stock. Neither the Company nor any of the New
York/New Jersey Obligors will permit any of its Subsidiaries to issue any shares
of stock or other ownership interests in such Subsidiary other than to, in the
case of the Subsidiaries of the Company, the Company and its Subsidiaries or, in
the case of the New York/New Jersey Subsidiaries, the New York/New Jersey
Obligors.
D. Financial Covenants:
Section 9.20 Operating Cash Flow. (a) Operating Cash Flow to Total
Interest Expense. The Company and the Guarantors will cause, for each Quarter,
the ratio of Operating Cash Flow for the period of two Quarters ending with such
Quarter to Total Interest Expense for such period of two Quarters ending with
such Quarter to be at least the following respective amounts at any time during
the following respective periods:
Period Ratio
------ -----
from and including the Effective
Date to and including the
Quarter ended December 31, 1998 1.50 to 1
from and including January 1, 1999
to and including the Quarter
ended December 31, 2000 1.75 to 1
on and after January 1, 2001 2.00 to 1
(b) Operating Cash Flow less Cash Taxes to Total Debt Expense. The Company
and the Guarantors will cause, for each Quarter, the ratio of (i) Operating Cash
Flow for the period of two Quarters ending with such Quarter less Cash Taxes
paid during such period of two Quarters to (ii) Total Debt Expense for such
period of two Quarters ending with such Quarter to be at least 1.20 to 1.
Section 9.21 Cash Flow Ratio. The Company and the Guarantors will not
permit the Cash Flow Ratio to exceed the following respective amounts at any
time during the following respective periods:
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Period Ratio
------ -----
from and including the Effective
Date to and including December 31, 1999 6.50 to 1
from and including January 1, 2000 to
and including September 30, 2000 6.25 to 1
from and including October 1, 2000 to
and including June 30, 2001 6.00 to 1
from and including July 1, 2001 to
and including December 31, 2001 5.75 to 1
from and including January 1, 2002 to
and including June 30, 2002 5.50 to 1
from and including July 1, 2002 to
and including December 31, 2002 5.25 to 1
on and after January 1, 2003 5.00 to 1.
ARTICLE X
DEFAULTS
Section 10.01 Events of Default. If any one of the following "Events of
Default" shall occur and be continuing, namely:
(a) Any representation or warranty in this Agreement or in any
certificate, statement or other document furnished to the Banks or the
Administrative Agent under this Agreement (including, without limitation, any
amendment to any of the foregoing), or any certification made or deemed to have
been made by either Obligor or any Guarantor to any Bank hereunder, shall prove
to have been incorrect, or shall be breached, in any material respect, when made
or deemed made; or
(b) Default in the payment when due of any principal on any Note, or
default in the payment when due of interest on any Note or any other amount
payable to any Bank or the Administrative Agent hereunder and the failure to pay
such interest or other amount by 11:00 a.m. on the second next following
Business Day; or
(c) Default by the Company or any of the Guarantors in the performance or
observance of any of its agreements in Article IX hereof (other than Sections
9.01, 9.02, 9.03, 9.04, 9.05, 9.06, 9.07 and 9.15 hereof but including Section
9.01(g) hereof); or
(d) Default by the Company or any of the Guarantors in the performance or
observance of any of its other agreements herein which shall remain unremedied
for 30 days
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after notice thereof shall have been given to the Company by any Bank (provided
that such period shall be five days and no such notice shall be required in the
case of a default under Section 9.01(e) or 9.15 hereof and provided further that
such period shall be fifteen days and no such notice shall be required in the
case of a default under Section 9.01(d) hereof); or
(e) Any Indebtedness of the Company or any of the Guarantors in an
aggregate principal amount of $2,500,000 or more, 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 Guarantor is
contesting its obligation to pay the same in good faith and by proper
proceedings and for which the Company or such Guarantor has established
appropriate reserves (herein called "Excluded Indebtedness"), shall (i) become
due before stated maturity by the acceleration of the maturity thereof by reason
of default or (ii) become due by its terms and shall not be promptly paid or
extended; or
(f) Any default under any indenture, credit agreement or loan agreement or
other agreement or instrument under which Indebtedness of the Company or any of
the Guarantors constituting indebtedness for borrowed money in an aggregate
principal amount of $500,000 or more is outstanding (other than Excluded
Indebtedness), or by which any such Indebtedness is evidenced, shall have
occurred and shall continue for a period of time sufficient to permit the holder
or holders of any such Indebtedness (or a trustee or agent on its or their
behalf) to accelerate the maturity thereof or to enforce any Lien provided for
by any such indenture, agreement or instrument, as the case may be, unless such
default shall have been permanently waived by the respective holder of such
Indebtedness; or
(g) The Company or any of the Guarantors shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) be adjudicated a bankrupt or insolvent, (v) commence a voluntary case under
the Federal bankruptcy laws (as now or hereafter in effect), (vi) file a
petition seeking to take advantage of any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of debts,
(vii) acquiesce in writing to, or fail to controvert in a timely and appropriate
manner, any petition filed against the Company or any of the Guarantors in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing; or
(h) A case or other proceeding shall be commenced, without the
application, approval or consent of the Company or any of the Guarantors in any
court of competent jurisdiction, seeking the liquidation, reorganization,
dissolution, winding up, or composition or readjustment or debts of the Company
or any of the Guarantors the appointment of a trustee, receiver, custodian,
liquidator or the like of the Company or any of the Guarantors or of all or any
substantial part of its assets, or any other similar action with respect to the
Company or any of the Guarantors under the laws of bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and such case
or proceeding shall continue undismissed, or unstayed and in effect, for any
period of 30 consecutive days, or an order for relief against the
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Company or any of the Guarantors shall be entered in an involuntary case under
the Federal bankruptcy laws (as now or hereafter in effect); or
(i) A judgment for the payment of money in excess of $250,000 shall be
rendered against the Company or any of the Guarantors and such judgment shall
remain unsatisfied and in effect for any period of 30 consecutive days without a
stay of execution or (if a stay is not provided for by applicable law) without
having been fully bonded; or
(j) Any Franchise issued to the Company or any of the Guarantors shall be
revoked or canceled or expire by its terms and not be renewed, or shall be
modified in a manner adverse to the Company or any of the Guarantors utilizing
such Franchise, if such action is likely to have a Materially Adverse Effect; or
(k) (i) Any Termination Event shall occur; (ii) any Accumulated Funding
Deficiency, whether or not waived, shall exist with respect to any Plan; (iii)
any Person shall engage in any Prohibited Transaction involving any Plan; (iv)
the Company, any Guarantor or any ERISA Affiliate is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from the Company's, any Guarantor's or any ERISA Affiliate's complete
or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Plan; (v) the Company, any Guarantor or any ERISA Affiliate of any such Person
shall fail to pay when due an amount which is payable by it to the PBGC or to a
Plan under Title IV of ERISA and which, when aggregated with all other such
amounts with respect to the payment of which the Company, the Guarantors and the
ERISA Affiliates are at the time in default, exceeds $125,000; (vi) a proceeding
shall be instituted by a fiduciary of any Plan against the Company, any
Guarantor or any ERISA Affiliate to enforce Section 515 of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; and by
reason of any or all of such events described in clauses (i) through (vi) as
applicable there shall or could result in actual or potential liability of the
Company, any Guarantor and any ERISA Affiliate in excess of $125,000 in the
aggregate; or
(l) CSC shall either cease to own, either directly or indirectly, 100% of
the common stock of the Company, or any Person other than CSC or a direct or
indirect wholly-owned Subsidiary of CSC shall obtain the legal or contractual
right to own, or to cause the transfer of the ownership of, any of the common
stock of the Company, without regard to any required approval of any other
Person; or
(m) Any Event of Default under (and as defined in) the New York/New Jersey
Agreement shall have occurred and be continuing; or
(n) The New York/New Jersey Agreement (other than any provision thereof
which by the terms thereof survives a termination thereof) shall cease to be in
effect at any time and any of the New York/New Jersey Companies shall have
failed to become a Subsidiary of the Company and a Restricted Subsidiary under
(and as defined in) the CSC Agreement in accordance with Section 9.08 (b)
thereof either at or before such time.
THEREUPON, the Administrative Agent may (and, if directed by the Majority Banks,
shall) by notice to the Company, terminate the Commitments of the Banks
hereunder (if then outstanding)
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and/or declare the unpaid principal of and accrued interest on the Notes, and
all other amounts owing hereunder, to be forthwith due and payable, whereupon
the same shall be and become forthwith due and payable, without presentment or
demand for payment, notice of nonpayment, protest or further notice or demand of
any kind, all of which are hereby expressly waived by the Company (provided that
the Banks' Commitments hereunder shall forthwith terminate and the unpaid
principal of and accrued interest on the Notes, and all other amounts owing
hereunder, shall automatically become and be forthwith due and payable upon the
occurrence of any event specified in clause (g) or (h) above without any such
notice or other action, all of which are hereby expressly waived by the
Company).
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder with such powers as are specifically delegated to the Administrative
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement
and shall not by reason of this Agreement be a trustee for any Bank. The
Administrative Agent shall not be responsible to any of the Banks for any
recitals, statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by any of the Banks under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other document referred to or provided for herein or for any failure by
either Obligor to perform any of its obligations hereunder. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
Section 11.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof received by telephone, telex, telegram or cable) believed
by it to be genuine and correct and to have been signed or sent by or on behalf
of the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance with
instructions signed by the Majority Banks, and such instructions of the Majority
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks.
Section 11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on the Obligations) unless the Administrative Agent has
received notice from a Bank or the
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Company specifying such Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
non-payment). The Administrative Agent shall (subject to Section 11.07 hereof)
take such action with respect to such Default as shall be reasonably directed by
the Majority Banks, provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may take such
action, or refrain from taking such action, with respect to such Default as it
shall deem advisable in the best interest of the Banks.
Section 11.04 Rights as a Bank. With respect to its Commitment and the
Loans made by it, the Administrative Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as Administrative Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
and its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Company, the Guarantors, CSC and any of their
Affiliates as if it were not acting as Administrative Agent, and the
Administrative Agent and its affiliates may accept fees and other consideration
from the Company, the Guarantors and CSC for services in connection with this
Agreement or otherwise without having to account for the same to the Banks.
Section 11.05 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Company under said Section 12.03),
ratably in accordance with the aggregate principal amount of the Obligations
held by the Banks (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Company is
obligated to pay under Section 12.03 hereof but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or of any such other documents, provided that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified.
Section 11.06 Non-Reliance on Administrative Agent and Other Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of CSC,
the Company and the Guarantors, and decision to enter into this Agreement and
that it will, independently and without reliance upon the Administrative Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any other document
contemplated by or referred to herein. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by CSC,
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the Company and the Guarantors of this Agreement or to inspect the properties or
books of the Company and its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of CSC, the Company and
the Guarantors (or any of their Affiliates) which may come into the possession
of the Administrative Agent or any of its affiliates.
Section 11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
Section 11.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Obligors and the Administrative Agent may be removed at any
time with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a bank organized or licensed
under the laws of the United States of America or any State having an office (or
an affiliate with an office) in New York, New York and a combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After the retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Article XI
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
Section 11.09 Agency Fee. So long as the Commitments are outstanding and
until payment in full of all Obligations hereunder, the Obligors will pay to the
Administrative Agent such fees as may have been agreed to by the Company and the
Administrative Agent. Such fees, once paid, shall be non-refundable.
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver. No failure on the part of the Administrative
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or
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partial exercise of any right, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
Section 12.02 Notices. All notices and other communications provided for
herein shall be by telegraph, cable or in writing and telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified in Schedule 12.02 hereto or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in Section 2.02 hereof, all notices and other
communications hereunder shall be deemed to have been duly given when
transmitted by telecopier, delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice, four Business Days
after the date deposited in the mails, airmail postage prepaid, in each case
given or addressed as aforesaid.
Section 12.03 Expenses, Etc. The Company or CSC shall pay or reimburse
each of the Banks and the Administrative Agent for: (a) the reasonable fees and
expenses of Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Administrative Agent, in connection with (i) the negotiation, preparation,
execution and delivery of this Agreement, the Notes and the other documents
contemplated by or referred to herein and the making of the Loans hereunder and
(ii) any amendment, modification or waiver of any of the terms of this
Agreement, the Notes or any of such other documents; (b) all reasonable costs
and expenses of the Banks and the Administrative Agent (including reasonable
counsels' fees and expenses) in connection with the enforcement, protection,
preservation or exercise of any of their rights under this Agreement, the Notes
and the other documents contemplated by or referred to herein; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement,
any of the Notes or any other document referred to herein. Each Obligor shall
(to the fullest extent permitted by applicable law) indemnify the Administrative
Agent, the Banks and each affiliate thereof and their respective directors,
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of or
in any way relate to or result from any actual or proposed use by either Obligor
of the proceeds of any Loan hereunder and/or the negotiation, execution,
delivery or performance of this Agreement or the Notes or any Loan made or to be
made hereunder or from any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, and the Obligors shall reimburse the Administrative Agent and each
Bank, and each affiliate thereof and their respective directors, officers,
employees and agents, upon demand, for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding (but excluding
any such losses, liabilities, claims, damages, or expenses to the extent, but
only to the extent, caused by action taken which constitutes the gross
negligence or willful misconduct of the Person to be indemnified). If and to the
extent that the obligations of either Obligor under the preceding sentence may
be unenforceable for any reason, such Obligor shall make the maximum
contribution to the payment and satisfaction of each of the losses, liabilities,
claims, damages and expenses referred to above as may be permitted by applicable
law.
Section 12.04 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor any consent to any departure by either Obligor
therefrom, shall in
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any event be effective unless the same shall be agreed or consented to by the
Majority Banks, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that no
amendment, waiver or consent shall, unless in writing and signed by all the
Banks, do any of the following: (a) increase the Commitment of any of the Banks,
extend the Commitment Termination Date or any date on which the Commitments are
scheduled to reduce hereunder, or subject the Banks to any additional
obligations; (b) reduce the principal of, or interest on, or fees with respect
to, the Obligations or the amount of any scheduled payments thereof; (c)
postpone any date fixed for payment of principal of, or interest on, or fees
with respect to, the Obligations or the Notes; (d) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Obligations, or
the number of Banks which shall be required for the Banks or any of them to take
any action under this Agreement; (e) change any provision contained in Section
2.03(b)(ii) (other than clause (F) of the proviso therein), Section
3.01(b)(iii), Section 4.05, Articles V, VI, VII, Section 12.03 or this Section
12.04; or (f) release or remove any Guarantor from its obligations hereunder
other than any such release or removal resulting from a transaction permitted by
Section 9.14 hereof.
Section 12.05 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Neither Obligor and no Guarantor may sell or assign its respective
rights or obligations hereunder or under the Notes without the prior consent of
all of the Banks and the Administrative Agent.
(c) At any time after the Effective Date, a Bank may sell a participation
of all or part of its rights and obligations under such Bank's Commitment under
this Agreement and the Notes to one or more commercial banks, investment
companies or other financial institutions that enter into participations of the
type contemplated by this Section 12.05 in the ordinary course of their business
and that qualify as "accredited investors," as such term is defined in
Regulation D of the Securities Act of 1933, as amended (each, a "participant"),
such participant's rights against such Bank to be set forth in a participation
agreement (a "Participation Agreement"); provided, however, that (i) such Bank
shall submit in writing to the Company and to the Administrative Agent a request
that each of the Company and the Administrative Agent consent to the choice of
such participant, (ii) the Company and the Administrative Agent shall consent in
writing to the choice of such participant prior to the time of effectiveness of
such participation, such consent not to be unreasonably withheld or delayed,
(iii) such participation, when added to the contemporaneous participations made
by such Bank under the CSC Agreement and, if then in effect, the New York/New
Jersey Agreement, must be in an amount not less than $10,000,000 (iv) such
participation shall be sold pro rata between such Bank's Commitment, such Bank's
CSC Commitment and, if the New York/New Jersey Agreement is then in effect, such
Bank's New York/New Jersey Commitment based on the relationship of each such
Commitment to such Bank's Aggregate Commitment and (v) in the event such Bank
was party to this Agreement on the Effective Date, after giving effect to such
participation, such Bank's Aggregate Commitment not so participated if any shall
be at least $10,000,000. All amounts payable by the Obligors to any Bank under
Article V hereof shall be determined as if such Bank had not sold any such
participations and as if such Bank were funding all of its Commitments and Loans
in the same way that it is funding the Commitments and Loans in which no
participations have been sold. In
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no event shall a Bank that sells a participation be obligated to the participant
under its Participation Agreement to refrain from taking any action hereunder or
under such Bank's Note except that such Bank may agree in such Participation
Agreement that it will not, without the consent of such participant, agree to
(A) extend the Commitment Termination Date or any date on which any Commitments
are scheduled to reduce hereunder, (B) reduce the principal of, or interest on,
the Obligations or under the Notes or any Commitment Fee, (C) postpone any date
fixed for payment of the principal of, or interest on, the Obligations or under
the Notes, (D) consent to any release of all or a significant portion of any
collateral for the Obligations or (E) change any provision in Article VI hereof.
Any Bank selling a participation hereunder shall promptly notify the Company of
the effectiveness thereof.
(d) At any time after the Effective Date, a Bank may assign part of its
rights and obligations under such Bank's Commitment under this Agreement and the
Notes to one or more commercial banks or other financial institutions (each, an
"assignee") pursuant to an Assignment and Acceptance; provided, that (i) such
Bank shall submit in writing to the Company and the Administrative Agent a
request that each of the Company and the Administrative Agent consent to the
choice of such assignee, (ii) the Company and the Administrative Agent shall
consent in writing to the choice of such assignee prior to the time of
effectiveness of such assignment, such consent not to be unreasonably withheld
or delayed, (iii) such assignment, when added to the contemporaneous assignments
made by such Bank under the CSC Agreement and, if then in effect, the New
York/New Jersey Agreement, must be in an aggregate amount not less than
$10,000,000, (iv) such assignment shall be made pro rata between such Bank's
Commitment, such Bank's CSC Commitment and, if the New York/New Jersey Agreement
is then in effect, such Bank's New York/New Jersey Commitment based on the
relationship of each such Commitment to such Bank's Aggregate Commitment, (v)
the parties to each assignment shall execute and deliver to the Administrative
Agent, for its approval, acceptance and recording in the books and records
maintained pursuant to Section 12.05(f) hereof an Assignment and Acceptance,
together with a processing and recordation fee of, when added to the processing
and recordation fee under the contemporaneous assignments under the CSC
Agreement and, if then in effect, the New York/New Jersey Agreement, $3,500 and
(vi) in the event such Bank was party to this Agreement on the Effective Date,
after giving effect to such assignment, such Bank's Aggregate Commitment shall
be at least $10,000,000. Upon such execution, delivery, approval, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto, and to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and under the Notes and (y) the Bank assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations hereunder and under the Notes. Any Bank making an assignment
hereunder shall promptly notify the Company of the effectiveness thereof. In the
event of any such assignment, the Obligors shall, against receipt of the
existing Note of the Bank assignor, issue a new Note to the Bank assignee and,
in the case of a partial assignment, to such Bank assignor, in either case
appropriately reflecting such assignment.
(e) By executing and delivering an Assignment and Acceptance, the Bank
assignor hereunder and the assignee thereunder shall confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such
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assigning Bank makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such assigning Bank makes
no representation or warranty with respect to the financial condition of either
Obligor or the performance or observance by either Obligor of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Sections 8.04 and 9.01 hereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Bank or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Bank.
(f) The Administrative Agent shall maintain books and records in which
shall be recorded (i) the names and addresses of the Banks and the Commitments
of, and principal amount of Obligations owing to, each Bank from time to time;
(ii) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, all interest, fees (including attorneys' fees and
disbursements to the extent reimbursable hereunder), expenses, charges and other
Obligations; and (iii) all payments of Obligations made by the Obligors or for
the Obligors' account. All entries in such books and records shall be made in
accordance with the Administrative Agent's customary accounting practices as in
effect from time to time. The Administrative Agent will render a quarterly
statement to the Obligors detailing all relevant transactions for billing
purposes. Each and every such statement shall be deemed final, binding and
conclusive upon the Company in all respects as to all matters reflected therein
(absent manifest error), unless the Company, within 15 days after the date such
statement is rendered, delivers to the Administrative Agent written notice of
any objections which the Company may have to such statement. In that event, only
those items expressly objected to in such notice shall be deemed to be disputed
by the Company. Notwithstanding the foregoing, the Administrative Agent's
entries in the books and records evidencing Loans and other financial
accommodations made from time to time shall be final, binding and conclusive
upon the Company (absent manifest error) as to the existence and amount of the
Obligations recorded in such books and records.
(g) The Administrative Agent shall maintain at the applicable address for
notices as determined in accordance with Section 12.02 hereof a copy of each
Assignment and Acceptance delivered to and accepted by it and shall record in
such books and records the names and addresses of each Bank and the Commitment
of, and principal amount of the Loans owing to, such Bank from time to time. The
Obligors, the Guarantors, the Administrative Agent and the
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Banks may treat each Person whose name is so recorded as a Bank hereunder for
all purposes of this Agreement.
(h) If any Bank (or, if such Bank has participated in any part of its
Loans or Commitment, any of such Bank's participants) does not agree with a
proposal of the Company for an amendment, waiver or consent in respect of an
issue described in the penultimate sentence of 12.05(c) hereof, the Obligors may
require that such Bank (and each of its participants, if any) transfer all of
its right, title and interest under this Agreement, under the CSC Agreement and,
if then in effect, the New York/New Jersey Agreement and such Bank's Note issued
hereunder, its note issued under the CSC Agreement and its note issued under the
New York/New Jersey Agreement to any Person (a "Proposed Bank") identified by
the Obligors who agrees to assume the obligations of such Bank and the CSC Loans
and New York/New Jersey Loans for a consideration equal to the outstanding
principal amount of such Bank's Loans, together with interest thereon to the
date of such transfer and all other amounts payable hereunder, under the CSC
Agreement and, if then in effect, the New York/New Jersey Agreement to such Bank
on or prior to the date of such transfer (including any fees accrued hereunder
and any amounts which would be payable under Section 5.05 hereof (or the
equivalent provisions of the CSC Agreement and, if then in effect, the New
York/New Jersey Agreement) as if all of such Bank's Loans, CSC Loans and New
York/New Jersey Loans were being prepaid in full on such date). Subject to the
execution and delivery of such instruments and agreements relating to such
transfer as the Banks (including the Proposed Bank and such Bank) shall request,
such Proposed Bank shall be a "Bank" for all purposes hereunder.
(i) A Bank may furnish any information concerning the Company , any of the
Guarantors or CSC in the possession of such Bank from time to time to assignees
and participants (including prospective assignees and participants).
(j) Notwithstanding anything in the foregoing to the contrary, (x) each
Bank may, without complying with any restrictions set forth in this Section
12.05, sell a participation or assign all or any part of its rights and
obligations under such Bank's Commitment under this Agreement and Notes to any
affiliate of such Bank, provided that the Company shall consent to the choice of
such affiliate, such consent not to be unreasonably withheld or delayed, and
provided, however, that any participation or assignment made by such affiliate
to a non-affiliate must be effected contemporaneously with its other affiliates
such that the non-affiliate participant or assignee holds pro rata amounts of
the Commitment, the CSC Commitment and, if the New York/New Jersey Agreement is
then in effect, the New York/New Jersey Commitment as if such participation or
assignment had been made by such Bank; and (y) each Bank may at any time,
without complying with any restrictions set forth in Section 12.05, assign all
or any portion of its rights under this Agreement and its Note to a Federal
Reserve Bank, provided that such assignment shall not release the Bank assignor
from its obligations under this Agreement.
Section 12.06 Survival. The obligations of the Company under Sections
5.01, 5.05 and 12.03 hereof shall survive the repayment of the Loans.
Section 12.07 Senior Indebtedness. The Obligations (including, without
limitation, the obligations of the Obligors and the Guarantors to pay, when due
(whether at stated maturity, by acceleration or otherwise), the principal of and
interest on the Loans to be made by the Banks to
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the Obligors pursuant to Section 2.01 hereof and the obligations of the Company
and its Subsidiaries with respect to Interest Swap Agreements shall constitute
"Senior Indebtedness" or "Senior Debt" as such terms are defined in all
documents to which CSC or any Restricted Subsidiary is a party.
Section 12.08 Conditions to Effectiveness. This Agreement shall become
effective on the first day (the "Effective Date") on which (i) this Agreement
shall have been duly executed by the parties hereto and thereto and (ii) the
conditions precedent to the initial Loan under Article VII hereof shall have
been satisfied, at which time the 1996 Agreement shall be amended and restated
by this Agreement. If no Effective Date shall occur, the 1996 Agreement shall
remain in full force and effect.
Section 12.09 Liability of General Partners and Other Persons. No general
partner of any Subsidiary of the Company which is a partnership, joint venture
or joint adventure shall have any personal liability in respect of such
Subsidiary's obligation under this Agreement or the Notes by reason of his, her
or its status as such general partner. In addition, no limited partner, officer,
employee, director, stockholder or other holder of an ownership interest of or
in CSC, the Company or any of the Guarantors or any partnership, corporation or
other entity which is a stockholder or other holder of an ownership interest of
or in the Company, any of the Guarantors or CSC shall have any personal
liability in respect of such obligations by reason of his, her or its status as
such limited partner, officer, employee, director, stockholder or holder.
Section 12.10 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.11 Waiver. THE COMPANY, THE GUARANTORS, CSC, THE ADMINISTRATIVE
AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH ANY OF THEM IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTES OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
Section 12.12 Entire Agreement. This Agreement and the Notes embody the
entire agreement among the Obligors, the Guarantors and the Banks and supersede
all prior agreements, representations and understandings, if any, relating to
the subject matter hereof and thereof.
Section 12.13 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the law of the State of New York.
Section 12.14 Captions, Etc. Captions, section headings and the table of
contents appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
Section 12.15 Waiver of Certain Defenses. The obligations of each Obligor
to pay amounts hereunder and under the Notes in accordance with the terms hereof
and thereof shall
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survive irrespective of the validity and enforceability of this Agreement or the
Notes against, or the obligations of, the other Obligor hereunder or thereunder
and any other circumstance that might otherwise affect the liability of such
other Obligor. The obligations of each Obligor under this Agreement shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the other Obligor is rescinded or must be otherwise restored by
any holder of the obligations guaranteed hereunder whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and the Obligors agree
that they will indemnify the Banks and the Administrative Agent on demand for
reasonable costs and expenses (including, without limitation, fees of counsel)
incurred by the Banks or the Administrative Agent in connection with such
rescission or restoration.
Section 12.16 Release; Acceptance of Release. (a) Release. (i) Each
Obligor hereby releases the other Obligor from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or otherwise), any
"claims" (as defined in Section 101(5) of the Bankruptcy Code), whether arising
under applicable law or otherwise, to which such Obligor is or would at any time
be entitled by virtue of its obligations under the Notes or this Agreement or
any payment made pursuant hereto, including any such claims to which such
Obligor may be entitled as a result of any right of subrogation, exoneration or
reimbursement.
(ii) To the extent not released by the Obligors under Section
12.16(a)(i), each Obligor agrees that it shall not be entitled to any rights of
subrogation, exoneration, reimbursement and contribution in respect of any
obligations hereunder until payment in full of all of the Obligations.
(b) Acceptance of Release. (i) Each of the Company and CSC hereby
accepts the releases effected by Section 12.16(a) hereof and agrees not to
restore or attempt to restore any of the rights thereby released.
(ii) The Obligors hereby accept the release effected by
Article VI and agree not to restore or attempt to restore any of the rights
thereby released.
Section 12.17 Authorization of Third Parties to Deliver Information and
Discuss Affairs. Each of the Obligors hereby confirms that it has authorized and
directed each Person whose preparation or delivery to the Administrative Agent
or the Banks of any opinion, report or other information is a condition or
covenant under this Agreement (including under Article VII and Article VIII) to
so prepare or deliver such opinions, reports or other information for the
benefit of the Administrative Agent and the Banks. The Obligors agree to confirm
such authorizations and directions provided for in this Section 12.17 from time
to time as may be requested by the Administrative Agent.
Section 12.18 Termination of 1996 Agreement and 1996 Pledge Agreement and
Release of Security Interests. The 1996 Agreement and the 1996 Pledge Agreement
are hereby terminated, and the security interests created by the 1996 Pledge
Agreement are hereby released in full. Promptly after the Effective Date, the
1996 Security Agent shall return to the Company all Collateral (as defined in
the 1996 Pledge Agreement) in its possession. The 1996 Security Agent and each
of the Banks (in its capacity as a 1996 Bank) hereby further agree to execute
such further instruments and documents (including UCC termination statements) as
the
60
<PAGE>
Company shall reasonably request to evidence or give effect to the termination
and release effected hereby.
Section 12.19 CSC Agreement. Notwithstanding any termination of the CSC
Agreement, CSC shall at all times comply with the terms of Section 9.25 thereof;
provided that, after any termination of the CSC Agreement, the term "Majority
Banks" in such section shall have the meaning ascribed to such term in this
Agreement.
Section 12.20 Acknowledgement. The Obligors hereby acknowledge that
neither the Administrative Agent nor any Bank has any fiduciary relationship
with or fiduciary duty to the Obligors arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Administrative Agent and the Banks, on the one hand, and each of the Obligors,
on the other hand, in connection herewith and therewith is solely that of debtor
and creditor.
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OBLIGORS
CABLEVISION MFR, INC.
CSC HOLDINGS, INC.
By
---------------------------------------------
Name:
Title:
of each of the above-named two corporations
GUARANTORS
CABLEVISION OF MONMOUTH, INC.
CABLEVISION OF HUDSON COUNTY, INC.
CABLEVISION OF NEW JERSEY, INC.,
for itself and as a General Partner of
Cablevision of Newark
CSC GATEWAY CORPORATION,
for itself and as a General Partner of
Cablevision of Newark
CSC TKR, INC.,
for itself and as General Partner of KRC/CCC
Investment Partnership
CABLEVISION OF BROOKHAVEN, INC.
CABLEVISION OF OAKLAND, INC.
CABLEVISION OF PATERSON, INC.
CSC TKR I, INC.
UA-COLUMBIA CABLEVISION OF WESTCHESTER, INC.
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
CABLEVISION OF ROCKLAND/RAMAPO, INC.
CABLEVISION OF WARWICK, INC.
By
---------------------------------------------
Name:
Title:
of each of the above-named twelve corporations
CABLEVISION OF NEWARK
By Cablevision of New Jersey, Inc., as a
General Partner
By CSC Gateway Corporation, as a General
Partner
KRC/CCC INVESTMENT PARTNERSHIP
By CSC TKR, Inc., as General Partner
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$112,500,000 TORONTO DOMINION (TEXAS), INC., as Arranging
Agent, Administrative Agent and Bank
By
-----------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Managing
Agent and Co-Syndication Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE BANK OF NEW YORK COMPANY, INC.,
as Bank
By
-----------------------------------------
Name:
Title:
$87,500,000 THE BANK OF NOVA SCOTIA, as Bank, Managing
Agent and Co-Syndication Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE CANADIAN IMPERIAL BANK OF COMMERCE,
as Bank and Managing Agent
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$87,500,000 NATIONSBANK, N.A., as Bank and
Managing Agent
By
-----------------------------------------
Name:
Title:
$87,500,000 THE CHASE MANHATTAN BANK, as Bank and
Managing Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 BANK OF MONTREAL, CHICAGO BRANCH,
as Bank and Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 BARCLAYS BANK PLC, as Bank and Agent
By
-----------------------------------------
Name:
Title:
$70,000,000 FLEET BANK, N.A., as Bank and Agent
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$70,000,000 ROYAL BANK OF CANADA, as Bank and Agent
By
-----------------------------------------
Name:
Title:
$57,500,000 MELLON BANK, N.A., as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 BANKBOSTON, N.A., as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 BANQUE PARIBAS, as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$50,000,000 CREDIT LYONNAIS, as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
as Bank and Co-Agent
By
-----------------------------------------
Name:
Title:
$50,000,000 SOCIETE GENERALE, NEW YORK BRANCH, as Bank
and Co-Agent
By
-----------------------------------------
Name:
Title:
$37,500,000 FIRST UNION NATIONAL BANK
By
-----------------------------------------
Name:
Title:
$37,500,000 PNC BANK, NATIONAL ASSOCIATION
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$25,000,000 ABN AMRO BANK N.V.
By
-----------------------------------------
Name:
Title:
$25,000,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$25,000,000 UNION BANK OF CALIFORNIA, N.A.
By
-----------------------------------------
Name:
Title:
$12,500,000 BANK OF HAWAII
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$12,500,000 NATEXIS BANQUE BFCE
By
-----------------------------------------
Name:
Title:
$12,500,000 THE DAI-ICHI KANGYO BANK, LTD.
By
-----------------------------------------
Name:
Title:
$12,500,000 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$12,500,000 THE FUJI BANK LIMITED, NEW YORK BRANCH
By
-----------------------------------------
Name:
Title:
$12,500,000 GENERAL ELECTRIC CAPITAL CORPORATION
By
-----------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement for Cablevision MFR, Inc.
<PAGE>
Commitment
$12,500,000 THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
By
-----------------------------------------
Name:
Title:
$12,500,000 THE SUMITOMO BANK, LIMITED
By
-----------------------------------------
Name:
Title:
By
-----------------------------------------
Name:
Title:
$12,500,000 SUMMIT BANK
By
-----------------------------------------
Name:
Title:
- - -----------------
$1,400,000,000.00
EXECUTION COPY
CSC TKR, INC.
CABLEVISION OF BROOKHAVEN, INC.
CABLEVISION OF OAKLAND, INC.
CABLEVISION OF PATERSON, INC.
CSC TKR I, INC.
UA-COLUMBIA CABLEVISION OF WESTCHESTER, INC.
----------
$800,000,000
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 28, 1998
TORONTO DOMINION (TEXAS), INC.
as Arranging Agent and as Administrative Agent
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
THE CANADIAN IMPERIAL BANK OF COMMERCE
NATIONSBANK, N.A.
THE CHASE MANHATTAN BANK
as Managing Agents
BANK OF MONTREAL, CHICAGO BRANCH
BARCLAYS BANK PLC
FLEET BANK, N.A.
ROYAL BANK OF CANADA
as Agents
BANQUE PARIBAS
CREDIT LYONNAIS
BANKBOSTON, N.A.
THE FIRST NATIONAL BANK OF CHICAGO
MELLON BANK, N.A.
SOCIETE GENERALE, NEW YORK BRANCH
as Co-Agents
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms.......................................1
Section 1.02 Accounting Terms and Determinations........................11
ARTICLE II
LOANS
Section 2.01 Loans......................................................12
Section 2.02 Manner of Borrowing; Conversion and Continuation...........12
Section 2.03 Reductions and Changes of Commitments......................14
Section 2.04 Commitment Fee.............................................15
Section 2.05 Notes......................................................15
Section 2.06 Lending Offices............................................15
Section 2.07 Several Obligations; Remedies Independent..................15
Section 2.08 Use of Proceeds............................................15
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments................................................16
Section 3.02 Repayment of Loans.........................................16
Section 3.03 Interest...................................................16
i
<PAGE>
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments...................................................17
Section 4.02 Pro Rata Treatment.........................................17
Section 4.03 Computations...............................................18
Section 4.04 Non-Receipt of Funds by the Administrative Agent...........18
Section 4.05 Sharing of Payments, Etc...................................18
Section 4.06 No Reductions..............................................19
Section 4.07 Taxes......................................................19
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans.......................20
Section 5.02 Limitation on Types of Loans...............................22
Section 5.03 Illegality.................................................22
Section 5.04 Certain Conversions of Loans Pursuant to Section 5.01
or 5.03..................................................22
Section 5.05 Compensation...............................................23
Section 5.06 Replacement of Banks.......................................23
ARTICLE VI
GUARANTEE................................24
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan...............................................25
Section 7.02 Each Loan..................................................27
ii
<PAGE>
ARTICLE VIII
REPRESENTATIONS
Section 8.01 Existence and Power........................................28
Section 8.02 Subsidiaries...............................................28
Section 8.03 Authority; No Conflict.....................................28
Section 8.04 Regulation U...............................................28
Section 8.05 Approval of Regulatory Authorities.........................28
Section 8.06 Binding Agreements.........................................29
ARTICLE IX
PARTICULAR COVENANTS OF THE OBLIGORS AND THEIR SUBSIDIARIES.......29
ARTICLE X
DEFAULTS
Section 10.01 Events of Default..........................................29
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities.........................31
Section 11.02 Reliance by Administrative Agent...........................31
Section 11.03 Defaults...................................................32
Section 11.04 Rights as a Bank...........................................32
Section 11.05 Indemnification............................................32
Section 11.06 Non-Reliance on Administrative Agent and Other Banks.......33
Section 11.07 Failure to Act.............................................33
Section 11.08 Resignation or Removal of Administrative Agent.............33
Section 11.09 Agency Fee.................................................34
iii
<PAGE>
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver..................................................34
Section 12.02 Notices....................................................34
Section 12.03 Expenses, Etc..............................................34
Section 12.04 Amendments, Etc............................................35
Section 12.05 Successors and Assigns.....................................35
Section 12.06 Survival...................................................39
Section 12.07 Conditions to Effectiveness................................39
Section 12.08 Liability of General Partners and Other Persons............39
Section 12.09 Counterparts...............................................39
Section 12.10 Waiver.....................................................39
Section 12.11 Entire Agreement...........................................39
Section 12.12 Governing Law..............................................39
Section 12.13 Captions, Etc..............................................39
Section 12.14 Waiver of Certain Defenses.................................39
Section 12.15 Release; Acceptance of Release.............................40
Section 12.16 Authorization of Third Parties to Deliver Information
and Discuss Affairs......................................40
Section 12.17 Termination of Existing Credit Agreement...................40
Section 12.18 Joint and Several Obligations..............................40
Section 12.19 Acknowledgement............................................41
iv
<PAGE>
Schedule 2.02(a)(i) Form of Notice of Loan
Schedule 2.02(c) Form of Notice of Conversion
and Continuation
Schedule 2.06 Applicable Lending Offices
Schedule 4.07(c) Form of Certificate of Non-US Bank
Schedule 8.02 Subsidiaries
Schedule 8.03 Required Consents and
Governmental Approvals
Schedule 12.02 Addresses for Notices
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of General Counsel
to the Obligors
EXHIBIT C(1) Form of Opinion of Special New
York Counsel to the Obligors
EXHIBIT C(2)) Form of Opinion of Special New Jersey
Counsel to the Obligors
EXHIBIT C(3) Form of Opinion of Special FCC Counsel
Counsel to the Obligors
EXHIBIT D Form of Opinion of Special New
York Counsel to the Administrative Agent
EXHIBIT E Form of Assignment and Acceptance
<PAGE>
FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 28, 1998 among
CSC TKR, INC., CABLEVISION OF BROOKHAVEN, INC., CABLEVISION OF OAKLAND, INC.,
CABLEVISION OF PATERSON, INC., CSC TKR I, INC., each a Delaware corporation, and
UA-COLUMBIA CABLEVISION OF WESTCHESTER INC., a New York corporation
(collectively, the "Obligors"; individually, each an "Obligor"), the Guarantors
(as defined below) which are parties hereto, the lenders which are parties
hereto, together with their respective successors and assigns (the "Banks"),
TORONTO DOMINION (TEXAS), INC., as Arranging Agent and as Administrative Agent,
and THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF
COMMERCE, NATIONSBANK, N.A. and THE CHASE MANHATTAN BANK, as Managing Agents,
BANK OF MONTREAL, CHICAGO BRANCH, BARCLAYS BANK, PLC, FLEET BANK, N.A., and
ROYAL BANK OF CANADA, as Agents, and BANQUE PARIBAS, CREDIT LYONNAIS,
BANKBOSTON, N.A., THE FIRST NATIONAL BANK OF CHICAGO, MELLON BANK, N.A. AND
SOCIETE GENERALE, NEW YORK BRANCH, as Co-Agents.
WHEREAS, on March 4, 1998, the Obligors, the Guarantors named therein, the
several banks whose names are set forth on the signature pages thereto, and
Toronto Dominion (Texas), Inc. as Arranging Agent and Administrative Agent, and
The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank of
Commerce, NationsBank of Texas, N.A. and The Chase Manhattan Bank, as Managing
Agents, entered into a Credit Agreement (such Credit Agreement being referred to
herein as the "Existing Credit Agreement");
WHEREAS, the Obligors are engaged in the business of developing,
constructing, owning, acquiring, altering, repairing, financing, operating,
maintaining, publishing, distributing, promoting and otherwise exploiting cable
television systems and related businesses, including, without limitation,
telecommunications services, data transmission and telephony activities; and
WHEREAS, the Existing Loan Banks have extended credit to the Obligors, by
the making of the Existing Loans to the Obligors; the proceeds of the Loans
hereunder are to be employed in accordance with Section 2.08 hereof, including
to repay the Existing Loans and all other amounts owing by the Obligors under
the Existing Credit Agreement; and each of the Obligors and their Subsidiaries
expects to derive benefit, directly or indirectly, from such loans. The Banks
have agreed to make the Loans provided for hereby in reliance upon certain
guarantees furnished by the Guarantors.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
<PAGE>
"Additional Costs" shall have the meaning given to such term in
Section 5.01 hereof.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc. in
its capacity as administrative agent for the Banks hereunder and its successors
in such capacity.
"Affected Loans" shall have the meaning given to such term in
Section 5.04 hereof.
"Affected Type" shall have the meaning given to such term in Section
5.04 hereof.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
provided further that no individual shall be an Affiliate of a corporation or
partnership solely by reason of his or her being an officer, director or partner
of such entity, except in the case of a partner if his or her interests in such
partnership shall qualify him or her as an Affiliate.
"Aggregate Commitment" shall mean, at any time, as to each Bank, the
sum of such Bank's Commitment, CSC Commitment and CMFRI Commitment at such time.
"Agreement" shall mean this First Amended and Restated Credit
Agreement, including all schedules and exhibits hereto, as the same may be
amended, supplemented or modified from time to time.
"Applicable Lending Office" shall mean, with respect to each Bank,
for each type of Loan, the lending office of such Bank (or of an affiliate of
such Bank) designated for such type of Loan in Schedule 2.06 hereto or such
other office of such Bank (or of an affiliate of such Bank) as such Bank may
from time to time specify to the Administrative Agent and the Obligors'
Representative as the office by which its Loans of such type are to be made and
maintained.
"Applicable Margin"
(a) With respect to Base Rate Loans, 0.250% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the immediately
preceding Quarter was greater than 6.00 to 1; .125% at all times during any
Applicable Period if the
2
<PAGE>
CSC Cash Flow Ratio as at the end of the immediately preceding Quarter was less
than or equal to 6.00 to 1 and greater than 5.50 to 1; and 0.000% at all times
during any Applicable Period if the CSC Cash Flow Ratio as at the end of the
immediately preceding Quarter was less than or equal to 5.50 to 1; and
(b) With respect to Eurodollar Loans, 1.125% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the immediately
preceding Quarter was greater than 6.00 to 1; 0.875% at all times during any
Applicable Period if the CSC Cash Flow Ratio as at the end of the immediately
preceding Quarter was less than or equal to 6.00 to 1 and greater than 5.50 to
1; 0.750% at all times during any Applicable Period if the CSC Cash Flow Ratio
as at the end of the immediately preceding Quarter was less than or equal to
5.50 to 1 and greater than 5.00 to 1; 0.600% at all times during any Applicable
Period if the CSC Cash Flow Ratio as at the end of the immediately preceding
Quarter was less than or equal to 5.00 to 1 and greater than 4.50 to 1; and
0.400% at all times during any Applicable Period if the CSC Cash Flow Ratio as
at the end of the immediately preceding Quarter was less than or equal to 4.50
to 1;.
For purposes of this definition, the CSC Cash Flow Ratio as at the end of any
Quarter (the "Subject Quarter") shall be determined based upon (i) for the
Quarter ended immediately prior to the Effective Date, the Compliance
Certificate delivered in accordance with Section 7.01 of the CSC Credit
Agreement, and (ii) for each Subject Quarter commencing thereafter, (x) the
Annualized Operating Cash Flow (as defined in the CSC Agreement) as set forth in
the Subscribers' Certificate (as defined in the CSC Credit Agreement) delivered
pursuant to Section 9.01(e) of the CSC Credit Agreement with respect to the
second month of such Subject Quarter and (y) the aggregate outstanding principal
amount of Indebtedness of CSC, the Restricted Subsidiaries and the New York/New
Jersey Companies (as calculated in accordance with the definition of CSC Cash
Flow Ratio) as of the last day of such Subject Quarter (as certified by CMFRI
and the New York/New Jersey Obligors to the Administrative Agent at the time of
the delivery of such Subscribers' Certificate).
As used in this definition, "Applicable Period" shall mean the period from and
including (i)(a) in the case of the first Applicable Period, the Effective Date
and (b) in the case of each subsequent Applicable Period, the first day after
the immediately preceding Applicable Period to but excluding (ii) the fifth
Business Day of the next July, October, January or April (whichever occurs
first) to occur thereafter.
"Assignment and Acceptance" shall have the meaning given to such
term in Section 5.06 hereof.
"Banks" shall have the meaning given to such term in the preamble to
this Agreement.
"Base Rate" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the higher of:
(a) the rate of interest adopted by The Toronto-Dominion Bank (New
York Branch), from time to time, as its reference rate for the determination of
interest rates on loans of varying maturities in Dollars to United States
residents of varying degrees of creditworthiness
3
<PAGE>
and being quoted at such time by The Toronto-Dominion Bank (New York Branch) as
its "prime rate," which rate is not necessarily The Toronto-Dominion Bank's
lowest rate of interest; and
(b) the sum (adjusted to the nearest one-quarter of one percent (1/4
of 1%) or, if there is no nearest one-quarter of one percent (1/4 of 1%), to the
next higher one-quarter of one percent (1/4 of 1%)) of (i) one-half of one
percent (1/2 of 1%) per annum plus (ii) the Federal Funds Rate.
"Base Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Base Rate" in
this Section 1.01.
"BPU" shall mean the New Jersey Board of Public Utilities or
successor thereto.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City or London.
"Capital Maintenance Costs" shall mean, with respect to the Loans of
each Bank, any costs which such Bank determines are attributable to the
maintenance by such Bank or any of its affiliates, pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law) of any court or governmental or monetary authority, whether in
effect on the Effective Date or thereafter, of capital in respect of its
maintaining Loans hereunder or its commitment to make Loans hereunder.
"CMFRI" shall mean Cablevision MFR, Inc., a Delaware corporation.
"CMFRI Agreement" shall mean the First Amended and Restated Credit
Agreement, dated as of May 28, 1998, among CMFRI, the Company, the Guarantors
that are parties thereto, the Banks that are parties thereto, Toronto Dominion
(Texas), Inc., as Arranging Agent and as Administrative Agent, The Bank of New
York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce,
NationsBank, N.A. and The Chase Manhattan Bank, as Managing Agents, Bank of
Montreal, Chicago Branch, Barclays Bank PLC, Fleet Bank, N.A. and Royal Bank of
Canada, as Agents, Banque Paribas, Credit Lyonnais, BankBoston, N.A., The First
National Bank of Chicago, Mellon Bank, N.A. and Societe Generale, New York
Branch, as Co-Agents, and The Bank of New York and The Bank of Nova Scotia, as
Co-Syndication Agents, as amended and/or restated and in effect from time to
time, or if such agreement shall cease to be in effect, as last in effect.
"CMFRI Commitment" shall mean, as to each Bank, its "Commitment" as
such term is used in the CMFRI Agreement (as the same may be reduced or
otherwise adjusted from time to time as provided in the CMFRI Agreement).
"CMFRI Loans" shall mean "Loans" as such term is used in the CMFRI
Agreement.
"CMFRI Specified Investments" shall mean "Specified Investments" as
such term is used in the CMFRI Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
4
<PAGE>
"Commitment" shall mean, as to each Bank, the amount set forth
opposite its name on the signature pages hereto under the heading "Commitment"
or amount set forth on any Assignment and Acceptance (as the same may be reduced
or otherwise adjusted from time to time as provided in this Agreement).
"Commitment Fee" shall have the meaning given to such term in
Section 2.04 hereof.
"Commitment Percentage" shall mean, as to each Bank at any time, the
percentage obtained by dividing such Bank's Commitment by the Total Commitment.
"Commitment Termination Date" shall mean the earlier of (i) April 4,
1999 and (ii) the tenth day after the date on which CSC and the Obligors receive
a tax ruling from the Internal Revenue Service that the transfer of the New
York/New Jersey Companies to CMFRI and/or its Subsidiaries will not adversely
affect the tax-free treatment of the TCI Acquisition under Section 351 of the
Code.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Obligors, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"CSC" shall mean CSC Holdings, Inc. (formerly known as Cablevision
Systems Corporation), a Delaware corporation.
"CSC Agreement" shall mean the Sixth Amended and Restated Credit
Agreement, dated as of May 28, 1998, among CSC, the Restricted Subsidiaries
parties thereto, the banks parties thereto and Toronto Dominion (Texas), Inc.,
as Arranging Agent and as Administrative Agent, The Bank of New York, The Bank
of Nova Scotia, The Canadian Imperial Bank of Commerce, NationsBank, N.A. and
The Chase Manhattan Bank, as Managing Agents, Bank of Montreal, Chicago Branch,
Barclays Bank PLC, Fleet Bank, N.A. and Royal Bank of Canada, as Agents, Banque
Paribas, Credit Lyonnais, BankBoston, N.A., The First National Bank of Chicago,
Mellon Bank, N.A. and Societe Generale, New York Branch, as Co-Agents, and The
Canadian Imperial Bank of Commerce, The Chase Manhattan Bank and NationsBank,
N.A., as Co-Syndication Agents, as amended and/or restated and in effect from
time to time, or if such agreement shall cease to be in effect, as last in
effect.
"CSC Cash Flow Ratio" shall have the meaning given to the term "Cash
Flow Ratio" in the CSC Agreement.
"CSC Commitment" shall mean, as to each Bank, its "Commitment" as
such term is used in the CSC Agreement (as the same may be reduced or otherwise
adjusted from time to time as provided in the CSC Agreement).
"CSC Loans" shall mean "Loans" as such term is used in the CSC
Agreement.
"CSC Specified Investments" shall mean "Specified Investments" as
such term is used in the CSC Agreement.
5
<PAGE>
"Default" shall mean an Event of Default or any other event which
with notice and/or passage of time would become an Event of Default.
"Dolan" shall mean Charles F. Dolan.
"Dolan Family Interests" shall mean (i) any Dolan Family Member,
(ii) any trusts for the benefit of any Dolan Family Members, (iii) any estate or
testamentary trust of any Dolan Family Member for the benefit of any Dolan
Family Members, (iv) any executor, administrator, conservator or legal or
personal representative of any Person or Persons specified in clauses (i), (ii)
or (iii) above to the extent acting in such capacity and not individually and
(v) any corporation, partnership, limited liability company or other similar
entity, in each case 80% of the ownership interests of which is owned or
controlled by any of the foregoing or combination of the foregoing.
"Dolan Family Members" shall mean Dolan, his spouse, his descendants
and any spouse of any such descendants.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Effective Date" shall have the meaning given to such term in
Section 12.07 hereof.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan, for any Interest Period, the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m. (London time) on the second
Business Day prior to the first day of such Interest Period by reference to the
British Bankers' Association Interest Settlement Rates for deposits in Dollars
(as set forth by any service selected by the Administrative Agent that has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period (rounded upward, if necessary, to the nearest 1/16 of 1%);
provided that, if, for any reason, the Administrative Agent cannot determine the
Eurodollar Base Rate for any Interest Period pursuant to the foregoing
provisions of this definition, the Administrative Agent shall determine the
Eurodollar Base Rate by using the offered rates of any three major banks active
in the London interbank market selected by the Administrative Agent, but in all
other respects in accordance with the foregoing provisions of this definition.
"Eurodollar Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loans for such Interest Period divided by 1
minus the Reserve Requirement for such Loans for such Interest Period.
"Event of Default" shall mean any of the events described in Article
X hereof.
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"Existing Credit Agreement" shall have the meaning given to such
term in the first "Whereas" clause of this Agreement.
"Existing Loans" shall mean "Loans" as such term is used in the
Existing Credit Agreement.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate quoted to The Toronto-Dominion Bank (New
York Branch) on such day on such transactions with Federal funds brokers of
recognized standing as may be determined by the Administrative Agent.
"Funding Costs" for any Bank shall mean, with respect to any
Eurodollar Loan, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount paid, prepaid or
converted or not borrowed or converted for the period from the date of such
payment, prepayment or conversion or failure to borrow or convert to the last
day of the Interest Period for such Loan (or, in the case of a failure to borrow
or convert, the Interest Period for such Loan which would have commenced on the
date of such failure to borrow or convert) had such principal amount borne
interest at the Eurodollar Rate applicable to such Loan over (ii) the interest
component of the amount such Bank would have bid in the London interbank market
for Dollar deposits of leading banks in amounts comparable to such principal
amount and with maturities comparable to such period (as reasonably determined
by such Bank).
"Guarantee" shall have the meaning given to such term in Section
9.11 of the CMFRI Agreement.
"Guarantor" shall mean each Subsidiary of each Obligor, other than
any such Subsidiary that is an Obligor.
"Interest Period" shall mean:
(a) With respect to any Eurodollar Loans, the period commencing on
the date such Eurodollar Loans are made and ending on the same day in the first,
second, third, sixth or, subject to availability from each Bank, twelfth
calendar month thereafter, as the Obligors' Representative may select as
provided in Section 2.02 hereof; and
(b) With respect to any Base Rate Loans, the period commencing on
the date such Base Rate Loans are made and ending on the next Quarterly Date
thereafter.
Notwithstanding the foregoing: (i) no Interest Period with respect to any Loan
may end after the Commitment Termination Date; (ii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an
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Interest Period for Eurodollar Loans, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day);
(iii) any Interest Period for a Eurodollar Loan that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month in which such Interest Period ends)
shall, subject to clause (i) above, end on the last Business Day of a calendar
month; and (iv) no more than 12 Interest Periods for all Eurodollar Loans
hereunder shall be in effect at the same time and, if the number of Interest
Periods for Eurodollar Loans would otherwise be in excess of 12, Eurodollar
Loans shall not be available hereunder.
"Interest Swap Agreement" shall mean an interest rate swap, cap or
collar agreement or similar arrangement among any Obligor and/or any Subsidiary
of any Obligor and one or more banks or financial institutions providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations among such Obligor and/or such Subsidiary and such banks or
financial institutions, either generally or under specific contingencies, as
said agreement or arrangement shall be modified and supplemented and in effect
from time to time.
"Liens" shall have the meaning given to such term in Section 9.12 of
the CMFRI Agreement.
"Loans" shall mean Base Rate Loans and Eurodollar Loans made
pursuant to Section 2.01 hereof.
"Majority Banks" shall mean, at any time, Banks having Commitments
aggregating at least 51% of the amount of the Total Commitment.
"Margin Stock" shall mean "margin stock" as defined in Regulation U.
"Materially Adverse Effect" shall mean a materially adverse effect
upon (i) the business, assets, financial condition or results of operations of
the Obligors and their Subsidiaries taken as a whole, (ii) the ability of the
Obligors and their Subsidiaries to perform the Obligations hereunder or (iii)
the legality, validity, binding nature or enforceability of this Agreement.
"Net Cash Proceeds" shall mean proceeds received by any Obligor or
any Subsidiary of any Obligor in cash from the sale or other disposition of
property of any Obligor or any Subsidiary of any Obligor, after deduction of the
costs of, and any income, franchise, transfer or other tax liability arising
from, such sale or disposition. If any amount payable to any Obligor or any such
Subsidiary in respect of any such sale or disposition shall be or become
evidenced by any promissory note or other negotiable or non-negotiable
instrument, the cash proceeds received on any such note or instrument shall
constitute Net Cash Proceeds.
"Non-US Bank" means a Person that is not a United States Person and
that is not described in Section 881(c)(3) of the Code.
"Notes" shall mean the promissory notes provided for by Section 2.05
hereof evidencing the Loans.
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"Obligations" shall mean, collectively, the obligations of the
Obligors hereunder in respect of the principal of and interest on the Loans and
all obligations in respect of fees and other amounts payable by the Obligors
hereunder.
"Obligor" and "Obligors" shall have the meaning given to such terms
in the preamble to this Agreement.
"Obligors' Representative" means Cablevision of Oakland, Inc.
"Paramus-Hillsdale Sale" shall mean the sale by the Obligors of the
cable television systems of the Obligors serving approximately 5,200 subscribers
on the Effective Date in the communities of Paramus and Hillsdale, New Jersey.
"Parent Corp." shall mean Cablevision Systems Corp., a Delaware
corporation.
"Participation Agreement" shall have the meaning given to such term
in Section 12.05(c) hereof.
"Person" shall mean an individual, a corporation, a partnership, a
limited liability company, a joint venture or adventure, a trust or estate or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, or any other
legal entity.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan or any other amount payable by the Obligors under this Agreement which is
not paid when due (whether at stated maturity, by acceleration or otherwise), a
rate per annum during the period commencing on the due date until such amount is
paid in full equal to 2% above the Base Rate as in effect from time to time plus
the Applicable Margin for Base Rate Loans; provided that, if such amount in
default is principal of a Eurodollar Loan and the due date is a day other than
the last day of an Interest Period therefor, the "Post-Default Rate" for such
principal shall be, for the period commencing on the due date and ending on the
last day of the Interest Period therefor, 2% above the interest rate for such
Loan for such Interest Period as provided in Section 3.03 hereof, and thereafter
the rate provided for above in this definition.
"Proposed Bank" shall have the meaning given to such term in Section
12.05(h) hereof.
"Quarter" shall mean a fiscal quarterly period of the Obligors.
"Quarterly Dates" shall mean the last day of each March, June,
September and December, the first of which shall be on June 30, 1998, provided
that, if any such day is not a Business Day, the relevant Quarterly Date shall
be the next succeeding Business Day.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
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"Regulatory Change" shall mean, with respect to any Bank, any change
on or after the Effective Date in United States Federal, state or foreign laws
or regulations (including Regulation D) or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank of or under any United States Federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Required Payment" shall have the meaning given to such term in
Section 4.04 hereof.
"Reserve Requirement" shall mean, for any Eurodollar Loans of any
Bank for any Interest Period, the rate at which such Bank actually is required
to maintain reserves (including any marginal, supplemental or emergency
reserves) during such Interest Period under Regulation D against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
actually required to be maintained by such Bank by reason of any Regulatory
Change against (A) any category of liabilities which includes deposits by
reference to which the Eurodollar Base Rate for such Eurodollar Loans is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (B) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Subscribers' Certificate" shall mean a certificate of a senior
financial executive of CMFRI and the Obligors in substantially the form of
Exhibit C to the CMFRI Agreement.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or adventure, limited liability company,
trust or estate:
(a) in the case of a corporation, of which a majority of the
outstanding capital stock having ordinary voting power to elect a majority of
the Board of Directors of such corporation (irrespective of whether or not at
the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency);
(b) in the case of a partnership or joint venture, in which such
Person is a general partner or joint venturer or of which a majority of the
partnership or other ownership interests;
(c) in the case of a limited liability company, of which a majority
of the ownership interests; or
(d) in the case of a trust or estate, the beneficial interest of
which, is at the time directly or indirectly owned by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
"Tax" means any Federal, State or foreign tax, assessment or other
governmental charge (including any withholding tax) upon a Person or upon its
assets, revenues, income or profits.
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"TCI Acquisition" shall mean the transactions contemplated by the
TCI Acquisition Documents, other than the Second-Tier Reorganization (as defined
in and contemplated by the Master Reorganization Agreement referred to in the
definition of "TCI Acquisition Documents" herein).
"TCI Acquisition Documents" shall mean (i) the Amended and Restated
Contribution and Merger Agreement, dated as of June 6, 1997, by and among
Cablevision Systems Corporation, Parent Corp., CSC Merger Corporation and TCI
Communications, Inc., (ii) the Master Reorganization Agreement, dated as of
March 3, 1998, among Parent Corp. and Cablevision Systems Corporation, and (iii)
the Assignment and Assumption Agreement, dated as of March 4, 1998, by and among
Parent Corp., CSC TKR, Inc., CSC TKR I, Inc., Cablevision of Oakland, Inc.,
Cablevision of Brookhaven, Inc. and Cablevision of Paterson, Inc.
"Total Available Commitment" shall mean, as of any date, the Total
Commitment as of such date minus an amount equal to the excess of (i) the
aggregate Net Cash Proceeds to be used as specified in all notices given by the
Obligors' Representative to the Administrative Agent in accordance with Sections
2.03(b) hereof over (ii) the sum of (x) the aggregate amount of all reductions
of the Total Commitment required by reason of the provisos to Section 2.03(b)
with respect to such Net Cash Proceeds and (y) the aggregate amount of Loans
(including the Loans requested to be made on such date) the proceeds of which
have been or, upon the making thereof, will be used for the purposes specified
in such notices in accordance with such Section.
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments of all the Banks (as the same may be reduced or otherwise
adjusted from time to time as provided in this Agreement).
"United States Person" means a corporation, partnership or other
entity created, organized or incorporated under the laws of the United States of
America or a State thereof (including the District of Columbia).
Section 1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect on December 31, 1996,
applied on a consolidated basis consistent with the audited financial statements
of the Obligors referred to in Section 8.04 of the CMFRI Agreement. To enable
the ready determination of compliance by the Obligors and their Subsidiaries
with the various covenants set forth in Article IX hereof, each of the Obligors
agrees that the fiscal year of itself and each of its Subsidiaries shall end
each year on December 31 and the first three Quarters in each year shall end on
March 31, June 30 and September 30, respectively.
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ARTICLE II
LOANS
Section 2.01 Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement:
(a) The Loans. On or after the Effective Date, to make one or more
Loans to the Obligors from time to time on any Business Day prior to the
Commitment Termination Date in an aggregate principal amount not to exceed at
any time outstanding such Bank's Commitment; provided that at no time shall the
aggregate outstanding principal amount of all Loans exceed the Total Available
Commitment.
(b) Types of Loans. The Loans, at the option of the Obligors, may be
made as, and from time to time continued as or converted into, Base Rate Loans
or Eurodollar Loans of any permitted type, or any combination thereof; provided,
however, that each borrowing of Loans shall be in an aggregate amount equal to
$500,000 or an integral multiple of $250,000 in excess thereof.
Section 2.02 Manner of Borrowing; Conversion and Continuation. (a) Notice
of Borrowing. The Obligors' Representative shall give the Administrative Agent
(which shall promptly notify the Banks) notice of each borrowing of Loans
hereunder substantially in the form of Schedule 2.02(a) hereto, which notices
shall be irrevocable and effective only upon receipt by the Administrative
Agent, shall specify the aggregate amount, the type or types and date of the
Loans to be borrowed and (in the case of Eurodollar Loans) the duration of the
Interest Period therefor and shall be given not later than 11:00 a.m. New York
time on the day which is not less than the number of Business Days prior to the
date of such borrowing specified below:
Type Number of
---- Business Days
-------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Obligors' Representative
to the Administrative Agent under this Section 2.02(a) may be given orally by
telephone and confirmed in writing within one Business Day. In the case of any
discrepancies between oral and written notices received by the Administrative
Agent, the oral notice shall be effective as understood in good faith by the
Administrative Agent.
(b) Funding. Not later than 1:00 p.m. New York time on the date specified
for borrowing hereunder, each Bank shall make available the amount of the Loan
to be made by it on such date to the Administrative Agent in immediately
available funds, for the account of the Obligors. The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Obligors by depositing the same, in
immediately available funds, in a joint account of the Obligors designated by
the Obligors'
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Representative or by wiring the same, in immediately available funds, to any
account specified by the Obligors' Representative in its notice of borrowing.
(c) Conversion and Continuation. (i) All or any part of the principal
amount of any Loan may, on any Business Day, be converted into another type or
types of Loans, except that Eurodollar Loans may be converted only on the last
day of the applicable Interest Period.
(ii) Base Rate Loans shall continue as Base Rate Loans unless and
until such Loans are converted into Eurodollar Loans of any type. Each
Eurodollar Loan shall continue as a Eurodollar Loan until the end of the then
current Interest Period therefor, at which time it shall be automatically
converted into a Base Rate Loan unless the Obligors' Representative shall have
given the Administrative Agent notice in accordance with Section 2.02(c)(iv)
hereof requesting either that such Eurodollar Loans continue as Eurodollar Loans
of such type for another Interest Period or that such Eurodollar Loans be
converted into Eurodollar Loans of another type at the end of such Interest
Period.
(iii) Notwithstanding anything to the contrary contained in Section
2.02(c)(i) or (ii), during an Event of Default, the Administrative Agent shall,
at the direction of the Majority Banks, notify the Obligors' Representative that
Loans may only be converted into or continued as Loans of certain specified
types and, thereafter, until no Event of Default shall continue to exist, Loans
may not be converted into or continued as Loans of any type other than one or
more of such specified types.
(iv) The Obligors' Representative shall give the Administrative
Agent (which shall promptly notify the Banks) notice of each conversion or
continuation of Loans hereunder substantially in the form of Schedule 2.02(c)
hereto, which notices shall be irrevocable and effective only upon receipt by
the Administrative Agent, shall specify (x) the aggregate amount and the type of
the Loans to be converted or continued and (in the case of Eurodollar Loans) the
duration of the Interest Period therefor, (y) the requested date of such
conversion or continuation and (z) the amount and type or types of Loans into
which such Loans are to be converted or as which such Loans are to be continued,
and shall be given not later than 11:00 a.m. New York time on the day which is
not less than the number of Business Days prior to the date of such conversion
into or continuation as the type of Loans specified below:
Type Number of
---- Business Days
-------------
Base Rate Loan 0
Eurodollar Loan 3
Notwithstanding the foregoing, any notice given by the Obligors' Representative
to the Administrative Agent under this Section 2.02(c)(iv) may be given orally
by telephone and confirmed in writing within one Business Day. In the case of
any discrepancies between oral and written notices received by the
Administrative Agent, the oral notice shall be effective as understood in good
faith by the Administrative Agent.
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Section 2.03 Reductions and Changes of Commitments. (a) Optional
Reductions and Terminations. (i) The Obligors shall have the right to terminate
or reduce the Total Commitment at any time or from time to time, provided that
(A) the Obligors' Representative shall give notice of each such termination or
reduction to the Administrative Agent at least two Business Days prior thereto,
(B) each partial reduction thereof shall be in an aggregate amount at least
equal to $5,000,000 and (C) the Total Commitment may not be reduced at any time
to an amount less than the aggregate principal amount of the Loans outstanding
at such time.
(ii) Notwithstanding anything to the contrary in this Agreement, so
long as no Default has occurred and is continuing, the Obligors shall have the
right to reduce or terminate the Aggregate Commitment of any Bank at any time or
from time to time (subject to clause (F) below) without reducing or terminating
the Aggregate Commitment (or any part thereof) of any other Bank at such time,
provided that (A) such reduction or termination shall be made on terms and
conditions agreed upon in writing by the Obligors' Representative and such Bank,
(B) the Obligors' Representative and such Bank shall have notified the
Administrative Agent in writing of such reduction or termination at least two
Business Days prior thereto, (C) such reduction or termination shall be made pro
rata among such Bank's Commitment, such Bank's CSC Commitment, and such Bank's
CMFRI Commitment based on the relationship of each such Commitment to such
Bank's Aggregate Commitment, (D) the aggregate amount of all reductions and
terminations of the Aggregate Commitments of Banks made pursuant to this clause
(ii) shall not exceed $420,000,000, (E) after giving effect to each reduction or
termination and any prepayment of such Bank's Loans pursuant to Section
3.01(b)(ii) in connection therewith, the Total Commitment may not be less than
the aggregate principal amount of the Loans outstanding at such time, and (F) no
such reduction or termination may be made pursuant to this clause (ii) after
November 18, 1999 (or such later date as is agreed in writing by the Majority
Banks).
(b) Special Mandatory Reductions. The Total Commitment shall be
automatically reduced upon the date of any sale, transfer or other disposition
of any asset of any Obligor or any Guarantor of the types permitted under
Section 9.14(a)(vi) of the CMFRI Agreement (other than the Paramus-Hillsdale
Sale), by an amount equal to 50% of the excess of the Net Cash Proceeds thereof
over all or any portion of such Net Cash Proceeds that will be used, as
specified in a notice from the Obligors' Representative to the Administrative
Agent, for an acquisition permitted under Section 9.14(b)(ii) of the CMFRI
Agreement; provided, however, that if the applicable Obligor or the applicable
Subsidiary shall not have entered into a binding purchase agreement with respect
to any such acquisition on or before the date that is six months after the date
of such disposition, the Total Commitment shall be automatically reduced
(without duplication) on such date by an amount equal to 50% of the entire Net
Cash Proceeds of such sale, transfer or disposition; and provided further,
however, that if the applicable Obligor or the applicable Subsidiary shall have
entered into a binding purchase agreement within six months after the date of
such disposition, but does not complete such acquisition within nine months of
signing such binding purchase agreement, the Total Commitment shall
automatically be reduced (without duplication) on the last day of such
nine-month period by an amount equal to 50% of the entire Net Cash Proceeds of
such sale, transfer or disposition.
(c) No Reinstatement. The Total Commitment once terminated or reduced may
not be reinstated.
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(d) Pro Rata Treatment. Except to the extent otherwise provided herein,
each reduction of the Total Commitment shall be applied to the Commitments of
the Banks pro rata in accordance with their respective Commitment Percentages.
Section 2.04 Commitment Fee. The Obligors shall pay to the Administrative
Agent for the account of each Bank a commitment fee (the "Commitment Fee") on
the daily average unutilized amount of such Bank's Commitment for the period
from and including the earlier of (x) the Effective Date and (y) June 30, 1998
to but not including the earlier of the date such Bank's Commitment is
terminated and the Commitment Termination Date, at a rate per annum equal to (i)
0.250% at any time at which the CSC Cash Flow Ratio is greater than or equal to
5.50 to 1 and (ii) 0.1875% at any time at which the CSC Cash Flow Ratio is less
than 5.50 to 1. For purposes of calculating the Commitment Fee, the Commitment
of each Bank shall be deemed to be utilized in an amount equal to the sum of the
aggregate outstanding principal amount of such Bank's Loans. Accrued Commitment
Fees under this Section 2.04 shall be payable in arrears on each Quarterly Date.
Section 2.05 Notes. (a) Form of Notes. The Loans made by each Bank shall
be evidenced by a single Note of the Obligors in substantially the form of
Exhibit A hereto, dated the Effective Date and duly completed.
(b) Endorsements. Each Bank is hereby authorized by the Obligors to
endorse on a schedule attached to each Note of such Bank (or any continuation
thereof) the amount and date of each Loan made by such Bank to the Obligors
hereunder, and the amount of each payment on account of principal of such Loan
received by such Bank, provided that any failure by such Bank to make any such
endorsement shall not affect the obligations of the Obligors under such Note or
hereunder in respect of such Loans.
Section 2.06 Lending Offices. The Loans of each type made by each Bank
shall be made and maintained at such Bank's Applicable Lending Office set forth
on Schedule 2.06 for Loans of such type.
Section 2.07 Several Obligations; Remedies Independent. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither the Administrative Agent nor any Bank shall be responsible for the
failure of any other Bank to make a Loan to be made by such other Bank. The
amounts payable by the Obligors at any time hereunder and under the Notes to
each Bank shall be a separate and independent debt and each Bank shall, subject
to Section 10.01 hereof, be entitled to protect and enforce its rights arising
out of this Agreement and its Note and it shall not be necessary for any other
Bank or the Administrative Agent to consent to, or be joined as an additional
party in, any proceedings for such purposes.
Section 2.08 Use of Proceeds. The proceeds of the Loans made hereunder
shall be used only (x) to repay the Existing Loans and all other amounts owing
by the Obligors under the Existing Credit Agreement, (y) for the general
business purposes of the Obligors and their Subsidiaries and (z) for any
transaction or activity in which the Obligors and their Subsidiaries are
permitted to engage under the provisions of this Agreement.
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ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Prepayments. (a) Optional Prepayments. Any Obligor may, at
any time and from time to time (subject, in the case of Eurodollar Loans, to
Section 5.05 hereof), prepay Base Rate Loans on any Business Day if prior notice
is given to the Administrative Agent before 11:00 a.m. New York time on such day
(and if such notice is received by the Administrative Agent after 11:00 a.m. New
York time, on the next succeeding Business Day), and Eurodollar Loans upon not
less than three Business Days' prior notice to the Administrative Agent (and the
Administrative Agent shall promptly notify the Banks in each case of such
notice), which notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be not less than
$1,000,000), and shall be irrevocable and effective only upon receipt by the
Administrative Agent, provided that, in the case of Eurodollar Loans, interest
on the principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date.
(b) Mandatory Prepayments. (i) The Obligors shall, upon any sale, transfer
or other disposition of any asset of any Obligor or any Guarantor permitted
under Section 9.14(a)(vi) of the CMFRI Agreement (other than the
Paramus-Hillsdale Sale), prepay Loans in an amount equal to 50% of the Net Cash
Proceeds thereof. Notwithstanding anything in this Agreement to the contrary,
amounts prepaid from any sale, transfer or other disposition pursuant to the
foregoing sentence may be reborrowed by the Obligors solely for the purpose of
effecting acquisitions permitted under Section 9.14(b)(ii) of the CMFRI
Agreement and solely to the extent that such disposition has not resulted in a
mandatory reduction of the Total Commitment pursuant to the provisos to Section
2.03(b) hereof.
(ii) On the date of any reduction or termination of any Bank's Aggregate
Commitment pursuant to Section 2.03(a)(ii), the Obligors shall repay such Bank's
Loans in an aggregate amount such that, after giving effect to such reduction or
termination and such repayment, the aggregate outstanding amount of such Bank's
Loans shall equal such Bank's Commitment Percentage of the amount of all
outstanding Loans. Each repayment required by this Section 3.01(b)(ii) shall be
applied pro rata among each type of Loan held by such Bank. The requirements of
Section 4.02 shall not apply to any payment made by the Obligors pursuant to
this clause (ii).
Section 3.02 Repayment of Loans. The aggregate outstanding principal
amount of the Loans shall mature and become due and payable, and shall be repaid
by the Obligors, together with all accrued and unpaid interest thereon and any
amounts payable pursuant to Section 5.05 hereof in connection therewith, on the
Commitment Termination Date.
Section 3.03 Interest. (a) The Obligors hereby promise to pay to the
Administrative Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period commencing on the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(i) if such Loan is a Base Rate Loan, the Base Rate plus the
Applicable Margin; and
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(ii) if such Loan is a Eurodollar Loan, the Eurodollar Rate for such
Loan for the Interest Period therefor plus the Applicable Margin.
Notwithstanding the foregoing, the Obligors hereby promise to pay to the
Administrative Agent for the account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank, and on any
other amount payable by the Obligors hereunder to or for the account of such
Bank (but, if such amount is interest, only to the extent legally enforceable),
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise), for the period commencing on the due date thereof
until the same is paid in full. Interest at the Post-Default Rate shall be
payable upon demand.
(b) Accrued interest on each Loan shall be payable (i) on the last
day of each Interest Period for such Loan (and, if such Interest Period is
longer than three months (in the case of a Eurodollar Loan) on each three-month
anniversary of the first day of such Interest Period), (ii) in the case of a
Eurodollar Loan, when such Loan shall be converted or be due by reason of
prepayment or (iii) when such Loan shall be due at maturity or by reason of
acceleration or otherwise (other than by reason of prepayment). Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall notify the Banks and the Obligors'
Representative thereof.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Obligors
hereunder and under the Notes shall be made in Dollars, in immediately available
funds, to the Administrative Agent not later than 11:00 a.m. New York time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day). The Administrative Agent, or any Bank for whose account any such
payment is made, may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of
any of the Obligors with the Administrative Agent or such Bank, as the case may
be. The Obligors' Representative shall, at the time of any Obligor making each
payment hereunder or under any Note, specify to the Administrative Agent the
Loans or other amounts payable by the Obligors hereunder to which such payment
is to be applied (but in the event that the Obligors' Representative fails to so
specify, or if an Event of Default has occurred and is continuing, the
Administrative Agent may apply such payment as it may elect in its sole
discretion, but subject to Section 4.02 hereof). Each payment received by the
Administrative Agent hereunder or under any Note for account of a Bank shall be
paid promptly to such Bank, in immediately available funds, for account of such
Bank's Applicable Lending Office for the Loan in respect of which such payment
is made.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) subsequent to the initial borrowing hereunder, the Loans shall be
made by the Banks pro rata according to their respective Commitment Percentages;
(b) each payment by any Obligor of principal of the Loans shall be made to the
Administrative Agent for the account of the Banks pro rata in accordance with
the respective unpaid principal amounts of such Loans held by the
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Banks; (c) each payment by any Obligor of interest on Loans of a particular type
shall be made to the Administrative Agent for the account of the Banks holding
Loans of such type pro rata in accordance with the respective unpaid principal
amounts of such Loans held by such Banks; and (d) each payment of the Commitment
Fee shall be made for the account of the Banks pro rata in accordance with their
respective Commitment Percentages.
Section 4.03 Computations. Interest on Eurodollar Loans and the Commitment
Fee shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable, and interest on Base Rate Loans shall be computed on the basis of
a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable, except that all interest determined on the basis of the
Post-Default Rate shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day).
Section 4.04 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or the Obligors'
Representative prior to the date on which such Bank is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder or the
Obligors are to make a payment to the Administrative Agent for the account of
one or more of the Banks, as the case may be (such payment being herein called
the "Required Payment"), which notice shall be effective upon receipt, that such
Bank or the Obligors, as the case may be, do not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if such Bank or the Obligors, as the case
may be, have not in fact made the Required Payment to the Administrative Agent,
the recipient of such payment shall, on demand, pay to the Administrative Agent
the amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at the Federal Funds Rate.
Section 4.05 Sharing of Payments, Etc. Each of the Obligors and the
Guarantors agrees that, in addition to (and without limitation of) any right of
set-off, banker's lien or counterclaim a Bank may otherwise have, each Bank
shall be entitled, at its option, to offset balances held by it for account of
such Obligor or such Guarantor at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Bank's Loans
hereunder, which is not paid when due (regardless of whether such balances are
then due to such Obligor or such Guarantor), in which case it shall promptly
notify the Administrative Agent and such Obligor or such Guarantor thereof,
provided that such Bank's failure to give such notice shall not affect the
validity thereof. If a Bank shall obtain payment of any principal of or interest
on any Loan made by it to the Obligors under this Agreement, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, and, as a result of such payment, such Bank shall have received a
greater percentage of the amounts then due hereunder by the Obligors to such
Bank than the percentage received by other Banks, it shall promptly purchase
from such other Banks participations in the Loans made by such other Banks in
such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Banks shall share the benefit of such excess
payment (net of any expense which may be incurred by such
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Bank in obtaining or preserving such excess payment) pro rata in accordance with
the unpaid principal and interest on the Loans held by each of the Banks. To
such end all the Banks shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Obligors and the Guarantors agree that any Bank
so purchasing a participation in the Loans made by other Banks may exercise all
rights of set-off, banker's lien, counterclaim or similar rights with respect to
such participation as fully as if such Bank were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Obligors or the Guarantors. If under any
applicable bankruptcy, insolvency or other similar law, any Bank receives a
secured claim in lieu of a set-off to which this Section 4.05 applies, such Bank
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Banks entitled under this
Section 4.05 to share in the benefits of any recovery on such secured claim.
Section 4.06 No Reductions. All payments due to the Administrative Agent
or any Bank under this Agreement shall be made by the Obligors, without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim or Tax, except, subject to Section 4.07, for
any withholding or deduction for Taxes required to be withheld or deducted under
applicable law.
Section 4.07 Taxes. (a) Taxes Payable by the Obligors. If under applicable
law any Tax is required to be withheld or deducted from, or is otherwise payable
by the Obligors in connection with, any payment to the Administrative Agent or
any Bank under this Agreement, the Obligors shall, subject to Section 4.07(b),
pay to the Administrative Agent or such Bank, as applicable, such additional
amounts as may be necessary so that the net amount received by the
Administrative Agent or such Bank with respect to such payment, after
withholding or deducting all Taxes required to be withheld or deducted, is equal
to the full amount payable under this Agreement.
(b) Limitations. Notwithstanding anything to the contrary contained
herein, the Obligors shall not be required to pay any additional amount in
respect of withholding of United States Federal income taxes pursuant to this
Section 4.07 to any Bank except to the extent (A) such Taxes are required to be
withheld solely as a result of (1) in the case of a person that is a Bank on the
Effective Date, a Regulatory Change enacted after the Effective Date and (2) in
the case of a Person that becomes a Bank after the Effective Date, a Regulatory
Change enacted after such Person becomes a Bank, and (B) such Bank has not
failed to submit any form or certificate that it is entitled to so submit under
applicable law.
(c) Exemption from U.S. Withholding Taxes. There shall be submitted to the
Obligors' Representative and the Administrative Agent, (A) on or before the
first date that interest or fees are payable to such Bank under this Agreement,
(1) if at the time the same are applicable, (aa) by each Bank that is not a
United States Person, two duly completed and signed copies of Internal Revenue
Service Form 1001 or 4224 (or any successor form to the applicable form), in
either case entitling such Bank to a complete exemption from withholding of any
United States federal income taxes on all amounts to be received by such Bank
under this Agreement, or (bb) by each Bank that is a Non-US Bank, (x) a duly
completed Internal Revenue
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Service Form W-8 (or any successor form to such form) and (y) a certification in
the form of Schedule 4.07(c) that such Bank is a Non-US Bank or (2) if at the
time any of the foregoing are inapplicable, duly completed and signed copies of
such form, if any, as entitles such Bank to exemption from withholding of United
States federal income taxes to the maximum extent to which such Bank is then
entitled under applicable law, and (B) from time to time thereafter, prior to
the expiration or obsolescence of any previously delivered form or upon any
previously delivered form becoming inaccurate or inapplicable, such further duly
completed and signed copies of such form, if any, as entitles such Bank to
exemption from withholding of United States federal income taxes to the maximum
extent to which such Bank is then entitled under applicable law. Each Bank shall
promptly notify the Obligors' Representative and the Administrative Agent if (A)
it is required to withdraw or cancel any form or certificate previously
submitted by it or any such form or certificate has otherwise become ineffective
or inaccurate or (B) payments to it are or will be subject to withholding of
United States federal income taxes to a greater extent than the extent to which
payments to it were previously subject. Upon the request of the Obligors'
Representative or the Administrative Agent, each Bank that is a United States
Person shall from time to time submit to the Obligors' Representative and the
Administrative Agent a certificate to the effect that it is such a United States
Person and a duly completed Internal Revenue Service Form W-9 (or any successor
form to such form).
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
Section 5.01 Additional Costs in Respect of Loans. (a) The Obligors shall
pay to the Administrative Agent for the account of each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs incurred by such Bank which such Bank determines are attributable to its
making or maintaining any Eurodollar Loans hereunder or its commitment to make
such Eurodollar Loans hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of such Eurodollar Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or its Note in respect of such Eurodollar Loans (other
than taxes imposed on the overall net income of such Bank or of its Applicable
Lending Office for such Eurodollar Loans by the jurisdiction in which such Bank
has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Bank (including such Eurodollar Loans or any deposits referred to in the
definition of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitments
of such Bank; or
(iii) mposes any other condition affecting this Agreement or the
Commitment of such Bank (or any of such extensions of credit or liabilities).
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Each Bank will notify the Obligors' Representative through the Administrative
Agent of any event which will entitle such Bank to compensation pursuant to this
Section 5.01(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation, and (if so requested by the
Obligors' Representative through the Administrative Agent) will designate a
different Applicable Lending Office for the Loans of such Bank affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, be disadvantageous
to such Bank, provided that no Obligor shall be obligated to compensate any Bank
under this Section 5.01(a) for any Additional Costs incurred more than six
months prior to the date the respective Bank requests such compensation from the
Obligors, except for periods preceding such date but which are after the date
such Bank notified the Obligors' Representative of the possibility that such
Additional Costs might be incurred as a result of the respective Regulatory
Change. Each Bank will furnish the Obligors' Representative with a statement
setting forth the basis and amount of each request by such Bank for compensation
under this Section 5.01(a). If any Bank requests compensation from the Obligors
under this Section 5.01(a), the Obligors' Representative may, by notice to such
Bank through the Administrative Agent, require that such Bank's Loans of the
type with respect to which such compensation is requested be converted into Base
Rate Loans in accordance with Section 5.04 hereof.
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on any
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes any Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Obligors' Representative (with a copy to the Administrative
Agent), the obligation of such Bank to make, and to convert Loans of any other
type into, Loans of such type hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect.
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Obligors shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank for Capital Maintenance Costs with respect to
its Loans or Commitment (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Bank to a level below that which such Bank could have achieved but for such law,
regulation, interpretation, directive or request). Each Bank will notify the
Obligors' Representative that it is entitled to compensation pursuant to this
Section 5.01(c) as promptly as practicable after it determines to request such
compensation, provided that no Obligor shall be obligated to compensate any Bank
under this Section 5.01(c) for any such costs incurred more than six months
prior to the date the respective Bank requests such compensation from the
Obligors, except for periods preceding such date but which are after the date
such Bank notified the Obligors' Representative of the possibility that such
costs might be incurred.
(d) Determinations by any Bank for purposes of this Section 5.01 of the
effect of any Regulatory Change on its costs of making or maintaining Loans or
maintaining its Commitment
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or on amounts receivable by it in respect of Loans or such Commitment, and of
the additional amounts required to compensate such Bank in respect of any
Additional Costs, shall be conclusive, provided that such determinations are
made on a reasonable basis.
Section 5.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall
be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant maturities
for purposes of determining the rate of interest for such Loans as provided in
this Agreement; or
(b) the Majority Banks determine (which determination shall be
conclusive) and notify the Administrative Agent that the relevant rates of
interest referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof upon the basis of which the rates of interest for such Loans are to be
determined do not adequately cover the cost to such Banks of making or
maintaining such Loans;
then the Administrative Agent shall promptly notify the Obligors' Representative
and each Bank thereof, and so long as such condition remains in effect, the
Banks shall be under no obligation to make Eurodollar Loans of the affected
type.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Bank or
its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Bank
shall promptly notify the Obligors' Representative thereof through the
Administrative Agent (which notice shall include a statement explaining the
nature of such unlawfulness) and such Bank's obligation to make Eurodollar Loans
shall be suspended until such time as such Bank may again make and maintain
Eurodollar Loans and such Bank's outstanding Eurodollar Loans shall be converted
into Base Rate Loans in accordance with Section 5.04 hereof.
Section 5.04 Certain Conversions of Loans Pursuant to Section 5.01 or
5.03. If the obligation of any Bank to make any type of Eurodollar Loans shall
be suspended pursuant to Section 5.01 or 5.03 hereof (Loans of such type being
herein called "Affected Loans" and such type being herein called the "Affected
Type"), all Loans which would otherwise be made by such Bank as Loans of the
Affected Type shall be made instead as Base Rate Loans (and, if an event
referred to in Section 5.01 or 5.03 hereof has occurred and such Bank determines
that it is required to convert such Loans, then, by notice to the Obligors'
Representative with a copy to the Administrative Agent, all Affected Loans of
such Bank then outstanding shall be automatically converted into Base Rate Loans
on the date specified by such Bank in such notice) and, to the extent that
Affected Loans are so made as (or converted into) Base Rate Loans, all payments
of principal which would otherwise be applied to such Bank's Affected Loans
shall be applied instead to its Base Rate Loans.
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Section 5.05 Compensation. (a) The Obligors shall pay to the
Administrative Agent for the account of each Bank, upon the request of such Bank
through the Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate it for any loss, costs or
expense incurred by it as a result of:
(i) any payment, prepayment or conversion of a Eurodollar Loan made
by such Bank for any reason (including, without limitation, the acceleration of
the Loans pursuant to Article X hereof) on a date other than the last day of an
Interest Period for such Loan; or
(ii) any failure by any Obligor for any reason (including, without
limitation, the failure of any of the conditions precedent specified in Article
VII hereof to be satisfied) to borrow or convert a Eurodollar Loan to be made by
such Bank on the date for such borrowing specified in the relevant notice of
borrowing under Section 2.02 hereof.
(b) Such compensation shall include Funding Costs in the case of any
payment, prepayment or conversion of, or failure to borrow or convert, any Loan
made or to be made as a Eurodollar Loan.
Section 5.06 Replacement of Banks. If any Bank requests compensation
pursuant to Section 5.01, or such Bank's obligation to make or continue, or to
convert Loans of any other type into, any type of Eurodollar Loan shall be
suspended pursuant to Section 5.02 or 5.03, or if an event occurs that entitles
such Bank to make a claim pursuant to Section 4.07, the Obligors'
Representative, upon three Business Days' notice to the Administrative Agent and
such Bank, may require that such Bank transfer all of its right, title and
interest under this Agreement, the CSC Agreement and the CMFRI Agreement and
such Bank's Notes and its notes issued under the CSC Agreement and the CMFRI
Agreement to any bank or financial institution identified by the Obligors'
Representative with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld), such assignment to be made pursuant to an
Assignment and Acceptance Agreement substantially in the form of Exhibit E
hereto (an "Assignment and Acceptance") (a) if such proposed transferee agrees
to assume all of the obligations of such Bank hereunder, under the CSC Agreement
and under the CMFRI Agreement for consideration equal to the aggregate
outstanding principal amount of such Bank's Loans, CSC Loans and the CMFRI
Loans, together with interest thereon to the date of such transfer, and
satisfactory arrangements are made for payment to such Bank of all other amounts
payable hereunder, under the CSC Agreement and under the CMFRI Agreement to such
Bank on or prior to the date of such transfer (including the amounts so
requested pursuant to Section 5.01 (or the equivalent provisions of the CSC
Agreement and the CMFRI Agreement) or so entitled to be claimed pursuant to
Section 4.07 (or the equivalent provisions of the CSC Agreement and the CMFRI
Agreement), any fees accrued hereunder, under the CSC Agreement and under the
CMFRI Agreement and any amounts that would be payable under Section 5.05 (or the
equivalent provisions of the CSC Agreement and the CMFRI Agreement) as if all of
such Bank's Loans, CSC Loans and CMFRI Loans were being prepaid in full on such
date) and (b) if such Bank being replaced has requested compensation pursuant to
Section 5.01 or is entitled to make a claim pursuant to Section 4.07, such
proposed transferee's aggregate requested compensation, if any, pursuant to
Section 5.01, or the amounts, if any, entitled to be claimed by such proposed
transferee pursuant to Section 4.07, with respect to such replaced Bank's Loans
would be lower than that of the Bank replaced. Without prejudice to the survival
of any other agreement of the
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Obligors hereunder, the agreements of the Obligors contained in Sections 4.07,
5.01 and 12.03 (without duplication of any payments made to such Bank by the
Obligors or the proposed transferee) shall survive for the benefit of any Bank
replaced under this Section 5.06 with respect to the time prior to such
replacement.
ARTICLE VI
GUARANTEE
(a) Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to the Banks and the Administrative Agent and their respective
successors and assigns and the subsequent holders of the Notes, irrespective of
the validity and enforceability of this Agreement or the Notes or the
obligations of the Obligors or any of the other Guarantors hereunder or
thereunder, or any other circumstance that might otherwise affect the liability
of a guarantor, that: (i) the principal of and interest on the Loans and the
Notes and all other obligations of the Obligors and the other Guarantors to the
Banks or the Administrative Agent under this Agreement and the Notes will be
promptly paid in full when due, whether at stated maturity, by acceleration or
otherwise, in accordance with the terms hereof and thereof; and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, the Guarantors will be obligated, jointly and severally, to
pay the same immediately.
(b) Each of the Guarantors hereby waives notice of, and consents to, any
extensions of time of payment, renewals, releases of collateral, delays in
obtaining or realizing upon or failure to obtain or realize upon collateral or
other indulgence from time to time granted by any of the Banks or the
Administrative Agent in respect of the Notes or this Agreement. Each of the
Guarantors hereby releases the Obligors from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or otherwise) any,
"claims" (as defined in section 101(5) of the Bankruptcy Code) against the
Obligors, whether arising under applicable law or otherwise, to which such
Guarantors are or would be entitled by virtue of their obligations hereunder or
any payment made pursuant hereto, or the exercise by the Administrative Agent or
the Banks of their rights with respect to any collateral for the obligations of
the Obligors or the Guarantors under this Agreement including any such claims to
which such Guarantors may be entitled as a result of any right of subrogation,
exoneration or reimbursement in each case to the extent, but only to the extent,
that such Guarantor would be deemed a "creditor" of the Obligors for purposes of
Section 547 of the Bankruptcy Code solely by reason of such Guarantor's holding
or asserting such claim. To the extent not released by the Guarantors under this
Article VI, each of the Guarantors agrees that it shall not be entitled to any
right of subrogation, exoneration, reimbursement or contribution in respect of
any obligations guaranteed hereby until payment in full of all the Obligations.
With respect to the Notes and this Agreement, each of the Guarantors hereby
waives presentment, protest, demand of payment, notice of dishonor and all other
notices and demands whatsoever. Each of the Guarantors further agrees that, as
between such Guarantor, on the one hand, and the Administrative Agent and the
Banks, on the other hand, (i) the maturity of the obligations guaranteed hereby
may be accelerated as provided in Section 10.01 hereof for the purposes of this
guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of such obligations as provided in
Section
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10.01 hereof, such obligations (whether or not due and payable) shall forthwith
become due and payable by each of the Guarantors for the purpose of this
guarantee. The obligations of each of the Guarantors under this Article VI shall
be automatically reinstated if and to the extent that for any reason any payment
by or on behalf of the Obligors is rescinded or must be otherwise restored by
any holder of any of the obligations guaranteed hereunder, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise and each of the
Guarantors agrees that it will indemnify the Banks and the Administrative Agent
on demand for reasonable costs and expenses (including, without limitation, fees
of counsel) incurred by the Banks or the Administrative Agent in connection with
such rescission or restoration.
(c) It is the intention of the Guarantors, the Banks and the Obligors that
the obligations of each Guarantor hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable law. To that end, but only to the
extent such obligations would otherwise be avoidable, the obligations of each
Guarantor hereunder shall be limited to the maximum amount that, after giving
effect to the incurrence thereof, would not render such Guarantor insolvent or
unable to make payments in respect of any of its indebtedness as such
indebtedness matures or leave such Guarantor with an unreasonably small capital.
The need for any such limitation shall be determined, and any such needed
limitation shall be effective, at the time or times that such Guarantor is
deemed, under applicable law, to incur the Obligations hereunder. Any such
limitation shall be apportioned amongst the Obligations pro rata in accordance
with the respective amounts thereof. This paragraph is intended solely to
preserve the rights of the Banks under this Agreement to the maximum extent
permitted by applicable law, and neither the Guarantors, the Obligors nor any
other Person shall have any right under this paragraph that it would not
otherwise have under applicable law. The Obligors and each Guarantor agree not
to commence any proceeding or action seeking to limit the amount of the
obligation of such Guarantor under this Article VI by reason of this paragraph.
For the purposes of this paragraph, "insolvency", "unreasonably small capital"
and "unable to make payments in respect of any of its indebtedness as such
indebtedness matures" shall be determined in accordance with applicable law.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Initial Loan. The obligation of each Bank to make its initial
Loan hereunder is subject to the satisfaction of the following conditions
precedent on or prior to the date of such initial Loan but in any event no later
than June 30, 1998:
(a) Execution and Notes. This Agreement shall have been duly
executed and delivered by each of the Obligors, the Guarantors in existence on
the Effective Date, the Banks and the Administrative Agent, and the Obligors
shall have executed and delivered to each Bank its Note evidencing the Loans to
be made by such Bank hereunder.
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(b) Signatures. Each of the Obligors and the Guarantors in existence
on the Effective Date shall have certified to the Administrative Agent (with
copies to be provided for each Bank) the name and signature of each of the
persons authorized to sign on its respective behalf such of this Agreement and
the Notes to which it is a party and to borrow under this Agreement. The Banks
may conclusively rely on such certifications until they receive notice in
writing from the applicable Obligor or Guarantor to the contrary.
(c) Proof of Action. The Administrative Agent shall have received
certified copies of all necessary action taken by each of the Obligors and the
Guarantors in existence on the Effective Date to authorize the execution,
delivery and performance of such of this Agreement and the Notes to which it is
a party.
(d) Opinions of Counsel to the Obligors. The Administrative Agent
shall have received opinions of:
(i) Robert Lemle, Esq., General Counsel to the Obligors and
the Guarantors, substantially in the form of Exhibit B hereto;
(ii) Sullivan & Cromwell, special New York counsel to the
Obligors and the Guarantors, substantially in the form of Exhibit
C(1) hereto;
(iii) Schenk, Price, Smith & King, special New Jersey counsel
to the Obligors and the Guarantors, substantially in the form of
Exhibit C(2) hereto; and
(iv) Piper & Marbury, special FCC counsel to the Obligors,
substantially in the form of Exhibit C(3) hereto;
and covering such other matters as any Bank or Banks or special New York counsel
to the Administrative Agent, Winthrop, Stimson, Putnam & Roberts, may reasonably
request (and for purposes of such opinions such counsel may rely upon opinions
of counsel in other jurisdictions, provided that such other counsel are
satisfactory to special counsel to the Administrative Agent and such other
opinions state that the Banks are entitled to rely thereon).
(e) Opinion of Banks' Counsel. Each Bank shall have received an
opinion of Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Administrative Agent, substantially in the form of Exhibit D hereto and covering
such other matters as any Bank or Banks may reasonably request.
(f) Certain Fees. The Obligors shall have paid to the Administrative
Agent, for its own account, fees calculated as specified in a letter dated the
date hereof.
(g) Other Fees. The Obligors shall have paid such other fees as may
have been agreed by the parties hereto.
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(h) CSC and CMFRI Agreements. All conditions precedent to the
initial extensions of credit under the CSC Agreement and the CMFRI Agreement
shall have been satisfied.
(i) Subscribers' Certificate. The Administrative Agent shall have
received the most recent Subscribers' Certificate required to be delivered under
Section 7.01 of the CMFRI Credit Agreement.
(i) Other Documents. Such other documents and papers relating to the
documents referred to herein and the transactions contemplated hereby as any
Bank or special counsel to the Banks shall reasonably require shall have been
received by the Administrative Agent.
(j) Regulatory Approvals. The Obligors shall have obtained the
approval of the BPU with respect to this Agreement and the uses of the proceeds
of the Loans specified in Section 2.08 hereof.
(k) Funding Adjustment. The Company shall have made arrangements
satisfactory to the Administrative Agent such that, after giving effect to the
initial Loans hereunder, (i) the outstanding Loans hereunder shall be made by
the Banks pro rata in accordance with their respective Commitment Percentages,
and (ii) the Loans (as defined in the Existing Credit Agreement) and all other
amounts owing under the Existing Credit Agreement to any Bank (as defined in the
Existing Credit Agreement) which is not a Bank hereunder shall have been repaid
in full.
Section 7.02 Each Loan. The obligation of each Bank to make each of its
Loans (including its initial Loan) hereunder (which shall not include any
conversion or continuation of any outstanding Loan) is subject to the additional
conditions precedent that:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties in Article VIII hereof and in
Article VIII of the CMFRI Agreement shall be true on and as of the date of the
making of, and after giving effect to, such Loan with the same force and effect
as if made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date; and
(c) to the extent requested by the Administrative Agent or any Bank,
a senior executive of the Obligors shall have certified compliance with
paragraphs (a) and (b) above to the Administrative Agent.
Each of the Obligors shall be deemed to have made a representation and
warranty hereunder as of the time of the making of such Loans hereunder that the
conditions specified in such clauses have been fulfilled as of such time.
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ARTICLE VIII
REPRESENTATIONS
Each of the Obligors and the Guarantors represents, warrants and covenants
as follows:
Section 8.01 Existence and Power. Each of the Obligors and their
Subsidiaries is a limited or general partnership or corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is duly qualified to transact business and is in good standing
in all jurisdictions in which such qualification is necessary in view of the
properties and assets owned and presently intended to be owned and the business
transacted and presently intended to be transacted by it except for
qualifications the lack of which, singly or in the aggregate, have not had and
are not likely to have a Materially Adverse Effect, and each of the Obligors and
their Subsidiaries has full power, authority and legal right to make and perform
such of this Agreement and the Notes to which it is a party or signatory.
Section 8.02 Subsidiaries. As at the Effective Date and the date of the
initial Loan hereunder, none of the Obligors has any Subsidiaries other than
those set forth on Schedule 8.02.
Section 8.03 Authority; No Conflict. The making and performance by each of
the Obligors and their Subsidiaries of such of this Agreement and the Notes to
which it is a party or signatory, and each extension of credit hereunder, have
been duly authorized by all necessary action and do not and will not: (i)
subject to the consummation of the action described in Section 8.05 hereof,
violate any provision of any laws, orders, rules or regulations presently in
effect (other than violations that, singly or in the aggregate, have not had and
are not likely to have a Materially Adverse Effect), or any provision of any of
the Obligors' or their Subsidiaries' partnership agreement, charter or by-laws
presently in effect; or (ii) result in the breach of, or constitute a default or
require any consent (except for the consents described on Schedule 8.03 hereto,
each of which has been duly obtained) under, any existing indenture or other
agreement or instrument to which any Obligor or any Subsidiary of any Obligor is
a party or its properties may be bound or affected (other than any breach,
default or required consent that, singly or in the aggregate, have not had and
are not likely to have a Materially Adverse Effect); or (iii) result in, or
require, the creation or imposition of any Lien upon or with respect to any of
the properties or assets now owned or hereafter acquired by any Obligor or any
Subsidiary of any Obligor.
Section 8.04 Regulation U. None of the proceeds of the Loans shall be used
to purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock. If requested by any Bank,
the Obligors will furnish to the Banks statements in conformity with the
requirements of Regulation U.
Section 8.05 Approval of Regulatory Authorities. Except as set forth on
Schedule 8.03 hereto and other than the approvals of the BPU referred to in
Section 7.01(j) hereof, no approval or consent of, or filing or registration
with, any Federal, state or local commission or other regulatory authority is
required in connection with the execution, delivery and performance by the
Obligors and their Subsidiaries of such of this Agreement and the Notes to which
they are a party. All such described action required to be taken as a condition
to the execution and delivery
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of such of this Agreement and the Notes to which the Obligors and their
Subsidiaries are a party has been duly taken by all such commissions and
authorities or other Persons, as the case may be, and all such action required
to be taken as a condition to the initial Loan hereunder has been or will be
duly taken prior to such initial Loans.
Section 8.06 Binding Agreements. This Agreement constitutes, and the Notes
when executed and delivered will constitute, the legal, valid and binding
obligations of each of the Obligors and their Subsidiaries that is a party
thereto, enforceable in accordance with their respective terms (except for
limitations on enforceability under bankruptcy, reorganization, insolvency and
other similar laws affecting creditors' rights generally and limitations on the
availability of the remedy of specific performance imposed by the application of
general equitable principles).
ARTICLE IX
PARTICULAR COVENANTS OF THE OBLIGORS AND THEIR SUBSIDIARIES
From the Effective Date and so long as the Commitments of the Banks shall
be in effect and until the payment in full of all Obligations hereunder and the
performance of all other obligations of the Obligors and their Subsidiaries
under this Agreement, each of the Obligors and their Subsidiaries agrees that,
unless the Majority Banks shall otherwise consent in writing, it will perform
and observe each of its agreements (in its capacity as a Guarantor under (and as
defined in) the CMFRI Agreement) in Article IX of the CMFRI Agreement.
ARTICLE X
DEFAULTS
Section 10.01 Events of Default. If any one of the following "Events of
Default" shall occur and be continuing, namely:
(a) Any representation or warranty in this Agreement, or in any
certificate, statement or other document furnished to the Banks or the
Administrative Agent under this Agreement (including, without limitation, any
amendment to any of the foregoing), or any certification made or deemed to have
been made by any Obligor or any Subsidiary of any Obligor to any Bank hereunder,
shall prove to have been incorrect, or shall be breached, in any material
respect, when made or deemed made; or
(b) Default in the payment when due of any principal on any Note, or
default in the payment when due of interest on any Note or any other amount
payable to any Bank or the Administrative Agent hereunder, and the failure to
pay such interest or other amount by 11:00 a.m. on the second next following
Business Day; or
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(c) Default by any Obligor or any Subsidiary of any Obligor in the
performance or observance of its agreement in Article IX hereof as a result of
its failure to perform or observe any of its agreements (in its capacity as a
Guarantor under (and as defined in) the CMFRI Agreement) in Article IX of the
CMFRI Agreement (other than Sections 9.01, 9.02, 9.03, 9.04, 9.05, 9.06, 9.07
and 9.15 thereof but including Section 9.01(g) thereof); or
(d) Default by any Obligor or any Subsidiary of any Obligor in the
performance or observance of (i) its agreement in Article IX hereof as a result
of its failure to perform or observe any of its agreements (in its capacity as a
Guarantor under (and as defined in) the CMFRI Credit Agreement) in Sections 9.01
(other than clause (g) thereof), 9.02, 9.03, 9.04, 9.05, 9.06, 9.07 and 9.15
thereof or (ii) any of its other agreements herein, in each case which shall
remain unremedied for 30 days after notice thereof shall have been given to the
Obligors' Representative by any Bank (provided that such period shall be five
days and no such notice shall be required in the case of a default arising from
a failure to perform or observe Section 9.01(e) or 9.15 of the CMFRI Agreement
and provided further that such period shall be fifteen days and no such notice
shall be required in the case of a default arising from a failure to perform or
observe Section 9.01(d) of the CMFRI Agreement); or
(e) Any Obligor or any Subsidiary of any Obligor shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) admit in writing its inability, or be generally unable, to
pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) commence
a voluntary case under the Federal bankruptcy laws (as now or hereafter in
effect), (vi) file a petition seeking to take advantage of any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts, (vii) acquiesce in writing to, or fail to controvert in a timely and
appropriate manner, any petition filed against such Obligor or such Subsidiary
in any involuntary case under such bankruptcy laws, or (viii) take any action
for the purpose of effecting any of the foregoing; or
(f) A case or other proceeding shall be commenced, without the
application, approval or consent of any Obligor or any Subsidiary of any
Obligor, in any court of competent jurisdiction, seeking the liquidation,
reorganization, dissolution, winding up, or composition or readjustment or debts
of any Obligor or any Subsidiary of any Obligor , the appointment of a trustee,
receiver, custodian, liquidator or the like of any Obligor or any Subsidiary of
any Obligor or of all or any substantial part of its assets, or any other
similar action with respect to any Obligor or any Subsidiary of any Obligor
under the laws of bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for any period of 30 consecutive days,
or an order for relief against any Obligor or any Subsidiary of any Obligor
shall be entered in an involuntary case under the Federal bankruptcy laws (as
now or hereafter in effect); or
(g) (i) Dolan Family Interests shall cease at any time to have beneficial
ownership (within the meaning of Rule 13d-3 (as in effect on the date hereof)
promulgated under the Securities and Exchange Act of 1934, as amended) of shares
of the capital stock of Parent Corp. having sufficient votes to elect (or
otherwise designate) at such time a majority of the members of the Board of
Directors of Parent Corp. or (ii) Parent Corp. shall cease to own directly (or,
in
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the case of CSC TKR I, Inc. indirectly through CSC TKR, Inc.) 100% of the common
stock of each Obligor, or any Person (other than Parent Corp. or, in the case of
CSC TKR I, Inc., CSC TKR, Inc.) shall obtain the legal or contractual right to
own, or to cause the transfer of the ownership of, any of the common stock of
any Obligor, without regard to any required approval of any other Person; or
(h) Any Event of Default under (and as defined in) the CMFRI Agreement
shall have occurred and be continuing;
THEREUPON, the Administrative Agent may (and, if directed by the Majority Banks,
shall) by notice to the Obligors' Representative, terminate the Commitments of
the Banks hereunder (if then outstanding) and/or declare the unpaid principal of
and accrued interest on the Notes, and all other amounts owing hereunder, to be
forthwith due and payable, whereupon the same shall be and become forthwith due
and payable, without presentment or demand for payment, notice of nonpayment,
protest or further notice or demand of any kind, all of which are hereby
expressly waived by the Obligors (provided that the Banks' Commitments hereunder
shall forthwith terminate and the unpaid principal of and accrued interest on
the Notes, and all other amounts owing hereunder, shall automatically become and
be forthwith due and payable upon the occurrence of any event specified in
clause (g) or (h) above without any such notice or other action, all of which
are hereby expressly waived by the Obligors).
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder with such powers as are specifically delegated to the Administrative
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement
and shall not by reason of this Agreement be a trustee for any Bank. The
Administrative Agent shall not be responsible to any of the Banks for any
recitals, statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by any of the Banks under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any other document referred to or provided for herein or for any failure by any
Obligor to perform any of its obligations hereunder. The Administrative Agent
may employ agents and attorneys-in-fact and shall not be responsible, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
Section 11.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof
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received by telephone, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Administrative Agent. As to any
matters not expressly provided for by this Agreement, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions signed by the Majority
Banks, and such instructions of the Majority Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
Section 11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on the Obligations) unless the Administrative Agent has
received notice from a Bank or the Obligors' Representative specifying such
Default and stating that such notice is a "Notice of Default". In the event that
the Administrative Agent receives such a notice of the occurrence of a Default,
the Administrative Agent shall give prompt notice thereof to the Banks (and
shall give each Bank prompt notice of each such non-payment). The Administrative
Agent shall (subject to Section 11.07 hereof) take such action with respect to
such Default as shall be reasonably directed by the Majority Banks, provided
that, unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Banks.
Section 11.04 Rights as a Bank. With respect to its Commitment and the
Loans made by it, the Administrative Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as Administrative Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
and its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Obligors, their Subsidiaries and any of their
Affiliates as if it were not acting as Administrative Agent, and the
Administrative Agent and its affiliates may accept fees and other consideration
from the Obligors and their Subsidiaries for services in connection with this
Agreement or otherwise without having to account for the same to the Banks.
Section 11.05 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Obligors under said Section 12.03),
ratably in accordance with the aggregate principal amount of the Obligations
held by the Banks (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Obligors are
obligated to pay under Section 12.03 hereof but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or of any such other documents,
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provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Person to be
indemnified.
Section 11.06 Non-Reliance on Administrative Agent and Other Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Obligors and their Subsidiaries and decision to enter into this Agreement and
that it will, independently and without reliance upon the Administrative Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any other document
contemplated by or referred to herein. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Obligors and their Subsidiaries of this Agreement or to inspect the properties
or books of the Obligors and their Subsidiaries. Except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Obligors and their Subsidiaries (or any of their Affiliates) which may come into
the possession of the Administrative Agent or any of its affiliates.
Section 11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
Section 11.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Obligors' Representative, and the Administrative Agent may
be removed at any time with or without cause by the Majority Banks. Upon any
such resignation or removal, the Majority Banks shall have the right to appoint
a successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a bank
organized or licensed under the laws of the United States of America or any
State having an office (or an affiliate with an office) in New York, New York
and a combined capital and surplus of at least $100,000,000. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After the
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article XI shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.
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Section 11.09 Agency Fee. So long as the Commitments are outstanding and
until payment in full of all Obligations hereunder, the Obligors will pay to the
Administrative Agent such fees as may have been agreed to by the Obligors and
the Administrative Agent. Such fees, once paid, shall be non-refundable.
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver. No failure on the part of the Administrative
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided for
herein shall be by telegraph, cable or in writing and telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified in Schedule 12.02 hereto or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in Section 2.02 hereof, all notices and other
communications hereunder shall be deemed to have been duly given when
transmitted by telecopier, delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice, four Business Days
after the date deposited in the mails, airmail postage prepaid, in each case
given or addressed as aforesaid.
Section 12.03 Expenses, Etc. The Obligors shall pay or reimburse each of
the Banks and the Administrative Agent for: (a) the reasonable fees and expenses
of Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Administrative Agent, in connection with (i) the negotiation, preparation,
execution and delivery of this Agreement, the Notes and the other documents
contemplated by or referred to herein and the making of the Loans hereunder and
(ii) any amendment, modification or waiver of any of the terms of this
Agreement, the Notes or any of such other documents; (b) all reasonable costs
and expenses of the Banks and the Administrative Agent (including reasonable
counsels' fees and expenses) in connection with the enforcement, protection,
preservation or exercise of any of their rights under this Agreement, the Notes
and the other documents contemplated by or referred to herein; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement,
any of the Notes or any other document referred to herein. Each Obligor shall
(to the fullest extent permitted by applicable law) indemnify the Administrative
Agent, the Banks and each affiliate thereof and their respective directors,
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of or
in any way relate to or result from any actual or proposed use by any Obligor of
the proceeds of any Loan hereunder and/or the negotiation, execution, delivery
or performance of this Agreement or the Notes or any Loan made or to be made
hereunder or from any investigation, litigation or other proceeding (including
any
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threatened investigation or proceeding) relating to the foregoing, and the
Obligors shall reimburse the Administrative Agent and each Bank, and each
affiliate thereof and their respective directors, officers, employees and
agents, upon demand, for any expenses (including legal fees) incurred in
connection with any such investigation or proceeding (but excluding any such
losses, liabilities, claims, damages, or expenses to the extent, but only to the
extent, caused by action taken which constitutes the gross negligence or willful
misconduct of the Person to be indemnified). If and to the extent that the
obligations of any Obligor under the preceding sentence may be unenforceable for
any reason, such Obligor shall make the maximum contribution to the payment and
satisfaction of each of the losses, liabilities, claims, damages and expenses
referred to above as may be permitted by applicable law.
Section 12.04 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor any consent to any departure by any Obligor
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Majority Banks, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, do any of the following: (a) increase the
Commitment of any of the Banks, extend the Commitment Termination Date or
subject the Banks to any additional obligations; (b) reduce the principal of, or
interest on, or fees with respect to, the Obligations or the amount of any
scheduled payments thereof; (c) postpone any date fixed for payment of principal
of, or interest on, or fees with respect to, the Obligations or the Notes; (d)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Obligations, or the number of Banks which shall be required for
the Banks or any of them to take any action under this Agreement; (e) release
all or a significant portion of any collateral for the Obligations; (f) change
any provision contained in Section 2.03(a)(ii) (other than clause (F) of the
proviso therein), Section 3.01(b)(ii), Section 4.05, Articles V, VI, VII,
Section 12.03 or this Section 12.04; or (g) release or remove any Guarantor from
its obligations hereunder other than any such release or removal resulting from
a transaction permitted by Section 9.14 of the CMFRI Agreement.
Section 12.05 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) No Obligor and no Guarantor may sell or assign its respective rights
or obligations hereunder or under the Notes without the prior consent of all of
the Banks and the Administrative Agent.
(c) At any time after the Effective Date, a Bank may sell a participation
of all or in part of its rights and obligations under such Bank's Commitment
under this Agreement and the Notes to one or more commercial banks, investment
companies or other financial institutions that enter into participations of the
type contemplated by this Section 12.05 in the ordinary course of their business
and that qualify as "accredited investors," as such term is defined in
Regulation D of the Securities Act of 1933, as amended (each, a "participant"),
such participant's rights against such Bank to be set forth in a participation
agreement (a "Participation Agreement"); provided, however, that (i) such Bank
shall submit in writing to the Obligors' Representative and to the
Administrative Agent a request that each of the Obligors' Representative and the
Administrative Agent consent to the choice of such participant, (ii) the
Obligors' Representative
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and the Administrative Agent shall consent in writing to the choice of such
participant prior to the time of effectiveness of such participation, such
consent not to be unreasonably withheld or delayed, (iii) such participation
when added to the contemporaneous participations made by such Bank under the CSC
Agreement and the CMFRI Agreement, must be in an amount not less than
$10,000,000 and (iv) such participation shall be sold pro rata between such
Bank's Commitment, such Bank's CSC Commitment and such Bank's CMFRI Commitment
based on the relationship of each such Commitment to such Bank's Aggregate
Commitment and (v) in the event such Bank was party to this Agreement on the
Effective Date, after giving effect to such participation, such Bank's
Commitment not so participated if any shall be at least $10,000,000. All amounts
payable by the Obligors to any Bank under Article V hereof shall be determined
as if such Bank had not sold any such participations and as if such Bank were
funding all of its Commitments and Loans in the same way that it is funding the
Commitments and Loans in which no participations have been sold. In no event
shall a Bank that sells a participation be obligated to the participant under
its Participation Agreement to refrain from taking any action hereunder or under
such Bank's Note except that such Bank may agree in such Participation Agreement
that it will not, without the consent of such participant, agree to (A) extend
the Commitment Termination Date, (B) reduce the principal of, or interest on,
the Obligations or under the Notes or any Commitment Fee, (C) postpone any date
fixed for payment of the principal of, or interest on, the Obligations or under
the Notes or any Commitment Fee, (D) consent to any release of all or a
significant portion of any collateral for the Obligations or (E) change any
provision in Article VI hereof. Any Bank selling a participation hereunder shall
promptly notify the Obligors' Representative of the effectiveness thereof.
(d) At any time after the Effective Date, a Bank may assign part of its
rights and obligations under such Bank's Commitment under this Agreement and the
Notes to one or more commercial banks or other financial institutions (each, an
"assignee") pursuant to an Assignment and Acceptance; provided, that (i) such
Bank shall submit in writing to the Obligors' Representative and the
Administrative Agent a request that each of the Obligors' Representative and the
Administrative Agent consent to the choice of such assignee, (ii) the Obligors'
Representative and the Administrative Agent shall consent in writing to the
choice of such assignee prior to the time of effectiveness of such assignment,
such consent not to be unreasonably withheld or delayed, (iii) such assignment,
when added to the contemporaneous assignments made by such Bank under the CSC
Agreement and the CMFRI Agreement, must be in an aggregate amount not less than
$10,000,000, (iv) such assignment shall be made pro rata between such Bank's
Commitment, such Bank's CSC Commitment and such Bank's CMFRI Commitment based on
the relationship of each such Commitment to such Bank's Aggregate Commitment,
(v) the parties to each assignment shall execute and deliver to the
Administrative Agent, for its approval, acceptance and recording in the books
and records maintained pursuant to Section 12.05(f) hereof an Assignment and
Acceptance, together with a processing and recordation fee of, when added to the
processing and recordation fee under the contemporaneous assignments under the
CSC Agreement and the CMFRI Agreement, $3,500 and (vi) in the event such Bank
was party to this Agreement on the Effective Date, after giving effect to such
assignment, such Bank's Aggregate Commitment shall be at least $10,000,000. Upon
such execution, delivery, approval, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto, and to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and under the
36
<PAGE>
Notes and (y) the Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations hereunder
and under the Notes. Any Bank making an assignment hereunder shall promptly
notify the Obligors' Representative of the effectiveness thereof. In the event
of any such assignment, the Obligors shall, against receipt of the existing Note
of the Bank assignor, issue a new Note to the Bank assignee and, in the case of
a partial assignment, to such Bank assignor, in either case appropriately
reflecting such assignment.
(e) By executing and delivering an Assignment and Acceptance, the Bank
assignor hereunder and the assignee thereunder shall confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty with
respect to the financial condition of any Obligor or the performance or
observance by any Obligor of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Sections 8.04 and 9.01 of the CMFRI
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Bank or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Bank.
(f) The Administrative Agent shall maintain books and records in which
shall be recorded (i) the names and addresses of the Banks and the Commitments
of, and principal amount of Obligations owing to, each Bank from time to time;
(ii) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, all interest, fees (including attorneys' fees and
disbursements to the extent reimbursable hereunder), expenses, charges and other
Obligations; and (iii) all payments of Obligations made by the Obligors or for
the Obligors' account. All entries in such books and records shall be made in
accordance with the Administrative Agent's customary accounting practices as in
effect from time to time. The Administrative Agent will render a quarterly
statement to the Obligors' Representative detailing all relevant transactions
for billing purposes. Each and every such statement shall be deemed final,
binding and conclusive upon the Obligors in all respects as to all matters
reflected therein (absent manifest error), unless the Obligors' Representative,
within 15 days after the date such statement is rendered, delivers to the
Administrative Agent written notice of any objections which the Obligors may
have to such statement. In that event, only those items expressly objected to in
such notice shall be deemed to be disputed by the Obligors. Notwithstanding the
foregoing, the Administrative Agent's entries in the books and records
evidencing Loans and
37
<PAGE>
other financial accommodations made from time to time shall be final, binding
and conclusive upon the Obligors (absent manifest error) as to the existence and
amount of the Obligations recorded in such books and records.
(g) The Administrative Agent shall maintain at the applicable address for
notices as determined in accordance with Section 12.02 hereof a copy of each
Assignment and Acceptance delivered to and accepted by it and shall record in
such books and records the names and addresses of each Bank and the Commitment
of, and principal amount of the Loans owing to, such Bank from time to time. The
Obligors, the Guarantors, the Administrative Agent and the Banks may treat each
Person whose name is so recorded as a Bank hereunder for all purposes of this
Agreement.
(h) If any Bank (or, if such Bank has participated in any part of its
Loans or Commitment, any of such Bank's participants) does not agree with a
proposal of the Obligors for an amendment, waiver or consent in respect of an
issue described in the penultimate sentence of 12.05(c) hereof, the Obligors may
require that such Bank (and each of its participants, if any) transfer all of
its right, title and interest under this Agreement, the CSC Agreement and the
CMFRI Agreement and such Bank's Note issued hereunder, its note issued under the
CSC Agreement and its note issued under the CMFRI Agreement to any Person (a
"Proposed Bank") identified by the Obligors who agrees to assume the obligations
of such Bank for a consideration equal to the outstanding principal amount of
such Bank's Loans, CSC Loans and CMFRI Loans, together with interest thereon to
the date of such transfer and all other amounts payable hereunder, under the CSC
Agreement and under the CMFRI Agreement to such Bank on or prior to the date of
such transfer (including any fees accrued hereunder and any amounts which would
be payable under Section 5.05 hereof (or the equivalent provisions of the CSC
Agreement and the CMFRI Agreement) as if all of such Bank's Loans, CSC Loans and
CMFRI Loans were being prepaid in full on such date). Subject to the execution
and delivery of such instruments and agreements relating to such transfer as the
Banks (including the Proposed Bank and such Bank) shall request, such Proposed
Bank shall be a "Bank" for all purposes hereunder.
(i) A Bank may furnish any information concerning any of the Obligors or
any of their Subsidiaries or Affiliates in the possession of such Bank from time
to time to assignees and participants (including prospective assignees and
participants).
(j) Notwithstanding anything in the foregoing to the contrary, (x) each
Bank may, without complying with any restrictions set forth in this Section
12.05, sell a participation or assign all or any part of its rights and
obligations under such Bank's Commitment under this Agreement and Notes to any
affiliate of such Bank, provided that the Obligors' Representative shall consent
to the choice of such affiliate, such consent not to be unreasonably withheld or
delayed, and provided, however, that any participation or assignment made by
such affiliate to a non-affiliate must be effected contemporaneously with its
other affiliates such that the non-affiliate participant or assignee holds pro
rata amounts of the Commitment, the CSC Commitment and the CMFRI Commitment as
if such participation or assignment had been made by such Bank; and (y) each
Bank may at any time, without complying with any restrictions set forth in
Section 12.05, assign all or any portion of its rights under this Agreement and
its Note to a Federal Reserve Bank, provided that such assignment shall not
release the Bank assignor from its obligations under this Agreement.
38
<PAGE>
Section 12.06 Survival. The obligations of the Obligors under Sections
5.01, 5.05 and 12.03 hereof shall survive the repayment of the Loans.
Section 12.07 Conditions to Effectiveness. This Agreement shall become
effective on the first day (the "Effective Date") on which (i) this Agreement
shall have been duly executed by the parties hereto and (ii) the conditions
precedent to the initial Loans under Article VII hereof shall have been
satisfied, at which time the Existing Credit Agreement shall be amended and
restated by this Agreement. If no Effective Date shall occur, the Existing
Credit Agreement shall remain in full force and effect.
Section 12.08 Liability of General Partners and Other Persons. No general
partner of any Subsidiary of any Obligor which is a partnership, joint venture
or joint adventure shall have any personal liability in respect of such
Subsidiary's obligations under this Agreement or the Notes by reason of his, her
or its status as such general partner. In addition, no limited partner, officer,
employee, director, stockholder or other holder of an ownership interest of or
in any Obligor or any Subsidiary of any Obligor or any partnership, corporation
or other entity which is a stockholder or other holder of an ownership interest
of or in any Obligor or any Subsidiary of any Obligor shall have any personal
liability in respect of such obligations by reason of his, her or its status as
such limited partner, officer, employee, director, stockholder or holder.
Section 12.09 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.10 Waiver. THE OBLIGORS, THEIR SUBSIDIARIES, THE ADMINISTRATIVE
AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH ANY OF THEM IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTES OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
Section 12.11 Entire Agreement. This Agreement and the Notes embody the
entire agreement among the Obligors, their Subsidiaries and the Banks and
supersede all prior agreements, representations and understandings, if any,
relating to the subject matter hereof and thereof.
Section 12.12 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the law of the State of New York.
Section 12.13 Captions, Etc. Captions, section headings and the table of
contents appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
Section 12.14 Waiver of Certain Defenses. The obligations of each Obligor
to pay amounts hereunder and under the Notes in accordance with the terms hereof
and thereof shall survive irrespective of the validity and enforceability of
this Agreement or the Notes, or the obligations of, any other Obligor hereunder
or thereunder and any other circumstance that might
39
<PAGE>
otherwise affect the liability of such other Obligor. The obligations of each
Obligor under this Agreement shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of any other Obligor is
rescinded or must be otherwise restored by any holder of the obligations
guaranteed hereunder whether as a result of any proceedings in bankruptcy or
reorganization or otherwise and the Obligors agree that they will indemnify the
Banks and the Administrative Agent on demand for reasonable costs and expenses
(including, without limitation, fees of counsel) incurred by the Banks or the
Administrative Agent in connection with such rescission or restoration.
Section 12.15 Release; Acceptance of Release. (a) Release. (i) Each
Obligor hereby releases each other Obligor from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or otherwise), any
"claims" (as defined in Section 101(5) of the Bankruptcy Code), whether arising
under applicable law or otherwise, to which such Obligor is or would at any time
be entitled by virtue of its obligations under the Notes or this Agreement or
any payment made pursuant hereto, including any such claims to which such
Obligor may be entitled as a result of any right of subrogation, exoneration or
reimbursement.
(ii) To the extent not released by the Obligors under Section
12.14(a)(i), each Obligor agrees that it shall not be entitled to any
rights of subrogation, exoneration, reimbursement and contribution in
respect of any obligations hereunder until payment in full of all of the
Obligations.
(b) Acceptance of Release. (i) Each Obligor hereby accepts the releases
effected by Section 12.14(a) hereof and agrees not to restore or attempt to
restore any of the rights thereby released.
(ii) Each Obligor hereby accepts the release effected by Article VI
and agrees not to restore or attempt to restore any of the rights thereby
released.
Section 12.16 Authorization of Third Parties to Deliver Information and
Discuss Affairs. Each Obligor hereby confirms that it has authorized and
directed each Person whose preparation or delivery to the Administrative Agent
or the Banks of any opinion, report or other information is a condition or
covenant under this Agreement (including under Article VII and Article VIII) to
so prepare or deliver such opinions, reports or other information for the
benefit of the Administrative Agent and the Banks. The Obligors agree to confirm
such authorizations and directions provided for in this Section 12.15 from time
to time as may be requested by the Administrative Agent.
Section 12.17 Termination of Existing Credit Agreement. The Existing
Credit Agreement is hereby terminated.
Section 12.18 Joint and Several Obligations. The Obligations shall be the
joint and several obligations of the Obligors, and all payments in respect of
the Obligations shall be made by the Obligors jointly and severally.
40
<PAGE>
Section 12.19 Acknowledgement. The Obligors hereby acknowledge that
neither the Administrative Agent nor any Bank has any fiduciary relationship
with or fiduciary duty to the Obligors arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Administrative Agent and the Banks, on the one hand, and each of the Obligors,
on the other hand, in connection herewith and therewith is solely that of debtor
and creditor.
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OBLIGORS
CSC TKR, INC.,
for itself and as General Partner of KRC/CCC
Investment Partnership
CABLEVISION OF BROOKHAVEN, INC.
CABLEVISION OF OAKLAND, INC.
CABLEVISION OF PATERSON, INC.
CSC TKR I, INC.
UA-COLUMBIA CABLEVISION OF
WESTCHESTER, INC.
By
-----------------------------------------------
Name:
Title:
of each of the above-named six corporations
GUARANTORS
TKR CABLE COMPANY OF RAMAPO, INC.
TKR CABLE COMPANY OF WARWICK, INC.
By
-----------------------------------------------
Name:
Title:
of each of the above-named two corporations
KRC/CCC INVESTMENT PARTNERSHIP
By: CSC TKR, Inc., as General Partner
<PAGE>
Commitment
$64,285,714.30 TORONTO DOMINION (TEXAS), INC., as Arranging
Agent, Administrative Agent and Bank
By
-----------------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Managing
Agent
By
-----------------------------------------------
Name:
Title:
$50,000,000 THE BANK OF NEW YORK COMPANY, INC.,
as Bank
By
-----------------------------------------------
Name:
Title:
$50,000,000 THE BANK OF NOVA SCOTIA, as Bank and Managing
Agent
By
-----------------------------------------------
Name:
Title:
$50,000,000 THE CANADIAN IMPERIAL BANK OF COMMERCE,
as Bank and Managing Agent
By
-----------------------------------------------
Name:
Title:
2
<PAGE>
Commitment
$50,000,000 NATIONSBANK, N.A., as Bank and
Managing Agent
By
-----------------------------------------------
Name:
Title:
$50,000,000 THE CHASE MANHATTAN BANK, as Bank and
Managing Agent
By
-----------------------------------------------
Name:
Title:
$40,000,000 BANK OF MONTREAL, CHICAGO BRANCH,
as Bank and Agent
By
-----------------------------------------------
Name:
Title:
$40,000,000 BARCLAYS BANK PLC, as Bank and Agent
By
-----------------------------------------------
Name:
Title:
$40,000,000 FLEET BANK, N.A., as Bank and Agent
By
-----------------------------------------------
Name:
Title:
3
<PAGE>
Commitment
$40,000,000 ROYAL BANK OF CANADA, as Bank and Agent
By
-----------------------------------------------
Name:
Title:
$32,857,142.86 MELLON BANK, N.A., as Bank and Co-Agent
By
-----------------------------------------------
Name:
Title:
$28,571,428.57 BANKBOSTON, N.A., as Bank and Co-Agent
By
-----------------------------------------------
Name:
Title:
$28,571,428.57 BANQUE PARIBAS, as Bank and Co-Agent
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
4
<PAGE>
Commitment
$28,571,428.57 CREDIT LYONNAIS, as Bank and Co-Agent
By
-----------------------------------------------
Name:
Title:
$28,571,428.57 THE FIRST NATIONAL BANK OF CHICAGO,
as Bank and Co-Agent
By
-----------------------------------------------
Name:
Title:
$28,571,428.57 SOCIETE GENERALE, NEW YORK BRANCH, as Bank
and Co-Agent,
By
-----------------------------------------------
Name:
Title:
$21,428,571.43 FIRST UNION NATIONAL BANK
By
-----------------------------------------------
Name:
Title:
$21,428,571.43 PNC BANK, NATIONAL ASSOCIATION
By
-----------------------------------------------
Name:
Title:
5
<PAGE>
Commitment
$14,285,714.29 ABN AMRO BANK N.V.
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
$14,285,714.29 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
$14,285,714.29 UNION BANK OF CALIFORNIA, N.A.
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 BANK OF HAWAII
By
-----------------------------------------------
Name:
Title:
6
<PAGE>
Commitment
$7,142,857.14 NATEXIS BANQUE BFCE
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 THE DAI-ICHI KANGYO BANK, LTD.
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 THE FUJI BANK LIMITED, NEW YORK BRANCH
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 GENERAL ELECTRIC CAPITAL CORPORATION
By
-----------------------------------------------
Name:
Title:
7
<PAGE>
Commitment
$7,142,857.14 THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 THE SUMITOMO BANK, LIMITED
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
$7,142,857.14 SUMMIT BANK
By
-----------------------------------------------
Name:
Title:
- - ---------------
$800,000,000.00
8
SUBSIDIARIES
OF
CABLEVISION SYSTEMS CORPORATION
State of
Name Organization
- - ---- ------------
CSC Holdings, Inc. Delaware
A-R Cable Investments, Inc. Delaware
A-R Cable Services, Inc. Massachusetts
Rainbow Media Holdings, Inc. New York
NYC LP Corp. Delaware
Cablevision of New York City - Master L.P. Delaware
Cablevision of NYC - Phase I New York
Cablevision MFR, Inc. Delaware
Regional Programming Partners New York
Regional MSG Holdings, LLC New York
Madison Square Garden, L.P. Delaware
SUBSIDIARIES
OF
CSC HOLDINGS, INC.
A-R Cable Investments, Inc. Delaware
A-R Cable Services, Inc. Massachusetts
Rainbow Media Holdings, Inc. New York
NYC LP Corp. Delaware
Cablevision of New York City - Master L.P. Delaware
Cablevision of NYC - Phase I New York
Cablevision MFR, Inc. Delaware
Regional Programming Partners New York
Regional MSG Holdings, LLC New York
Madison Square Garden, L.P. Delaware
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement
(number 333-44547) filed on Form S-4 of Cablevision Systems Corporation of our
report dated March 12, 1999 relating to the consolidated balance sheets of
Cablevision Systems Corporation and Subsidiaries as of December 31, 1998 and
1997 and the related consolidated statements of operations, stockholders'
deficiency and cash flows and related schedule for each of the years in the
three year period ended December 31, 1998 which report appears in the December
31, 1998 annual report on Form 10-K of Cablevision Systems Corporation.
Melville, New York
March 29, 1999
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration
statements (numbers 33-05987, 33-08768, 33-19409, 33-20583, 33-54346 and
333-41349) filed on Forms S-8, the registration statements (numbers 33-29192,
33-33596 and 333-35263) filed on Forms S-3 and in the registration statement
(number 333-44547) filed on Form S-4 of CSC Holdings, Inc. of our report dated
March 12, 1999 relating to the consolidated balance sheets of CSC Holdings, Inc.
and Subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of operations, stockholders' deficiency and cash flows and related
schedule for each of the years in the three-year period ended December 31, 1998
which report appears in the December 31, 1998 annual report on Form 10-K of CSC
Holdings, Inc.
Melville, New York
March 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000784681
<NAME> CSC Holdings, Inc. and Subsidiaries
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 173,699
<SECURITIES> 0
<RECEIVABLES> 223,864
<ALLOWANCES> (31,910)
<INVENTORY> 293,310
<CURRENT-ASSETS> 0
<PP&E> 3,773,944
<DEPRECIATION> (1,663,105)
<TOTAL-ASSETS> 5,935,860
<CURRENT-LIABILITIES> 0
<BONDS> 4,834,608
1,256,339
14
<COMMON> 1
<OTHER-SE> (2,824,368)
<TOTAL-LIABILITY-AND-EQUITY> 5,935,860
<SALES> 0
<TOTAL-REVENUES> 2,941,316
<CGS> 0
<TOTAL-COSTS> 1,524,555
<OTHER-EXPENSES> 577,635
<LOSS-PROVISION> (28,897)
<INTEREST-EXPENSE> 393,008
<INCOME-PRETAX> (239,533)
<INCOME-TAX> 0
<INCOME-CONTINUING> (239,533)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (239,533)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented as the resultant computation would be a decrease in net loss
per share and therefore not meaningful.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001053112
<NAME> Cablevision Systems Corporation and Subsidiaries
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 173,826
<SECURITIES> 0
<RECEIVABLES> 232,103
<ALLOWANCES> (34,377)
<INVENTORY> 293,310
<CURRENT-ASSETS> 0
<PP&E> 4,242,975
<DEPRECIATION> (1,736,141)
<TOTAL-ASSETS> 7,061,062
<CURRENT-LIABILITIES> 0
<BONDS> 5,357,608
0
0
<COMMON> 1,515
<OTHER-SE> (2,613,200)
<TOTAL-LIABILITY-AND-EQUITY> 7,061,062
<SALES> 0
<TOTAL-REVENUES> 3,297,253
<CGS> 0
<TOTAL-COSTS> 1,659,537
<OTHER-EXPENSES> 734,107
<LOSS-PROVISION> (32,110)
<INTEREST-EXPENSE> 426,402
<INCOME-PRETAX> (448,504)
<INCOME-TAX> 0
<INCOME-CONTINUING> (448,504)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (448,504)
<EPS-PRIMARY> (3.16)
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented as the resultant computation would be a decrease in net loss
per share and therefore not meaningful.
</FN>
</TABLE>
