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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CABLEVISION SYSTEMS CORPORATION
CSC HOLDINGS, INC.
CSC CAPITAL I
CSC CAPITAL II
CSC CAPITAL III
(Exact name of each registrant as specified in its charter)
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DELAWARE 11-3415180
DELAWARE 11-2776686
DELAWARE TO BE APPLIED FOR
DELAWARE TO BE APPLIED FOR
DELAWARE TO BE APPLIED FOR
(State or other jurisdiction of (IRS employer
incorporation or organization) identification numbers)
</TABLE>
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
(516) 803-2300
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
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ROBERT S. LEMLE
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
(516) 803-2300
(Name, address, including zip code, and telephone number,
including area code, of agent for service of each registrant)
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WITH COPIES TO:
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JOHN P. MEAD JONATHAN JEWETT
SULLIVAN & CROMWELL SHEARMAN & STERLING
125 BROAD STREET 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10022
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AS DETERMINED IN THE
LIGHT OF MARKET CONDITIONS.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "SECURITIES ACT"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same
offering. / /________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER UNIT(2) OFFERING PRICE (2) REGISTRATION FEE
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Debt Securities(3)................................
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Preferred Stock(3)................................
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Depositary Shares(6)..............................
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$1,500,000,000(4) 100% $1,500,000,000(4)(5) $417,000
CSC Capital I, II and III Preferred Securities....
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Guarantees with respect to CSC Capital I, II and
III Preferred Securities(7).....................
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(1) U.S. dollars or the equivalent thereof in one or more other currencies,
currency units or composite currencies.
(2) Estimated for the sole purpose of computing the registration fee in
accordance with Rule 457(o).
(3) Also includes such indeterminate amounts of Debt Securities and Preferred
Stock as may be issued upon conversion of or exchange for any other
securities that provide for conversion or exchange into Debt Securities or
Preferred Stock.
(4) Such amount represents the aggregate amount of Debt Securities issued at
their principal amount or the issue price rather than the principal amount
of any Debt Securities issued at an original issue discount and the
liquidation preference of any Preferred Stock.
(5) No separate consideration will be received for the Debt Securities or
Preferred Stock issuable upon conversion of or in exchange for Debt
Securities and Preferred Stock.
(6) Such indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Depositary Agreement. In the event the
Registrants elect to offer to the public fractional interests in shares of
the Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests, and the
shares of Preferred Stock will be issued to the Depositary under the
Depositary Agreement. No separate consideration will be received for the
Depositary Shares.
(7) Includes the rights of the holders of the Preferred Securities under the
Guarantees and certain back-up undertakings, comprised of obligations of
Cablevision Systems Corporation or CSC Holdings, Inc. to provide certain
indemnities in respect of, and pay and be responsible for certain costs,
expenses, debts and liabilities of, each of CSC Capital I, II and III and
such obligations as set forth in the Expense Agreement relating to each such
entity and the Indenture, in each case as further described in the
Registration Statement. No separate consideration will be received for any
Guarantees or such back-up obligations.
----------------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER, SOLICITATION OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
$1,500,000,000
CABLEVISION SYSTEMS CORPORATION
CSC HOLDINGS, INC.
DEBT SECURITIES
PREFERRED STOCK
CSC CAPITAL I
CSC CAPITAL II
CSC CAPITAL III
PREFERRED SECURITIES, FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
CABLEVISION SYSTEMS CORPORATION
OR
CSC HOLDINGS, INC.
Cablevision Systems Corporation and CSC Holdings, Inc. may offer and sell
debt securities, shares of preferred stock or depositary shares representing
fractions of shares of preferred stock. CSC Capital I, II or III may offer and
sell preferred securities representing undivided beneficial interests in the
assets of such entity. These securities may be offered and sold from time to
time for an aggregate offering price of up to $1,500,000,000.
We will provide the specific terms and the initial public offering prices of
these securities in supplements to this prospectus. This prospectus may not be
used to sell securities unless accompanied by a prospectus supplement. WE URGE
YOU TO READ CAREFULLY THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT, WHICH WILL DESCRIBE THE SPECIFIC TERMS OF THE SECURITIES OFFERED,
BEFORE YOU MAKE YOUR INVESTMENT DECISION.
INVESTMENT IN THE SECURITIES INVOLVES SIGNIFICANT RISKS. READ THE SECTION
CAPTIONED "RISK FACTORS" BEGINNING ON PAGE 7 TO LEARN ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE INVESTING IN THE SECURITIES.
---------------------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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About This Prospectus..................................................... 2
Where You Can Find More Information....................................... 2
Cablevision............................................................... 5
CSC Holdings.............................................................. 5
The Trusts................................................................ 5
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 15
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends and
Deficiency of Earnings Available to Cover Fixed Charges and Preferred
Stock Dividends......................................................... 15
Description of the Securities We May Offer................................ 16
We May Offer Debt Securities.............................................. 18
We May Offer Preferred Stock, Which May Be Offered in the Form of
Depositary Shares Representing Fractional Shares of Preferred Stock..... 35
We May Offer Preferred Securities......................................... 46
Description of the Preferred Securities................................... 46
Description of the Junior Subordinated Debt Securities.................... 59
Relationship Among Preferred Securities, Junior Subordinated Debt
Securities, Guarantee and Expense Agreement............................. 70
Accounting Treatment of Preferred Securities.............................. 72
U.S. Federal Income Tax Consequences Relating to Preferred Securities..... 72
Plan of Distribution...................................................... 77
Validity of the Securities................................................ 78
Experts................................................................... 78
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement filed by Cablevision
Systems Corporation ("CABLEVISION"), CSC Holdings, Inc. ("CSC HOLDINGS") and CSC
Capital I, CSC Capital II and CSC Capital III (the "TRUSTS") with the Securities
and Exchange Commission (the "COMMISSION") using the Commission's "shelf"
registration rules. Under the shelf registration rules, using this prospectus,
together with a prospectus supplement, Cablevision, CSC Holdings and the Trusts
may sell from time to time:
- CSC Holdings' debt securities, which may be either senior or subordinated
debt securities;
- Cablevision's or CSC Holdings' preferred stock, which may be issued in
fractional form as depositary shares evidenced by depositary receipts;
- Cablevision's or CSC Holdings' junior subordinated debt securities;
- any one of the Trusts' preferred securities, which represent undivided
beneficial interests in the assets of the issuing Trust; and
- Cablevision's or CSC Holdings' guarantees for the benefit from time to
time of holders of the preferred securities.
Any one of the Trusts may also issue common securities, which represent
undivided beneficial interests in the assets of the issuing Trust, to
Cablevision or CSC Holdings. The issuing Trust will use the proceeds from any
sale of preferred securities and common securities to buy junior subordinated
debt securities from Cablevision or CSC Holdings with terms that correspond to
those of the preferred securities and common securities. If a Trust sells
preferred securities and common securities, Cablevision or CSC Holdings, as the
case may be, will pay principal and interest on the junior subordinated debt
securities to the issuing Trust (subject to the payment of its more senior debt
and subject to its right to defer interest payments), which the issuing Trust
will distribute as dividends on the preferred securities and common securities.
Cablevision or CSC Holdings, as the case may be, will fully and unconditionally
guarantee the Trust's obligations on the preferred securities based on the
combined effect of certain agreements described in this prospectus and may
choose to distribute PRO RATA the junior subordinated debt securities to the
holders of the preferred securities and common securities if it terminates the
Trust.
This prospectus provides you with a general description of the securities.
Each time we sell the securities, we will provide a prospectus supplement that
will contain specific information about the terms of that offering. For
simplicity, we will refer to Cablevision and CSC Holdings interchangeably as the
"ISSUER" (and collectively as the "Issuers") throughout this prospectus to refer
to the entity that is issuing the preferred stock (or, in the case of preferred
securities, the entity that is purchasing the common securities of the issuing
Trust and issuing the relevant junior subordinated debt securities). In the case
of debt securities other than junior subordinated debt securities, the term
"Issuer" refers to CSC Holdings. We will also refer to "Cablevision" to mean
Cablevision and its consolidated subsidiaries and "CSC Holdings" to mean CSC
Holdings and its consolidated subsidiaries, in each case, unless the context
requires otherwise. The prospectus supplement may also add, update or change
information contained in this prospectus. We urge you to read carefully this
prospectus, the applicable prospectus supplement and the additional information
described below under "Where You Can Find More Information".
WHERE YOU CAN FIND MORE INFORMATION
Cablevision files proxy statements and both Issuers file reports and other
information with the Commission. You may obtain copies of this information by
mail from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's offices in
New York, New York and Chicago, Illinois, at prescribed rates. Please call the
Commission at 1-800-SEC-0330 for further information on the Public Reference
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Room. You may also read this information at the offices of the American Stock
Exchange, 86 Trinity Place, New York, New York 10006 or from the Commission's
website: http://www.sec.gov.
The Commission's rules permit the Issuers to "incorporate by reference"
information into this prospectus filed with the Commission. This means the
Issuers can disclose important information to you by referring you to another
document. Any information referred to in this way is considered part of this
prospectus, and any reports filed with the Commission after the date of this
prospectus and before the date the offering of the securities is terminated will
automatically be deemed to update and supersede any information contained in
this prospectus or incorporated in this prospectus by reference.
Cablevision hereby incorporates by reference into this prospectus the
following documents or information filed with the Commission:
- Cablevision's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by Cablevision's Form 10-K/A for the fiscal
year ended December 31, 1997 (collectively, the "CABLEVISION FORM 10-K");
- Cablevision's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 (each, a "CABLEVISION
FORM 10-Q" and, collectively, the "CABLEVISION FORM 10-QS");
- Cablevision's Current Reports on Form 8-K filed March 4, 1998 (as amended
by Cablevision's Current Report on Form 8-K/A filed May 18, 1998), March
19, 1998 and September 1, 1998;
- Cablevision's Proxy Statement on Schedule 14A filed January 20, 1998; and
- all documents filed by Cablevision pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), on or (i) after the date of the filing of this registration
statement and prior to its effectiveness and (ii) after the date of this
prospectus and prior to the termination of the offering made hereby.
CSC Holdings hereby incorporates by reference into this prospectus the
following documents or information filed with the Commission:
- CSC Holdings' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by CSC Holdings' Form 10-K/A for the fiscal
year ended December 31, 1997 (collectively, the "CSC HOLDINGS FORM 10-K");
- CSC Holdings' Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 (each, a "CSC
HOLDINGS FORM 10-Q" and, collectively, the "CSC HOLDINGS FORM 10-QS");
- CSC Holdings' Current Reports on Form 8-K filed February 5, 1998, March 4,
1998, March 19, 1998, July 6, 1998 and July 21, 1998;
- CSC Holdings' Proxy Statement on Schedule 14A filed January 20, 1998; and
- all documents filed by CSC Holdings pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act on or (i) after the date of the filing of
this registration statement and prior to its effectiveness and (ii) after
the date of this prospectus and prior to the termination of the offering
made hereby.
Each Issuer will provide without charge to each person, including any
beneficial owner, to whom this prospectus is delivered, upon the written or oral
request of any such person, a copy of any or all of the information incorporated
herein by reference other than exhibits to such information (unless such
exhibits are specifically incorporated by reference into such information).
Requests should be made to Secretary, Cablevision Systems Corporation, 1111
Stewart Avenue, Bethpage, New York 11714 or by phone to (516) 803-2300 or at our
website: www.cablevision.com.
We have not included separate financial statements of the Trusts in this
prospectus. The Issuers and the Trusts do not consider that such
3
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financial statements would be useful to holders of the preferred securities
because:
- the voting securities of the Trusts will be owned, directly or indirectly,
by Cablevision or CSC Holdings, each a reporting company under the
Exchange Act;
- each Trust is a newly formed special purpose entity, has no operating
history or independent operations and is not engaged in and does not
propose to engage in any activity other than holding junior subordinated
debt securities as trust assets and issuing the preferred securities and
the common securities; and
- the Issuer's obligations described in this prospectus and in the
applicable prospectus supplement, through the applicable guarantee, the
applicable Declaration of Trust (as defined in "The Trusts"), the junior
subordinated debt securities, the junior subordinated indenture and any
supplemental indentures thereto, and the expense agreement, taken
together, constitute a full, irrevocable and unconditional guarantee by
the Issuer of the Trust's obligations under the preferred securities. No
single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations
under the preferred securities.
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES. SUCH
TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT, STABILIZING, THE PURCHASE OF
SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION".
------------------------
This prospectus is part of a registration statement filed with the
Commission by Cablevision, CSC Holdings and the Trusts. This prospectus does not
contain all of the information that is in the registration statement. The full
registration statement (including exhibits and schedules) contains additional
relevant information about the Issuers and the securities. The rules and
regulations of the Commission allow us to omit certain information included in
the registration statement from this prospectus. You can obtain our registration
statement from the Commission as indicated above, or from Cablevision or CSC
Holdings as described below.
In this prospectus, we make statements that constitute forward-looking
information within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may be made directly in this document or may be
"incorporated by reference" to other documents. You can find many of these
statements by looking for words such as "believes", "expects", "anticipates",
"estimates" or similar expressions. We caution you that such forward-looking
statements are not guarantees of future performance or results. They involve
risks and uncertainties that are difficult to predict. Among the factors that
may cause our actual results to differ from those expressed or implied in the
forward-looking statements are the following:
- level of growth in the revenues of Cablevision and CSC Holdings;
- demand, competition, the cost of programming and industry conditions;
- expenses of Cablevision and CSC Holdings continue to increase or increase
at a rate faster than expected;
- any unconsummated transactions are consummated on the terms and at the
times set forth (if at all);
- competitors entering the Issuer's franchise areas; and
- risks and uncertainties inherent in the cable television business.
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
4
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endeavor are, for that reason, particularly hard to make with any certainty. As
a result, our estimates may prove to be materially inaccurate. More
specifically, our forecasts may prove to be wrong for the reasons described
under "Risk Factors", as well as for the following reasons, among others:
- our forecasts are dependent upon the representations of third parties
which may be inaccurate or mistaken;
- 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 that
have not been, and are not, identified in a timely manner;
- because of the lack of experience with problems of this nature and
magnitude, it is difficult to estimate remediation costs with accuracy;
- remediation requires the efforts of third parties whose performance is
beyond our control; and
- because the Y2K issues are so widespread and because the number of third
parties who can provide meaningful remediation services is limited, we may
have difficulty obtaining the timely assistance of such third parties,
particularly as such services are needed closer to January 1, 2000.
CABLEVISION
Cablevision, one of the largest operators of cable television systems in the
United States, owns all of the outstanding common stock of its subsidiary, CSC
Holdings. The businesses of CSC Holdings are summarized below. Cablevision also
owns all of the equity interests in certain other subsidiaries that operate
cable television systems located in New Jersey, on Long Island and in New York's
Rockland, Orange and Westchester counties which served approximately 846,000
subscribers as of September 30, 1998. Cablevision also owns equity interests in
subsidiaries that own and operate motion picture theaters in the New York City
metropolitan area. Cablevision has no significant assets other than the stock of
its subsidiaries.
CSC HOLDINGS
CSC Holdings served approximately 2,568,000 cable television subscribers in
eight states as of September 30, 1998. Through Rainbow Media Holdings, Inc.
("RAINBOW MEDIA"), a company owned 75% by CSC Holdings and 25% by NBC Cable
Holding, Inc., a subsidiary of National Broadcasting Company, Inc., CSC Holdings
owns interests in and manages numerous national and regional programming
networks, the Madison Square Garden sports and entertainment business ("MSG")
and cable television advertising sales companies. CSC Holdings, through
Cablevision Lightpath, Inc., 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 City metropolitan area. CSC Holdings also
owns equity interests in a subsidiary that owns and operates motion picture
theaters in the New York City metropolitan area.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law under a
declaration of trust between CSC Holdings, as depositor (the "DEPOSITOR"), and
The Bank of New York (Delaware), as Delaware trustee (the "DELAWARE TRUSTEE").
Certificates of trust have been filed with the Secretary of State of the State
of Delaware. The form of each declaration of trust is filed as an exhibit to the
registration statement. Each declaration of trust will be amended and restated
in its entirety at the time of an offering of preferred stock and filed as an
exhibit to a Current Report on Form 8-K under the Exchange Act (as amended, a
"DECLARATION OF TRUST"). Each Declaration of Trust will be qualified as an
indenture under the Trust Indenture Act and will govern the duties and
obligations of the Trust and the Trust Trustees (as defined below).
In connection with an offering by a Trust, the Trust will issue preferred
securities and common securities under the Declaration of Trust. The
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preferred securities will represent preferred undivided beneficial interests in
the assets of the Trust, and the common securities will represent common
undivided beneficial interests in the assets of the Trust. The preferred
securities and the common securities will have substantially similar terms,
except that the holders of preferred securities will be entitled to priority in
right of payment over the holders of common securities in certain circumstances
involving an event of default under the Declaration of Trust, and the holders of
common securities will have broader voting rights.
At the closing of an offering of preferred securities, the underwriters will
purchase the preferred securities and the Issuer (either Cablevision or CSC
Holdings) will purchase the common securities from the issuing Trust, and the
issuing Trust will use the proceeds from those sales to purchase corresponding
junior subordinated debt securities from the Issuer. The aggregate liquidation
amount of the common securities acquired by the Issuer will equal 3% of the
issuing Trust's total capital at the closing. The Issuer will continue to hold
all the common securities after the closing of the offering.
Also at the closing, the Issuer will execute a guarantee and an expense
agreement. Under the guarantee, the Issuer will guarantee payments on the
preferred securities, but only to the extent that the Trust has funds legally
available to make those payments. The expense agreement will provide for the
Issuer to reimburse the Trust for all expenses and liabilities it incurs (other
than amounts payable in respect of the preferred securities). The Issuer will
also pay the expenses of the offering of the preferred securities, including
underwriters' commissions.
Each Trust exists solely for the following purposes:
- issuing and selling the preferred securities and the common securities;
- using the proceeds from the sale of the preferred securities and the
common securities to acquire the junior subordinated debt securities; and
- engaging only in those other activities that are necessary or incidental
to the activities described above (such as registering the transfer of the
preferred securities and the common securities).
Each Trust will have no assets other than the junior subordinated debt
securities and the right to receive reimbursement under the expense agreement.
Each Trust will have no revenue other than payments under the junior
subordinated debt securities and the expense agreement.
Each Trust has a term of approximately 55 years but may terminate earlier as
provided in its Declaration of Trust. Each Trust's business and affairs will be
conducted by its trustees. These trustees will be The Bank of New York, as
property trustee (the "PROPERTY TRUSTEE"), and the Delaware Trustee
(collectively, the "TRUST TRUSTEES"). In addition, the Issuer, as the holder of
the common securities, will select two individuals who will act as
administrators with respect to each Trust (the "ADMINISTRATORS"). The
Administrators will initially be employees or officers of Cablevision. The
Property Trustee will act as the indenture trustee under the Declaration of
Trust for purposes of compliance with the Trust Indenture Act.
The Bank of New York will also act as the trustee under the guarantee and
the indenture relating to the junior subordinated debt securities, which are
described in "Description of the Junior Subordinated Debt Securities". The
principal executive office of each Trust is 1111 Stewart Avenue, Bethpage, New
York 11714, and each Trust's telephone number is (516) 803-2300. The Trusts will
not be subject to the reporting requirements of the Exchange Act.
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RISK FACTORS
An investment in the securities involves a number of risks, some or all of
which could be substantial and are inherent in our business. We urge you to
consider carefully the following information about these risks, together with
the other information in this prospectus or in the attached prospectus
supplement, before buying any of the securities. "We," "us" and "our" in this
section refer to Cablevision and CSC Holdings.
COMPANY-SPECIFIC RISKS
WE HAVE SUBSTANTIAL INDEBTEDNESS, AND WE ARE HIGHLY LEVERAGED AS A RESULT
CSC Holdings incurred, and CSC Holdings and Cablevision will continue to
incur in the future, substantial amounts of indebtedness to finance operations,
expand cable operations and acquire other cable television systems, programming
networks, sources of programming and other businesses. CSC Holdings also has
incurred, and CSC Holdings and Cablevision will continue to incur, indebtedness
in order to offer new services such as high speed Internet access, digital video
service and residential telephone service to present and potential customers. In
addition, CSC Holdings has borrowed and CSC Holdings and Cablevision will
continue to borrow money from time to time to refinance existing indebtedness
and redeem mandatorily redeemable preferred stock. At September 30, 1998,
Cablevision's consolidated debt (including two series of mandatorily redeemable
preferred stock of CSC Holdings) totalled $6.3 billion, and CSC Holdings'
consolidated debt (including the same two series of mandatorily redeemable
preferred stock) totalled $5.7 billion (all of which is included in
Cablevision's $6.3 billion of consolidated debt). We urge you to read carefully
our consolidated financial statements contained in the Cablevision Form 10-K and
the CSC Holdings Form 10-K and the more recent information contained in the
Cablevision Form 10-Qs and the CSC Holdings Form 10-Qs, which provide more
detailed information about this indebtedness and mandatorily redeemable
preferred stock.
Because of this substantial indebtedness and mandatorily redeemable
preferred stock of CSC Holdings, we are highly leveraged, meaning that interest
on and required repayments of our borrowings and dividends on and required
redemption amounts with respect to our mandatorily redeemable preferred stock
are significant in relation to our revenues and cash flow. This leverage exposes
us to significant risk in the event of downturns in our businesses, in our
industries or in the economy generally, because although our cash flows would
decrease in such a scenario, our required payments in respect of indebtedness
and preferred stock will not.
OUR FINANCIAL STATEMENTS REFLECT NET LOSSES AND A STOCKHOLDERS' DEFICIENCY
Cablevision and CSC Holdings have reported recent net losses applicable to
common shareholders as follows:
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CSC
CABLEVISION HOLDINGS
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FOR THE NINE MONTHS
ENDED:
September 30, 1998...... $263.8 million $253.3 million
September 30, 1997...... $194.2 million $194.2 million
FOR THE YEAR ENDED:
December 31, 1997....... $12.1 million $12.1 million
December 31, 1996....... $459.9 million $459.9 million
December 31, 1995....... $337.7 million $337.7 million
</TABLE>
Net losses are calculated by subtracting, without limitation, from gross
revenues (i) operating expenses (including depreciation and amortization), (ii)
interest expense, (iii) preferred stock dividends, (iv) other income and
expenses and (v) net profit or loss from affiliate operations. The net losses
described above primarily reflect our high interest expense and depreciation and
amortization charges, which are expected to continue. As a cumulative result of
these net losses, at September 30, 1998, Cablevision had a stockholders'
deficiency of $2.5 billion, and CSC Holdings had a stockholders' deficiency of
$2.6 billion. We urge you to read carefully our consolidated financial
statements contained in the Cablevision Form 10-K and the CSC Holdings Form 10-K
and the more recent information contained in the Cablevision Form 10-Qs and the
CSC Holdings Form 10-Qs, which provide more detailed information about these net
losses.
7
<PAGE>
We expect our net losses to continue and to remain substantial for the
foreseeable future because:
- interest expense and depreciation and amortization charges relating to
existing indebtedness and completed acquisitions and capital expenditures
will remain high for the foreseeable future;
- we expect that future indebtedness incurred to fund pending and future
acquisitions and the development of the new businesses, including, but not
limited to, capital expenditures and additional investments in our cable
television plant and programming operations, will result in significant
additional charges to gross revenues; and
- we expect expenses and depreciation relating to each new service we offer
to be particularly high in relation to the amount of revenues such new
service will generate in its first years of operations, resulting in
significant net losses each time we begin offering a new service or
supporting a new business we acquire.
WE WILL NEED SIGNIFICANT ADDITIONAL BORROWINGS, AND WE HAVE COMMITTED TO
SIGNIFICANT FUTURE CAPITAL EXPENDITURES AND OTHER CAPITAL COMMITMENTS
Our business is very capital-intensive. Operating, maintaining and upgrading
our cable television plant require significant amounts of cash payments to third
parties. In addition, we have incurred significant expenses to start up and
operate new businesses such as high speed Internet access, digital video service
and residential telephone service, and we expect such expenses to continue or
grow as we continue to introduce these and possibly other new services (such as
personal communications services and direct broadcast satellite ventures) to our
cable television customers. We also incur significant start-up costs in funding
new cable programming services before they have positive cash flow, typically
during their start-up and development. Our acquisition and development of
related businesses, such as electronics retailing and movie theaters, also
result in significant expenditures. Finally, we pay a significant amount of
interest in respect of our outstanding indebtedness, and significant amounts of
cash will be required to repay our existing indebtedness and the mandatorily
redeemable preferred stock of CSC Holdings. We will not be able to generate
sufficient cash internally to finance these projects or to repay this
indebtedness and the mandatorily redeemable preferred stock of CSC Holdings.
Since we will be unable to generate sufficient cash internally for these
purposes, we will be required to either raise additional capital, through debt
or equity issuances or both, or we will be required to cancel or scale back
current and future spending programs. You should not assume that we will be able
to raise any required additional capital, nor should you assume that we will be
able to compete effectively if we are unable to pursue our current and future
spending programs.
Many of our more substantial future capital expenditures and commitments are
in the form of long-term contracts that require substantial payments over an
extended period of time. For example, rights agreements with sports teams
pursuant to which we carry games on our programming networks almost always
involve multi-year contracts that are difficult and expensive to terminate.
Accordingly, if we are forced to cancel or scale back current and future
spending programs as described above, our choice of which spending programs we
will cancel or scale back may be limited.
SECURITIES ISSUED BY CABLEVISION AND CSC HOLDINGS AND THEIR OBLIGATIONS
UNDER THE GUARANTEE AND THE EXPENSE AGREEMENT WILL BE EFFECTIVELY SUBORDINATED
TO ALL EXISTING AND FUTURE INDEBTEDNESS OF THEIR SUBSIDIARIES
Cablevision and CSC Holdings are each holding companies whose assets consist
primarily of investments in subsidiaries. Cablevision's principal subsidiaries
are CSC Holdings and various entities that own cable television systems acquired
from subsidiaries of Tele-
Communications Inc. ("TCI") in March 1998. CSC Holdings' principal subsidiaries
are various entities that own cable television systems, interests in programming
networks and Rainbow Media. The ability of Cablevision and CSC Holdings to pay
interest on and repay principal of their indebtedness, to make dividend payments
and redemptions of their preferred stock and to meet
8
<PAGE>
their obligations under the guarantee and the expense agreement are dependent
primarily upon the earnings of their subsidiaries and the distribution or other
payment of these earnings to Cablevision and CSC Holdings in the form of
dividends, loans or advances. CSC Holdings and Cablevision's subsidiaries are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due on public indebtedness or preferred stock of
Cablevision or CSC Holdings or to make any funds available to Cablevision or CSC
Holdings to do so. CSC Holdings' principal bank credit facility (the "CREDIT
AGREEMENT") and certain of CSC Holdings' debt instruments contain various
financial and operating covenants that restrict the payment of distributions by
CSC Holdings to Cablevision. As of September 30, 1998, CSC Holdings had
available for distribution to Cablevision $100 million under the Credit
Agreement and $890 million under the most restrictive of its debt instruments.
Rainbow Media and certain of its subsidiaries are parties to credit agreements
that further contain various financial and operating covenants that restrict the
payment of dividends or other distributions.
In addition, creditors of subsidiaries of Cablevision and CSC Holdings would
be entitled to a claim on the assets of such subsidiaries prior to any claims of
Cablevision or CSC Holdings, as the case may be, as a stockholder. Consequently,
in the event of a liquidation or reorganization of any subsidiary, creditors of
these subsidiaries are likely to be paid in full before any distribution is made
to Cablevision or CSC Holdings, as the case may be. To the extent that
Cablevision or CSC Holdings is a creditor of such subsidiary, the claims of
Cablevision or CSC Holdings, as the case may be, would be subordinated to any
security interest in the assets of such subsidiary and/or any indebtedness of
such subsidiary senior to that held by Cablevision or CSC Holdings, as the case
may be.
A SIGNIFICANT AMOUNT OF OUR BOOK VALUE CONSISTS OF INTANGIBLE ASSETS
At September 30, 1998, Cablevision reported total assets of $6.6 billion on
its consolidated balance sheet, of which $2.9 billion were intangible assets. At
that date, CSC Holdings reported $5.5 billion of consolidated total assets, of
which $2.2 billion were intangible. Intangible assets include assets such as
franchises from city and county governments to operate cable television systems,
affiliation agreements, an amount representing the cost of certain acquired
assets in excess of their fair value and certain deferred costs associated with
past financings, acquisitions and other transactions. You should not assume that
any cash would be received from the voluntary or involuntary sale of these
intangible assets. We urge you to read carefully our consolidated financial
statements contained in the Cablevision Form 10-K and the CSC Holdings Form 10-K
and the more recent information contained in the Cablevision Form 10-Qs and the
CSC Holdings Form 10-Qs, which provide more detailed information about these
intangible assets.
WE MAY NOT BE ABLE TO COMPLETE OUR PENDING TRANSACTIONS
We have announced and may continue to announce a number of transactions,
some of which are or may be significant to our business. Because of the
conditions required to be fulfilled before we can complete these transactions,
you should not assume that any of our announced transactions will be completed
on the schedule we announce, or that any of them will be completed at all. Our
pending transactions are generally disclosed in our Form 10-Ks, our Form 10-Qs
or in our Form 8-Ks. We urge you to read carefully the description of pending
transactions contained therein, particularly the conditions required to be
fulfilled in order to complete each such transaction.
WE MAY SEPARATE RAINBOW MEDIA FROM CSC HOLDINGS
Under our existing debt instruments, we are permitted under certain
circumstances to restructure our holdings so that Rainbow Media would become a
separate subsidiary of Cablevision and would no longer be a subsidiary of CSC
Holdings, as it presently is, and the cable television assets held by
Cablevision other than through CSC Holdings would be transferred to CSC
Holdings. If we engage in such a restructuring, Rainbow Media's cash flow and
assets would no longer be available to support payments due with respect to CSC
Holdings' securities. Similarly, following a spin-off of Rainbow Media by CSC
Holdings to Cablevision,
9
<PAGE>
Cablevision might decide to spin off Rainbow Media to its shareholders, in which
event Rainbow Media's cash flow and assets would not be available to support
payments due with respect to Cablevision securities. Therefore, you should not
assume that Rainbow Media's cash flow and assets will be available to support
any Cablevision securities or CSC Holdings' securities in the future.
WE ARE CONTROLLED BY THE DOLAN FAMILY
Cablevision has two classes of Common Stock:
- Class B Common Stock, which is generally entitled to ten votes per share
and is entitled collectively to elect 75% of the Cablevision board of
directors, and
- Class A Common Stock, which is entitled to one vote per share and is
entitled collectively to elect the remaining 25% of the Cablevision board
of directors.
As of September 30, 1998, Charles F. Dolan, Chairman of the Board of Directors
of Cablevision, beneficially owned over 1% of the Class A Common Stock and 53.8%
of the Class B Common Stock and 43.3% of the total voting power of both classes
of stock (in each case taking into account shares held in trusts and as to which
Mr. Dolan disclaims beneficial ownership).
As a result of this stock ownership, Dolan family members have the power to
elect all the directors of Cablevision subject to election by holders of the
Class B Common Stock. Dolan family members may control stockholder decisions on
matters in which holders of the Common Stock vote together as a class. These
matters include the amendment of certain provisions of Cablevision's certificate
of incorporation and the approval of fundamental corporate transactions,
including mergers. In addition, because the affirmative vote or consent of the
holders of at least 66 2/3% of the outstanding shares of the Class B Common
Stock, voting separately as a class, is required to approve (i) the
authorization or issuance of any additional shares of Class B Common Stock and
(ii) any amendment, alteration or repeal of any of the provisions of the
Cablevision Certificate of Incorporation that adversely affects the powers,
preferences or rights of the Class B Common Stock, Dolan family members also
have the power to prevent such issuance or amendment. The voting rights of the
Class B Common Stock beneficially owned by the Dolan family members will not be
modified as a result of any transfer of legal or beneficial ownership thereof.
The Dolan family will therefore be able to prevent or cause a change of
control of Cablevision. We urge you to read carefully the more detailed
description of the Dolan family's interests in Cablevision's Common Stock in
Cablevision's proxy statement, which we have incorporated herein by reference.
SIGNIFICANT RESTRICTIVE COVENANTS IN OUR FINANCING AGREEMENTS LIMIT OUR
FLEXIBILITY
The Credit Agreement and certain debt instruments of CSC Holdings and its
subsidiaries contain various financial and operating covenants which, among
other things, require the maintenance of certain financial ratios and restrict
the relevant borrower's ability to incur debt from other sources and to use
funds for various purposes, including investments in certain subsidiaries.
Violation of these covenants could result in a default which would permit the
parties who have lent money under the Credit Agreement and such other debt
instruments to:
- restrict our ability to borrow undrawn funds under the Credit Agreement;
and
- require the immediate repayment of the borrowings under the Credit
Agreement and such other debt instruments.
REGULATORY RISKS ARE INHERENT AND SUBSTANTIAL IN OUR BUSINESSES
GENERAL. The Federal Communications Commission (the "FCC") and state and
local governments extensively regulate the rates we may charge our customers for
video services. They also regulate us in other ways that affect the daily
conduct of our video delivery and video programming business, as well as our
telephone business and possibly in the future, our high speed Internet access
business. Any action by the FCC, the states of New York, New Jersey,
Connecticut, Massachusetts or Ohio or concerted action by local regulators (the
likelihood or extent of which cannot be predicted) could have a material
financial effect on us. For example, in 1992
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<PAGE>
Congress enacted the Cable Television Consumer Protection and Competition Act of
1992 (the "1992 CABLE ACT"), which represented a significant change in the
regulatory framework under which cable television systems operate. In 1993 and
1994, the FCC ordered reductions in cable television rates based on the 1992
Cable Act. In 1995, a Federal appeals court upheld the material aspects of the
FCC's rate regulation scheme. Congress subsequently enacted the
Telecommunications Act of 1996, which relaxes the regulation of higher tier
cable television rates. The most significant rate regulation relaxation
affecting us will not occur until after March 31, 1999, and legislation has been
introduced in Congress to postpone this date indefinitely. The regulation by
local governments of basic cable rates will continue in most communities in
which we operate after March 31, 1999.
OUR CURRENT FRANCHISES ARE GENERALLY NON-EXCLUSIVE, AND OUR FRANCHISORS NEED
NOT RENEW OUR FRANCHISES. Our cable television systems are operated primarily
under non-exclusive franchise agreements with local government franchising
authorities, in some cases with the approval of state cable television
authorities. Consequently, our business is dependent on our ability to obtain
and renew our franchises. Although we have never lost a franchise as a result of
a failure to obtain a renewal, our franchises are subject to non-renewal or
termination under certain circumstances. In certain cases, franchises have not
been renewed at expiration, and we operate under either temporary operating
agreements or without a license while negotiating renewal terms with the
franchising authorities.
WE ARE EXPOSED TO A SIGNIFICANT AND CREDIBLE RISK OF COMPETITION
GENERAL. Cable operators compete with a variety of television programming
distribution systems, including broadcast television stations, direct
broadcasting satellite systems, multichannel multipoint distribution services,
satellite master antenna systems and private home dish earth stations. For
example, three direct broadcasting satellite systems are now operational in the
United States. Companies with substantial resources such as Hughes Electronics
Corp. have invested in some of these systems. The 1992 Cable Act prohibits a
cable programmer that is owned by or affiliated with a cable operator (such as
Rainbow Media) from (i) unreasonably discriminating among or between cable
operators and other multichannel video distribution systems with respect to the
price, terms and conditions of sale or distribution of the programmer's service
and (ii) unreasonably refusing to sell service to any multichannel video
programming distributor. Cable systems also compete with the entities that make
videotaped movies and programs available for home rental. The Telecommunications
Act of 1996 gives telephone companies and other video providers the option of
providing video programming to subscribers through "OPEN VIDEO SYSTEMS", a wired
video delivery system similar to a cable television system that may not require
a local cable franchise. RCN, an open video system operator, has authority to
operate open video systems in parts of the New York and Boston metropolitan
areas and is currently operating open video systems in Boston and parts of New
York City. Additional video competition to cable systems is possible from new
wireless local multipoint distribution services authorized by the FCC, for which
spectrum was recently auctioned by the FCC.
COMPETITION FROM TELEPHONE COMPANIES. The Cable Communications Policy Act
of 1984 (the "1984 CABLE ACT") barred co-ownership of telephone companies and
cable television systems operating in the same service areas. The
Telecommunications Act of 1996 repealed this restriction and permits a telephone
company to provide video programming directly to subscribers in its telephone
service territory, subject to certain regulatory requirements, but generally
prohibits a telephone company from acquiring an in-region cable operator, except
in certain small markets under certain circumstances. Telephone companies
(Ameritech Corp. in Ohio and Southern New England Telephone Co. in Connecticut)
have obtained or applied for local franchises to construct and operate cable
television systems in several communities in which we currently hold cable
franchises, and in certain locations have commenced offering service in
competition with us.
OUR SYSTEMS AND THE SYSTEMS OF THIRD PARTIES MAY NOT ACHIEVE YEAR 2000
READINESS
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<PAGE>
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 our
operations. Our plan to identify and address Y2K issues is described in our Form
10-Q for the quarter ended September 30, 1998.
Many of the information technology ("IT") and non-IT systems that are
necessary for the continued operation of our businesses are dependent upon
components that may not be Y2K compliant. While our Y2K compliance program is
designed to identify and remediate these systems in order to avoid interruption
of our operations, there can be no assurance that we 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 our businesses, including, without limitation, our 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 us.
We are dependent upon third-party products and services, such as utility
services and programming uplinks, for the operation of our businesses. While, as
part of the Inventory and Assessment phase of our Y2K program, we have contacted
third-party product and service providers to ascertain whether Y2K compliance
issues may exist, we have in many cases not received assurances from such
suppliers. Moreover, in most cases we do not have the ability to verify any
assurances we do 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 us is interrupted, our ability to continue
to provide services to our customers may be interrupted. Such an interruption
could have a material adverse effect on us. We intend to implement contingency
plans to address those risks, although no such plans have yet been identified,
and 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 us. For example, we and our 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 us and the risk of actions against us if the businesses of others are
disrupted. Also, the failure of such non-IT systems could result in injury to
individuals which could expose us to actions by or on behalf of such
individuals.
RISKS RELATING TO THE PREFERRED SECURITIES
Because a Trust will rely on the payments it receives on the junior
subordinated debt securities to fund all payments on preferred securities, and
because a Trust may distribute the junior subordinated debt securities in
exchange for the preferred securities upon liquidation, if you purchase
preferred securities you are making an investment decision with regard to the
junior subordinated debt securities as well as the preferred securities. You
should carefully review the information in this prospectus about both of these
securities.
OUR OBLIGATIONS TO YOU WILL BE DEEPLY SUBORDINATED
Our obligations under the junior subordinated debt securities will be
unsecured and will be subordinated in right of payment to all Senior Debt.
"SENIOR DEBT" will include substantially all current and future indebtedness of
the Issuer, other than trade accounts payable and accrued liabilities arising in
the ordinary course, and therefore will include most of the Issuer's other
subordinated debt. There will be no limit on our ability to incur Senior Debt,
and we expect to incur substantial additional amounts of Senior Debt in the
future. The subordination provisions that apply to the junior subordinated debt
securities are described in "Description of the Junior Subordinated Debt
Securities-- Subordination".
The guarantee and the expense agreement will be subordinated in right of
payment to all
12
<PAGE>
liabilities of the Issuer, including liabilities to trade creditors (but
excluding any similar guarantees and expense agreements), and will rank PARI
PASSU with the most senior class of any preferred stock that the Issuer may
issue.
DISTRIBUTION PAYMENTS ON THE PREFERRED SECURITIES COULD BE DEFERRED FOR
SUBSTANTIAL PERIODS, BUT HOLDERS WOULD CONTINUE TO RECOGNIZE INCOME FOR TAX
PURPOSES
If no Event of Default is continuing under the indenture relating to the
junior subordinated debt securities, we will have the right to begin an
Extension Period during which we will defer payments of interest on the junior
subordinated debt securities and the Trust will defer payments of distributions
on the preferred securities. Each Extension Period may last for up to 20
consecutive quarters (but not beyond the Stated Maturity). There is no
particular limit on the number of Extension Periods that we may begin, so long
as no Event of Default is continuing under the indenture relating to the junior
subordinated debt securities.
During any Extension Period, a holder of preferred securities will be
required to recognize income (in the form of original issue discount ("OID") on
a constant yield method) in respect of its PRO RATA share of the junior
subordinated debt securities held by the Trust for U.S. federal income tax
purposes. As a result, a holder of preferred securities will be required to
include that income in gross income for U.S. federal income tax purposes before
it actually receives any cash attributable to that income and will not receive
the cash related to such income from the Issuer if the holder disposes of the
preferred securities prior to the record date for the payment of the accrued and
unpaid dividends.
WE MAY REDEEM THE JUNIOR SUBORDINATED DEBT SECURITIES IF CERTAIN TAX OR
REGULATORY EVENTS OCCUR
If a Tax Event (as defined in the section captioned "Description of the
Junior Subordinated Debt Securities--Optional Redemption--Definition of Tax
Event") or an Investment Company Act Event (as defined in the section captioned
"Description of the Junior Subordinated Debt Securities--Optional
Redemption--Definition of Investment Company Act Event") occurs, we have the
right to redeem the junior subordinated debt securities in whole (but not in
part) within 90 days. If the junior subordinated debt securities are redeemed,
the preferred securities will also be redeemed. Thus, it is possible that the
preferred securities will be redeemed before their earliest stated redemption
date.
We are aware that in the past the Clinton Administration proposed
legislation that, if enacted, would have resulted in a Tax Event had the
preferred securities been outstanding at that time. Although legislation of that
kind is not currently pending, you should not assume that similar legislation
will not ultimately be enacted into law. See "U.S. Federal Income Tax
Consequences Relating to Preferred Securities-- Possible Tax Law Changes".
THE TRUST MAY DISTRIBUTE THE JUNIOR SUBORDINATED DEBT SECURITIES IN EXCHANGE
FOR THE PREFERRED SECURITIES, WHICH COULD BE A TAXABLE EVENT IN CERTAIN
CIRCUMSTANCES
The Issuer, as the holder of the outstanding common securities of the Trust,
will have the right at any time, in its sole discretion, to cause the Trust to
dissolve. In that event, after satisfying all liabilities to its creditors as
required by applicable law, the Trust would distribute the junior subordinated
debt securities to the holders of the preferred securities in exchange for those
securities upon liquidation of the Trust.
Under current U.S. federal income tax law and interpretations, and assuming,
as expected, that the Trust will not be classified as an association taxable as
a corporation, holders of the preferred securities would not have a taxable
event if the junior subordinated debt securities were distributed upon
liquidation of the Trust. However, if a Tax Event were to occur and the Trust
became subject to U.S. federal income tax with respect to income received or
accrued on the junior subordinated debt securities, both the Trust and the
holders of the preferred securities could be taxed on that distribution. See
"U.S. Federal Income Tax Consequences Relating to Preferred
Securities--Distribution of the Junior Subordinated Debt Securities to Holders
of Preferred Securities upon Liquidation of the Trust".
13
<PAGE>
WE MAY EXTEND THE STATED MATURITY OF THE JUNIOR SUBORDINATED DEBT SECURITIES
As long as the Issuer has outstanding long-term senior unsecured debt that
is rated investment grade, the Issuer will have the right to extend the stated
maturity of the junior subordinated debt securities--and therefore the mandatory
redemption date for the preferred securities. Consequently, holders of preferred
securities could have to wait until such extended maturity date before they are
entitled to have their preferred securities redeemed.
OUR DEFERRAL AND EXTENSION RIGHTS AND THE TAX TREATMENT OF THE PREFERRED
SECURITIES COULD ADVERSELY AFFECT MARKET PRICES FOR THE PREFERRED SECURITIES
Because we have the right to defer interest payments and extend or shorten
the stated maturity on the junior subordinated debt securities, the market price
of the preferred securities may be more volatile than the market prices of
similar securities that are not subject to these rights. Moreover, any exercise
of these rights could cause the market price of the preferred securities to
decline. Accordingly, the preferred securities that you may purchase or the
junior subordinated debt securities that a holder of preferred securities may
receive on liquidation of the Trust may trade at a discount to the price that
you paid to purchase the preferred securities. Furthermore, a holder that
disposes of any preferred securities or junior subordinated debt securities
during an Extension Period, when trading prices are likely to be adversely
affected by deferral, is not likely to receive the same return on its investment
as a holder that holds its preferred securities until the period ends.
A holder of preferred securities that disposes of its preferred securities
before the record date for the payment of distributions will not receive payment
of a distribution for the period prior to the disposition. Nevertheless, that
holder will be required to include accrued but unpaid interest on the junior
subordinated debt securities through the date of disposition as ordinary income
for U.S. federal income tax purposes and to add the amount of the accrued but
unpaid interest to its tax basis in the preferred securities. The holder will
recognize a capital loss to the extent the selling price is less than its
adjusted tax basis. Subject to certain limited exceptions, a holder of preferred
securities cannot offset ordinary income against capital losses for U.S. federal
income tax purposes. See "U.S. Federal Income Tax Consequences Relating to
Preferred Securities Sale or Redemption of Preferred Securities".
HOLDERS OF PREFERRED SECURITIES WILL HAVE LIMITED VOTING RIGHTS
In general, holders of preferred securities will have limited voting rights
relating principally to the modification of the Declaration of Trust (which
provides the terms and conditions of the preferred securities) and the exercise
of the Trust's rights as the holder of the junior subordinated debt securities.
Holders of preferred securities will not be entitled to appoint, remove or
replace the Property Trustee or the Delaware Trustee except upon the occurrence
of certain events. The Issuer, with the Property Trustee or the Indenture
Trustee, as applicable, may amend the Declaration of Trust and the indenture
without the consent of the holders of preferred securities to ensure that (i)
the Trust will be classified for U.S. federal income tax purposes as a grantor
trust or as other than an association taxable as a corporation, (ii) the junior
subordinated debt securities will be treated as indebtedness of the Issuer and
(iii) the Trust will not be required to register as an "investment company"
under the Investment Company Act of 1940, as amended ("the INVESTMENT COMPANY
ACT").
THERE HAS BEEN NO PRIOR MARKET FOR THE SECURITIES
There is presently no trading market for the securities that may be offered
hereby. Although the Trust may choose to apply to list the preferred securities
on the American Stock Exchange or another exchange or interdealer quotation
system, a listing does not guarantee that a trading market for the preferred
securities will develop or, if a trading market for the preferred securities
does develop, the depth of that market.
14
<PAGE>
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable prospectus
supplement, the net proceeds from the sale of the securities will be added to
our general funds and used for general corporate purposes, including the
repayment of indebtedness. Each Trust will use all proceeds received from the
sale of its preferred securities and common securities to purchase junior
subordinated debt securities of the Issuer.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS AND DEFICIENCY
OF EARNINGS AVAILABLE TO COVER FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Set forth below is information concerning Cablevision's and CSC Holdings'
ratios of earnings to fixed charges and earnings to fixed charges and preferred
stock dividends and deficiency of earnings available to cover fixed charges and
deficiency of earnings available to cover fixed charges and preferred stock
dividends. These ratios show the extent to which our businesses generate enough
earnings after the payment of all expenses other than interest and preferred
stock dividends to make required interest and dividend payments on our debt and
preferred stock. For this purpose, "earnings" represents:
- the sum of pretax income from continuing operations before adjustment for
minority interests in consolidated subsidiaries or income or loss from
equity securities, fixed charges, amortization of capital interest,
distributed income of equity investees and the share of pretax losses of
equity investees for which charges arising from guarantees are included in
fixed charges, less
- the sum of interest capitalized, preference security dividend requirements
of consolidated subsidiaries and the minority interest in pretax income of
subsidiaries that have not incurred fixed charges.
"Fixed charges" represents the sum of interest expensed and capitalized,
amortized premiums, discounts and capitalized expenses related to indebtedness,
an estimate of the interest within rental expense and preference security
dividend requirements of consolidated subsidiaries. "Preferred stock dividends"
represents the amount of pretax earnings required to pay the dividends on
outstanding preference securities.
CABLEVISION
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Ratio of earnings to fixed charges.......... 1.36 -- -- -- --
Deficiency of earnings available to cover
fixed charges............................. $(143,764) -- $(332,079) $(317,458) $(315,151) $(246,782)
Ratio of earnings to fixed charges and
preferred stock dividends................. -- -- -- --
Deficiency of earnings available to cover
fixed charges and preferred stock
dividends................................. $(263,769) $ (12,104) $(459,859) $(337,707) $(321,536) $(247,667)
</TABLE>
15
<PAGE>
CSC HOLDINGS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Ratio of earnings to fixed charges.......... -- $ 1.36 -- -- -- --
Deficiency of earnings available to cover
fixed charges............................. $(133,313) -- $(332,079) $(317,458) $(315,151) $(246,782)
Ratio of earnings to fixed charges and
preferred stock dividends................. -- -- -- -- -- --
Deficiency of earnings available to cover
fixed charges and preferred stock
dividends................................. $(253,318) $ (12,104) $(459,859) $(337,707) $(321,536) $(247,667)
</TABLE>
DESCRIPTION OF THE SECURITIES WE MAY OFFER
OVERVIEW
This prospectus describes the securities we may offer from time to time. The
remainder of this section provides some background information about the manner
in which the securities may be held, then describes the terms of the four basic
categories of securities:
- CSC Holdings' debt securities, which may be senior or subordinated;
- Cablevision's or CSC Holdings' preferred stock, which may be issued in the
form of depositary shares representing fractions of shares of preferred
stock;
- Cablevision's or CSC Holdings' junior subordinated debt securities; and
- any of the Trusts' preferred securities.
Each time we sell securities, we will provide a prospectus supplement that will
contain specific information about the securities being offered.
IN THIS SECTION, "ISSUER" MEANS THE ISSUER OF THE PARTICULAR SECURITIES IN
RESPECT OF WHICH THIS PROSPECTUS IS BEING DELIVERED (OR, IN THE CASE OF THE
PREFERRED SECURITIES, THE ENTITY THAT IS PURCHASING THE COMMON SECURITIES OF
THE ISSUING TRUST).
LEGAL OWNERSHIP
"STREET NAME" AND OTHER INDIRECT HOLDERS
In general, we would not recognize investors who hold securities in accounts
at banks or brokers as legal holders of securities. This is called holding in
"street name". Instead, we will recognize only the bank or broker or the
financial institution that the bank or broker uses to hold its securities and in
whose name the securities are registered. These intermediary banks, brokers and
other financial institutions pass along distributions, dividends, principal,
interest and other payments on the securities, pursuant to their customer
agreements or legal requirement. If you hold securities in "street name", you
should ask your institution:
- How does it handle securities payments and notices?
- Does it impose fees or charges?
- How would it handle voting if ever required?
- Whether and how can you instruct it to send you securities registered in
your own name so you can be a registered holder as described below?
- How would it pursue rights under the securities if there were a default or
other event triggering the need for holders to act to protect their
interests?
REGISTERED HOLDERS
We, and any third parties employed by us or acting on your behalf (such as
trustees, depositaries and transfer agents), are obligated only to persons who
are registered as holders of securities. As noted above, we do not have
obligations to you if you hold in "street name" or other indirect means, either
because you choose to hold securities in that manner or because the securities
are issued in the form of Global
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Securities as described below. For example, once we make a payment to the
registered holder, we have no further responsibility for the payment even if
that holder is legally required to pass the payment to you as a "street name"
customer but does not do so.
BOOK-ENTRY SECURITIES
WHAT IS A GLOBAL SECURITY? A Global Security is a special type of indirectly
held security, as described above under "-- 'Street Name' and Other Indirect
Holders". If we issue securities in the form of Global Securities, the ultimate
beneficial owners can only be indirect holders. We do this by requiring that the
Global Security be registered in the name of a financial institution selected by
us and by requiring that the securities included in the Global Security not be
transferred to the name of any other direct holder unless special circumstances
occur as described below. The financial institution that acts as the sole direct
holder of the Global Security is called the "DEPOSITARY". Any person wishing to
own a security issued in the form of a Global Security must do so indirectly by
virtue of an account with a broker, bank or other financial institution that in
turn has an account with the Depositary (a "PARTICIPANT"). The prospectus
supplement will indicate whether your series of securities will be issued only
in the form of Global Securities.
SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES. As an indirect
holder, your rights relating to a Global Security will be governed by the
account rules of your financial institution and the Depositary, as well as
general laws relating to securities transfers. We would not recognize you as a
registered holder of securities and would deal only with the Depositary that
holds the Global Security.
You should be aware that if securities are issued only in the form of Global
Securities:
- You cannot get securities registered in your own name.
- You cannot receive physical certificates for your interest in the
securities.
- You will be a "street name" holder and must look to your own bank or
broker for payments on the securities and protection of your legal rights
relating to the securities. See "-- 'Street Name' and Other Indirect
Holders".
- You may not be able to sell interests in the securities to some insurance
companies and other institutions that are required by law to hold their
securities in the form of physical certificates.
- The Depositary's policies will govern payments, transfers, exchanges and
other matters relating to your interest in the Global Security. Neither we
nor anyone other than the Depositary have any responsibility for any
aspect of the Depositary's actions or for its records of ownership
interests in the Global Security. We also do not supervise the Depositary
in any way.
SPECIAL SITUATIONS WHEN A GLOBAL SECURITY WILL BE TERMINATED. In a few
special situations, the Global Security will terminate and interests in it will
be exchanged for physical certificates representing the securities. After that
exchange, the choice of whether to hold securities directly or in "street name"
will be up to you. You must consult your bank or broker to find out how to have
your interests in securities transferred to your name, so that you will be the
registered holder. The rights of "street name" investors and registered holders
in the securities have been previously described in the subsections entitled
"-- 'Street Name' and Other Indirect Holders" and "Registered Holders".
The special situations for termination of a Global Security are:
- when the Depositary notifies us that it is unwilling, unable or no longer
qualified to continue as Depositary;
- when we elect to terminate the Global Security; or
- when an Event of Default on the securities has occurred and has not been
cured. (See "We May Offer Debt Securities--Default and Related Matters"
and "Description of the Junior Subordinated Debt Securities-- Events of
Default".)
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The prospectus supplement may also list additional situations for terminating a
Global Security that would apply to the particular series of securities covered
by the prospectus supplement. When a Global Security terminates, only the
Depositary is responsible for selecting the institutions that will be the
initial registered holders.
WE MAY OFFER DEBT SECURITIES
There is no limit to the number of different series of debt securities that
CSC Holdings may issue under the Indentures described below. This section
summarizes terms of the debt securities that are common to all series. Most of
the financial and other terms of your series, including, but not limited to,
maturity, interest, redemption, amortization, sinking fund or retirement, are
described in the prospectus supplement attached to the front of this prospectus.
Those terms may vary from the terms described here, in which case you should
rely on the terms in the prospectus supplement. The prospectus supplement may
also describe special U.S. federal income tax consequences of the debt
securities.
As required by U.S. federal law, debt securities are governed by a document
called an "Indenture". The Indenture is a contract between CSC Holdings and an
entity (in our case, The Bank of New York) which acts as Trustee. The Trustee
has two main roles. First, the Trustee can enforce your rights, including rights
you have against us if we default. There are some limitations on the extent to
which the Trustee acts on your behalf, described later under "--Default and
Related Matters--Events of Default-- Remedies if an Event of Default Occurs".
Second, the Trustee performs administrative duties for us, such as sending you
interest payments, transferring your debt securities to a new buyer if you sell
and sending you notices.
Because CSC Holdings may issue both senior debt securities and subordinated
debt securities, our references to the "Indenture" are to each of CSC Holdings'
senior debt indenture, which is separately referred to as the "Senior
Indenture", and CSC Holdings' senior subordinated debt indenture, which is
separately referred to as the "Senior Subordinated Indenture", unless the
context requires otherwise. We refer to these indentures collectively as the
"Indentures". Either Cablevision or CSC Holdings may also issue junior
subordinated debt securities under a junior subordinated debt indenture, which
is separately referred to as the "Junior Subordinated Indenture" See the section
"Description of the Junior Subordinated Debt Securities".
The Indentures and their associated documents contain the full legal text of
the matters described in this section. The Indentures and the debt securities
are governed by New York law. Copies of the Indentures have been filed with the
Commission as part of our registration statement. See "Where You Can Find More
Information" to determine how to obtain a copy.
Because this section is a summary, it does not describe every aspect of the
debt securities. This summary is subject to and qualified in its entirety by
reference to all the provisions of the Indentures, including definitions of
certain terms used in the Indentures. For example, in this section we use
capitalized words to signify defined terms that have been given special meaning
in the Indentures. We describe the meaning of only the more important terms.
Whenever we refer to defined terms of the Indentures in this prospectus or in
the prospectus supplement, such defined terms are incorporated by reference to
this prospectus or to the prospectus supplement. This summary is also subject to
and qualified by reference to the description of the particular terms of your
series described in the prospectus supplement.
OVERVIEW OF REMAINDER OF THIS DESCRIPTION OF THE DEBT SECURITIES
The remainder of this description of the debt securities summarizes:
- ADDITIONAL MECHANICS relevant to the debt securities under normal
circumstances, such as how you transfer ownership and where we make
payments;
- your rights under several SPECIAL SITUATIONS, such as if we merge with
another company or if we want to change a term of the debt securities;
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- promises we make to you about how we will run our business, or business
actions we promise not to take (known as "RESTRICTIVE COVENANTS"); and
- your rights if we DEFAULT or experience other financial difficulties.
ADDITIONAL MECHANICS
FORM, EXCHANGE AND TRANSFER
The debt securities will be issued:
- only in fully registered form;
- without interest coupons; and
- in denominations that are even multiples of $1,000.
You may have your debt securities divided into debt securities of smaller
denominations or combined into debt securities of larger denominations, as long
as the total principal amount is not changed. This is called an "exchange".
You may exchange or transfer debt securities at the office of the Trustee in
New York City. That office is currently located at The Bank of New York, 101
Barclay Street, Floor 7E, New York, New York 10286, Attn: Reorganization
Section. The Trustee maintains the list of registered holders and acts as our
agent for registering debt securities in the names of holders and transferring
debt securities. However, we may appoint another trustee to act as our agent or
act as our own agent.
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the transfer agent is satisfied with your proof of
ownership.
If we have designated additional transfer agents, they are named in the
prospectus supplement. We may cancel the designation of any particular transfer
agent. We may also approve a change in the office through which any transfer
agent acts.
If the debt securities are redeemable and we redeem less than all of the
debt securities of a particular series, we may block the transfer or exchange of
debt securities for 15 days before the day we mail the notice of redemption and
ending on the day of that mailing in order to freeze the list of holders to
prepare the mailing. We may also refuse to register transfers or exchanges of
debt securities selected for redemption, except that we will continue to permit
transfers and exchanges of the unredeemed portion of any debt security being
partially redeemed.
PAYMENT AND PAYING AGENTS
We will pay interest to you if you are a direct holder in the list of
registered holders at the close of business on a particular day in advance of
each due date for interest, even if you no longer own the security on the
interest due date. That particular time and day, usually about two weeks in
advance of the interest due date, is called the "REGULAR RECORD DATE" and is
stated in the prospectus supplement. Holders buying and selling debt securities
must work out between them how to compensate for the fact that we will pay all
the interest for an interest period to the one who is the registered holder on
the Regular Record Date. The most common manner is to adjust the sales price of
the debt securities to PRO RATE interest fairly between buyer and seller. This
PRO RATED interest amount is called "ACCRUED INTEREST".
We will pay interest, principal and any other money due on the debt
securities at the corporate trust office of the Trustee in New York City. That
office is currently located at The Bank of New York, 101 Barclay Street, Floor
21W, New York, New York 10286, Attn: Corporate Trust Administration. You must
make arrangements to have your payments picked up at or wired from that office.
We may also choose to pay interest by mailing checks or making wire transfers.
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS.
We may also arrange for additional payment offices, and may cancel or change
these offices, including our use of the Trustee's corporate trust office. We may
also choose to act as our own
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paying agent. We must notify you of changes in identities of the the paying
agents for any particular series of debt securities.
BOOK-ENTRY SECURITIES
The debt securities may be issued in whole or in part in the form of one or
more Global Securities. See "Description of the Securities We May Offer" for
additional information about your limited rights as the beneficial owner of a
Global Security.
NOTICES
We and the Trustee will send notices regarding the debt securities only to
registered holders, using their addresses as listed in the list of registered
holders.
Regardless of who acts as the paying agent, all money paid by us to a paying
agent that remains unclaimed at the end of two years after the amount is due to
registered holders will be repaid to us. After that two-year period, you may
look only to us for payment and not to the Trustee, any other paying agent or
anyone else.
SPECIAL SITUATIONS
MERGERS AND SIMILAR EVENTS
CSC Holdings is generally permitted to consolidate or merge with another
company. CSC Holdings is also permitted to sell, lease or otherwise transfer
substantially all of its assets to another company. However, CSC Holdings may
not take any of these actions unless all the following conditions are met:
- If CSC Holdings merges out of existence or transfers its assets, the
entity into which it merges or sells its assets must be a corporation
organized under the laws of the United States, any state thereof or the
District of Columbia and it must agree to be legally responsible for the
debt securities.
- Immediately before and after the merger or transfer of assets, no default
on the debt securities can exist. A default for this purpose includes any
event that would be an Event of Default if the requirements for giving a
default notice or of having the default exist for a specific period of
time were disregarded.
- It is possible that the merger, sale of assets or other transaction would
cause some of CSC Holdings' property to become subject to a mortgage or
other legal mechanism giving lenders preferential rights in that property
over other lenders or over CSC Holdings' general creditors if CSC Holdings
fails to repay them. For holders of senior debt securities, CSC Holdings
has promised to limit these preferential rights on our property, called
"LIENS", as discussed later under "Restrictive Covenants and Certain
Releases from Them--Covenants--Covenants Applicable to Senior Debt
Securities--Limitation on Liens". If a merger or other transaction would
create any Liens on our property, CSC Holdings must comply with that
restrictive covenant. CSC Holdings would do this either by deciding that
the Liens were permitted or by following the requirements of the
restrictive covenant to grant an equivalent or higher-ranking Lien on the
same property to you and the other direct holders of the senior debt
securities.
MODIFICATION AND WAIVER
There are three types of changes CSC Holdings can make to the Indentures and
the debt securities.
CHANGES REQUIRING YOUR APPROVAL. The following are changes that cannot be
made to your debt securities without your approval:
- changing the stated maturity of the principal or premium or payment date
of interest on a debt security;
- reducing any amounts due on a debt security;
- changing the currency of payment on a debt security;
- impairing your rights to sue for payment or to convert or exchange a
security;
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- in the case of subordinated debt securities, modifying the subordination
provisions in a manner that is adverse to you;
- reducing the percentage of the principal amount of debt securities whose
holders' consent is needed to waive compliance with certain provisions of
the Indenture or to waive certain defaults;
- reducing the requirements for quorum or voting with respect to the debt
securities; and
- modifying any other aspect of the provisions of the Indenture dealing with
modification and waiver except to increase the voting requirements.
CHANGES REQUIRING A MAJORITY VOTE. The second type of change to the
Indenture and the debt securities requires a vote in favor by holders of debt
securities owning a majority of the principal amount of the outstanding
securities of the particular series affected. The same vote is required for CSC
Holdings to obtain a waiver of all or part of the restrictive covenants
described later, or a waiver of a past default. However, CSC Holdings cannot
obtain a waiver of a payment default or of any default in respect of a covenant
or provision of the Indenture or the debt securities described previously under
"--Changes Requiring Your Approval" unless you consent to the waiver.
CHANGES NOT REQUIRING APPROVAL. Curing ambiguities, defects or
inconsistencies (as long as these changes do not materially adversely affect the
interests of the holders of the debt securities) and qualifying, or maintaining
the qualification of, the Indentures under the Trust Indenture Act do not
require any vote by holders of debt securities.
FURTHER DETAILS CONCERNING VOTING. CSC Holdings will use the following
rules to decide how much principal amount to attribute to a debt security for
purposes of voting:
- for OID debt securities, the principal amount that would be due and
payable on the voting date if the maturity of the debt securities were
accelerated to that date because of a default;
- for debt securities whose principal amount is not known (for example,
because it is based on an index), a special rule for that debt security
described in the prospectus supplement; and
- for debt securities denominated in one or more foreign currencies or
currency units, the U.S. dollar equivalent, determined as of the date the
security was originally issued.
If CSC Holdings has deposited or set aside in trust for you money for the
redemption of certain debt securities and satisfactory notice of redemption has
been sent to you, those securities will not be considered outstanding, and
therefore not eligible to vote. Debt securities will also not be eligible to
vote if they have been fully defeased as described later under "--Restrictive
Covenants and Certain Releases From Them--Defeasance-- Full Defeasance".
CSC Holdings can generally set any day as a record date for determining the
holders of outstanding debt securities that are entitled to vote or take other
action under the Indenture. If CSC Holdings sets a record date for a vote or
other action by holders of a particular series, that vote or action may be taken
only by persons who are registered as holders of outstanding debt securities of
that series on the record date.
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO
CHANGE THE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
RESTRICTIVE COVENANTS AND CERTAIN RELEASES FROM THEM
COVENANTS
COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES AND SUBORDINATED DEBT
SECURITIES. Unless otherwise specified in the applicable prospectus supplement,
the following covenants contained in the Indentures will be applicable with
respect to any series of debt securities (other than junior subordinated debt
securities, which are addressed
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in the section "Description of the Junior Subordinated Debt Securities"):
LIMITATION ON INDEBTEDNESS. The Indentures provide that CSC Holdings will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
incur, create, issue, assume, guarantee or otherwise become liable for,
contingently or otherwise, or become responsible for the payment of,
contingently or otherwise, any Indebtedness (other than Indebtedness between or
among any of the Issuer and its Restricted Subsidiaries) unless, after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1.
LIMITATION ON RESTRICTED PAYMENTS. The Indentures provide that, so long as
any of the debt securities of such series remain outstanding, CSC Holdings will
not, and will not permit any Restricted Subsidiary to, make any Restricted
Payment if (a) at the time of such proposed Restricted Payment, a Default or
Event of Default has occurred and is continuing or will occur as a consequence
of such Restricted Payment or (b) immediately after giving effect to such
Restricted Payment, the aggregate of all Restricted Payments that have been made
on or after July 1, 1988 would exceed the sum of:
- $25,000,000, plus
- an amount equal to the difference between (A) the Cumulative Cash Flow
Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
For purposes of the "Limitation on Restricted Payments" covenant, the amount
of any Restricted Payment, if other than cash, shall be based upon fair market
value as determined by the Board of Directors of CSC Holdings, whose good faith
determination shall be conclusive.
The provisions above do not prevent: (i) the payment of any dividend within
60 days after the date of declaration thereof, if at such date of declaration
such payment complied with the above provisions; and (ii) the retirement,
redemption, purchase, defeasance or other acquisition of any shares of CSC
Holdings' capital stock or warrants, rights or options to acquire capital stock
of CSC Holdings, in exchange for, or out of the proceeds of a sale (within one
year before or 180 days after such retirement, redemption, purchase, defeasance
or other acquisition) of, other shares of CSC Holdings' capital stock or
warrants, rights or options to acquire capital stock of CSC Holdings. For
purposes of determining the aggregate permissible amount of Restricted Payments
in accordance with clause (b) of the first paragraph of this covenant, all
amounts expended pursuant to clause (i) of this paragraph shall be included and
all amounts expended or received pursuant to clause (ii) of this paragraph shall
be excluded; PROVIDED, HOWEVER, that amounts paid pursuant to clause (i) of this
paragraph shall be included only to the extent that such amounts were not
previously included in calculating Restricted Payments.
For the purposes of the provisions above, the net proceeds from the issuance
of shares of CSC Holdings' capital stock upon conversion of Indebtedness will be
deemed to be an amount equal to the accumulated value of such Indebtedness on
the date of such conversion and the additional consideration, if any, CSC
Holdings receives upon such conversion, minus any cash payment on account of
fractional shares (such consideration, if in property other than cash, to be
determined by CSC Holdings' Board of Directors, whose good faith determination
shall be conclusive). If CSC Holdings makes a Restricted Payment which, at the
time of the making of such Restricted Payment, would be in CSC Holdings' good
faith determination permitted under the requirements of this covenant, such
Restricted Payment will be deemed to have been made in compliance with this
covenant notwithstanding any subsequent adjustments made in good faith to CSC
Holdings' financial statements affecting Cumulative Cash Flow Credit or
Cumulative Interest Expense for any period.
LIMITATION ON INVESTMENTS IN UNRESTRICTED SUBSIDIARIES AND AFFILIATES. The
Indentures provide that CSC Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any Investment or allow
any Restricted Subsidiary to become an Unrestricted Subsidiary, in each case
unless (a) no Default or Event of Default has occurred and is continuing or will
occur as a consequence of such Investment or such redesignation of a Restricted
Subsidiary, and (b) after giving effect thereto, the Cash Flow Ratio shall be
less than or equal to 9 to 1.
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The preceding provisions of this covenant will not prohibit any renewal or
reclassification of any Investment existing on the date hereof or trade credit
extended on usual and customary terms in the ordinary course of business.
TRANSACTIONS WITH AFFILIATES. The Indentures provide that CSC Holdings will
not and will not permit any of its subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to or purchase any property
or assets from, or enter into any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, an Affiliate of CSC Holdings
that is not a subsidiary of CSC Holdings, having a value, or for consideration
having a value, in excess of $10,000,000 (individually or in the aggregate)
unless CSC Holdings' Board of Directors shall make a good faith determination
that the terms of such transaction are, taken as a whole, no less favorable to
CSC Holdings or such subsidiary, as the case may be, than those which might be
available in a comparable transaction with an unrelated person. For purposes of
clarification, this provision shall not apply to Restricted Payments permitted
under "-- Limitation on Restricted Payments".
COVENANT APPLICABLE TO SENIOR DEBT SECURITIES. Unless otherwise specified in
the applicable prospectus supplement, the following covenant will be applicable
with respect to any series of senior debt securities:
LIMITATION ON LIENS. The Senior Indenture provides that CSC Holdings will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, assume or suffer to exist any Lien of any kind, except for
Permitted Liens, on or with respect to any of its property or assets, whether
owned at the date of the Senior Indenture or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereon, unless (x) in the case of any Lien securing Indebtedness
that is subordinated in right of payment to the senior debt securities of the
series offered pursuant to such prospectus supplement, the senior debt
securities of such series are secured by a Lien on such property, assets or
proceeds that is senior in priority to such Lien and (y) in the case of any
other Lien, the senior debt securities of such series are equally and ratably
secured.
COVENANT APPLICABLE TO SUBORDINATED DEBT SECURITIES. Unless otherwise
specified in the applicable prospectus supplement, the following covenant will
be applicable with respect to any series of subordinated debt securities:
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Senior Subordinated
Indenture provides that CSC Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become liable for, contingently or otherwise, or become
responsible for the payment of, contingently or otherwise, any Indebtedness
which is both senior in right of payment to the subordinated debt securities of
any series and expressly subordinate in right of payment to any other
Indebtedness of CSC Holdings. For purposes of this covenant, Indebtedness is
deemed to be senior in right of payment of the subordinated debt securities of a
series if it is not subordinate in right of payment to Senior Indebtedness at
least to the same extent as such subordinated debt securities are subordinate to
senior indebtedness.
If so indicated in the applicable prospectus supplement with respect to a
particular series of debt securities, CSC Holdings will also be subject to the
covenants described in the prospectus supplement.
CERTAIN DEFINITIONS RELATING TO OUR RESTRICTIVE COVENANTS. Unless otherwise
specified in the applicable prospectus supplement, the following definitions are
applicable to the Indenture relating to the debt securities being offered
pursuant to such prospectus supplement. Reference is made to the applicable
Indenture for the full definition of all such terms.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a person (a) existing at the
time such person is merged with or into CSC Holdings or a subsidiary or becomes
a subsidiary or (b) assumed in connection with the acquisition of assets from
such person.
"AFFILIATE" means, with respect to any specified person, any other person
directly or
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indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"ANNUALIZED OPERATING CASH FLOW" means, for any period of three complete
consecutive calendar months, an amount equal to Operating Cash Flow for such
period multiplied by four.
"AVERAGE LIFE" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"BANKS" means the lenders from time to time under the Credit Agreement.
"CAPITALIZED LEASE OBLIGATION" means any obligation of a person to pay rent
or other amounts under a lease with respect to any property (whether real,
personal or mixed) acquired or leased by such person and used in its business
that is required to be accounted for as a liability on the balance sheet of such
person in accordance with GAAP, and the amount of such Capitalized Lease
Obligation shall be the amount so required to be accounted for as a liability.
"CASH FLOW RATIO" means, as at any date, the ratio of (i) the sum of the
aggregate outstanding principal amount of all Indebtedness of CSC Holdings and
the Restricted Subsidiaries determined on a consolidated basis but excluding all
Interest Swap Obligations entered into by CSC Holdings or any Restricted
Subsidiary and one of the Banks outstanding on such date plus (but without
duplication of Indebtedness supported by letters of credit) the aggregate
undrawn face amount of all letters of credit outstanding on such date to (ii)
Annualized Operating Cash Flow determined as at the last day of the most recent
month for which financial information is available.
"CONSOLIDATED NET TANGIBLE ASSETS" of any person means, as of any date, (a)
all amounts that would be shown as assets on a consolidated balance sheet of
such person and its Restricted Subsidiaries prepared in accordance with GAAP,
less (b) the amount thereof constituting goodwill and other intangible assets as
calculated in accordance with GAAP.
"CUMULATIVE CASH FLOW CREDIT" means the sum of:
- cumulative Operating Cash Flow during the period commencing on July 1,
1988 and ending on the last day of the most recent month preceding the
date of the proposed Restricted Payment for which financial information is
available or, if cumulative Operating Cash Flow for such period is
negative, minus the amount by which cumulative Operating Cash Flow is less
than zero; PLUS
- the aggregate net proceeds received by CSC Holdings from the issuance or
sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992; PLUS
- the aggregate net proceeds received by CSC Holdings from the issuance or
sale (other than to a Restricted Subsidiary) of its capital stock (other
than Disqualified Stock) on or after January 1, 1992, upon the conversion
of, or exchange for, Indebtedness of CSC Holdings or any Restricted
Subsidiary or from the exercise of any options, warrants or other rights
to acquire capital stock of CSC Holdings.
For purposes of this definition, the net proceeds in property other than
cash received by CSC Holdings as contemplated by clauses (b) and (c) above shall
be valued at the fair market value of such property (as determined by the Board
of Directors of CSC Holdings, whose good faith determination shall be
conclusive) at the date of receipt by CSC Holdings.
"CUMULATIVE INTEREST EXPENSE" means, for the period commencing on July 1,
1988 and ending on
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the last day of the most recent month preceding the proposed Restricted Payment
for which financial information is available, the aggregate of the interest
expense of CSC Holdings and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, including interest
expense attributable to Capitalized Lease Obligations.
"DEBT" with respect to any person means, without duplication, any liability,
whether or not contingent:
- in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements with
respect thereto), but excluding reimbursement obligations under any surety
bond;
- representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to Capitalized Lease Obligations), except any
such balance that constitutes a trade payable;
- under Interest Swap Agreements (as defined in the Credit Agreement)
entered into pursuant to the Credit Agreement;
- under any other agreement related to the fixing of interest rates on any
Indebtedness, such as an interest swap, cap or collar agreement (if and to
the extent any of the foregoing would appear as a liability upon a balance
sheet of such person prepared on a consolidated basis in accordance with
GAAP); or
- guarantees of items of other persons which would be included within this
definition for such other persons (whether or not the guarantee would
appear on such balance sheet).
"DEBT" does not include:
- Disqualified Stock;
- any liability for federal, state, local or other taxes owed or owing by
such person; or
- any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities).
"DISQUALIFIED STOCK" means, with respect to any series of debt securities,
any capital stock of CSC Holdings or any Restricted Subsidiary which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of such series of debt securities.
"INDEBTEDNESS" with respect to any person means the Debt of such person;
PROVIDED THAT, for purposes of the definition of "INDEBTEDNESS" (including the
term "DEBT" to the extent incorporated in such definition) and for purposes of
the definition of "EVENT OF DEFAULT", the term "GUARANTEE" shall not be
interpreted to extend to a guarantee under which recourse is limited to the
capital stock of an entity that is not a Restricted Subsidiary.
"INTEREST SWAP OBLIGATIONS" means, with respect to any person, the
obligations of such person pursuant to any arrangement with any other person
whereby, directly or indirectly, such person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a fixed rate
of interest on a stated notional amount in exchange for periodic payments made
by such person calculated by applying a fixed or a floating rate of interest on
the same notional amount.
"INVESTMENT" means any advance, loan, account receivable (other than an
account receivable arising in the ordinary course of business), or other
extension of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or any capital contribution
to (by means of transfers of property to others, payments for property or
services for the account or use of others, or otherwise), any purchase or
ownership of any stock, bonds, notes, debentures or other securities (including,
without limitation, any interests in any partnership or joint venture) of, or
any bank accounts with or guarantee of any Indebtedness or other obligations of,
any Unrestricted Subsidiary
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or Affiliate that is not a subsidiary of CSC Holdings, PROVIDED THAT (i) the
term "INVESTMENT" shall not include any transaction that would otherwise
constitute an Investment of CSC Holdings or a subsidiary of CSC Holdings to the
extent that the consideration provided by CSC Holdings or such subsidiary in
connection therewith shall consist of capital stock of CSC Holdings (other than
Disqualified Stock) and (ii) the term "GUARANTEE" shall not be interpreted to
extend to a guarantee under which recourse is limited to the capital stock of an
entity that is not a Restricted Subsidiary.
"LIEN" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature of a security interest and any agreement to give any security
interest). A person shall be deemed to own subject to a Lien any property which
such person has acquired or holds subject to the interest of a vendor or lessor
under a conditional sale agreement, capital lease or other title retention
agreement.
"MANDATORILY REDEEMABLE PREFERRED STOCK" means CSC Holdings' Series H
Redeemable Exchangeable Preferred Stock, Series M Redeemable Exchangeable
Preferred Stock and any other series of capital stock of CSC Holdings that is
Disqualified Stock outstanding at the time of issuance of the applicable series
of debt securities and any series of preferred stock of CSC Holdings issued in
exchange for, or the proceeds of which are used to repurchase, redeem, defease
or otherwise acquire, all or any portion of the Series H Redeemable Exchangeable
Preferred Stock, Series M Redeemable Exchangeable Preferred Stock or any other
Mandatorily Redeemable Preferred Stock.
"OPERATING CASH FLOW" means, for any period, the sum of the following for
the Issuer and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (except for the amortization of
deferred installation income which shall be excluded from the calculation of
Operating Cash Flow for all purposes of the Indenture): aggregate operating
revenues minus aggregate operating expenses (including technical, programming,
sales, selling, general and administrative expenses and salaries and other
compensation, net of amounts allocated to Affiliates, paid to any general
partner, director, officer or employee of CSC Holdings or any Restricted
Subsidiary, but excluding interest, depreciation and amortization and the amount
of non-cash compensation in respect of CSC Holdings' employee incentive stock
programs for such period (not to exceed in the aggregate for any calendar year
7% of the Operating Cash Flow for the previous calendar year) and, to the extent
otherwise included in operating expenses, any losses resulting from a write-off
or write-down of Investments by CSC Holdings or any Restricted Subsidiary in
Affiliates). For purposes of determining Operating Cash Flow, there shall be
excluded all management fees until actually paid to CSC Holdings or any
Restricted Subsidiary in cash.
"PERMITTED LIENS" means the following types of Liens:
- Liens existing on the applicable issuance date of debt securities of a
series;
- Liens on shares of the capital stock of an entity that is not a Restricted
Subsidiary, which Liens solely secure a guarantee by CSC Holdings or a
Restricted Subsidiary, or both, of Indebtedness of such entity;
- Liens on Receivables and Related Assets (and proceeds thereto) securing
only Indebtedness otherwise permitted to be incurred by a Securitization
Subsidiary;
- Liens on shares of the capital stock of a subsidiary of CSC Holdings
securing Indebtedness under the Credit Agreement or any renewal of or
replacement of the Credit Agreement;
- Liens granted in favor of CSC Holdings or any Restricted Subsidiary;
- Liens securing the debt securities;
- Liens securing Acquired Indebtedness created prior to (and not in
connection with or in contemplation of) the incurrence of such
Indebtedness by CSC Holdings or a Restricted Subsidiary; PROVIDED THAT
such Lien does not extend to any property or assets of CSC Holdings or any
Restricted Subsidiary other than the assets acquired in
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connection with the incurrence of such Acquired Indebtedness;
- Liens securing Interest Swap Obligations or "MARGIN STOCK", as defined in
Regulations G and U of the Board of Governors of the Federal Reserve
System;
- statutory Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like liens arising in the
ordinary course of business of CSC Holdings or any Restricted Subsidiary
and with respect to amounts not yet delinquent or being contested in good
faith by appropriate proceedings;
- Liens for taxes, assessments, government charges or claims not yet due or
that are being contested in good faith by appropriate proceedings;
- zoning restrictions, easements, rights-of-way, restrictions and other
similar charges or encumbrances or minor defects in title not interfering
in any material respect with the business of CSC Holdings or any of its
Restricted Subsidiaries;
- Liens arising by reason of any judgment, decree or order of any court,
arbitral tribunal or similar entity so long as any appropriate legal
proceedings that may have been initiated for the review of such judgment,
decree or order shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired;
- Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security or similar legislation;
- Liens securing the performance of bids, tenders, leases, contracts,
franchises, public or statutory obligations, surety, stay or appeal bonds,
or other similar obligations arising in the ordinary course of business;
- Leases under which CSC Holdings or any Restricted Subsidiary is the lessee
or the lessor;
- purchase money mortgages or other purchase money liens (including without
limitation any Capital Lease Obligations) upon any fixed or capital assets
acquired after the applicable issuance date of debt securities of a
series, or purchase money mortgages (including without limitation
Capitalized Lease Obligations) on any such assets hereafter acquired or
existing at the time of acquisition of such assets, whether or not
assumed, so long as such mortgage or lien does not extend to or cover any
other asset of CSC Holdings or any Restricted Subsidiary and such mortgage
or lien secures the obligation to pay the purchase price of such asset,
interest thereon and other charges incurred in connection therewith (or
the obligation under such Capitalized Lease Obligation) only;
- Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
- Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of CSC
Holdings or any of its Restricted Subsidiaries, including rights of offset
and set-off;
- Liens to secure other Indebtedness; PROVIDED, HOWEVER, that the principal
amount of any Indebtedness secured by such Liens, together with the
principal amount of any Indebtedness refinancing any Indebtedness incurred
under this clause as permitted by the immediately following clause (and
successive refinancings thereof), may not exceed 15% of CSC Holdings'
Consolidated Net Tangible Assets as of the last day of CSC Holdings' most
recently completed fiscal year for which financial information is
available; and
- any extension, renewal or replacement, in whole or in part, of any Lien
described in the immediately preceding clauses; PROVIDED THAT any such
extension, renewal
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or replacement shall be no more restrictive in any material respect than
the Lien so extended, renewed or replaced and shall not extend to any
additional property or assets.
"RECEIVABLES AND RELATED ASSETS" means
- accounts receivable, instruments, chattel paper, obligations, general
intangibles, equipment and other similar assets, including interests in
merchandise or goods, the sale or lease of which gives rise to the
foregoing, related contractual rights, guarantees, insurance proceeds,
collections and other related assets;
- equipment;
- inventory; and
- proceeds of all of the above.
"REFINANCING INDEBTEDNESS" means, with respect to any series of senior debt
securities, Indebtedness of CSC Holdings incurred to redeem, repurchase, defease
or otherwise acquire or retire for value other Indebtedness that is subordinate
in right of payment to such senior debt securities, so long as any such new
Indebtedness (i) is made subordinate to such senior debt securities at least to
the same extent as the Indebtedness being refinanced and (ii) does not have (x)
an Average Life less than the Average Life of the Indebtedness being refinanced,
(y) a final scheduled maturity earlier than the final scheduled maturity of the
Indebtedness being refinanced or (z) permit redemption at the option of the
holder earlier than the earlier of (A) the final scheduled maturity of the
Indebtedness being refinanced or (B) any date of redemption at the option of the
holder of the Indebtedness being refinanced.
"RESTRICTED PAYMENT" means, with respect to any series of debt securities,
- any Stock Payment by CSC Holdings or a Restricted Subsidiary;
- any direct or indirect payment to redeem, purchase, defease or otherwise
acquire or retire for value, or permit any Restricted Subsidiary to
redeem, purchase, defease or otherwise acquire or retire for value, prior
to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of CSC Holdings that is subordinate in right of
payment to such debt securities; PROVIDED, HOWEVER, that, with respect to
any series of senior debt securities, any direct or indirect payment to
redeem, purchase, defease or otherwise acquire or retire for value, or
permit any Restricted Subsidiary to redeem, repurchase, defease or
otherwise acquire or retire for value, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness
that is subordinate in right of payment to such senior debt securities
shall not be a Restricted Payment if either (i) after giving effect
thereto, the ratio of the Senior Indebtedness of CSC Holdings and the
Restricted Subsidiaries to Annualized Operating Cash Flow determined as of
the last day of the most recent month for which financial information is
available is less than or equal to 5 to 1 or (ii) such subordinate
Indebtedness is redeemed, purchased, defeased or otherwise acquired or
retired in exchange for, or out of, (x) the proceeds of a sale (within one
year before or 180 days after such redemption, purchase, defeasance,
acquisition or retirement) of Refinancing Indebtedness or capital stock of
CSC Holdings or warrants, rights or options to acquire capital stock of
CSC Holdings or (y) any source of funds other than the incurrence of
Indebtedness; or
- any direct or indirect payment to redeem, purchase, defease or otherwise
acquire or retire for value any Disqualified Stock at its mandatory
redemption date or other maturity date if and to the extent that
Indebtedness is incurred to finance such redemption, purchase, defeasance
or other acquisition or retirement; PROVIDED, HOWEVER, that the
redemption, purchase, defeasance or other acquisition or retirement of
Mandatorily Redeemable Preferred Stock at its mandatory redemption or
other maturity date shall not be a Restricted Payment if and to the
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extent any Indebtedness incurred to finance all or a portion of the
purchase or redemption price does not have a final scheduled maturity
date, or permit redemption at the option of the holder thereof, earlier
than the final scheduled maturity of such series of debt securities.
Notwithstanding the foregoing, Restricted Payments shall not include (x)
payments by any Restricted Subsidiary to CSC Holdings or any other Restricted
Subsidiary or (y) any Investment or designation of a Restricted Subsidiary as an
Unrestricted Subsidiary permitted under the "Limitation on Investments in
Unrestricted Subsidiaries and Affiliates" covenant.
"RESTRICTED SUBSIDIARY" means any subsidiary of CSC Holdings, whether
existing on the date of the applicable Indenture or created subsequent thereto,
designated from time to time by CSC Holdings as a "Restricted Subsidiary",
PROVIDED, HOWEVER, that no subsidiary that is not a Securitization Subsidiary
can be or remain so designated unless (i) at least 67% of each of the total
equity interest and the voting control of such subsidiary is owned, directly or
indirectly, by CSC Holdings or another Restricted Subsidiary and (ii) such
subsidiary is not restricted, pursuant to the terms of any loan agreement, note,
indenture or other evidence of indebtedness, from (a) paying dividends or making
any distribution on such subsidiary's capital stock or other equity securities
or paying any Indebtedness owed to CSC Holdings or to any Restricted Subsidiary,
(b) making any loans or advances to CSC Holdings or any Restricted Subsidiary or
(c) transferring any of its properties or assets to CSC Holdings or any
Restricted Subsidiary (it being understood that a financial covenant any of the
components of which are directly impacted by the taking of the action (e.g., the
payment of a dividend) itself (such as a minimum net worth test) would be deemed
to be a restriction on the foregoing actions, while a financial covenant none of
the components of which is directly impacted by the taking of the action (e.g.,
the payment of a dividend) itself (such as a debt to cash flow test) would not
be deemed to be a restriction on the foregoing actions); and PROVIDED FURTHER
that CSC Holdings may, from time to time, redesignate any Restricted Subsidiary
as an Unrestricted Subsidiary in accordance with the provisions of the
"Limitation on Investments in Unrestricted Subsidiaries and Affiliates"
covenant.
"SECURITIZATION SUBSIDIARY" means a Restricted Subsidiary that is
established for the limited purpose of acquiring and financing Receivables and
Related Assets and engaging in activities ancillary thereto; PROVIDED THAT (i)
no portion of the Indebtedness of a Securitization Subsidiary is guaranteed by
or is recourse to CSC Holdings or any other Restricted Subsidiary (other than
recourse for customary representations, warranties, covenants and indemnities,
none of which shall relate to the collectibility of the Receivables and Related
Assets) and (ii) none of CSC Holdings or any other Restricted Subsidiary has any
obligation to maintain or preserve such Securitization Subsidiary's financial
condition.
"SENIOR INDEBTEDNESS" means, with respect to the subordinated debt
securities of any series except as otherwise provided in the applicable
prospectus supplement, the principal, premium, if any, interest, if any
(including post-petition interest in any proceeding under any bankruptcy law,
whether or not such interest is an allowed claim enforceable against the debtor
in a proceeding under such bankruptcy law), penalties, fees and other
liabilities payable with respect to (i) all Debt of CSC Holdings, other than the
junior subordinated debt securities, if any (to which the subordinated debt
securities of such series are intended to be senior) and the subordinated debt
securities and CSC Holdings' 9 7/8% Senior Subordinated Notes due 2005, 9 7/8%
Senior Subordinated Notes due 2006, 9 7/8% Senior Subordinated Debentures due
2013, 10 1/2% Senior Subordinated Debentures due 2016 and 9 7/8% Senior
Subordinated Debentures due 2023 (with which the Subordinated Debt Securities of
such series are intended to rank on a parity), whether outstanding on the date
of the Indenture or thereafter created, incurred or assumed, which is (x) for
money borrowed, (y) evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets of any
kind or (z) in respect of any Capitalized Lease Obligations and (ii) all
renewals, extensions, refundings, increases or refinancings thereof, unless, in
the case of (i) or (ii) above, the instrument under which the Debt is created,
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incurred, assumed or guaranteed expressly provides that such Debt is not senior
in right of payment to the subordinated debt securities of any series.
Notwithstanding anything to the contrary contained herein, "SENIOR INDEBTEDNESS"
shall mean and include all amounts of Senior Indebtedness that are such by
virtue of clause (i) and (ii) of the foregoing definition that are repaid by CSC
Holdings and subsequently recovered from the holder of such Senior Indebtedness
under any applicable bankruptcy laws or otherwise (other than by reason of some
wrongful conduct on the part of the holders of such Debt).
"STOCK PAYMENT" means, with respect to any person, the payment or
declaration of any dividend, either in cash or in property (except dividends
payable in common stock or common shares of capital stock of such person), or
the making by such person of any other distribution, on account of any shares of
any class of its capital stock, now or hereafter outstanding, or the redemption,
purchase, retirement or other acquisition for value by such person, directly or
indirectly, of any shares of any class of its capital stock, now or hereafter
outstanding, other than the redemption, purchase, defeasance or other
acquisition or retirement for value of any Disqualified Stock at its mandatory
redemption date or other maturity date.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of CSC Holdings which is not
a Restricted Subsidiary.
SATISFACTION AND DISCHARGE
Except as noted below, the Indentures will cease to be of further effect,
and CSC Holdings will be deemed to have satisfied and discharged the Indentures,
when the following conditions (among others) have been satisfied:
- all debt securities not previously delivered to the Trustee for
cancellation have become due and payable or will become due and payable at
their stated maturity or on a redemption date within one year, and
- CSC Holdings deposits with the Trustee, in trust, funds sufficient to pay
the entire indebtedness on those debt securities not previously delivered
for cancellation, for the principal and interest (including any Additional
Sums) to the date of the deposit (for debt securities that have become due
and payable) or to the stated maturity or the redemption date, as the case
may be (for debt securities that have not become due and payable).
CSC Holdings will remain obligated in certain ministerial respects including
providing for registration of transfer and exchange and providing notices of
redemption.
DEFEASANCE
The following discussion of full defeasance and covenant defeasance will be
applicable to your series of debt securities only if CSC Holdings chooses to
have them apply to that series. If CSC Holdings does so choose, CSC Holdings
will state that in the applicable prospectus supplement.
FULL DEFEASANCE. If there is a change in federal tax law, as described
below, CSC Holdings can legally release itself from any payment or other
obligations on the debt securities (called "FULL DEFEASANCE") if CSC Holdings
puts in place the following other arrangements for you to be repaid:
- CSC Holdings must deposit in trust for your benefit and the benefit of all
other registered holders of the debt securities a combination of money and
U.S. government or U.S. government agency notes or bonds that will
generate enough cash to make interest, principal and any other payments on
the debt securities on their various due dates (including, possibly their
earlier redemption date).
- Under current federal tax law, the deposit and CSC Holdings' legal release
from the debt securities would likely be treated as though you surrendered
your debt securities in exchange for your share of the cash and notes or
bonds deposited in trust. In that event, you could recognize gain or loss
on the debt securities you surrendered. In order for CSC Holdings to
effect a full defeasance, CSC Holdings must deliver to the Trustee a legal
opinion confirming that you will not recognize income gain or loss
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for federal income tax purposes as a result of the defeasance and that you
will not be taxed on the debt securities any differently than if CSC
Holdings did not make the deposit and just repaid the debt securities
itself.
If CSC Holdings accomplishes a full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment on the debt securities.
You could not look to CSC Holdings for repayment in the unlikely event of any
shortfall. Conversely, the trust deposit would most likely be protected from
claims of CSC Holdings' lenders and other creditors if CSC Holdings ever becomes
bankrupt or insolvent. You would also be released from any applicable
subordination provisions on the subordinated debt securities described below
under "--Default and Related Matters-- Subordination".
COVENANT DEFEASANCE. Under current federal tax law, CSC Holdings can make
the same type of deposit described above and be released from some of the
restrictive covenants in the debt securities. This is called "COVENANT
DEFEASANCE". In that event, you would lose the protection of those restrictive
covenants but would gain the protection of having money and securities set aside
in trust to repay the debt securities, and you would be released from any
applicable subordination provisions on the subordinated debt securities
described later under "--Default and Related Matters--Subordination". In order
to achieve covenant defeasance, CSC Holdings must do the following:
- CSC Holdings must deposit in trust for your benefit and the benefit of all
other registered holders of the debt securities a combination of money and
U.S. government or U.S. government agency notes or bonds that will
generate enough cash to make interest, principal and any other payments on
the debt securities on their various due dates.
- CSC Holdings must deliver to the Trustee a legal opinion confirming that
under current federal income tax law it may make the above deposit without
causing you to be taxed on the debt securities any differently than if CSC
Holdings did not make the deposit and just repaid the debt securities
itself.
If CSC Holdings accomplishes covenant defeasance, the following provisions
of the Indenture and the debt securities would no longer apply:
- CSC Holdings' promises regarding conduct of its business and other matters
previously described under "--Covenants" and any other covenants
applicable to the series of debt securities and described in the
prospectus supplement;
- the condition regarding the treatment of Liens when CSC Holdings merges or
engages in similar transactions, as previously described under "--Special
Situations--Mergers and Similar Events"; and
- the definition of an Event of Default as a breach of such covenants,
described below under "--Default and Related Matters-- Events of
Default--What Is an Event of Default?".
If CSC Holdings accomplishes covenant defeasance, you can still look to CSC
Holdings for repayment of the debt securities if there were a shortfall in the
trust deposit. In fact, if one of the remaining Events of Default occurred (such
as our bankruptcy) and the debt securities become immediately due and payable,
there may be such a shortfall. Depending on the event causing the default, of
course, you may not be able to obtain payment of the shortfall.
In order to exercise either defeasance or covenant defeasance, CSC Holdings
must comply with certain conditions, and in the case of subordinated debt
securities, no event or condition can exist that, pursuant to certain provisions
described under "--Default and Related Matters--Subordination" below, would
prevent CSC Holdings from making payments of principal of and premium, if any,
and interest, if any, on the senior debt securities or subordinated debt
securities of such series on the date the irrevocable deposit is made or at any
time during the period ending on the 91st day after the deposit date.
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DEFAULT AND RELATED MATTERS
RANKING
Unless provided otherwise in the applicable prospectus supplement, the debt
securities are not secured by any of CSC Holdings' property or assets.
Accordingly, your ownership of debt securities means you are one of CSC
Holdings' unsecured creditors. The senior debt securities are not subordinated
to any of CSC Holdings' other debt obligations and therefore they rank equally
with all CSC Holdings' other unsecured and unsubordinated indebtedness. The
subordinated debt securities are subordinated to some of CSC Holdings' existing
and future debt and other liabilities. See "--Subordination" for additional
information on how subordination limits your ability to receive payment or
pursue other rights if CSC Holdings defaults or has certain other financial
difficulties.
EVENTS OF DEFAULT
You will have special rights if an Event of Default occurs and is not cured,
as described later in this subsection.
WHAT IS AN EVENT OF DEFAULT? The term "EVENT OF DEFAULT" for the Senior
Indenture and the Senior Subordinated Indenture only means any of the following:
- CSC Holdings does not pay the principal or any premium on a debt security
on the date it is due (whether at maturity, upon redemption or upon
acceleration).
- CSC Holdings does not pay interest on a debt security within 30 days of
its due date.
- CSC Holdings does not deposit any sinking fund payment on its due date.
- CSC Holdings remains in breach of a restrictive covenant or any other term
of the Indenture for 60 days (or, with respect to certain covenants and
terms, 30 days) after CSC Holdings receives a notice of default stating
CSC Holdings is in breach. The notice must be sent by either the Trustee
or holders of 25% of the principal amount of debt securities of the
affected series.
- A default in certain other debt of CSC Holdings totaling $10,000,000 or
more without CSC Holdings contesting the default.
- A judgment is entered against CSC Holdings in an amount exceeding
$10,000,000 and remains undischarged and unstayed for 60 days or as to
which a creditor has commenced an enforcement proceeding.
- CSC Holdings files for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur.
- Any other Event of Default described in the applicable prospectus
supplement occurs.
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an Event of Default has occurred
and has not been cured, the Trustee or the holders of 25% in principal amount of
the debt securities of the affected series may declare the entire principal
amount of and accrued interest on all the debt securities of that series to be
due and immediately payable. This is called a declaration of acceleration of
maturity. If an Event of Default occurs because of certain events in bankruptcy,
insolvency or reorganization, the principal amount of all the debt securities of
that series will be automatically accelerated, without any action by the Trustee
or any holder. There are special notice and timing rules which apply to the
acceleration of subordinated debt securities which are designed to protect the
interests of holders of senior debt.
A declaration of acceleration of maturity may be cancelled by the holders of
at least a majority in principal amount of the debt securities of the affected
series if (i) all existing Events of Default, other than the nonpayment of
principal of or premium or interest, if any, on the debt securities of such
series which have become due solely because of the acceleration, have been cured
or waived and (ii) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. A declaration of acceleration because of
an Event of Default which occurs because CSC Holdings has defaulted under our
other debt totaling $10,000,000 or more would be automatically annulled if the
debt on which
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CSC Holdings defaulted were discharged, or the holders of such debt rescinded
their declaration of acceleration, within 30 days after the acceleration of the
debt securities of such series and no other Event of Default had occurred and
not been cured or waived during such period.
Except in cases of default, where the Trustee has some special duties, the
Trustee is not required to take any action under an Indenture at the request of
any holders unless the holders offer the Trustee reasonable protection from
expenses and liability (called an "INDEMNITY"). If reasonable indemnity is
provided, the holders of a majority in principal amount of the outstanding debt
securities of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any remedy available
to the Trustee. These majority holders may also direct the Trustee in performing
any other action under the Indenture.
Before you bypass the Trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
- You must give the Trustee written notice that an Event of Default has
occurred and remains uncured.
- The holders of 25% in principal amount of all outstanding debt securities
of the relevant series must make a written request that the Trustee take
action because of the default, must not give the Trustee any direction
inconsistent with such written request, and must offer reasonable
indemnity to the Trustee against the cost and other liabilities of taking
that action.
- The Trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A
REQUEST OF THE TRUSTEE AND TO MAKE OR CANCEL A DECLARATION OF ACCELERATION.
CSC Holdings will furnish to the Trustee every year a written statement of
certain of its officers certifying that to their knowledge it is in compliance
with the applicable Indenture and the debt securities, or else specifying any
default.
SUBORDINATION
Unless the prospectus supplement provides otherwise, the following
provisions will apply to the subordinated debt securities:
The payment of principal, any premium and interest on the subordinated debt
securities is subordinated in right of payment to the prior payment in full of
all of CSC Holdings' Senior Indebtedness. This means that in certain
circumstances where CSC Holdings may not be making payments on all of its debt
obligations as they come due, the holders of all of CSC Holdings' Senior
Indebtedness will be entitled to receive payment in full of all amounts that are
due or will become due on the Senior Indebtedness before you and the other
registered holders of subordinated debt securities will be entitled to receive
any payment or distribution (other than in the form of subordinated securities)
on the subordinated debt securities. These circumstances include the following
circumstances:
- CSC Holdings makes a payment or distributes assets to creditors upon any
liquidation, dissolution, winding up or reorganization of our company, or
as part of an assignment or marshalling of its assets for the benefit of
its creditors.
- CSC Holdings files for bankruptcy or certain other events in bankruptcy,
insolvency or similar proceedings occur.
- The maturity of the subordinated debt securities is accelerated. For
example, the entire principal amount of a series of subordinated debt
securities may be declared to be due and immediately payable or may be
automatically
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accelerated due to an Event of Default as described under "--Events of
Default".
In addition, CSC Holdings is generally not permitted to make payments of
principal, any premium or interest on the subordinated debt securities if CSC
Holdings defaults in its obligation to make payments on Senior Indebtedness and
does not cure such default.
CSC Holdings is also prohibited from making payments on subordinated debt
securities if an Event of Default (other than a payment default) that permits
the holders of Senior Indebtedness to accelerate the maturity of the Senior
Indebtedness occurs and the agent banks under its credit agreement notify them
and the Trustee; however, unless the Senior Indebtedness has been accelerated
because of that Event of Default, this payment blockage cannot last more than
120 days. Not more than one of these payment blockage notices can be given every
240 days.
These subordination provisions mean that if CSC Holdings is insolvent a
holder of its Senior Indebtedness may ultimately receive out of its assets more
than a holder of the same amount of its subordinated debt securities, and a
creditor of CSC Holdings that is owed a specific amount but who owns neither its
Senior Indebtedness nor its subordinated debt securities may ultimately receive
less than a holder of the same amount of Senior Indebtedness and more than a
holder of subordinated debt securities.
The Senior Subordinated Indenture does not limit the amount of Senior
Indebtedness CSC Holdings is permitted to have and we may in the future incur
additional Senior Indebtedness.
REGARDING THE TRUSTEE
The Bank of New York is the Trustee under the Senior Indenture, the Senior
Subordinated Indenture, the Junior Subordinated Indentures and CSC Holdings'
existing senior and senior subordinated indebtedness. The Bank of New York is
also party to certain credit agreements with CSC Holdings and its subsidiaries,
including the Credit Agreement. The Bank of New York also maintains other
banking and escrow arrangements with us in the ordinary course of business.
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WE MAY OFFER PREFERRED STOCK, WHICH MAY BE OFFERED
IN THE FORM OF DEPOSITARY SHARES REPRESENTING FRACTIONAL
SHARES OF PREFERRED STOCK
This section describes the general terms and provisions of the preferred
stock we may offer by this prospectus. The applicable prospectus supplement will
describe the specific terms of the series of preferred stock then offered, and
the terms and provisions described in this section will apply only to the extent
not superseded by the terms of the applicable prospectus supplement.
This section is only a summary of the preferred stock we may offer and does
not include a complete description of CSC Holdings' outstanding preferred stock.
We have filed and have incorporated by reference our certificates of
incorporation and the certificates of designation relating to CSC Holdings'
outstanding preferred stock. We urge you to read carefully our certificates of
incorporation and the certificates of designation before you buy any preferred
stock.
BOOK-ENTRY SECURITIES
The preferred stock may be issued in whole or in part in the form of one or
more Global Securities. See "Description of the Securities We May Offer" for
additional information about your limited rights as the beneficial owner of a
Global Security.
CSC HOLDINGS' OUTSTANDING SERIES OF PREFERRED STOCK
Our certificates of incorporation permit each of Cablevision and CSC
Holdings to issue, without prior permission from our stockholders, up to
10,000,000 shares of preferred stock. As of September 30, 1998, Cablevision had
no preferred stock outstanding; CSC Holdings had previously authorized:
- 200,000 shares of Series B Cumulative Convertible Preferred Stock, $.01
par value and $100 liquidation value per share (the "SERIES B PREFERRED
STOCK"), none of which are expected to be issued nor are outstanding;
- 112,500 shares of Series C Cumulative Preferred Stock, $.01 par value and
$100 liquidation value per share (the "SERIES C PREFERRED STOCK"), none of
which are expected to be issued nor are outstanding;
- 112,500 shares of Series D Cumulative Preferred Stock, $.01 par value and
$100 liquidation value per share (the "SERIES D PREFERRED STOCK"), which
would be issuable upon conversion of the Series C Preferred Stock (none of
which are outstanding);
- 4,500,000 shares of 11 3/4% Series H Redeemable Exchangeable Preferred
Stock, $.01 par value and $100 initial liquidation preference per share
(the "SERIES H PREFERRED STOCK"), of which 3,545,390 shares were
outstanding as of October 1, 1998;
- 1,380,000 shares of 8 1/2% Series I Cumulative Convertible Exchangeable
Preferred Stock, $.01 par value and $250 liquidation value per share (the
"SERIES I PREFERRED STOCK"), 1,380,000 shares of which were outstanding
and represented by 13,800,000 depositary shares as of September 30, 1998;
- 115,000 shares of 11 1/8% Series L Redeemable Exchangeable Preferred
Stock, $.01 par value and $10,000 liquidation value per share (the "SERIES
L PREFERRED STOCK"), none of which are outstanding; and
- 115,000 shares of 11 1/8% Series M Redeemable Exchangeable Preferred
Stock, $.01 par value and $10,000 liquidation value per share (the "SERIES
M PREFERRED STOCK"), 86,727 shares of which were outstanding and
represented by 867,267 depositary shares as of October 1, 1998.
The Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred
Stock, Series L Preferred Stock and Series M Preferred Stock are hereinafter
sometimes collectively referred to as
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the "AUTHORIZED PREFERRED STOCK". The right to dividends on shares of the
Authorized Preferred Stock are cumulative.
To date, CSC Holdings has cancelled:
- 200,000 shares of Series A Cumulative Convertible Preferred Stock in 1988;
- 100,000 shares of Series E Redeemable Exchangeable Convertible Preferred
Stock in 1996;
- 100,000 shares of Series F Redeemable Preferred Stock in 1996; and
- 4,500,000 shares of 11 3/4% Series G Redeemable Exchangeable Preferred
Stock in 1996.
TERMS OF OUR OUTSTANDING SERIES OF PREFERRED STOCK WHICH WILL LIMIT OUR FUTURE
SERIES OF PREFERRED STOCK
SERIES H PREFERRED STOCK
With respect to dividends and distributions upon the liquidation, winding up
and dissolution of CSC Holdings, the Series H Preferred Stock ranks:
- senior to all classes of common stock and each class of capital stock or
series of preferred stock which does not expressly provide that it ranks
senior to or equally with the Series H Preferred Stock for dividends and
liquidation distributions;
- equally with the Series B, Series C, Series D, Series I, Series L and
Series M Preferred Stock and each class of capital stock or series of
preferred stock which expressly provides that it ranks equally with Series
H Preferred Stock for dividends and liquidation distributions; and
- junior to each class of capital stock or series of preferred stock which
expressly provides that it ranks senior to the Series H Preferred Stock
for dividends and liquidation distributions.
Holders of Series H Preferred Stock receive cumulative dividends at an
annual rate of 11 3/4% or $11.75 per share. Dividends are payable at the end of
each quarter on January 1, April 1, July 1 and October 1 to the holder on the
record date set for each dividend payment.
CSC Holdings cannot pay dividends in full on any class of stock which ranks
equally with Series H Preferred Stock for any period, unless CSC Holdings has
paid cumulative dividends in full on the Series H Preferred Stock. If dividends
are not paid in full, the holders of Series H Preferred Stock will share
dividends PRO RATA with the holders of equally-ranking classes of stock. If any
dividends payable on the Series H Preferred Stock have not been paid in full,
CSC Holdings cannot pay any dividend on any class of stock which ranks junior to
Series H Preferred Stock, except dividends consisting of additional shares of
the junior-ranking stock, and cannot repurchase, redeem or otherwise retire the
junior-ranking stock or any warrants, rights, calls or options exercisable for
or convertible into any junior-ranking stock.
With at least 30 but not more than 60 days' notice, CSC Holdings can redeem
the Series H Preferred Stock on the following basis:
- at any time on or after October 1, 2002, some or all of the shares at
certain redemption prices plus accumulated and unpaid dividends;
- at any time before October 1, 2002 and within 180 days after a change in
control, all the shares at certain redemption prices; and
- on October 1, 2007, all outstanding shares of Series H Preferred Stock
must be redeemed at a price of $100 per share, plus accumulated and unpaid
dividends.
Dividends will continue to accumulate on the preferred stock until any
redemption price is paid in full.
On any scheduled dividend payment date, CSC Holdings can exchange the Series
H Preferred Stock for CSC Holdings' 11 3/4% Senior Subordinated Debentures due
2007.
If CSC Holdings is liquidated, wound up or dissolved, holders of Series H
Preferred Stock will receive $100 per share, plus all accrued and unpaid
dividends, before any distribution is made on any junior-ranking stock. If the
liquidation
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amounts payable on the Series H Preferred Stock and all other classes of stock
which are equally ranked are not paid in full, these holders will share in any
distribution of assets PRO RATA based on the liquidation value per share. After
the liquidation value is paid in full, the holders of Series H Preferred Stock
will not receive any further distribution of CSC Holdings' assets. For clarity,
neither a sale, conveyance, exchange or transfer of all or substantially all the
property or assets of CSC Holdings nor a consolidation or merger of CSC Holdings
with one or more corporations is a liquidation, dissolution or winding up of CSC
Holdings.
Holders of the Series H Preferred Stock have no voting rights with respect
to general corporate matters. However, if (a) dividends on the Series H
Preferred Stock are overdue, unpaid and, if after October 1, 2000, not paid in
cash, for six consecutive or non-consecutive quarterly periods, or (b) CSC
Holdings does not redeem the Series H Preferred Stock on October 1, 2007, the
number of directors constituting CSC Holdings' Board of Directors will be
adjusted to permit the holders of a majority of the outstanding Series H
Preferred Stock, voting as a class, to elect a director. These voting rights
will continue until CSC Holdings pays all past-due dividends in full and in the
case of dividends payable after October 1, 2000, in cash, and CSC Holdings'
failure, if any, to redeem shares on October 1, 2007 is remedied, at which time
the term of the directors elected by the Series H Preferred Stock holders will
terminate. Any vacancy occurring in the office of this director will be filled
by the departing director unless the vacancy is filled by the holders of the
Series H Preferred Stock.
CSC Holdings cannot authorize any class of stock which ranks senior to the
Series H Preferred Stock without the consent of the holders of at least a
majority of the outstanding shares of Series H Preferred Stock, voting as a
class. CSC Holdings cannot amend the certificate of designations for the Series
H Preferred Stock in any way that adversely affects the rights of holders of
Series H Preferred Stock without the consent of the holders of at least a
majority of the outstanding shares of Series H Preferred Stock, voting as a
class.
Without the consent of a majority of the outstanding shares of Series H
Preferred Stock, CSC Holdings cannot consolidate or merge with or into, or sell,
assign, lease or otherwise dispose of all or substantially all of its assets to,
any person unless:
- the entity formed by such consolidation or merger (if other than CSC
Holdings) or which receives the assets is a corporation organized under
the laws of the United States, any State or the District of Columbia;
- the Series H Preferred Stock will be exchanged for shares of the
successor, which have the same rights and limitations that the Series H
Preferred Stock had immediately prior to such transactions; and
- immediately after giving effect to such transaction, neither event
allowing the holders of Series H Preferred Stock to elect a board member,
as described above, will have occurred and be continuing.
However, CSC Holdings may consolidate or merge with or into, or sell,
assign, lease or otherwise dispose of all or substantially all of its assets to,
any person if CSC Holdings:
- before October 1, 2002, redeems the Series H Preferred Stock after a
change in control, or
- on or after October 1, 2002, redeems the Series H Preferred Stock as
previously described.
SERIES I PREFERRED STOCK
With respect to dividends and distributions upon the liquidation, winding up
and dissolution of CSC Holdings, the Series I Preferred Stock ranks:
- senior to all classes of common stock and each class of capital stock or
series of preferred stock which does not expressly provide that it ranks
senior to or equally with the Series I Preferred Stock as to dividends and
liquidation distributions;
- equally with CSC Holdings' Series B, Series C, Series D, Series H, Series
L and
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Series M Preferred Stock and each class of capital stock or series of
preferred stock which expressly provides that it ranks equally with the
Series I Preferred Stock as to dividends and liquidation distributions;
and
- junior to each class of capital stock or series of preferred stock which
expressly provides that it ranks senior to the Series I Preferred Stock as
to dividends and liquidation distributions.
Holders of Series I Preferred Stock receive cumulative cash dividends at an
annual rate of 8 1/2% or $21.25 per share (equivalent to $2.125 per depositary
share). Dividends are payable at the end of each quarter on January 1, April 1,
July 1 and October 1 to the holder on the record date set for each dividend
payment.
CSC Holdings cannot pay dividends on any class of stock which ranks equally
with Series I Preferred Stock for any period, unless CSC Holdings has paid
cumulative dividends in full on the Series I Preferred Stock. If the dividends
are not paid in full, the holders of Series I Preferred Stock will share
dividends PRO RATA with equally-ranking classes of stock. If any dividends
payable on the Series I Preferred Stock have not been paid in full, CSC Holdings
cannot pay any dividend on any class of stock which ranks junior to the Series I
Preferred Stock, except dividends consisting of additional shares of the junior-
ranking stock, and may not repurchase, redeem or otherwise retire the
junior-ranking stock or any warrants, rights, calls or options exercisable for
or convertible into any junior-ranking stock.
If CSC Holdings is liquidated, dissolved or wound up, the holders of Series
I Preferred Stock will receive $250.00 per share (equivalent to $25 per
depositary share) plus all accrued and unpaid dividends, before any distribution
is made on any junior-ranking stock. If the liquidation amounts payable on the
Series I Preferred Stock and all other stock which are equally ranked are not
paid in full, these holders will share in any distribution of assets PRO RATA
based on the liquidation value per share. After the liquidation value is paid in
full, the holders of Series I Preferred Stock will not receive any further
distribution of assets.
CSC Holdings can exchange all of the Series I Preferred Stock for CSC
Holdings' 8 1/2% Convertible Subordinated Debentures due 2007 on any dividend
payment date.
At any time after November 1, 1999, with at least 30 but not more than 60
days' notice, CSC Holdings may redeem some or all of the Series I Preferred
Stock at certain redemption prices. Dividends will continue to accumulate on the
preferred stock until any redemption price is paid in full.
A holder of Series I Preferred Stock may convert his shares into shares of
Class A Common Stock at a conversion rate equal to $250.00 divided by a
conversion price described below. However, if shares of Series I Preferred Stock
are called for redemption or CSC Holdings elects to issue debentures in exchange
for the Series I Preferred Stock, this conversion right will terminate at the
close of five business days prior to the date set for redemption or exchange.
The conversion price is $16.86 per share, but is subject to adjustment (under
formulas set forth in the certificate of designations for the Series I Preferred
Stock) in certain events, including:
- the distribution of Class A Common Stock on any class of the capital stock
of Cablevision and its subsidiaries;
- subdivisions, reclassifications and combinations of the Class A Common
Stock;
- the issuance of certain rights or warrants entitling all holders of Class
A Common Stock to subscribe for or purchase Class A Common Stock at less
than the current market price; and
- certain distributions to all holders of Class A Common Stock of capital
stock, debt of Cablevision or its subsidiaries or cash or other assets of
Cablevision or its subsidiaries.
If one of several significant transactions affecting the ownership or
control of CSC Holdings or the market for the Class A Common Stock occurs, a
holder of Series I Preferred Stock may convert all of his shares into shares of
Class A Common Stock at a conversion rate equal to
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$250.00 divided by a conversion price equal to the greater of the market price
of Class A Common Stock and $8.64 per share. However, CSC Holdings can choose to
provide the holders with an amount in cash, instead of common stock, equal to
the market value of the Class A Common Stock multiplied by the number of such
shares into which the shares of Series I Preferred Stock would have been
convertible. If the change of control involves:
- any consolidation with, or merger of Cablevision or its subsidiaries into,
another entity,
- any merger of another entity into Cablevision or its subsidiaries, or
- any sale or transfer of all or substantially all of the assets of
Cablevision or its subsidiaries,
the holder of Series I Preferred Stock can convert all of his shares into the
kind and amount of securities, cash and other property receivable in the
transaction by a holder of the number of shares of CSC Holdings' Class A Common
Stock into which the share of Series I Preferred Stock could have been converted
immediately prior to the transaction.
Holders of the Series I Preferred Stock will have no voting rights with
respect to general corporate matters. The certificate of designations provides
that if dividends on the Series I Preferred Stock are overdue and unpaid for six
consecutive or nonconsecutive quarterly periods, then the number of directors
constituting CSC Holdings' Board of Directors will be adjusted to permit the
holders of a majority of the Series I Preferred Stock, voting as a class, to
elect one director and a second director if the right to elect a second director
is required by the American Stock Exchange or any other national securities
exchange the Class A Common Stock is listed or by the Nasdaq National Market
System if the Class A Common Stock is traded thereon. These voting rights will
continue until all overdue dividends are paid in full, at which time the term of
the directors elected by the Series I Preferred Stock will terminate. Any
vacancy occurring in the office of the director elected by holders of the Series
I Preferred Stock will be filled by the remaining director, if any, or by the
departing director unless the vacancy is filled by the holders of Series I
Preferred Stock.
CSC Holdings cannot authorize the creation of any class of stock ranking
senior to Series I Preferred Stock without the consent of holders of at least
66 2/3% of the outstanding shares of Series I Preferred Stock, voting as a
class. CSC Holdings cannot amend the certificate of designations in any way that
adversely affects the rights of holders of the Series I Preferred Stock without
the consent of the holders of at least 66 2/3% of the outstanding shares of
Series I Preferred Stock, voting as a class.
Unless the transaction constitutes a change of control, CSC Holdings cannot
consolidate or merge with or into, or sell, assign, lease or otherwise dispose
of all or substantially all of its assets to, any person without the consent of
the holders of a majority of the outstanding shares of Series I Preferred Stock
unless:
- the entity formed by the consolidation or merger or which receives the
assets is a corporation organized or existing under the laws of the United
States, any State or the District of Columbia;
- the Series I Preferred Stock will remain unchanged or be exchanged for
shares of the resulting entity, which have the same or more favorable
rights and the same or more favorable limitations that the stock had
immediately prior to the transaction. For clarity, a change in the rights
of the Series I Preferred Stock will not be deemed to have occurred if (i)
the Series I Preferred Stock becomes convertible into a different amount
or type of securities, cash or other property or (ii) the resulting entity
has authorized or outstanding any securities other than classes of stock
which rank senior to the Series I Preferred Stock; and
- immediately after giving effect to the transaction, neither event allowing
the holders of Series I Preferred Stock to elect a board member, as
described above, will have occurred or be continuing.
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SERIES M PREFERRED STOCK
With respect to dividends and distributions upon the liquidation, winding up
and dissolution of CSC Holdings, the Series M Preferred Stock ranks:
- senior to all classes of common stock and every other class of capital
stock or series of preferred stock which does not expressly provide that
it ranks senior to or on a parity with the Series M Preferred Stock as to
dividends and liquidation distributions;
- equally with the Series B, Series C, Series D, Series H, Series I and
Series L Preferred Stock and any other class of capital stock or series of
preferred stock which expressly provides that it ranks equally with Series
M Preferred Stock as to dividends and liquidation distributions; and
- junior to each class of capital stock or series of preferred stock which
expressly provides that it ranks senior to the Series M Preferred Stock
for dividends and liquidation distributions.
Holders of Series M Preferred Stock receive cumulative dividends at an
annual rate of 11 1/8% or $1,113 per share (equivalent to $111.30 per depositary
share). Dividends are payable at the end of each quarter on January 1, April 1,
July 1 and October 1 to the holder on the record date set for each dividend
payment.
CSC Holdings cannot pay dividends in full on any class of stock which ranks
on an equal basis with Series M Preferred Stock for any period unless CSC
Holdings has paid cumulative dividends in full on the Series M Preferred Stock.
If dividends are not paid in full, the holders of Series M Preferred Stock will
share dividends PRO RATA with each class of stock which ranks equally with
Series M Preferred Stock. If any dividends payable on Series M Preferred Stock
have not been paid in full, CSC Holdings cannot pay any dividend on any class of
stock which ranks junior to the Series M Preferred Stock, except dividends
consisting of additional shares of the junior-ranking stock, and cannot
repurchase, redeem or otherwise retire the junior-ranking stock or any warrants,
rights, calls or options exercisable for or convertible into any junior-ranking
stock.
With at least 30 but not more than 60 days' notice, CSC Holdings can redeem
the Series M Preferred Stock on the following basis:
- at any time on or after April 1, 2003, some or all of the shares at
certain redemption prices;
- at any time before April 1, 1999, some of the shares at a redemption price
per share of $10,000 plus accumulated and unpaid dividends and a premium
of $1,000 per share, out of the proceeds of the sale of stock which ranks
junior to the Series M Preferred Stock to a corporation with a market
capitalization, a net asset value or annual revenues of at least $1.0
billion that owns and operates businesses in the telecommunications,
information systems, entertainment, cable or similar industry or of a
public offering of CSC Holdings' common stock;
- at any time before April 1, 2003 and within 180 days after a change in
control, all the shares at certain redemption prices; or
- on April 1, 2008, all outstanding shares of Series M Preferred Stock must
be redeemed.
Dividends will continue to accumulate on the preferred stock until any
redemption price is paid in full.
On any scheduled dividend payment date, CSC Holdings can exchange the Series
M Preferred Stock for CSC Holdings' 11 1/8% Senior Subordinated Debentures due
2008.
If CSC Holdings is liquidated, wound up or dissolved, holders of Series M
Preferred Stock will receive $10,000 per share, plus all accumulated and unpaid
dividends, before any distribution is made on any junior-ranking stock. If the
liquidation amounts payable on the Series M Preferred Stock and all other
classes of stock which are equally ranked are not paid in full, these holders
will share in any distribution of assets PRO RATA based on the liquidation value
per share. After the liquidation value is paid in full, the holders of Series M
Preferred Stock will not receive any further distribution of CSC Holdings'
assets.
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Holders of the Series M Preferred Stock will have no voting rights with
respect to general corporate matters. However, if (a) dividends on the Series M
Preferred Stock are overdue, unpaid and, if on or after April 1, 2001, not paid
in cash, for six consecutive or non-consecutive quarterly periods, or (b) CSC
Holdings fails to redeem the Series M Preferred Stock on April 1, 2008, the
number of directors constituting CSC Holdings' Board of Directors will be
adjusted to permit the holders of a majority of the outstanding Series L and
Series M Preferred Stock, voting as a single class, to elect a director. These
voting rights will continue until CSC Holdings pays all past-due dividends in
full and in the case of dividends payable on or after April 1, 2001, in cash,
and CSC Holdings' failure, if any, to redeem shares on April 1, 2008 is
remedied, at which time the term of the directors elected by the holders of
Series M Preferred Stock will terminate. Any vacancy occurring in the office of
this director will be filled by the departing director unless it is filled by
the holders of the Series M Preferred Stock.
CSC Holdings cannot authorize the creation of any class of stock which ranks
senior to the Series M Preferred Stock without the consent of the holders of at
least a majority of the outstanding shares of Series L and Series M Preferred
Stock, voting as a single class. CSC Holdings cannot amend the certificate of
designations for the Series M Preferred Stock in any way that adversely affects
the rights of holders of Series L and Series M Preferred Stock, without the
consent of the holders of at least a majority of the outstanding shares of
Series L and M Preferred Stock, voting as a single class.
Without the consent of a majority of the outstanding shares of Series L and
Series M Preferred Stock, voting as a single class, CSC Holdings cannot
consolidate or merge with or into, or sell, assign, lease or otherwise dispose
of all or substantially all of its assets to, any person unless:
- the entity formed by such consolidation or merger or which receives the
assets is a corporation organized under the laws of the United States, any
State or the District of Columbia;
- the Series L and Series M Preferred Stock will remain unchanged or be
exchanged for shares of the successor, which have the same or more
favorable rights and limitations that each class of preferred stock had
immediately prior to the transactions; and
- immediately after giving effect to such transaction, neither event
allowing holders of Series M Preferred Stock to elect a board member, as
described above, will have occurred and be continuing.
However, CSC Holdings may consolidate or merge with or into, or sell,
assign, lease or otherwise dispose of all or substantially all of its assets to,
any person if CSC Holdings:
- before April 1, 2003, redeems the Series M Preferred Stock after a change
in control, or
- on or after April 1, 2003, redeems the Series M Preferred Stock as
previously described.
TERMS OF FUTURE SERIES OF PREFERRED STOCK
The powers, designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions,
including dividend rights, voting rights, conversion rights, terms of redemption
and liquidation preferences, of the preferred stock of each series will be fixed
or designated by the Board of Directors of the Issuer pursuant to a certificate
of designations. We will describe in the applicable prospectus supplement the
specific terms of a particular series of preferred stock, which will include the
following:
- the maximum number of shares in the series;
- the designation of the series;
- the terms of any voting rights of the series;
- the dividend rate, if any, on the shares of such series, the conditions
and dates upon which such dividends shall be payable, the preference or
relation which such dividends shall bear to the dividends payable on any
other class or classes or on any other series
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of capital stock, and whether such dividends shall be cumulative or
non-cumulative;
- whether the shares of such series shall be redeemable by the Issuer and,
if so, the times, prices and other terms and conditions of such
redemption;
- the rights of the holders of shares of such series upon the liquidation,
dissolution or winding up of the Issuer;
- whether or not the shares of such series shall be subject to the operation
of a retirement or sinking fund and, if so, the extent to and manner in
which any such retirement or sinking fund shall be applied to the purchase
or redemption of the shares of such series for retirement or to other
corporate purposes and the terms and provisions relative to the operation
thereof;
- whether or not the shares of such series shall be convertible into, or
exchangeable for, (i) debt securities of Cablevision or CSC Holdings, (ii)
shares of any other class or classes of stock, or of any other series of
the same or different class of stock, or (iii) shares of any class or
series of stock of any other corporation, and if so convertible or
exchangeable, the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
- the limitations and restrictions, if any, to be effective while any shares
of such series are outstanding upon the payment of dividends or making of
other distributions on, and upon the purchase, redemption or other
acquisition by Cablevision of, the Cablevision Class A Common Stock, the
Cablevision Class B Common Stock or any other class or classes of stock of
the Issuer ranking junior to the shares of such series either as to
dividends or upon liquidation;
- the conditions or restrictions, if any, upon the creation of indebtedness
of the Issuer or upon the issue of any additional stock (including
additional shares of such series or of any other series or of any other
class) ranking on a parity with or prior to the shares of such series as
to dividends or distribution of assets on liquidation, dissolution or
winding up;
- whether fractional interests in shares of the series will be offered in
the form of depositary shares as described below under "--Depositary
Shares";
- any other preference and relative, participating, optional or other
special rights or qualifications, limitations or restrictions thereof; and
- the Issuer's ability to modify the rights of holders otherwise than by a
vote of a majority or more of the shares outstanding.
The preferred stock will, when issued, be fully paid and nonassessable.
We will select the transfer agent, registrar and dividend disbursement agent
for a series of preferred stock and will describe our selection in the
applicable prospectus supplement. The registrar for shares of preferred stock
will send notices to stockholders of any meetings at which holders of the
preferred stock have the right to elect directors of the Issuer or to vote on
any other matter.
DEPOSITARY SHARES
This section describes the general terms and provisions of the depositary
shares we may offer. The applicable prospectus supplement will describe the
specific terms of the depositary shares offered through that prospectus
supplement, including, but not limited to, the title of the depositary shares
and the deposited security, the amount of deposited securities represented by
one depositary share, and any general terms outlined in this section that will
not apply to those depositary shares.
We have summarized certain terms and provisions of the Depositary Agreement,
the depositary shares and the depositary receipts in this section. The summary
is not complete. We have also filed the form of Depositary Agreement, including
the form of depositary receipt, as an exhibit to the registration statement. You
should read the forms of Depositary Agreement and depositary receipt relating to
a series of preferred
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stock for additional information before you buy any depositary shares that
represent preferred stock of such series.
GENERAL
We may offer fractional interests in preferred stock rather than full shares
of preferred stock. If we do, we will provide for the issuance by a Depositary
to the public of receipts for depositary shares, each of which will represent a
fractional interest in a share of a particular series of preferred stock.
The stock of any series of preferred stock underlying the depositary shares
will be deposited under a separate Depositary Agreement between us and a
Depositary. For these purposes, the Depositary will be a bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $50 million. We will name the Depositary and give the
address of its principal executive office in the applicable prospectus
supplement. Subject to the terms of the Depositary Agreement, each owner of a
depositary share will have a fractional interest in all the rights and
preferences of the preferred stock underlying such depositary shares. Those
rights include any dividend, voting, redemption, conversion and liquidation
rights.
The depositary shares will be evidenced by depositary receipts issued under
the Depositary Agreement. If you purchase fractional interests in shares of the
related series of preferred stock, you will receive depositary receipts as
described in the applicable prospectus supplement. While the final depositary
receipts are being prepared, we may order the Depositary to issue temporary
depositary receipts substantially identical to the final depositary receipts in
final form. The holders of the temporary depositary receipts will be entitled to
the same rights as if they held the depositary receipts although not in final
form. Holders of the temporary depositary receipts can exchange them for the
final depositary receipts at our expense.
If you surrender depositary receipts at the principal office of the
Depositary (unless the related depositary shares have previously been called for
redemption), you are entitled to receive at such office the number of shares of
preferred stock and any money or other property represented by such depositary
shares. We will not issue partial shares of preferred stock. If you deliver
depositary receipts evidencing a number of depositary shares that represent more
than a whole number of shares of preferred stock, the Depositary will issue you
a new depositary receipt evidencing such excess number of depositary shares at
the same time that the shares of preferred stock are withdrawn. Holders of
preferred stock received in exchange for depositary shares will no longer be
entitled to deposit such shares under the Depositary Agreement or to receive
depositary shares in exchange for such preferred stock.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received with respect to the preferred stock to the record holders
of depositary shares representing the preferred stock in proportion to the
number of depositary shares owned by the holders on the relevant record date.
The Depositary will distribute only the amount that can be distributed without
attributing to any holder of depositary shares a fraction of one cent. The
balance not distributed will be added to and treated as part of the next sum
received by the Depositary for distribution to record holders of depositary
shares.
If there is a distribution other than in cash, the Depositary will
distribute property to the holders of depositary shares, unless the Depositary
determines that it is not feasible to make such distribution. If this occurs,
the Depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the holders of depositary shares.
The Depositary Agreement will also contain provisions relating to how any
subscription or similar rights offered by us to the holders of the preferred
stock will be made available to the holders of depositary shares.
CONVERSION AND EXCHANGE
If any series of preferred stock underlying the depositary shares is subject
to conversion or exchange, the applicable prospectus supplement will describe
the rights or obligations of each
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record holder of depositary receipts to convert or exchange the depositary
shares.
REDEMPTION OF DEPOSITARY SHARES
If the series of the preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the
redemption proceeds, in whole or in part, of such series of the preferred stock
held by the Depositary. The Depositary will mail notice of redemption between 30
to 60 days prior to the date fixed for redemption to the record holders of the
depositary shares to be redeemed at their addresses appearing in the
Depositary's records. The redemption price per depositary share will bear the
same relationship to the redemption price per share of preferred stock that the
depositary share bears to the underlying preferred share. Whenever we redeem
preferred stock held by the Depositary, the Depositary will redeem, as of the
same redemption date, the number of depositary shares representing the preferred
stock redeemed. If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro rata as
determined by the Depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be outstanding. When the depositary shares are no
longer outstanding, all rights of the holders will cease, except the right to
receive money or other property that the holders of the depositary shares were
entitled to receive upon such redemption. Such payments will be made when
holders surrender their depositary receipts to the Depositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the Depositary will mail information about the
meeting contained in the notice to the record holders of the depositary shares
relating to such preferred stock. Each record holder of such depositary shares
on the record date (which will be the same date as the record date for the
preferred stock) will be entitled to instruct the Depositary as to how the
preferred stock underlying the holder's depositary shares should be voted.
The Depositary will try, if practical, to vote the number of shares of
preferred stock underlying the depositary shares according to the instructions
received. We will agree to take all action requested and deemed necessary by the
Depositary in order to enable the Depositary to vote the preferred stock in that
manner. The Depositary will not vote any preferred stock for which it does not
receive specific instructions from the holder of the depositary shares relating
to such preferred stock.
TAXATION
Provided that each obligation in the Depositary Agreement and any related
agreement is performed in accordance with its terms, owners of depositary shares
will be treated for federal income tax purposes as if they were owners of the
shares of preferred stock represented by the depositary shares. Accordingly, for
federal income tax purposes they will have the income and deductions to which
they would be entitled if they were holders of the preferred stock. In addition:
- No gain or loss will be recognized for federal income tax purposes upon
withdrawal of preferred stock in exchange for depositary shares as
provided in the Depositary Agreement.
- The tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, upon the exchange, be the same as the aggregate
tax basis of the depositary shares exchanged for such preferred stock.
- The holding period for the preferred stock, in the hands of an exchanging
owner of depositary shares who held the depositary shares as a capital
asset at the time of the exchange, will include the period that the owner
held such depositary shares.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the Depositary Agreement may be amended by agreement between us and
the Depositary at any
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time. However, any amendment that materially and adversely alters the rights of
the existing holders of depositary shares will not be effective unless approved
by the record holders of at least a majority of the depositary shares then
outstanding. A Depositary Agreement may be terminated by us or the Depositary
only if:
- All outstanding depositary shares relating to the Depositary Agreement
have been redeemed.
- There has been a final distribution on the preferred stock of the relevant
series in connection with the liquidation, dissolution or winding up of
the business and the distribution has been distributed to the holders of
the related depositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay associated
charges of the Depositary for the initial deposit of the preferred stock and any
redemption of the preferred stock. Holders of depositary shares will pay
transfer and other taxes and governmental charges and any other charges that are
stated to be their responsibility in the Depositary Agreement.
MISCELLANEOUS
We will forward to the holders of depositary shares all reports and
communications that we must furnish to the holders of the preferred stock.
Neither the Depositary nor we will be liable if the Depositary is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Depositary Agreement. Our obligations and the Depositary's
obligations under the Depositary Agreement will be limited to performance in
good faith of duties set forth in the Depositary Agreement. Neither the
Depositary nor we will be obligated to prosecute or defend any legal proceeding
connected with any depositary shares or preferred stock unless satisfactory
indemnity is furnished to us and/or the Depositary. We and the Depositary may
rely upon written advice of counsel or accountants, or information provided by
persons presenting preferred stock for deposit, holders of depositary shares or
other persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering notice to us. We may
also remove the Depositary at any time. Resignations of removals will take
effect upon the appointment of a successor Depositary and its acceptance of the
appointment. The successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50 million.
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WE MAY OFFER PREFERRED SECURITIES
We may offer preferred securities, which may be issued by any one of the
Trusts and which represent preferred undivided beneficial interests in the
assets of the issuing Trust. In connection with an offering of preferred
securities, we will sell common securities of the issuing Trust to the Issuer
which represent common undivided beneficial interests in the assets of the
issuing Trust. The issuing Trust will use the proceeds from any sale of
preferred securities and common securities to buy junior subordinated debt
securities from the Issuer with payment terms similar to those of the preferred
securities. If a Trust sells preferred securities and common securities, the
Issuer will pay principal and interest on the junior subordinated debt
securities to the issuing Trust, which the issuing Trust will distribute to the
holders of the preferred securities. As long as no Event of Default under the
Junior Subordinated Indenture has occurred and is continuing, we have the right
under the Indenture to defer the payment of interest on the junior subordinated
debt securities at any time. Furthermore, if we defer interest payments, the
Trust will defer the payment of distributions on the preferred securities during
the related period. For additional information on our ability to defer interest
payments and the Trust's ability to defer distributions, see "Description of the
Junior Subordinated Debt Securities--Interest" and "Description of the Preferred
Securities-- Distributions--Extension Periods" and "--Extension Period
Restrictions". The Issuer will fully and unconditionally guarantee the preferred
securities based on several obligations described in this prospectus.
The following four sections describe the various aspects of an offering of
preferred securities, including:
- the preferred securities and the common securities themselves;
- the corresponding junior subordinated debt securities and the Indenture
under which they are issued;
- the guarantee and the expense agreement, which together with the
Declaration of Trust, the junior subordinated debt securities and the
Indenture constitute a full and unconditional guarantee of the preferred
securities by the Issuer; and
- the relationship among the preferred securities, the junior subordinated
debt securities, the guarantee and the expense agreement.
The sections following those four sections contain a description of several
important tax and accounting matters of which you should be aware.
The preferred securities may be issued in whole or in part in the form of
one or more Global Securities. See "Description of the Securities We May Offer"
for additional information about your limited rights as the beneficial owner of
a Global Security.
DESCRIPTION OF THE PREFERRED SECURITIES
The following is a general description of the preferred securities. For more
specific details, see the attached prospectus supplement. In addition, to the
extent anything in the prospectus supplement is inconsistent with the following,
you should rely on the information in the prospectus supplement.
This section summarizes the main provisions of the preferred securities and
the Declaration of Trust, but it does not describe all the provisions.
Consequently, this summary is qualified by reference to the full text of the
Declaration of Trust. We have filed a form of the Declaration of Trust as an
exhibit to our registration statement.
THE TERM "INDENTURE", WHEN USED IN THIS SECTION, REFERS ONLY TO THE
INDENTURE FOR THE JUNIOR SUBORDINATED DEBT SECURITIES OF THE ISSUER AND NOT TO
THE INDENTURES FOR THE SENIOR DEBT SECURITIES OR THE SUBORDINATED DEBT
SECURITIES.
This section uses terms that are defined in the Declaration of Trust and the
Indenture. Unless we define those terms in this prospectus, we intend
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them to have the meanings given them in the Declaration of Trust or the
Indenture, as the case may be.
GENERAL
The Trust will issue the preferred securities and the common securities
under the Declaration of Trust, with a stated liquidation amount of $25 per
security (for the remainder of this section, the "LIQUIDATION AMOUNT"). The
preferred securities and the common securities will rank PARI PASSU with one
another, and all payments will be made on the preferred securities and the
common securities PRO RATA, except as described in "--Priority over Common
Securities".
The Issuer will issue the junior subordinated debt securities under the
Indenture as described in "Description of the Junior Subordinated Debt
Securities", and the Property Trustee will hold legal title to the junior
subordinated debt securities in trust for the benefit of the holders of the
preferred securities and the common securities. The Issuer will also provide the
guarantee under the guarantee agreement as described in "Description of
Guarantee and Expense Agreement". Under the guarantee, the Issuer will
guarantee, on a subordinated basis, the payment of distributions and other
amounts payable on the preferred securities, but only to the extent that the
Trust has funds on hand legally and immediately available to make those
payments.
DISTRIBUTIONS
Distributions will accumulate on the preferred securities from their
original issue date at an annual rate provided in the applicable prospectus
supplement. Unless deferred as described below, distributions will be payable
quarterly in arrears to the holders of the preferred securities at the close of
business on the 15th day (whether or not a business day) next preceding the
relevant distribution date. The amount of distributions payable for any period
will be computed on the basis of a 360-day year of 12 30-day months.
The Trust will have no funds to distribute in respect of the preferred
securities other than the payments it receives from the Issuer in respect of the
junior subordinated debt securities. Consequently, if the Issuer defers or for
any other reason fails to make interest payments on the junior subordinated debt
securities, the Trust will not have funds available to pay distributions on the
preferred securities. We have no current intention to exercise our right to
defer interest payments on the junior subordinated debt securities.
EXTENSION PERIODS
As long as no Event of Default under the Indenture has occurred and is
continuing, we have the right under the Indenture to defer the payment of
interest on the junior subordinated debt securities at any time. We may do so
for a period not exceeding 20 consecutive quarters (each, an "EXTENSION
PERIOD"), PROVIDED THAT no Extension Period may extend beyond the stated
maturity of the junior subordinated debt securities. However, during an
Extension Period, interest will continue to accrue and, to the extent permitted
by applicable law, additional interest will accrue on each deferred interest
payment at an annual rate specified in the prospectus supplement, compounded
quarterly from the corresponding interest payment date. Before an Extension
Period ends, we may extend it further, subject to the limit described above.
When an Extension Period ends and we have paid all interest then accrued and
unpaid on the junior subordinated debt securities, we may begin a new Extension
Period, PROVIDED no Event of Default under the Indenture has occurred and is
continuing. There is no limit on the number of Extension Periods that we may
begin. For additional information on interest payments on the junior
subordinated debt securities, see "Description of the Junior Subordinated Debt
Securities--Interest".
If we elect to defer interest payments on the junior subordinated debt
securities, the Trust will defer the payment of distributions on the preferred
securities during the related Extension Period. However, during an Extension
Period, distributions will continue to accumulate on the Liquidation Amount of
the preferred securities and, to the extent permitted by applicable law, those
deferred distributions will accumulate additional distributions at an annual
rate specified in the prospectus supplement, compounded
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quarterly from the corresponding distribution date. The term "DISTRIBUTION",
wherever we use it in this section, includes any of these additional
distributions. During an Extension Period, holders of preferred securities may
be required to accrue interest income for U.S. federal income tax purposes. See
"U.S. Federal Income Tax Consequences Relating to Preferred Securities--
Interest Income and Original Issue Discount".
Any distributions that would otherwise become due and payable during an
Extension Period will not become due and payable until the day after the
Extension Period ends. If any preferred securities become subject to redemption
on a redemption date that would otherwise occur during an Extension Period, that
Extension Period will end automatically on the next preceding day.
We must give the Property Trustee and the holders of preferred securities
notice of our election to begin or extend an Extension Period. The notice must
be given at least one business day before the earlier of the following:
- the record date for the distribution date on which distributions would
have been payable but for the election, and
- the date on which notice of that record date must be given to the New York
Stock Exchange (or any other national securities exchange or organization
on which the preferred securities are then listed) under the rules of that
exchange or other organization.
We must notify the holders in the manner described below in "--Notices".
EXTENSION PERIOD RESTRICTIONS
The Indenture provides that, during any Extension Period, neither the Issuer
nor any of its subsidiaries may take any of the following actions:
- declare or pay any dividend or other distribution on, or redeem, purchase
or otherwise acquire, or make any distribution or liquidation payment with
respect to, any capital stock of the Issuer, except as described below,
and
- pay any principal, interest or other amount in respect of, or redeem,
purchase or otherwise acquire, any debt securities (including guarantees
of such indebtedness) of the Issuer that rank, in right of payment in all
respects, equally with or junior to the junior subordinated debt
securities, except as described below.
The Indenture restriction described above provides for significant exceptions.
Any of the following that would otherwise be covered by this restriction will
nevertheless be permitted:
- any transaction in which the only consideration given or to be given by
the Issuer or any of its Subsidiaries is Junior Securities (as defined
below);
- any transaction in connection with or arising from:
- any employment contract, benefit plan or other similar arrangement with,
or for the benefit of, one or more employees, officers, directors or
consultants in connection with a dividend reinvestment or stockholder
stock purchase plan, or
- any issuance of Junior Securities as consideration in an acquisition
transaction entered into before the applicable Extension Period;
- any reclassification, exchange or conversion of capital stock or
indebtedness (of the Issuer or any Subsidiary) as, into or for any Junior
Securities of the Issuer;
- any purchase of fractional interests in capital stock pursuant to the
conversion or exchange provisions of a security being converted into or
exchanged for capital stock;
- any declaration or payment of a dividend, issuance of rights, stock or
other property or redemption or other acquisition of rights in connection
with any stockholder rights plan; or
- payments under the guarantee and the expense agreement.
"JUNIOR SECURITIES" means (i) capital stock or debt securities of the Issuer
that rank, in right of payment in all respects, PARI PASSU with or junior to the
junior subordinated debt securities and
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(ii) warrants, options and other rights to acquire or convert into capital stock
or debt securities of the kind described in clause (i).
MANDATORY REDEMPTION
The preferred securities will remain outstanding until the Trust redeems
them or distributes the junior subordinated debt securities in exchange for the
preferred securities. Any redemption of preferred securities must occur as
described below. Any exchange distribution must occur as described below in
"--Exchange of Preferred Securities for Junior Subordinated Debt Securities".
REDEMPTION OF PREFERRED SECURITIES AND COMMON SECURITIES
If the Issuer repays or redeems the junior subordinated debt securities at
any time, whether at their stated maturity, upon acceleration after an Indenture
Event of Default or upon optional redemption, the Trust will be obligated to
redeem a Like Amount of preferred securities and common securities on the
redemption date at the redemption price specified in the prospectus supplement.
In this context, "LIKE AMOUNT" means preferred securities and common securities
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the junior subordinated debt securities to be contemporaneously repaid or
redeemed.
REPAYMENT AND REDEMPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The junior subordinated debt securities will mature on the date set forth in
the applicable prospectus supplement. We will also be entitled to redeem the
junior subordinated debt securities before their stated maturity, as follows:
- on or after the date set forth in the applicable prospectus supplement, in
whole or in part, PROVIDED that no partial redemption may occur during an
Extension Period, or
- in whole at any time within 90 days after the occurrence of a Tax Event or
an Investment Company Act Event.
See "Description of the Junior Subordinated Debt Securities--Optional
Redemption" for the definitions of "Tax Event" and "Investment Company Act
Event".
The Indenture provides that if a Tax Event has occurred and is continuing
and we do not elect to redeem the junior subordinated debt securities, we may be
required to pay certain Additional Sums on the junior subordinated debt
securities. The Indenture provisions regarding repayment and redemption of the
junior subordinated debt securities, as well as information about the effect
that possible tax law changes may have on the junior subordinated debt
securities and preferred securities, are addressed in "Description of the Junior
Subordinated Debt Securities--Stated Maturity; Shortening and Extension" and
"--Optional Redemption".
REDEMPTION PROCEDURES
The Property Trustee will give notice of any redemption of preferred
securities to the holders of preferred securities not less than 30 nor more than
60 days before the redemption date, unless the redemption results from
acceleration of the maturity of the junior subordinated debt securities and the
Property Trustee cannot reasonably give this notice during this period. In that
case, the Property Trustee will give the notice as soon as practicable. In all
cases, the Property Trustee will give the notice of redemption in the manner
described below under "--Notices".
Payment of the redemption price for any preferred securities will be made
against surrender of the certificates representing those preferred securities
(or, in the case of any preferred securities held in book-entry form, in
accordance with the applicable procedures of the Depositary). However, any
distributions that are payable on a distribution date that falls on or before
the redemption date will be payable to the persons who are the holders of those
preferred securities on the record date for the distribution date.
If the Property Trustee gives a notice of redemption, it will irrevocably
deposit with the Depositary (in the case of any book-entry preferred securities)
or the Paying Agent (in the case of any non-book-entry preferred securities), on
the redemption date, funds sufficient to pay the redemption price for all
preferred securities to be redeemed on that date (to the extent the funds are
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available to the Property Trustee). Upon the date of such deposit, all rights of
the holders of the preferred securities called for redemption will cease, except
the right of those holders to receive the redemption price (but without
additional interest on that amount), and those preferred securities will cease
to be outstanding. If payment of the redemption price for any preferred
securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by the Issuer under the guarantee (or if notice of
redemption is not given as required), distributions on those preferred
securities will continue to accumulate to the date the redemption price is
actually paid.
If less than all the preferred securities and common securities are to be
redeemed on a redemption date, the aggregate Liquidation Amount of preferred
securities and common securities to be redeemed will be allocated PRO RATA
between the outstanding preferred securities and the outstanding common
securities, based upon their respective aggregate Liquidation Amounts. Not more
than 60 days prior to the redemption date, the Property Trustee will select the
preferred securities to be redeemed from among the outstanding preferred
securities not previously called for redemption. The Property Trustee may use
any method of selection that it deems to be fair and appropriate, including any
method that involves the redemption of a portion of the aggregate Liquidation
Amount of any particular holder's preferred securities.
OTHER PURCHASES OF PREFERRED SECURITIES
Subject to applicable law (including U.S. federal securities laws), we may
purchase outstanding preferred securities by tender, in the open market or by
private agreement. These purchases may occur at any time and from time to time
other than during an Extension Period.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBT SECURITIES
The holders of the common securities will have the right at any time, in
their sole discretion, to elect to dissolve the Trust. Upon such an election,
and after liabilities of creditors of the Trust have been satisfied as provided
by applicable law, the Property Trustee will cause a Like Amount of junior
subordinated debt securities to be distributed in exchange for all the
outstanding preferred securities and common securities, in liquidation of the
Trust. In this context, "LIKE AMOUNT" means junior subordinated debt securities
having an aggregate principal amount equal to the aggregate Liquidation Amount
of all outstanding preferred securities and common securities. The exchange
distribution will be made to the persons who are the holders of record of the
outstanding preferred securities and common securities on the 15th day (whether
or not a business day) before the date fixed for the distribution by the
Property Trustee (the "EXCHANGE DATE"). See "--Liquidation Distribution upon
Dissolution".
EXCHANGE PROCEDURES
The Property Trustee will notify holders of preferred securities of any
exchange 30 to 60 days before the Exchange Date, in the manner described below
under "--Notices". On the Exchange Date, the following shall occur:
- The preferred securities will cease to be outstanding.
- The Depositary or its nominee will receive certificates representing the
junior subordinated debt securities to be distributed in exchange for all
preferred securities held in book-entry form, with those junior
subordinated debt securities also being in book-entry form.
- Any certificates representing preferred securities that are not held in
book-entry form will be deemed to represent a Like Amount of junior
subordinated debt securities, bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid distributions on those
preferred securities, until those certificates are presented to the Paying
Agent for exchange or transfer.
- All rights of the holders of preferred securities will cease, except for
the right of holders of preferred securities in non-book-entry form to
receive certificates representing junior subordinated debt
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securities in non-book-entry form, upon surrender of the certificates
representing their preferred securities, as described above.
CERTAIN TAX CONSEQUENCES
Under current U.S. federal income tax law and interpretations, and assuming,
as we expect, that the Trust will not be classified as an association taxable as
a corporation, holders of the preferred securities would not be taxed if the
junior subordinated debt securities were distributed in exchange for preferred
securities. However, if a Tax Event were to occur and the Trust became taxable
on income received or accrued on the junior subordinated debt securities, both
the Trust and the holders of the preferred securities could be taxed on the
distribution of junior subordinated debt securities in exchange for preferred
securities. See "U.S. Federal Income Tax Consequences Relating to Preferred
Securities--Distribution of Junior Subordinated Debt Securities to Holders of
Preferred Securities upon Liquidation of the Trust".
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Under the Declaration of Trust, the Trust will automatically dissolve upon
the occurrence of any of the following events, whichever occurs first:
- the expiration of its term of 55 years;
- certain events of bankruptcy, dissolution or liquidation of a holder of
common securities;
- upon the election by the holders of common securities to terminate the
Trust, as described above under "--Exchange of Preferred Securities for
Junior Subordinated Debt Securities";
- redemption of all the preferred securities and common securities as
described above under "--Mandatory Redemption-- Redemption of Preferred
Securities and Common Securities"; or
- the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If the Trust dissolves while the preferred securities are outstanding, the
Property Trustee will liquidate the Trust as expeditiously as the Property
Trustee determines to be possible. The Property Trustee will do so by
distributing a Like Amount of the junior subordinated debt securities to the
holders of the preferred securities and common securities in exchange for their
securities, as described above under "--Exchange of Preferred Securities for
Junior Subordinated Debt Securities". However, the Property Trustee will do so
only after satisfying liabilities to creditors of the Trust as provided by
applicable law and only if the Property Trustee determines that an exchange
distribution of this kind is practical.
If the Property Trustee determines that an exchange distribution is not
practical, each holder of outstanding preferred securities will be entitled to
receive out of the assets of the Trust available for distribution to holders,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the Liquidation Distribution. The
"LIQUIDATION DISTRIBUTION" for any preferred securities will equal the aggregate
Liquidation Amount of those preferred securities plus all accrued and unpaid
distributions on them to the date of payment. If the Liquidation Distribution
for all outstanding preferred securities can be paid only in part because the
Trust has insufficient assets available to pay it in full, the amounts payable
by the Trust on the preferred securities will be paid PRO RATA, based on their
respective Liquidation Distributions.
On any liquidation of the Trust, the holders of the common securities will
be entitled to receive distributions PRO RATA with the holders of the preferred
securities, unless a Trust Event of Default has occurred and is continuing. In
that case, the preferred securities will have priority in right of payment over
the common securities, as described below under "--Priority over Common
Securities".
PRIORITY OVER COMMON SECURITIES
Payment of distributions and the redemption price will be made in respect of
the preferred securities and the common securities PRO RATA, based on the
respective aggregate Liquidation
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Amounts of the two classes, except as follows. If a Trust Event of Default (see
the next subsection) has occurred and is continuing, the Trust will not pay any
distribution or redemption price, or make any Liquidation Distribution, in
respect of the common securities on any day unless any of the following have
occurred:
- In the case of any distribution to be paid, all accumulated and unpaid
distributions on all outstanding preferred securities for all distribution
periods ending on or before the payment day have been paid (or duly
provided for) in cash.
- In the case of any redemption price to be paid, the redemption price on
all outstanding preferred securities called on or before the payment day
for redemption has been paid (or duly provided for) in cash.
- In the case of a Liquidation Distribution to be made, the Liquidation
Distribution on all outstanding preferred securities has been made (or
duly provided for).
Whenever any distribution or redemption price is due and payable in respect of
the preferred securities, the Property Trustee will apply all available funds to
the payment of those amounts in full in cash before making any payment in
respect of the common securities. The Trust will not make any payment or other
distribution in respect of the common securities (including on account of any
purchase or other acquisition) while the preferred securities are outstanding,
other than distributions, the redemption price and the Liquidation Distribution
on the terms set forth in the Declaration of Trust.
If a Trust Event of Default occurs, the holders of the common securities
will be deemed to have waived all rights to act with respect to the Trust Event
of Default until all Trust Events of Default have been cured, waived or
otherwise eliminated. Until that time, the Property Trustee will act solely on
behalf of the holders of the preferred securities and not on behalf of the
holders of the common securities, and only the holders of the preferred
securities will have the right to direct the Property Trustee to act on their
behalf.
Notwithstanding the foregoing, the holders of common securities may act with
respect to a Trust Event of Default that results solely from a default in the
payment of any amount due and payable on the common securities, or from a
default or breach under any covenant in the Declaration of Trust made solely for
the benefit of the holders of common securities (a "COMMON SECURITIES DEFAULT"),
subject to the following conditions. The action of the common securities holders
must not adversely affect the interests of the holders of preferred securities
and no Trust Event of Default (and no event or condition that after the passage
of time or giving of notice would result in a Trust Event of Default) that is
not a Common Securities Default may have occurred and be continuing.
TRUST EVENTS OF DEFAULT
Any one of the following events will be a "TRUST EVENT OF DEFAULT" under the
Declaration of Trust. This will be the case regardless of the reason why the
event occurs, whether it is voluntary or involuntary and whether or not it
results from operation of law, from any judgment, decree or order of any court
or from any order, rule or regulation of any administrative or governmental
body:
- the occurrence of an Event of Default under the Junior Subordinated
Indenture (see "Description of the Junior Subordinated Debt
Securities--Events of Default");
- the default by the Trust in the payment of any distribution when it
becomes due and payable and continuation of the default for 30 days;
- the default by the Trust in the payment of any redemption price when it
becomes due and payable;
- a material default or breach under any covenant or warranty of the Trust
Trustees in the Declaration of Trust, and continuation of the default or
breach for 60 days after a notice default has been given, which may be
given only by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding
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preferred securities, as provided under the Declaration of Trust; or
- the occurrence of certain events of bankruptcy or insolvency with respect
to the Property Trustee if a successor Property Trustee has not been
appointed within 90 days.
Within five business days after learning about a Trust Event of Default, the
Property Trustee will notify the holders of the outstanding preferred securities
and common securities, unless the Trust Event of Default has been cured or
waived. The Issuer, as Depositor, and the Administrators are obligated to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
Declaration of Trust.
ENFORCEMENT RIGHTS
If an Event of Default under the Junior Subordinated Indenture occurs and is
continuing as to a series of corresponding junior subordinated debt securities,
the Property Trustee, as the holder of the junior subordinated debt securities,
will have the right to declare the principal of and premium and interest, if
any, on the corresponding junior subordinated debt securities, and any other
amounts payable under the Junior Subordinated Indenture, due and payable and to
enforce its other rights as a creditor with respect to such corresponding junior
subordinated debt securities.
This means, however, that as a holder of the related preferred securities,
you must rely on the Property Trustee to enforce its rights against the Issuer,
subject to the following provisions.
RIGHT TO DIRECT PROPERTY TRUSTEE'S ACTIONS
The holders of a majority in aggregate Liquidation Amount of outstanding
preferred securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to, or exercising any trust
or power conferred on, the Property Trustee under the Declaration of Trust,
including the right to direct the Property Trustee to exercise the remedies
available to it as the holder of the junior subordinated debt securities.
Accordingly, the Property Trustee will not take any of the following actions
without obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of the outstanding preferred securities (or, in the case of
any action that under the Indenture may be taken only with the prior consent of
each affected holder of junior subordinated debt securities, without the prior
consent of each holder of outstanding preferred securities):
- direct the time, method or place of conducting any proceeding for any
remedy available to, or executing any trust or power conferred on, the
Indenture Trustee with respect to the junior subordinated debt securities;
- waive any past default that may be waived under the Indenture;
- exercise any right to rescind or annul a declaration that the aggregate
principal amount of the junior subordinated debt securities be due and
payable;
- consent to any amendment, modification or termination of the Indenture or
the junior subordinated debt securities, if the consent of any holder of
junior subordinated debt securities is required under the Indenture; or
- revoke any action previously authorized or approved by the holders of the
preferred securities except by, or with the subsequent authorization or
approval of, the holders of the preferred securities.
Before taking any of the actions described above, the Property Trustee must also
obtain an opinion of counsel, experienced in the following matters, to the
effect that the action will not cause the Trust to be classified as an
association taxable as a corporation, or as other than a grantor trust, or cause
the junior subordinated debt securities to be treated as other than indebtedness
of the Issuer, for U.S. federal income tax purposes. The Property Trustee will
notify the holders of preferred securities of any notice of default with respect
to the junior subordinated debt securities, in the manner described below under
"--Notices".
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Any required approval of holders of preferred securities may be given by
written consent or at a meeting convened for that purpose. The Property Trustee
must cause a notice of any matter upon which holders of preferred securities are
to act by written consent, or of any meeting at which holders of preferred
securities are entitled to vote, to be given to the holders of preferred
securities in the manner described below under "--Notices".
RIGHT OF DIRECT ACTION
If an Event of Default under the Junior Subordinated Indenture has occurred
and is continuing and is attributable to the failure of the Issuer to pay any
interest or principal on the junior subordinated debt securities when due and
payable, a holder of preferred securities may begin a legal proceeding directly
against the Issuer for enforcement of payment, to that holder, of the interest
(including any Additional Sums) or principal due and payable on junior
subordinated debt securities having a principal amount equal to the aggregate
Liquidation Amount of that holder's preferred securities (a "DIRECT ACTION").
The Issuer may not amend the Indenture to remove the right of any holder of
outstanding preferred securities to bring a Direct Action without the prior
written consent of that holder. The Issuer will have the right under the
Indenture to set off any payment made to a holder of preferred securities in
connection with a Direct Action. Except for the right to bring a Direct Action,
holders of preferred securities will not have the right to exercise directly
against the Issuer any remedy available to a holder of junior subordinated debt
securities.
RIGHT TO ACCELERATE JUNIOR SUBORDINATED DEBT SECURITIES
The holders of certain minimum percentages of the outstanding preferred
securities will be entitled to exercise certain rights of the holders of the
junior subordinated debt securities under the Indenture, if the holders of
junior subordinated debt securities do not do so. These rights include the right
to accelerate the maturity of the junior subordinated debt securities when an
Event of Default under the Junior Subordinated Indenture has occurred and is
continuing, to cancel a declaration of acceleration of the junior subordinated
debt securities and to waive certain defaults under the Indenture. See
"Description of the Junior Subordinated Debt Securities--Events of Default".
MERGERS, CONSOLIDATIONS, AMALGAMATIONS AND REPLACEMENTS OF THE TRUST
At the request of the holders of the common securities and without the
consent of any holder of preferred securities or any Trust Trustee or
Administrator, the Trust may merge with or into, or consolidate or amalgamate
with, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, another person (each, a "TRUST SUCCESSOR
TRANSACTION"), but only if that other person is a trust organized as such under
the laws of any state in the United States and only if all the following
requirements are met:
- The successor entity (if not the Trust) EITHER expressly assumes all the
obligations of the Trust with respect to the preferred securities or
substitutes for the preferred securities other securities having
substantially the same terms as the preferred securities, PROVIDED THAT
the successor securities rank at least as high as the preferred securities
rank with regard to the priority in right of payment of all distributions
and other amounts payable upon liquidation, redemption and otherwise.
- The successor entity (if not the Trust) has a purpose identical to that of
the Trust.
- A trustee of the successor entity (if not the Trust) possessing the same
powers and duties as the Property Trustee is appointed to hold the junior
subordinated debt securities.
- The successor securities (if any) are listed, or will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the preferred securities are then listed.
- The Trust Successor Transaction does not cause the preferred securities
(or any successor securities) to be downgraded by any nationally
recognized statistical rating
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organization that assigns ratings to the preferred securities.
- The Trust Successor Transaction does not adversely affect the material
rights, preferences and privileges of the holders of the preferred
securities (or any successor securities) in any material respect.
- Prior to the Trust Successor Transaction, the Issuer and the Trust have
received an opinion from independent counsel to the Issuer and the Trust,
experienced in the following matters, to the effect that (i) the Trust
Successor Transaction will not adversely affect the rights, preferences
and privileges of the holders of the preferred securities (or any
successor securities) in any material respect and (ii) upon completion of
the Trust Successor Transaction, the Trust or the successor entity, as
applicable, will not be required to register as an investment company
under the Investment Company Act.
- The Issuer (or any permitted successor), together with its permitted
assignees, holds all the common securities of the Trust or all comparable
securities of the successor entity, as applicable, and guarantees the
obligations of the successor entity (if not the Trust) in respect of the
preferred securities (or any successor securities) at least to the extent
provided by the guarantee.
Notwithstanding the foregoing, the Trust may not engage in a Trust Successor
Transaction that would cause the Trust or the successor entity, as applicable,
to be classified as an association taxable as a corporation or as other than a
grantor trust, or would cause the junior subordinated debt securities or any
successor securities to be treated as other than indebtedness of the Issuer, for
U.S. federal income tax purposes, unless it first obtains the consent of all
holders of outstanding preferred securities. Except as permitted under the
provisions described above, the Trust may not engage in any Trust Successor
Transaction.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION OF TRUST
Except as provided below and under "Description of Guarantee and Expense
Agreement--Amendments, Assignment and Succession", and as otherwise required by
law and the Declaration of Trust, the holders of the preferred securities will
have no voting rights.
The holders of the common securities and the Property Trustee, without the
consent of the holders of the preferred securities, may amend the Declaration of
Trust from time to time to do any of the following:
- cure any ambiguity, or correct or supplement any provision that may be
inconsistent with any other provision, in the Declaration of Trust;
- make any provision with respect to matters or questions arising under the
Declaration of Trust that is not inconsistent with the other provisions of
the Declaration of Trust; and
- modify, eliminate or add to any provisions of the Declaration of Trust to
any extent that may be necessary to ensure that the Trust will not be
taxable as a corporation or be classified as other than a grantor trust,
or to ensure that the junior subordinated debt securities are treated as
indebtedness of the Issuer, for U.S. federal income tax purposes, or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act;
BUT ONLY if the amendment does not adversely affect the interests of any holder
of preferred securities in any material respect and does not become effective
until notice of the amendment is given to the holders of preferred securities.
The holders of the common securities and the Property Trustee may also amend
the Declaration of Trust if:
- they obtain the consent of the holders of not less than a majority in
aggregate Liquidation Amount of the outstanding preferred securities, and
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- the Trust Trustees receive an opinion of counsel to the effect that the
amendment or the exercise of any power granted to the Trust Trustees in
accordance with the amendment will not result in the Trust being taxable
as a corporation or being classified as other than a grantor trust, or the
junior subordinated debt securities being treated as other than
indebtedness of the Issuer, for U.S. federal income tax purposes or being
required to register as an "investment company" under the Investment
Company Act.
Notwithstanding the foregoing, each holder of preferred securities or common
securities must consent to an amendment of the Declaration of Trust that:
- changes the amount or timing of any distribution or other payment, or
otherwise adversely affects the amount or timing of any distribution or
other payment required to be made as of a specified date, in respect of
that holder's preferred securities and common securities, or
- restricts the right of that holder to institute suit for the enforcement
of any payment on those preferred securities and common securities on or
after the date on which it becomes due and payable.
For the purpose of any vote or consent of holders of preferred securities,
any preferred securities owned by the Issuer, any Trust Trustee or any affiliate
of the Issuer or any Trust Trustee will be treated as if they were not
outstanding.
NOTICES
Notices to be given to holders of preferred securities held in book-entry
form will be given only to the Depositary in accordance with its applicable
procedures. Notices to be given to holders of preferred securities not held in
book-entry form may be given by mail to the respective addresses of the holders
as they appear in the security register. Neither the failure to give any notice
to a particular holder, nor any defect in a notice given to a particular holder,
will affect the sufficiency of any notice given to another holder.
PAYMENT AND PAYING AGENCY
Payments in respect of any preferred securities held in book-entry form will
be made only to the Depositary or its nominee in accordance with its applicable
procedures. Payments in respect of any preferred securities not held in
book-entry form will be made at the offices of any Paying Agent. However, at the
option of the Issuer, distributions payable on non-book-entry preferred
securities may be paid by check mailed to the persons entitled to receive them,
at their addresses appearing on the security register on the relevant record
date.
The Property Trustee will initially serve as the Paying Agent. From time to
time, the Property Trustee may select one or more firms to act as the Paying
Agent or as co-Paying Agents. Each Paying Agent must be a bank or trust company
acceptable to the Administrators. A Paying Agent will be permitted to resign as
Paying Agent upon 30 days' written notice to the Property Trustee and the
Issuer. In the event there is no Paying Agent, the Property Trustee will appoint
a firm to act as Paying Agent.
If any distribution, redemption price or other amount is payable in respect
of the preferred securities on a day that is not a business day, the payment may
be made on the next succeeding business day unless that business day is in a
different calendar year, in which case the payment may be made on the next
preceding business day. Each payment made on the next succeeding or preceding
business day as described above may be made with the same force and effect as if
made on the day on which the payment is originally payable.
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THE OWNERS OF BENEFICIAL INTERESTS IN PREFERRED SECURITIES HELD IN
BOOK-ENTRY FORM WILL NOT HAVE ANY RIGHTS UNDER THE DECLARATION OF TRUST OR THE
INDENTURE TO RECEIVE PAYMENTS IN RESPECT OF THOSE PREFERRED SECURITIES. THOSE
BENEFICIAL OWNERS WILL HAVE ONLY SUCH RIGHTS AS MAY EXIST UNDER THE APPLICABLE
PROCEDURES OF THE DEPOSITARY AND ITS DIRECT AND INDIRECT PARTICIPANTS. FOR A
DESCRIPTION OF CERTAIN MATTERS RELATING TO SECURITIES HELD IN BOOK-ENTRY FORM,
SEE "DESCRIPTION OF THE SECURITIES WE MAY OFFER--LEGAL OWNERSHIP".
Any moneys deposited with the Property Trustee or any Paying Agent, or then held
in trust by the Issuer or the Trust, for the payment of any amount due and
payable on any preferred securities, and remaining unclaimed for two years after
the amount has become due and payable, will, at the request of the Issuer, be
repaid to the Issuer. Thereafter, the holders of those preferred securities will
look, as a general unsecured creditor, only to the Issuer for payment thereof.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
preferred securities. The Property Trustee will exchange and register transfers
of preferred securities without charge by or on behalf of the Trust, but will
require payment of any tax or other governmental charge that may be imposed in
connection with the exchange or transfer. If any preferred securities have been
called for redemption, the Property Trustee may refuse to register any transfer
of those preferred securities during a period beginning 15 days before the
redemption date.
REGARDING THE TRUST TRUSTEES
REMOVAL AND APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding preferred securities may remove the Trust Trustees for cause or, if
an Event of Default under the Indenture has occurred and is continuing, with or
without cause. If a Trust Trustee is removed by the holders of the outstanding
preferred securities, the successor may be appointed by the holders of at least
25% in aggregate Liquidation Amount of the outstanding preferred securities. If
a Trust Trustee resigns, it will appoint its successor. If a Trust Trustee fails
to appoint a successor, the holders of at least 25% in aggregate Liquidation
Amount of the outstanding preferred securities may appoint a successor. If a
successor has not been appointed by the holders, any holder of preferred
securities or common securities, or the other Trust Trustee, may petition a
court in the State of Delaware to appoint a successor. Any Delaware Trustee must
meet the applicable requirements of Delaware law. Any Property Trustee must be a
national or state-chartered bank and, at the time of appointment, must have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization and have capital and surplus of at
least $50,000,000. No resignation or removal of a Trust Trustee, and no
appointment of a successor trustee, will be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Declaration of Trust.
MERGER, CONSOLIDATION, ETC.
If a Trust Trustee merges, consolidates with or converts into, another
person, or another person succeeds to all or substantially all the corporate
trust business of that Trust Trustee, that other person will be the successor of
that Trust Trustee under the Declaration of Trust, but only if that other person
is qualified and eligible to be a Trust Trustee.
DUTIES OF PROPERTY TRUSTEE
The Property Trustee undertakes to perform only those duties that are
specifically set forth in the Declaration of Trust, unless a Trust Event of
Default is continuing. In that event, the Property Trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee will have no obligation to exercise any of the powers vested in it by
the Declaration of Trust at the request of any holder of preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that it might incur as a result. If no Trust Event of Default is
continuing and the Property Trustee must decide between alternative causes of
action or construe ambiguous provisions
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in the Declaration of Trust, or is unsure of the application of any provision of
the Declaration of Trust, and the matter is not one on which the holders of
preferred securities and common securities are entitled under the Declaration of
Trust to vote, then the Property Trustee may take any action that it deems to be
advisable and in the best interests of the holders of the preferred securities
and common securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Declaration of Trust authorizes and directs the Administrators and the
Property Trustee to conduct the affairs of and to operate the Trust so that the
Trust will not be required to register as an "investment company" under the
Investment Company Act or be classified as an association taxable as a
corporation or as other than a grantor trust for U.S. federal income tax
purposes and so that the junior subordinated debt securities will be treated as
indebtedness of the Issuer for U.S. federal income tax purposes. The Declaration
of Trust authorizes the Property Trustee and the holders of common securities to
take any action, not inconsistent with applicable law, the certificate of trust
of the Trust or the Declaration of Trust, that they (or any successor entity)
determine in their discretion to be necessary or desirable for these purposes,
as long as the action does not adversely affect the interests of the holders of
the preferred securities in any material respect. Holders of the preferred
securities will have no preemptive or similar rights.
GOVERNING LAW
The Declaration of Trust and the preferred securities and common securities
provide that they are to be governed by and construed in accordance with the
laws of Delaware.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
This section summarizes the main provisions of the junior subordinated debt
securities and the Junior Subordinated Indenture, but it does not describe all
the provisions. Therefore, you should read the full text of the Indenture for a
complete description of the junior subordinated debt securities. We have filed a
form of the Junior Subordinated Indenture as an exhibit to the registration
statement.
THE TERM "INDENTURE", WHEN USED IN THIS SECTION, REFERS ONLY TO THE
INDENTURE FOR THE JUNIOR SUBORDINATED DEBT SECURITIES OF THE ISSUER AND NOT TO
THE INDENTURES FOR THE SENIOR DEBT SECURITIES OR THE SUBORDINATED DEBT
SECURITIES.
This section uses terms that are defined in the Junior Subordinated
Indenture and the Declaration of Trust. Unless we define those terms in this
prospectus, we intend for them to have the meanings given them in the Junior
Subordinated Indenture or the Declaration of Trust, as the case may be.
GENERAL
Concurrently with the issuance of the preferred securities, the relevant
Issuer will issue the junior subordinated debt securities under the Indenture,
and the Trust will use the proceeds from the sale of the preferred securities,
together with the consideration paid by the Issuer for the common securities, to
purchase the junior subordinated debt securities. The junior subordinated debt
securities will initially equal the sum of the initial aggregate Liquidation
Amount of the preferred securities and the common securities. Unless the Trust
distributes the junior subordinated debt securities in exchange for the
preferred securities as described below, the junior subordinated debt securities
will be held in the name of the Property Trustee in trust for the benefit of the
holders of the preferred securities and common securities.
The junior subordinated debt securities will be general, unsecured
obligations of the Issuer and will be subordinated in right of payment, to the
extent and in the manner set forth in the Indenture, to all Senior Debt of the
Issuer. Because each Issuer is a holding company, the junior subordinated debt
securities will also effectively be subordinated to all existing and future
liabilities of the Issuer's subsidiaries (other than trade accounts payable and
accrued liabilities arising in the ordinary course). See "Risk Factors--Risks
Relating to the Preferred Securities--Our Obligations to You Will Be Deeply
Subordinated".
INTEREST
Interest will accrue on the principal of the preferred securities from their
original issue date at the annual rate set forth in the applicable prospectus
supplement. Unless deferred as described below, interest will be payable
quarterly in arrears on the dates set forth in the applicable prospectus
supplement to the persons who are the record holders of the junior subordinated
debt securities at the close of business on the 15th day (whether or not a
business day) next preceding the relevant interest payment date. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of 12 30-day months.
As long as no Event of Default under the Indenture has occurred and is
continuing, the Issuer will have the right to defer the payment of interest on
the junior subordinated debt securities as described in "Description of the
Preferred Securities--Distributions--Extension Periods". However, during an
Extension Period, interest will continue to accrue on the junior subordinated
debt securities and, to the extent permitted by applicable law, additional
interest will accrue on each deferred interest payment at an annual rate
specified in the prospectus supplement, compounded quarterly from the
corresponding interest payment date. The term "INTEREST", wherever we use it in
this prospectus with respect to the junior subordinated debt securities,
includes any of this additional interest. In addition, during any Extension
Period, the Indenture will prohibit the Issuer and its subsidiaries from taking
certain actions described in "Description of the Preferred
Securities--Distributions--Extension Period Restrictions".
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Any interest that would otherwise become due and payable in respect of any
junior subordinated debt securities during an Extension Period will not become
due and payable until the day after the period ends. If the principal of any
junior subordinated debt securities becomes due and payable on a day that would
otherwise occur during an Extension Period, that period will end automatically
on the next preceding day (which will be the last day of that period).
STATED MATURITY; SHORTENING AND EXTENSION
The junior subordinated debt securities will initially have a stated
maturity. However, the Issuer will have the option at any time to shorten the
stated maturity to a date not earlier than a date set forth in the applicable
prospectus supplement. The Issuer would expect to exercise this option if, for
example, a tax development occurred that could adversely affect the
deductibility of the interest payments on the junior subordinated debt
securities and shortening the maturity would preserve such deductibility.
If provided in the Indenture, the Issuer will also have the option at any
time to extend the stated maturity to a date set forth in the applicable
prospectus supplement, but only if the Issuer has long-term senior unsecured
debt that is outstanding and rated Investment Grade when it gives notice of the
extension as described below. As used herein, "INVESTMENT GRADE" means either a
rating of BBB or better by Standard & Poor's Ratings Services (or any equivalent
successor rating) or a rating of Baa3 or better by Moody's Investors Service,
Inc. (or any equivalent successor rating).
To exercise its option to shorten or extend the stated maturity, the Issuer
must select a date when the change is to become effective and must notify the
Indenture Trustee, and the Indenture Trustee must notify the holders of the
junior subordinated debt securities in the manner described below under
"--Notices", of the new stated maturity and the effective date of the change.
The notice must be given not less than 30 days nor more than 60 days before the
effective date. Any notice of this kind will be irrevocable when given.
OPTIONAL REDEMPTION
The Issuer will have the option to redeem the junior subordinated debt
securities before the stated maturity as follows:
- on or after a date set forth in the applicable prospectus supplement, in
whole at any time or in part from time to time (PROVIDED that no partial
redemption may occur during an Extension Period), or
- in whole (but not in part) at any time within 90 days after the occurrence
of a Tax Event or an Investment Company Act Event (as defined below).
If the Issuer elects to redeem any junior subordinated debt securities, it
will do so at a redemption price equal to the principal amount of the junior
subordinated debt securities to be redeemed, plus any accrued and unpaid
interest on those securities to the redemption date. Unless the Issuer defaults
in payment of the redemption price, on and after the redemption date, interest
will cease to accrue on the junior subordinated debt securities called for
redemption. The Issuer may not elect to redeem any junior subordinated debt
securities on a redemption date that would occur during an Extension Period
unless it elects to redeem all outstanding junior subordinated debt securities
on that date.
The Issuer must give notice of any redemption to the holders of the junior
subordinated debt securities 30 to 60 days before the redemption date in the
manner described below under "--Notices". In all other respects, the procedures
for redeeming the junior subordinated debt securities will be similar to those
for redeeming the preferred securities, described under "Description of the
Preferred Securities--Mandatory Redemption-- Redemption Procedures".
DEFINITION OF TAX EVENT
"TAX EVENT" means the receipt by the Issuer (and, if the preferred
securities are outstanding, the Trust) of an opinion of independent counsel,
experienced in the following matters, to the effect that as a result of any Tax
Change (as defined
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below), there is more than an insubstantial risk that any of the following will
occur:
- The Trust is, or will be within 90 days after the date of the opinion of
counsel, subject to U.S. federal income tax with respect to income
received or accrued on the junior subordinated debt securities.
- Interest payable by the Issuer or OID accruing on the junior subordinated
debt securities is not, or within 90 days after the opinion of counsel
will not be, deductible by the Issuer, in whole or in part, for U.S.
federal income tax purposes.
- The Trust is, or will be within 90 days after the date of the opinion of
counsel, subject to more than a DE MINIMIS amount of other taxes, duties
or other governmental charges.
As used above, "TAX CHANGE" means any of the following:
- any amendment to, clarification of or change (including any announced
prospective change) in the laws, or any regulations under the laws, of the
United States or of any political subdivision or taxing authority of or in
the United States, if the amendment or change is enacted, promulgated or
announced on or after the date of the applicable prospectus supplement, or
- any official administrative pronouncement (including any private letter
ruling, technical advice memorandum or field service advice) or any
judicial decision, whether or not the pronouncement or decision is issued
to or in connection with a proceeding involving the Issuer or the Trust or
is subject to review or appeal, if the pronouncement or decision is
enacted, promulgated or announced on or after the date of the applicable
prospectus supplement.
For a description of certain tax law developments that could result in a Tax
Event and thus early redemption of the junior subordinated debt securities and
the preferred securities, see "U.S. Federal Income Tax Consequences Relating to
Preferred Securities--Possible Tax Law Changes".
DEFINITION OF INVESTMENT COMPANY ACT EVENT
"INVESTMENT COMPANY ACT EVENT" means the receipt by the Issuer and the Trust
of an opinion of counsel, experienced in the following matters, to the following
effect: As a result of the occurrence of a change (including any announced
prospective change) in law or regulation, or a written change (including any
announced prospective change) in interpretation or application of law or
regulation, by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act. To be effective for this purpose, the change or
prospective change must become effective (or the prospective change will become
effective) on or after the date of the applicable prospectus supplement.
PAYMENT OF ADDITIONAL SUMS
If a Tax Event has occurred and is continuing and the Issuer does not elect
to redeem the junior subordinated debt securities and thereby cause a mandatory
redemption of the preferred securities (and does not elect to liquidate the
Trust and cause the junior subordinated debt securities to be distributed to the
holders of the preferred securities and common securities in exchange for their
securities) as described above, the preferred securities will remain outstanding
and the Issuer will be obligated to pay Additional Sums on the junior
subordinated debt securities. "ADDITIONAL SUMS" means such additional amounts as
may be necessary so that the amount of distributions that are due and payable by
the Trust on the outstanding preferred securities and common securities at any
time will not be reduced as a result of certain additional taxes, duties and
other governmental charges to which the Trust has become subject as a result of
the Tax Event.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBT SECURITIES
As described under "Description of the Preferred Securities--Exchange of
Preferred Securities for Junior Subordinated Debt Securities", the holders of
common securities may
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elect to dissolve the Trust and, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, cause the Trust to distribute the
junior subordinated debt securities to the holders of the preferred securities
and common securities in exchange for these securities. Junior subordinated debt
securities distributed in exchange for preferred securities held in book-entry
form will also be issued, upon the distribution, in book-entry form. We expect
that any book-entry arrangements for the junior subordinated debt securities
would be substantially similar to those that will apply to the preferred
securities. See "Description of the Securities We May Offer--Legal Ownership".
The Issuer will be obligated to use its best efforts to list the junior
subordinated debt securities on the American Stock Exchange (or such other stock
exchange or organization, if any, on which the preferred securities are then
listed) if an exchange distribution occurs. We can give no assurance as to the
market price of any junior subordinated debt securities that may be distributed
to the holders of the preferred securities.
CERTAIN COVENANTS OF THE ISSUER
The Issuer will make the following covenants in the Indenture:
- to hold, directly or indirectly through one or more subsidiaries, 100% of
the common securities, PROVIDED THAT permitted successors under the
Indenture may succeed to its ownership of the common securities;
- not to terminate, wind-up or liquidate the Trust voluntarily, except in
connection with a distribution of junior subordinated debt securities in
exchange for preferred securities or a Trust Successor Transaction
permitted by the Declaration of Trust; and
- to use its reasonable efforts, consistent with the Declaration of Trust,
to cause the Trust to be classified as a grantor trust or not to be
classified as an association taxable as a corporation for U.S. federal
income tax purposes.
RESTRICTIONS ON CERTAIN PAYMENTS. If any of the following has occurred and
is continuing:
- any event of which the Issuer has knowledge that
- with notice or the lapse of time, or both, would constitute an Event of
Default with respect to the junior subordinated debt securities of such
series and
- in respect of which the Issuer has not taken reasonable steps to cure,
- the junior subordinated debt securities are held by a Trust of a series of
related preferred securities and the Issuer is in default with respect to
its payment of any obligations under the guarantee relating to such
preferred securities, or
- the Issuer has given notice of an Extension Period with respect to the
junior subordinated debt securities of such series and has not rescinded
such notice, or such Extension Period, or any extension thereof,
then the Issuer will not, and will not permit any subsidiary to:
- pay any dividends or distributions on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of the Issuer's capital
stock,
- make any payment of principal of, or premium or interest, if any, on, or
repay or repurchase or redeem any debt securities of the Issuer (including
other junior subordinated debt securities) that rank equally with or
junior in interest to the junior subordinated debt securities, or
- make any guarantee payments with respect to any guarantee by the Issuer of
the debt securities of any subsidiary if such guarantee ranks equally with
or junior in interest to the junior subordinated debt securities,
PROVIDED THAT the Issuer may continue to:
- pay any dividends or distributions in common stock of the Issuer,
- redeem or purchase any rights pursuant to any stockholder protection
rights plan and
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declare a dividend of such rights or the issuance of stock under such
plans,
- make any payment under any guarantee of the preferred securities by the
Issuer, and
- purchase common stock related to the issuance of common stock under any of
the Issuer's benefit plans for its directors, officers or employees.
MODIFICATION OF INDENTURE
There are three types of changes we can make to the Indenture and the junior
subordinated debt securities.
CHANGES REQUIRING YOUR APPROVAL. The first type of change cannot be made to
your junior subordinated debt securities without your specific approval. They
are:
- a change in the stated maturity of the junior subordinated debt securities
(except to shorten or extend it as permitted by the Indenture), a
reduction in the principal amount of the junior subordinated debt
securities, or a reduction in the rate or extension of the time of payment
of interest on the junior subordinated debt securities (except for any
permitted deferral in connection with an Extension Period), and
- a reduction in the percentage of principal amount of the outstanding
junior subordinated debt securities, the holders of which are required to
consent to any modification of the Indenture.
CHANGES REQUIRING A MAJORITY VOTE. The second type of change to the
Indenture and the junior subordinated debt securities is the kind that requires
a vote in favor by holders of junior subordinated debt securities owning a
majority of the principal amount of the outstanding securities of the particular
series affected.
CHANGES NOT REQUIRING APPROVAL. The third type of change does not require
any vote of the holders of the junior subordinated debt securities. This type is
limited to (i) curing ambiguities, defects or inconsistencies as long as such
changes do not adversely affect the interests of the holders of the junior
subordinated debt securities or the related preferred securities in any material
respect and (ii) qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act.
CONSENT OF THE RELATED PREFERRED SECURITY HOLDERS. As long as the related
preferred securities are outstanding, the Property Trustee, as the holder of the
junior subordinated debt securities, will not be permitted to consent to any
modification, waiver or termination of the Indenture without obtaining the
consent of the holders of preferred securities as required under the Declaration
of Trust. See "Description of the Preferred Securities--Enforcement Rights".
EVENTS OF DEFAULT
You will have special rights if an Event of Default under the Indenture
occurs and is not cured, as described later in this subsection.
WHAT IS AN EVENT OF DEFAULT? The term "EVENT OF DEFAULT" under the
Indenture means any of the following:
- We do not pay interest or any Additional Sum on the junior subordinated
debt securities within 30 days of its due date (except a permitted
deferral during an Extension Period will not be a default).
- We do not pay the principal of the junior subordinated debt securities
when due, whether at maturity or upon redemption (except when the maturity
date has been extended as permitted by the Indenture).
- We remain in breach of any other covenant in the Indenture in any material
respect for 90 days after we receive a notice of default stating we are in
breach. The notice must be sent by either the Indenture Trustee or the
holders of at least 25% in aggregate principal amount of the outstanding
junior subordinated debt securities.
- We file for bankruptcy or certain other events in bankruptcy, insolvency
or reorganization occur.
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an Event of Default has occurred
and is
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continuing, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the outstanding junior subordinated debt
securities may declare the principal of all junior subordinated debt securities
to be due and payable immediately. If the preferred securities are outstanding
and the Indenture Trustee or those holders of junior subordinated debt
securities fail to exercise this right, the holders of at least 25% in aggregate
Liquidation Amount of the outstanding preferred securities may do so. The
holders of a majority in aggregate principal amount of the outstanding junior
subordinated debt securities may also cancel any declaration of acceleration. If
they do not exercise this right, the holders of a majority in aggregate
Liquidation Amount of the outstanding preferred securities may do so.
The holders of a majority in aggregate principal amount of the outstanding
junior subordinated debt securities may, on behalf of the holders of all junior
subordinated debt securities, waive any default under the Indenture other than:
- a default in the payment of principal or interest (and any Additional
Sum), unless the default has been cured and a sum sufficient to pay all
matured installments of interest and principal (and any Additional Sum)
due otherwise than by acceleration has been deposited with the Indenture
Trustee, or
- a default in respect of a covenant that under the Indenture cannot be
modified or amended without the consent of the holder of each affected
junior subordinated debt security.
If they do not exercise this right, the holders of a majority in aggregate
Liquidation Amount of the outstanding preferred securities may do so.
The holders of a majority in aggregate principal amount of outstanding
junior subordinated debt securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee. This right, as well as the rights of the holders of junior
subordinated debt securities with regard to acceleration, cancellation and
waiver described above, will be subject to the enforcement rights of the holders
of preferred securities when the preferred securities are outstanding. See
"Description of the Preferred Securities--Enforcement Rights". The Issuer will
be obligated to provide the Indenture Trustee (and, if the preferred securities
are outstanding, the Property Trustee) annually a certificate as to whether or
not the Issuer is in compliance with the provisions of the Indenture applicable
to it.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We are generally permitted to consolidate or merge with another company or
firm. We are also permitted to sell, lease or otherwise transfer substantially
all of our assets to another company or firm. However, we may not take any of
these actions unless all the following conditions are met:
- If we merge out of existence or transfer our assets, the entity into which
we merge or sell our assets must be a corporation organized under the laws
of the United States, any state thereof or the District of Columbia and it
must agree to be legally responsible for the Issuer's obligations in
respect of the junior subordinated debt securities, the Indenture, the
guarantee and the expense agreement.
- Immediately after the merger or transfer of assets, no default on the debt
securities can exist. A default for this purpose would also include any
event that would be an Event of Default if the requirements for giving us
default notice or our default having to exist for a specific period of
time were disregarded.
The conditions referred to above will apply only with respect to a transaction
specifically mentioned above; other transactions, including transactions that
involve a change of control of the Issuer or an acquisition by the Issuer of the
stock or assets of another person, would not be subject to these conditions.
The general provisions of the Indenture do not afford holders of the junior
subordinated debt securities (or related preferred securities) protection in the
event of a highly leveraged or
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other transaction involving the Issuer that may adversely affect the interests
of those holders.
SATISFACTION AND DISCHARGE
The Indenture provides that, except as noted below, the Indenture will cease
to be of further effect, and the Issuer will be deemed to have satisfied and
discharged the Indenture, when the following conditions (among others) have been
satisfied:
- All debt securities not previously delivered to the Indenture Trustee for
cancellation have become due and payable or will become due and payable at
their stated maturity or on a redemption date within one year.
- The Issuer deposits with the Indenture Trustee, in trust, funds sufficient
to pay the entire indebtedness on those debt securities not previously
delivered for cancellation, for the principal and interest (including any
Additional Sums) to the date of the deposit (for debt securities that have
become due and payable) or to the stated maturity or the redemption date,
as the case may be (for debt securities that have not).
The Issuer will remain obligated to provide for registration of transfer and
exchange and notices of redemption and in certain other ministerial respects.
SUBORDINATION
Unless the prospectus supplement provides otherwise, the following
provisions will apply to the junior subordinated debt securities:
The payment of principal, any premium and interest on the junior
subordinated debt securities is subordinated in right of payment to the prior
payment in full of all of our Senior Debt. This means that in certain
circumstances where we may not be making payments on all of our debt obligations
as they come due, the holders of all of our Senior Debt will be entitled to
receive payment in full of all amounts that are due or will become due on the
Senior Debt before you and the other registered holders of junior subordinated
debt securities will be entitled to receive any payment or distribution on the
junior subordinated debt securities. These circumstances include the following
circumstances:
- We make a payment or distribute assets to creditors upon any liquidation,
dissolution, winding up or reorganization of our company, or as part of an
assignment or marshalling of our assets for the benefit of our creditors.
- We file for bankruptcy or certain other events in bankruptcy, insolvency
or similar proceedings occur.
- We make any assignment for the benefit of creditors.
- We are subject to any other marshalling of our assets.
In addition, we are generally not permitted to make payments of principal,
any premium or interest on the junior subordinated debt securities if we default
in our obligation to make payments on Senior Debt and do not cure such default.
After payment in full of all amounts owed on Senior Debt, the holders of
junior subordinated debt securities, together with the holders of any equally
ranking obligations, will be paid from the remaining assets of the Issuer the
amounts owed on the junior subordinated debt securities and those other
obligations before any payment or other distribution will be made on any capital
stock or any junior ranking obligations of the Issuer.
If any holder of junior subordinated debt securities receives any payment or
distribution on his securities before all the Senior Debt has been paid in full,
the holder must receive the payment or distribution in trust for the benefit of,
and must pay over or deliver and transfer the same to, the holders of the Senior
Debt at the time outstanding to the extent necessary to pay all the Senior Debt
in full.
These subordination provisions mean that if we are insolvent a holder of our
Senior Debt may ultimately receive out of our assets more than a holder of the
same amount of our junior subordinated debt securities, and a creditor of ours
that is owed a specific amount but who owns neither our Senior Debt nor the
junior
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subordinated debt securities may ultimately receive less than a holder of the
same amount of Senior Debt and an equal amount on a PRO RATA basis as a holder
of junior subordinated debt securities.
The term "SENIOR DEBT" means any obligation of the Issuer to its creditors,
whether existing now or incurred in the future, unless in the instrument
creating or evidencing the obligation or pursuant to which the obligation is
outstanding, it is provided that the obligation is not superior in right of
payment to the junior subordinated debt securities, and other than trade
accounts payable and accrued liabilities arising in the ordinary course of
business. Senior Debt will also include any subordinated debt of the Issuer that
does not fall within the specific exceptions described above.
The Indenture places no limitation on the amount of additional Senior Debt
that the Issuer may incur in the future. We expect to incur substantial amounts
of additional Senior Debt from time to time.
PAYMENT AND PAYING AGENTS
Unless the junior subordinated debt securities have been distributed in
exchange for the preferred securities, payments in respect of the junior
subordinated debt securities will be made to or upon the order of the Property
Trustee. If in the future the junior subordinated debt securities have been
distributed in exchange for the preferred securities, payments in respect of the
junior subordinated debt securities will be made in accordance with provisions
similar to those applicable to payments in respect of the preferred securities,
described under "Description of the Preferred Securities--Payment and Paying
Agency".
If any interest, principal or other amount is payable in respect of the
junior subordinated debt securities on a day that is not a business day, the
payment may be made on the next succeeding business day unless that business day
is in a different calendar year, in which case the payment may be made on the
next preceding Business Day. Each payment made on the next succeeding or
preceding business day as described above may be made with the same force and
effect as if made on the day on which the payment is originally payable.
Any monies deposited with the Indenture Trustee or any paying agent, or then
held by the Issuer in trust, for the payment of any amount due and payable on
any junior subordinated debt securities, and remaining unclaimed for two years
after the amount has become due and payable, will, at the request of the Issuer,
be repaid to the Issuer. Thereafter, the holders of those junior subordinated
debt securities will look, as general unsecured creditors, only to the Issuer
for payment of those amounts.
NOTICES
Copies of notices to holders of junior subordinated debt securities under
the Indenture will be given to the holders of the preferred securities in
accordance with provisions similar to those described in "Description of the
Preferred Securities--Notices" and to the Property Trustee. If in the future the
junior subordinated debt securities have been distributed in exchange for the
preferred securities, notices to holders of preferred securities will be given
to those holders in accordance with the provisions for notices to the holders of
the preferred securities referred to above.
REGARDING THE INDENTURE TRUSTEE
The Indenture Trustee will have all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
However, the Indenture Trustee will have no obligation to act at the request of
any holder of junior subordinated debt securities, unless such holder offers to
reimburse the Indenture Trustee for reasonable costs, expenses and liabilities
that it might incur. Also, the Indenture Trustee will not be required to expend
its own funds or otherwise incur personal financial liability in the performance
of its duties if it reasonably believes that repayment is not reasonably
certain.
GOVERNING LAW
The Indenture provides that the Indenture and the junior subordinated debt
securities are to be governed by and construed in accordance with New York law.
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DESCRIPTION OF GUARANTEE AND EXPENSE AGREEMENT
This section summarizes the main provisions of the guarantee and the expense
agreement, but it does not describe all the provisions. Consequently, this
summary is qualified by reference to the full text of the guarantee and the
expense agreement. We have filed forms of the guarantee and the expense
agreement as exhibits to the registration statement.
This section uses terms that are defined in the guarantee and the expense
agreement. Unless we define those terms in this section, we intend them to have
the meanings given them in the guarantee or the expense agreement, as
applicable.
GENERAL
The Issuer will execute the guarantee when the preferred securities are
issued. The Bank of New York will act as indenture trustee ("GUARANTEE TRUSTEE")
under the guarantee for the purpose of compliance with the Trust Indenture Act,
and the guarantee will be qualified as an indenture under the Trust Indenture
Act. The Guarantee Trustee will hold the guarantee for the benefit of the
holders of the preferred securities.
Under the guarantee, the Issuer will irrevocably agree to pay in full, on a
subordinated basis and to the extent described below, to the holders of the
preferred securities, the guarantee payments as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments in respect of the
preferred securities, to the extent not paid by or on behalf of the Trust, are
guarantee payments:
- any accumulated and unpaid distributions required to be paid on the
preferred securities, to the extent that the Trust has funds legally and
immediately available to pay them;
- any redemption price required to be paid on the preferred securities, to
the extent that the Trust has funds legally and immediately available to
pay it; and
- upon a voluntary or involuntary termination, winding-up or liquidation of
the Trust (unless the junior subordinated debt securities are distributed
to holders of the preferred securities in exchange for those securities),
the lesser of (i) the payments made on liquidation for the preferred
securities and (ii) the amount of assets of the Trust remaining available
for distribution to holders of preferred securities after satisfaction of
liabilities to creditors of the Trust as required by applicable law.
The Issuer may satisfy its obligation to make a guarantee payment by paying the
required amounts directly to the holders of the preferred securities or by
causing the Trust to pay them to the holders.
The Issuer will be required to make payments under the guarantee only to the
extent that the Trust has funds sufficient to make payments in respect of its
obligations under the preferred securities. If and to the extent the Issuer does
not make payments on the junior subordinated debt securities, the Trust will not
be able to make payments on the preferred securities and will not have funds
available to do so. However, through the guarantee, the Declaration of Trust,
the junior subordinated debt securities, the Junior Subordinated Indenture and
the expense agreement, taken together, the Issuer has fully, irrevocably and
unconditionally guaranteed all the Trust's obligations under the preferred
securities. See "Relationship Among Preferred Securities, Junior Subordinated
Debt Securities, Guarantee and Expense Agreement".
STATUS OF THE GUARANTEE
The guarantee will be a general unsecured obligation of the Issuer and will
be subordinated in right of payment to all liabilities of the Issuer (other than
any similar guarantees, the expense agreement and any other similar expense
agreement), including all liabilities to trade creditors, and will rank PARI
PASSU with the most senior class of any preferred stock that the Issuer may
issue. Because the Issuer is a holding company, its obligations under the
guarantee, like its obligations under the junior subordinated debt securities,
will also be effectively subordinated to all existing and future liabilities of
the Issuer's subsidiaries. See "Risk Factors--Risks Relating to
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the Preferred Securities--Our Obligations to You Will Be Deeply Subordinated",
and "Description of the Junior Subordinated Debt Securities-- Subordination".
AMENDMENTS, ASSIGNMENT AND SUCCESSION
The guarantee may not be amended without the prior approval of the holders
of a majority of the aggregate Liquidation Amount of the outstanding preferred
securities, other than in ways that do not adversely affect the rights of
holders of the preferred securities in any material respect (in which case no
approval will be required). The manner of obtaining any such approval will be
similar to the manner in which any approval to amend the Declaration of Trust
may be obtained. See "Description of the Preferred Securities--Voting Rights;
Amendment of the Declaration of Trust".
The Issuer may not assign its obligations under the guarantee without
obtaining the approval of the holders required to amend that agreement. However,
any permitted successor to the Issuer's obligations under the Indenture will
also succeed to its obligations under the guarantee. See "Description of the
Junior Subordinated Debt Securities--Consolidation, Merger, Sale of Assets and
Other Transactions". The guarantee will bind the Issuer's successors, assigns,
receivers, trustees and representatives and will inure to the benefit of the
holders of the outstanding preferred securities.
EVENTS OF DEFAULT
An event of default under the guarantee will occur if the Issuer fails to
make any guarantee payment when obligated to do so, or if the Issuer fails to
perform any other obligation and the default remains unremedied for 30 days. The
holders of a majority in aggregate Liquidation Amount of the outstanding
preferred securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the guarantee.
The guarantee will guarantee payment and not collection. This means that any
holder of outstanding preferred securities may begin a legal proceeding directly
against the Issuer to enforce its rights under the guarantee without first
beginning a legal proceeding against the Trust, the Guarantee Trustee or any
other party.
The Issuer, as guarantor, will be obligated to file annually with the
Guarantee Trustee a certificate as to the Issuer's compliance with all the
conditions and covenants applicable to it under the guarantee.
REGARDING THE GUARANTEE TRUSTEE
The Guarantee Trustee undertakes to perform only those duties that are
specifically set forth in the guarantee, except that, after a default by the
Issuer under the guarantee, it must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the guarantee Trustee is under no obligation
to exercise any of the powers vested in it by the guarantee at the request of
any holder of preferred securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that it might incur as a result.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force or effect when:
- the guarantee payments have been paid in full by the Issuer, the Trust or
both; or
- the junior subordinated debt securities are distributed to the holders of
the preferred securities in exchange for their securities.
Until that time, the guarantee will remain in full force and effect. In
addition, the guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of the preferred securities must
restore payment of any sums paid to it under the preferred securities or the
guarantee.
GOVERNING LAW
The guarantee provides that it is to be governed by and construed in
accordance with New York law.
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EXPENSE AGREEMENT
In the expense agreement, the Issuer will irrevocably and unconditionally
guarantee to each person to whom the Trust becomes indebted or liable the full
payment of all the Trust's costs, expenses and liabilities, other than the
obligations of the Trust to pay amounts due to the holders of the preferred
securities and common securities pursuant to the terms of those securities. The
expense agreement will be enforceable by third parties.
The Issuer's obligations under the expense agreement will be subordinated in
right of payment to the same extent as the guarantee. The Issuer's obligations
under the expense agreement will be subject to provisions regarding amendment,
termination, assignment, succession and governing law similar to those
applicable to the guarantee.
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RELATIONSHIP AMONG PREFERRED SECURITIES, JUNIOR SUBORDINATED DEBT SECURITIES,
GUARANTEE AND EXPENSE AGREEMENT
FULL AND UNCONDITIONAL GUARANTEE
Taken together, the Issuer's obligations under the Declaration of Trust, the
junior subordinated debt securities, the Junior Subordinated Indenture, the
guarantee and the expense agreement provide a full, irrevocable and
unconditional guarantee of the Trust's obligations under the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all the other documents provides this guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
preferred securities.
If and to the extent that the Issuer does not make payments on the junior
subordinated debt securities, the Trust will not have funds available for
payments on the preferred securities. The guarantee will not apply to payment of
any amounts due on the preferred securities when the Trust does not have
available funds to pay those amounts. In that event, the remedy of a holder of
preferred securities is to exercise its right of Direct Action--that is, to
begin a legal proceeding directly against the Issuer for enforcement of the
Issuer's obligations under junior subordinated debt securities having a
principal amount equal to the Liquidation Amount of the preferred securities
held by the holder.
If the Issuer makes payment on the junior subordinated debt securities and
the Trust has funds available to make payments on the preferred securities but
fails to do so, a holder of preferred securities may begin a legal proceeding
against the Issuer to enforce the Issuer's obligations under the guarantee to
make these payments. In the event that the Trust receives payments on the junior
subordinated debt securities, but these funds are unavailable for payment on the
preferred securities because of claims made by creditors of the Trust, the
Issuer would be obligated under the expense agreement to pay those claims.
The obligations of the Issuer under the junior subordinated debt securities
are subordinated in right of payment to all Senior Debt of the Issuer. They are
subordinated in the manner described in "Description of the Junior Subordinated
Debt Securities--Subordination". The obligations of the Issuer under the
guarantee and the expense agreement are subordinated in right of payment to all
liabilities of the Issuer (other than similar guarantees and expense
agreements), including liabilities to trade creditors, and will rank PARI PASSU
with the most senior class of preferred stock that the Issuer may issue.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the junior subordinated debt
securities, those payments should be sufficient to fund distributions and other
amounts payable on the preferred securities, primarily because:
- The aggregate principal amount of the junior subordinated debt securities
will equal the aggregate Liquidation Amount of the preferred securities
and the common securities.
- The interest rate, interest payment dates and other payment dates for the
junior subordinated debt securities will match the distribution rate,
distribution dates and other payment dates for the preferred securities.
- The expense agreement provides that the Issuer will pay any and all costs,
expenses and liabilities of the Trust, other than the Trust's obligations
under the preferred securities and common securities.
- The Declaration of Trust provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Issuer has the right to set off any payment it makes under the
guarantee in respect of the preferred securities against any payment it is
otherwise required to make under the Junior Subordinated Indenture in respect of
the junior subordinated debt securities.
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ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of preferred securities may begin a legal proceeding directly
against the Issuer to enforce its right of Direct Action under the Junior
Subordinated Indenture without first beginning a legal proceeding against the
Trust, the Property Trustee or any other party. A holder of preferred securities
may also begin a legal proceeding directly against the Issuer to enforce its
rights under the guarantee without first instituting a legal proceeding against
the Guarantee Trustee, the Trust or any other party.
A default or event of default under any Senior Debt of the Issuer would not
be a default with respect to the preferred securities or the junior subordinated
debt securities. However, in the event of a payment default under, or
acceleration of, any Senior Debt of the Issuer, the subordination provisions of
the Junior Subordinated Indenture, the guarantee and the expense agreement
provide that no payments may be made in respect of the junior subordinated debt
securities, the guarantee or the expense agreement until the Senior Debt has
been paid in full or any payment default under that debt has been cured or
waived. See "Description of the Junior Subordinated Debt Securities--
Subordination".
LIMITED PURPOSE OF TRUST
The preferred securities evidence a preferred undivided beneficial interest
in the assets of the Trust, and the Trust exists solely to issue and sell the
preferred securities and common securities, invest the sale proceeds in the
junior subordinated debt securities and engage only in such other activities as
may be necessary or incidental to those activities. A principal difference
between the rights of a holder of preferred securities against the Trust and
those of a holder of junior subordinated debt securities against the Issuer is
that a holder of junior subordinated debt securities is entitled to receive from
the Issuer all amounts payable on the preferred securities, while a holder of
preferred securities is entitled to receive from the Trust (or from the Issuer
under the guarantee) amounts payable on the junior subordinated debt securities
ONLY if and to the extent the Trust has funds available to pay those amounts.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary dissolution of the Trust, the holders of
preferred securities will be entitled to receive a Like Amount of junior
subordinated debt securities in exchange for their preferred securities, subject
to prior satisfaction of liabilities to creditors of the Trust as required by
applicable law. If the Property Trustee determines that a distribution of junior
subordinated debt securities is not practical, the holders of preferred
securities will be entitled to receive the Liquidation Distribution out of the
assets held by the Trust after satisfaction of those liabilities. See
"Description of the Preferred Securities--Liquidation Distribution upon
Dissolution".
Upon any voluntary or involuntary liquidation or bankruptcy of the Issuer,
the Property Trustee, as registered holder of the junior subordinated debt
securities, would be a subordinated creditor of the Issuer, subordinated in
right of payment to all Senior Debt as set forth in the Junior Subordinated
Indenture. However, the Property Trustee would be entitled to receive payment in
full of all amounts payable with respect to the junior subordinated debt
securities before any holders of the Issuer's capital stock receive payments or
distributions.
In the light of the effective guarantee provided by the combined operation
of the documents described above and the subordinated status of the obligations
they evidence, the positions of a holder of preferred securities and a holder of
junior subordinated debt securities, relative to other creditors and to
stockholders of the Issuer, in the event of liquidation or bankruptcy of the
Issuer, should be substantially the same.
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ACCOUNTING TREATMENT OF PREFERRED SECURITIES
For financial reporting purposes, each Trust will be treated as a subsidiary
of the Issuer and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Issuer. The preferred securities
will be presented as a separate line item in the consolidated balance sheets of
the Issuer, entitled "Company--obligated mandatorily redeemable preferred
securities", and appropriate disclosures about the preferred securities, the
guarantee and the junior subordinated debt securities will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Issuer will record distributions payable on the preferred
securities as minority interest in net income (loss) of consolidated
subsidiaries in the consolidated statements of operations.
U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING
TO PREFERRED SECURITIES
The following is a summary of the principal U.S. federal income tax
consequences of the purchase, ownership and disposition of preferred securities.
This summary only addresses the U.S. federal income tax consequences to a person
that acquires preferred securities on their original issue at their original
offering price and that is:
- an individual citizen or resident of the United States;
- a corporation organized in or under the laws of the United States or any
state thereof or the District of Columbia;
- an estate the income of which is subject to U.S. federal income tax
without regard to its source; or
- a trust if a U.S. court is able to exercise primary supervision over
administration of the trust and one or more U.S. persons have authority to
control all substantial decisions of the trust.
We refer to the above persons as "U.S. HOLDERS".
In the case of a holder of preferred securities that is a partnership for
U.S. tax purposes, each partner will take into account its allocable share of
income or loss from the preferred securities, and will take such income or loss
into account under the rules of taxation applicable to such partner, in light of
the activities of the partnership and the partner.
This summary does not address the tax consequences to:
- persons that are not United States Holders, except as described below
under "--U.S. Alien Holders";
- persons that may be subject to special treatment under U.S. federal income
tax law, such as banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt
organizations, traders in securities that elect to mark to market and
dealers in securities or currencies;
- persons that will hold preferred securities as part of a position in a
"straddle" or as part of a "hedging", "conversion" or other integrated
investment transaction for U.S. federal income tax purposes;
- persons whose functional currency is not the U.S. dollar; or
- persons that do not hold preferred securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, counsel to the Issuers and the
Trusts. This summary is based upon the U.S. Internal Revenue Code of 1986, as
amended (the "CODE"), Treasury regulations, Internal Revenue Service rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change at any time. Such changes may be applied retroactively in a manner that
could cause the tax consequences to vary substantially from the consequences
described below, possibly adversely
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affecting a beneficial owner of preferred securities. The authorities on which
this summary is based are subject to various interpretations, and it is
therefore possible that the federal income tax treatment of the purchase,
ownership and disposition of preferred securities may differ from the treatment
described below.
YOU ARE ADVISED TO CONSULT WITH YOUR OWN TAX ADVISORS IN LIGHT OF YOUR OWN
PARTICULAR CIRCUMSTANCES AS TO THE U.S. FEDERAL TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE TRUST
Under current law and assuming full compliance with the terms of the
Declaration of Trust, the Junior Subordinated Indenture and certain other
documents, the Trust will not be taxable as a corporation for U.S. federal
income tax purposes. As a result, each beneficial owner of preferred securities
will be required to include in its gross income its pro rata share of the
interest income, including OID, paid or accrued with respect to the junior
subordinated debt securities, whether or not cash is actually distributed to the
beneficial owners of preferred securities. See "--Interest Income and Original
Issue Discount".
INTEREST INCOME AND ORIGINAL
ISSUE DISCOUNT
Under applicable Treasury regulations (the "REGULATIONS"), a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether such debt instrument is issued with OID. As a result of
terms and conditions of the junior subordinated debt securities that prohibit
certain payments with respect to the Issuer's capital stock and indebtedness if
the Issuer elects to extend interest payment periods, the Issuer believes that
the likelihood of its exercising its option to defer payments is remote. See
"Description of the Junior Subordinated Debt Securities--Interest". Based on the
foregoing, the Issuer believes that the junior subordinated debt securities will
not be considered to be issued with OID at the time of their original issuance.
The following discussion assumes that unless and until the Issuer exercises
its option to defer any payment of interest, the junior subordinated debt
securities will not be treated as issued with OID.
Under the Regulations, if the Issuer exercises its option to defer any
payment of interest, the junior subordinated debt securities would at that time
be treated as issued with OID, and all stated interest on the junior
subordinated debt securities would thereafter be treated as OID as long as the
junior subordinated debt securities remained outstanding. In such event, all of
the taxable interest income of a beneficial owner of preferred securities with
respect to the junior subordinated debt securities would be accounted for as OID
on an economic accrual basis using a constant yield method regardless of such
beneficial owner's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income. Consequently, a beneficial
owner would be required to include OID in gross income even though the Issuer
would not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
Because income on the preferred securities will constitute interest or OID,
corporate U.S. Holders of the preferred securities will not be entitled to a
dividends-received deduction with respect to any income taken into account with
respect to the preferred securities.
Subsequent uses of the term "INTEREST" in this summary include income in the
form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES TO HOLDERS OF PREFERRED
SECURITIES UPON LIQUIDATION OF THE TRUST
Under current law, a distribution by the Trust of the junior subordinated
debt securities as described under the caption "Description of the Preferred
Securities--Liquidation Distribution upon Dissolution" will be non-taxable and
will result in the beneficial owner receiving directly its pro rata share of the
junior subordinated debt securities previously held indirectly through the
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Trust, with a holding period and aggregate tax basis equal to the holding period
and aggregate tax basis such beneficial owner had in its preferred securities
before such distribution. If, however, the liquidation of the Trust were to
occur because the Trust is subject to U.S. federal income tax with respect to
income accrued or received on the junior subordinated debt securities, the
distribution of junior subordinated debt securities to a beneficial owner by the
Trust would be a taxable event to the Trust and each beneficial owner would
recognize gain or loss as if the beneficial owner had exchanged its preferred
securities for the junior subordinated debt securities it received upon the
liquidation of the Trust. A beneficial owner will include interest in income in
respect of junior subordinated debt securities received from the Trust in the
manner described above under "--Interest Income and Original Issue Discount".
SALE OR REDEMPTION OF PREFERRED SECURITIES
A beneficial owner that sells preferred securities (including through a
redemption for cash) will recognize gain or loss equal to the difference between
its adjusted tax basis in the preferred securities and the amount realized on
the sale of such preferred securities. Assuming that the Issuer does not
exercise its option to defer payment of interest on the junior subordinated debt
securities, a beneficial owner's adjusted tax basis in the preferred securities
generally will be its initial purchase price. If the junior subordinated debt
securities are deemed to be issued with OID as a result of the Issuer's deferral
of interest payments, a beneficial owner's adjusted tax basis in the preferred
securities generally will be its initial purchase price, increased by OID
previously includible in such U.S. Holder's gross income to the date of
disposition and decreased by distributions or other payments received on the
preferred securities since and including the date of the first Extension Period.
Such gain or loss generally will be a capital gain or loss (except to the extent
any amount realized is treated as a payment of accrued interest with respect to
such beneficial owner's pro rata share of the junior subordinated debt
securities required to be included in income) and generally will be long-term
capital gain or loss if the preferred securities have been held for more than
one year. Long-term capital gain of a non-corporate U.S. Holder is generally
subject to a maximum tax rate of 20%.
If the Issuer exercises its option to defer any payment of interest on the
junior subordinated debt securities, the preferred securities may trade at a
price that does not accurately reflect the value of accrued but unpaid interest
with respect to the underlying junior subordinated debt securities. A beneficial
owner who disposes of its preferred securities between record dates for payments
of distributions thereon will be required to include accrued but unpaid interest
on the junior subordinated debt securities through the date of disposition in
income as ordinary income, but may not receive the cash related thereto.
However, such beneficial owner will add such amount to its adjusted tax basis in
the preferred securities. To the extent the selling price is less than the
beneficial owner's adjusted tax basis, such beneficial owner will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for U.S. federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the preferred
securities held of record by U.S. Holders (other than corporations and other
exempt U.S. Holders) will be reported to the IRS. "BACKUP WITHHOLDING" at a rate
of 31% will apply to payments of interest to a non-exempt U.S. Holder unless the
U.S. Holder furnishes its taxpayer identification number in the manner
prescribed in applicable Treasury regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and meets
certain other conditions.
Payment of the proceeds from the disposition of preferred securities to or
through the U.S. office of a broker is subject to information reporting and
backup withholding unless the beneficial owner establishes an exemption from
information reporting and backup withholding.
Backup withholding is not an additional tax. Any amounts withheld from a
beneficial owner under the backup withholding rules will be
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allowed as a refund or a credit against such beneficial owner's U.S. federal
income tax liability, provided the required information is furnished to the IRS.
It is anticipated that income on the preferred securities will be reported
to holders on Form 1099, which is expected to be mailed to holders of the
preferred securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
You should be aware that legislation has been proposed by the Clinton
Administration in the past that, if enacted, would have denied an interest
expense deduction to issuers of instruments such as the junior subordinated debt
securities. No such legislation is currently pending. There can be no assurance,
however, that similar legislation will not ultimately be enacted into law, or
that other developments will not occur on or after the date hereof that would
adversely affect the tax treatment of the junior subordinated debt securities or
the Trust. Changes of that kind also could give rise to a Tax Event, which would
permit the Issuer to cause a redemption of the preferred securities, as
described more fully under the section captioned "Description of the Preferred
Securities--Mandatory Redemption".
U.S. ALIEN HOLDERS
For purposes of this discussion, a "U.S. ALIEN HOLDER" is any beneficial
owner of preferred securities that is for U.S. federal income tax purposes:
- a nonresident alien individual, or
- a foreign corporation or partnership or estate or trust, in each case not
subject to U.S. federal income tax on a net income basis in respect of
income or gain in respect of the preferred securities.
Under present U.S. federal income tax laws:
- payments by the Trust or any of its paying agents to any holder of
preferred securities who is a U.S. Alien Holder will not be subject to
withholding of U.S. federal income tax; PROVIDED THAT,
- the beneficial owner of the preferred securities does not actually or
constructively own 10 percent or more of the total combined voting power
of all classes of stock of the Issuer entitled to vote;
- the beneficial owner of the preferred securities is not a controlled
foreign corporation that is related to the Issuer through stock ownership;
- either
- the beneficial owner of the preferred securities certifies to the Trust
or its agent, under penalty of perjury, that it is not a U.S. Holder and
provides its name and address, or
- a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "FINANCIAL INSTITUTION"), and holds the preferred securities
in such capacity, certifies to the Trust or its agent, under penalty of
perjury, that such statement has been received from the beneficial owner
by it or by a Financial Institution between it and the beneficial owner
and furnishes the Trust or its agent with a copy thereof; and
- a U.S. Alien Holder of preferred securities will generally not be subject
to U.S. federal income tax on any gain realized upon the sale or other
disposition of preferred securities unless the gain is effectively
connected with the conduct of a trade or business in the United States by
the U.S. Alien Holder or such U.S. Alien Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
the disposition and certain other conditions are met.
Recently finalized Treasury regulations that are generally effective with
respect to payments after December 31, 1999 would provide alternative methods
for satisfying the certification requirements described above. These regulations
also would require, in the case of preferred securities held by a foreign
partnership, that
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- the certification described above be provided by the partners rather than
by the foreign partnership, and
- the partnership provide certain information, including a U.S. taxpayer
identification number.
A look-through rule would apply in the case of tiered partnerships.
Under certain circumstances, payments on the sale, exchange or other
disposition of preferred securities by a U.S. Alien Holder may be subject to
"backup withholding" at a rate of 31% and/or information reporting may be
required, unless such U.S. Alien Holder certifies that it is not a U.S. Holder
and provides its name and address as described above or otherwise properly
establishes an exemption.
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PLAN OF DISTRIBUTION
The Issuers and the Trusts may sell the securities to one or more
underwriters for public offering and sale by them or may sell the securities to
investors directly or through agents. The name of any such underwriter or agent
involved in the offer and sale of the securities, the amounts underwritten and
the nature of its obligation to take the securities will be named in the
applicable prospectus supplement. The Issuers and the Trusts have reserved the
right to sell the securities directly to investors on their own behalf in those
jurisdictions where they are authorized to do so.
Underwriters may offer and sell the securities at a fixed price or prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. They may offer
the securities on an exchange, which will be disclosed in the applicable
prospectus supplement. The Issuers and the Trusts also may, from time to time,
authorize dealers, acting as their agents, to offer and sell the securities upon
such terms and conditions as set forth in the applicable prospectus supplement.
In connection with the sale of the securities, underwriters may receive
compensation from the Issuers and the Trusts in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of the
securities for whom they may act as agent. Underwriters may sell the securities
to or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasers for whom they may
act as agents.
Any underwriting compensation paid by the applicable Issuer and the
applicable Trust to underwriters or agents in connection with the offering of
the securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
prospectus supplement. Dealers and agents participating in the distribution of
the securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
securities may be deemed to be underwriting discounts and commissions under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the applicable Issuer and the applicable Trust, to
indemnification against and contribution towards certain civil liabilities,
including any liabilities under the Securities Act.
Until the distribution of the securities is completed, rules of the
Commission may limit the ability of the underwriters to bid for and purchase the
securities. As an exception to these rules, the underwriters are permitted to
engage in certain transactions that stabilize the price of the securities. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the securities. If the underwriters create a short
position in the securities in connection with the offering, I.E., if they sell
more securities than are set forth on the cover page of the applicable
prospectus supplement, the underwriters may reduce that short position by
purchasing securities in the open market. The underwriters may also impose a
penalty bid on certain underwriters. This means that if the underwriters
purchase the securities in the open market to reduce the underwriters' short
position or to stabilize the price of the securities, they may reclaim the
amount of the selling concession from the underwriters who sold those securities
as part of the offering. In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases. The
imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security.
Any securities issued hereunder will be new issues of securities with no
established trading market. Any underwriters or agents to or through whom such
securities are sold for public offering and sale may make a market in such
securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market at any time without notice. No assurance can be given
as to the liquidity of the trading market for any such securities.
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The amount of expenses expected to be incurred by us in connection with any
issuance of securities will be set forth in the prospectus supplement. Certain
of the underwriters, dealers or agents and their associates may engage in
transactions with, and perform services for, the Issuers and certain of their
affiliates in the ordinary course.
VALIDITY OF THE SECURITIES
The validity of any securities issued hereunder will be passed upon for the
Issuers by Sullivan & Cromwell, New York, New York, counsel to the Issuers, and
for the Trusts with respect to certain matters of Delaware law by Morris,
Nichols, Arsht & Tunnell, Wilmington, Delaware, special Delaware counsel to the
Trusts. Unless otherwise indicated in the applicable prospectus supplement, the
validity of any securities issued hereunder will be passed upon for any agents
or underwriters by Shearman & Sterling, New York, New York.
EXPERTS
The consolidated financial statements and schedule of CSC Holdings and its
subsidiaries as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997 that are incorporated in this
prospectus by reference have been incorporated herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheet of Cablevision and its subsidiary as of
December 31, 1997 that is incorporated in this prospectus by reference has been
incorporated herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
It is expected that the following expenses (all of which will be paid by the
registrants) will be incurred in connection with the registration and
distribution of the securities:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee..................... $ 417,000
Blue Sky fees and expenses........................................ *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Printing and engraving expenses................................... *
Trustee's and Depositary's fees and expenses...................... *
Rating Agency fees................................................ *
Stock Exchange listing fees....................................... *
Miscellaneous..................................................... *
---------
Total........................................................... $ *
---------
---------
</TABLE>
- ------------------------
* To be completed by amendment.
All of these expenses except the Securities and Exchange Commission filing
fee represent estimates only.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "DERIVATIVE ACTION"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of such action, and the statute requires court approval before
there can be any indemnification where the person seeking indemnification has
been found liable to the corporation. The statute provides that it is not
exclusive of other rights to which those seeking indemnification may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise.
The first paragraph of Article Ninth of each Issuer's Certificate of
Incorporation provides:
The corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, or by any successor thereto, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred
to in or covered by said section. Such right to indemnification shall
continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. The indemnification provided for herein
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
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Article VIII of the By-Laws of each Issuer provides:
A. The corporation shall indemnify each person who was or is made a
party or is threatened to be made a party to or is involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "PROCEEDING"), by
reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or alleged
action in any other capacity while serving as a director, officer, employee
or agent, to the maximum extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than said law
permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred by such person in connection with such
proceeding. Such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators. The right to
indemnification conferred in this Article shall be a contract right and
shall include the right to be paid by the corporation the expenses incurred
in defending any such proceeding in advance of its final disposition;
PROVIDED THAT, if the Delaware General Corporation Law so requires, the
payment of such expenses incurred by a director or officer in advance of the
final disposition of a proceeding shall be made only upon receipt by the
corporation of an undertaking by or on behalf of such person to repay all
amounts so advanced if it shall ultimately be determined that such person is
not entitled to be indemnified by the corporation as authorized in this
Article or otherwise.
B. The right to indemnification and advancement of expenses conferred on
any person by this Article shall not limit the corporation from providing
any other indemnification permitted by law nor shall it be deemed exclusive
of any other right which any such person may have or hereafter acquire under
any statute, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
C. The corporation may purchase and maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
Cablevision has entered into indemnification agreements with certain of its
officers and directors indemnifying such officers and directors from and against
certain expenses, liabilities or other matters referred to in or covered by
Section 145 of the Delaware General Corporation Law. Cablevision maintains
directors' and officers' liability insurance.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. The second paragraph of Article Ninth of each Issuer's Certificate of
Incorporation provides for such limitation of liability.
II-2
<PAGE>
Under each Declaration of Trust, CSC Holdings or Cablevision, as applicable,
will agree to indemnify each of the Trust Trustees, each Administrator, each
Paying Agent, any Affiliate, officer, director, shareholder, employee,
representative or agent of any Trust Trustee, and any employee or agent of the
issuing Trust (each an "Indemnified Person"), and to hold such Indemnified
Person harmless against, any loss, damage, claims, liability or expense incurred
without negligence, bad faith or wilful misconduct on its part, arising out of
or in connection with the acceptance or administration of the Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under the Trust Agreement.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
*1.1 --Form of Underwriting Agreement for Debt Securities.
*1.2 --Form of Underwriting Agreement for Preferred Stock.
*1.3 --Form of Underwriting Agreement for Preferred Securities.
4.1 --Certificate of Incorporation of Cablevision Systems Corporation (incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed by
Cablevision Systems Corporation on January 20, 1998, File No. 333-44547 (the
"Form S-4").
4.2 --Certificate of Incorporation of CSC Holdings, Inc. (incorporated by reference to
Exhibits 3.1A(i) and 3.1A(ii) to CSC Holdings' Annual Report on Form 10-K for the
year ended December 31, 1989).
4.2A --Certificate of Designations for the Series H Redeemable Exchangeable Preferred
Stock of CSC Holdings, Inc. (incorporated by reference to Exhibit 4.1C to CSC
Holdings' Registration Statement on Form S-4, File No. 33-63691).
4.2B --Certificate of Designations for the Series I Cumulative Convertible Exchangeable
Preferred Stock of CSC Holdings, Inc. (incorporated by reference to Exhibit 99.3
to CSC Holdings' Current Report on Form 8-K filed November 7, 1995).
4.2C --Certificate of Designations for the Series M Redeemable Exchangeable Preferred
Stock of CSC Holdings, Inc. (incorporated by reference to Exhibit 4.1F to CSC
Holdings' Registration Statement on Form S-4, File No. 333-02527).
4.3 --By-laws of Cablevision Systems Corporation (incorporated by reference to Exhibit
3.2 to the Form S-4).
4.4 --By-laws of CSC Holdings, Inc. (incorporated by reference to Exhibit 3.20 to CSC
Holdings' Registration Statement on Form S-4, File No. 33-62717).
4.5 --Senior Indenture (incorporated by reference to Exhibit 4.1 to CSC Holdings'
Registration Statement on Form S-3, File No. 333-57407).
4.6 --Subordinated Indenture (incorporated by reference to Exhibit 4.2 to CSC Holdings'
Registration Statement on Form S-3, File No. 333-57407).
**4.7 --Form of Junior Subordinated Indenture.
**4.8 --Form of Debt Security (included in the Senior Indenture, the Subordinated
Indenture and the Junior Subordinated Indenture).
*4.9 --Form of Certificate of Designations.
*4.10 --Form of Depositary Agreement.
*4.11 --Form of Depositary Receipt.
4.12 --Certificate of Trust of CSC Capital I.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
4.13 --Certificate of Trust of CSC Capital II.
4.14 --Certificate of Trust of CSC Capital III.
**4.15 --Declaration of Trust of CSC Capital I.
**4.16 --Declaration of Trust of CSC Capital II.
**4.17 --Declaration of Trust of CSC Capital III.
**4.18 --Form of Amended and Restated Declaration of Trust for each of CSC Capital I, II
and III.
4.19 --Form of Preferred Security (included in the Form of Amended and Restated
Declaration of Trust for each of CSC Capital I, II and III).
**4.20 --Form of Preferred Securities Guarantee.
**4.21 --Form of Agreement as to Expenses and Liabilities.
**5.1 --Opinion of Sullivan & Cromwell.
**5.2 --Opinion of Morris, Nichols, Arsht & Tunnel.
**8.1 --Opinion of Sullivan & Cromwell as to tax matters.
**12.1 --Computation of Ratio of Earnings to Fixed Charges and to Fixed Charges and
Preferred Stock Dividends.
23.1 --Consents of Sullivan & Cromwell (included in Exhibit 5.1 and Exhibit 8.1).
23.2 --Consent of Morris, Nichols, Arsht & Tunnel (included in Exhibit 5.2).
23.3 --Consent of KPMG LLP.
24.1 --Powers of Attorney (included in signature pages).
**25.1 --Form of T-1 Statement of Eligibility of the Senior Indenture Trustee.
**25.2 --Form of T-1 Statement of Eligibility of the Subordinated Indenture Trustee.
**25.3 --Form of T-1 Statement of Eligibility of the Cablevision Systems Corporation
Junior Subordinated Indenture Trustee.
**25.4 --Form of T-1 Statement of Eligibility of the CSC Holdings, Inc. Junior
Subordinated Indenture Trustee.
**25.5 --Form of T-1 Statement of Eligibility of the Property Trustee.
**25.6 --Form of T-1 Statement of Eligibility of the Preferred Securities Guarantee
Trustee.
</TABLE>
- ------------------------
* To be filed as an exhibit to a Current Report on Form 8-K.
** To be filed by Amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; notwithstanding the foregoing, any increase
or decrease in the volume of securities offered (if the total dollar
value of securities would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
II-4
<PAGE>
range may be reflected in the form of prospectus filed with Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
in Item 15 or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by any such director, officer or controlling person in
connection with the securities being registered, the registrants will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether or not such indemnification is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the Town of Oyster Bay and the State of New York, on the 5th day
of February, 1999.
<TABLE>
<S> <C> <C>
CABLEVISION SYSTEMS CORPORATION
By: /s/ WILLIAM J. BELL
-----------------------------------------
Name: William J. Bell
Title: Vice Chairman
CSC HOLDINGS, INC.
By: /s/ WILLIAM J. BELL
-----------------------------------------
Name: William J. Bell
Title: Vice Chairman
CSC CAPITAL I
By: CSC Holdings, Inc., as Depositor
By: /s/ WILLIAM J. BELL
-----------------------------------------
Name: William J. Bell
Title: Vice Chairman
CSC CAPITAL II
By: CSC Holdings, Inc., as Depositor
By: /s/ WILLIAM J. BELL
-----------------------------------------
Name: William J. Bell
Title: Vice Chairman
CSC CAPITAL III
By: CSC Holdings, Inc., as Depositor
By: /s/ WILLIAM J. BELL
-----------------------------------------
Name: William J. Bell
Title: Vice Chairman
</TABLE>
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William J. Bell, Robert S. Lemle and Barry J.
O'Leary, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to the Registration Statement, and file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
report has been signed below by the following persons in the capacities
indicated and on February 5, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
President, Chief Executive Officer and Director of
/s/ JAMES L. DOLAN Cablevision Systems Corporation and CSC Holdings, Inc.
------------------------------------------- (Principal Executive Officer of Cablevision Systems
James L. Dolan Corporation and CSC Holdings, Inc.)
Vice Chairman and Director of Cablevision Systems
/s/ WILLIAM J. BELL Corporation and CSC Holdings, Inc. (Principal Financial
------------------------------------------- Officer of Cablevision Systems Corporation and CSC
William J. Bell Holdings, Inc.)
Executive Vice President, Financial Planning and
/s/ ANDREW B. ROSENGARD Controller of Cablevision Systems Corporation and CSC
------------------------------------------- Holdings, Inc. (Principal Accounting Officer of
Andrew B. Rosengard Cablevision Systems Corporation and CSC Holdings, Inc.)
/s/ CHARLES F. DOLAN
------------------------------------------- Chairman of the Board of Directors of Cablevision Systems
Charles F. Dolan Corporation and CSC Holdings, Inc.
------------------------------------------- Vice Chairman and Director of Cablevision Systems
Marc A. Lustgarten Corporation and CSC Holdings, Inc.
/s/ ROBERT S. LEMLE Executive Vice President, General Counsel, Secretary and
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Robert S. Lemle Holdings, Inc.
------------------------------------------- Senior Vice President and Director of Cablevision Systems
Sheila A. Mahony Corporation and CSC Holdings, Inc.
Senior Vice President, Chief Information Officer and
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Thomas C. Dolan Holdings, Inc.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ JOHN TATTA
------------------------------------------- Director of Cablevision Systems Corporation and CSC
John Tatta Holdings, Inc.
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Patrick F. Dolan Holdings, Inc.
/s/ CHARLES D. FERRIS
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Charles D. Ferris Holdings, Inc.
/s/ RICHARD H. HOCHMAN
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Richard H. Hochman Holdings, Inc.
/s/ VICTOR ORISTANO
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Victor Oristano Holdings, Inc.
/s/ VINCENT TESE
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Vincent Tese Holdings, Inc.
/s/ JOHN C. MALONE
------------------------------------------- Director of Cablevision Systems Corporation and CSC
John C. Malone Holdings, Inc.
/s/ LEO J. HINDERY, JR.
------------------------------------------- Director of Cablevision Systems Corporation and CSC
Leo J. Hindery, Jr. Holdings, Inc.
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- ---------
<C> <S> <C>
*1.1 --Form of Underwriting Agreement for Debt Securities.
*1.2 --Form of Underwriting Agreement for Preferred Stock.
*1.3 --Form of Underwriting Agreement for Preferred Securities.
4.1 --Certificate of Incorporation of Cablevision Systems Corporation (incorporated by reference to
Exhibit 3.1 to the Registration Statement on Form S-4 filed by Cablevision Systems
Corporation on January 20, 1998, File No. 333-44547 (the "Form S-4").
4.2 --Certificate of Incorporation of CSC Holdings, Inc. (incorporated by reference to Exhibits
3.1A(i) and 3.1A(ii) to CSC Holdings' Annual Report on Form 10-K for the year ended December
31, 1989).
4.2A --Certificate of Designations for the Series H Redeemable Exchangeable Preferred Stock of CSC
Holdings, Inc. (incorporated by reference to Exhibit 4.1C to CSC Holdings' Registration
Statement on Form S-4, File No. 33-63691).
4.2B --Certificate of Designations for the Series I Cumulative Convertible Exchangeable Preferred
Stock of CSC Holdings, Inc. (incorporated by reference to Exhibit 99.3 to CSC Holdings'
Current Report on Form 8-K filed November 7, 1995).
4.2C --Certificate of Designations for the Series M Redeemable Exchangeable Preferred Stock of CSC
Holdings, Inc. (incorporated by reference to Exhibit 4.1F to CSC Holdings' Registration
Statement on Form S-4, File No. 333-02527).
4.3 --By-laws of Cablevision Systems Corporation (incorporated by reference to Exhibit 3.2 to the
Form S-4).
4.4 --By-laws of CSC Holdings, Inc. (incorporated by reference to Exhibit 3.20 to CSC Holdings'
Registration Statement on Form S-4, File No. 33-62717).
4.5 --Senior Indenture (incorporated by reference to Exhibit 4.1 to CSC Holdings' Registration
Statement on Form S-3, File No. 333-57407).
4.6 --Subordinated Indenture (incorporated by reference to Exhibit 4.2 to CSC Holdings'
Registration Statement on Form S-3, File No. 333-57407).
**4.7 --Form of Junior Subordinated Indenture.
**4.8 --Form of Debt Security (included in the Senior Indenture, the Subordinated Indenture and the
Junior Subordinated Indenture).
*4.9 --Form of Certificate of Designations.
*4.10 --Form of Depositary Agreement.
*4.11 --Form of Depositary Receipt.
4.12 --Certificate of Trust of CSC Capital I.
4.13 --Certificate of Trust of CSC Capital II.
4.14 --Certificate of Trust of CSC Capital III.
**4.15 --Declaration of Trust of CSC Capital I.
**4.16 --Declaration of Trust of CSC Capital II.
**4.17 --Declaration of Trust of CSC Capital III.
**4.18 --Form of Amended and Restated Declaration of Trust for each of CSC Capital I, II and III.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- ---------
<C> <S> <C>
4.19 --Form of Preferred Security (included in the Form of Amended and Restated Declaration of Trust
for each of CSC Capital I, II and III).
**4.20 --Form of Preferred Securities Guarantee.
**4.21 --Form of Agreement as to Expenses and Liabilities.
**5.1 --Opinion of Sullivan & Cromwell.
**5.2 --Opinion of Morris, Nichols, Arsht & Tunnel.
**8.1 --Opinion of Sullivan & Cromwell as to tax matters.
**12.1 --Computation of Ratio of Earnings to Fixed Charges and to Fixed Charges and Preferred Stock
Dividends.
23.1 --Consents of Sullivan & Cromwell (included in Exhibit 5.1 and Exhibit 8.1).
23.2 --Consent of Morris, Nichols, Arsht & Tunnel (included in Exhibit 5.2).
23.3 --Consent of KPMG LLP.
24.1 --Powers of Attorney (included in signature pages).
**25.1 --Form of T-1 Statement of Eligibility of the Senior Indenture Trustee.
**25.2 --Form of T-1 Statement of Eligibility of the Subordinated Indenture Trustee.
**25.3 --Form of T-1 Statement of Eligibility of the Cablevision Systems Corporation Junior
Subordinated Indenture Trustee.
**25.4 --Form of T-1 Statement of Eligibility of the CSC Holdings, Inc. Junior Subordinated Indenture
Trustee.
**25.5 --Form of T-1 Statement of Eligibility of the Property Trustee.
**25.6 --Form of T-1 Statement of Eligibility of the Preferred Securities Guarantee Trustee.
</TABLE>
- ------------------------
* To be filed as an exhibit to a Current Report on Form 8-K.
** To be filed by Amendment.
<PAGE>
EXHIBIT 4.12
CERTIFICATE OF TRUST
OF
CSC CAPITAL I
This Certificate of Trust is being executed as of December 9, 1998 for the
purposes of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 DEL. C. Section 3801 ET SEQ. (the "Act").
The undersigned hereby certifies as follows:
1) NAME. The name of the business trust is CSC Capital I (the "Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware resident
trustee of the Trust meeting the requirements of Section 3807 of the Act are as
follows:
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
3) EFFECTIVE. This Certificate of Trust shall be effective immediately upon
filing in the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, as trustee of the Trust, has duly
executed this Certificate of Trust as of the day and year first above written.
<TABLE>
<S> <C> <C>
BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ FREDERICK W. CLARK
------------------------------------------
Name: Frederick W. Clark
Title: Authorized Signatory
</TABLE>
<PAGE>
EXHIBIT 4.13
CERTIFICATE OF TRUST
OF
CSC CAPITAL II
This Certificate of Trust is being executed as of December 9, 1998 for the
purposes of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 DEL. C. Section 3801 ET SEQ. (the "Act").
The undersigned hereby certifies as follows:
1) NAME. The name of the business trust is CSC Capital II (the "Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware resident
trustee of the Trust meeting the requirements of Section 3807 of the Act are as
follows:
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
3) EFFECTIVE. This Certificate of Trust shall be effective immediately upon
filing in the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, as trustee of the Trust, has duly
executed this Certificate of Trust as of the day and year first above written.
<TABLE>
<S> <C> <C>
BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ FREDERICK W. CLARK
------------------------------------------
Name: Frederick W. Clark
Title: Authorized Signatory
</TABLE>
<PAGE>
EXHIBIT 4.14
CERTIFICATE OF TRUST
OF
CSC CAPITAL III
This Certificate of Trust is being executed as of December 9, 1998 for the
purposes of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 DEL. C. Section 3801 ET SEQ. (the "Act").
The undersigned hereby certifies as follows:
1) NAME. The name of the business trust is CSC Capital III (the "Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware resident
trustee of the Trust meeting the requirements of Section 3807 of the Act are as
follows:
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
3) EFFECTIVE. This Certificate of Trust shall be effective immediately upon
filing in the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, as trustee of the Trust, has duly
executed this Certificate of Trust as of the day and year first above written.
<TABLE>
<S> <C> <C>
BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ FREDERICK W. CLARK
------------------------------------------
Name: Frederick W. Clark
Title: Authorized Signatory
</TABLE>
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Boards of Directors
Cablevision Systems Corporation and
CSC Holdings, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of Cablevision Systems Corporation, CSC Holdings, Inc., CSC Capital
I, CSC Capital II and CSC Capital III of our reports dated March 20, 1998,
relating to (i) the consolidated balance sheet of Cablevision Systems
Corporation and subsidiary as of December 31, 1997, and (ii) the consolidated
balance sheets of CSC Holdings, Inc. and subsidiaries as of December 31, 1997
and 1996, 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, 1997, and the related schedule, which reports appear in the
December 31, 1997 combined annual report on Form 10-K of Cablevision Systems
Corporation and CSC Holdings, Inc., and to the references to our firm under the
heading "Experts" in the registration statement.
KPMG LPP
Melville, New York
February 5, 1999
